Taiwan Today

The good news is that the government recognizes it must streamline its structure, build more civil service professionalism, and cut down on red tape. One of the most troublesome facets of reform lies in the allocation and distribution of human resources—putting the right number of personnel with the right expertise in the right place. But while personnel costs are already taking too much of the budget, the public wants more and better services.

The challenge is to streamline staff and improve services at the same time. The first steps are under way. A three-year program to make a 5 percent across-the-board cut in personnel began in 1993. Hiring and retention programs for civil servants are also being fine-tuned. Now that these programs are well into their second year, it’s a good time to review their progress and see what lessons have been learned that may assist continued administrative reform.

“Lose weight & get fit!” This firm recommen­dation is no longer limited to fitness center ads. It sums up the government’s latest attempt to cut the flab out of government. “Just like being overweight affects one’s health and productivity, a fat government can’t be efficient—and even worse, it be­comes a financial burden on the country,” says Chen Kang-chin (陳庚金), director­-general of the Executive Yuan’s Central Personnel Administration (CPA).

Chen says a prevailing mentality in­side and outside the government contributes to the problem: “If a government agency gets bigger, people assume that it is also becoming more important,” he says. “Agencies therefore tend to ask for as many people as they can. Any new responsibility, even if temporary, provides an opportunity to request more employ­ees.” The inevitable result is overstaffing, a fact reflected over the past decade by the steady increase in the size of government.

In 1983, Taiwan had a total of 463,000 civil servants at the local, provin­cial, and central government levels. In 1993, the total was 577,000, meaning that one of every twenty-four adults between the ages of 20 and 64 is on a government payroll. On average, the annual increase of personnel over the past decade was 11,700—all receiving salaries, insurance, retirement and additional benefits as well as other necessary support, including desks and chairs, telephones and comput­ers, offices and cafeterias. Direct and indirect personnel costs have soared, claiming larger and larger chunks of government budgets.

“At the central administrative level, personnel costs take up about 30 percent of the annual budget,” Chen says. “At the provincial level, they’re more than 50 percent, and at some local offices, the costs exceed 60 percent.” Chen would like to cut back on personnel costs and free more funds for government services and public works projects. He also points out that Taiwan’s current push for smaller government is actually part of an international trend, one that includes the United States. “But downsizing is not just fashionable, it’s practical,” he says.

Where to start? The executive branch made downsizing government a national policy in mid-1993, and in September 1993, the CPA officially announced that all levels of government were mandated to cut 5 percent of their budgeted personnel positions within three years (1994-1996), and that a minimum of 2 percent was expected to be cut by the end of the project’s first year.

This approach is generally considered the quickest and most effective way to urge administrators to pursue cost-ef­fectiveness and some of the modern forms of management already found in the pri­vate sector. As in private business, the goal is to reduce costs by using the least amount of manpower to handle the maximum amount of work. After personnel are cut, the reasoning goes, the job specifica­tions of the remaining employees have to be redefined to cover the tasks previously done by their missing colleagues. This often forces a streamlining of standard operating procedures.

One aspect of the downsizing plan is to cut personnel in larger swaths by elimi­nating whole agencies that have become superfluous or outdated. For example, over the past year, the provincial government’s Automobiles Mobilization Committee, originally set up as a means to call all pri­vate vehicles into government service in case of a war, was eliminated, cutting 2,366 positions. In other cases, various sub-of­fices have been cut. The Taipei City Government eliminated 178 positions, many in its family planning center, an agency con­sidered irrelevant since the population growth rate has almost reached zero. Other offices are also under critical examination. Among these are the tenant committees at the local government level, because there are no more tenant farmers and the total farming population is decreasing.

But oftentimes the gains made by cutting personnel and offices in one part of government are lost because other agencies need to add staff. In recent years, the government has taken on many new responsibilities, such as opening universi­ties, setting up a national health insurance system, and importing overseas laborers to help overcome the local shortage of factory, domestic, and construction workers. These require additional administra­tors, teachers, social workers, civil engineers, and office staff.

Chang Shih-hsien (張世賢), a professor in the Department of Public Administration at National Chung Hsing University, says most government of­fices have two employee categories that are ripe for downsizing. “The govern­ment can’t afford to retain the typists and file clerks who haven’t been able to learn how to use computers,” he says. “And we shouldn’t have so many errand per­sons to carry documents from office to office or make tea for high officials. Documents should travel by computer network and no positions are needed for making tea.”

Chang also says that civil servants are “overprotected” because, unlike in the private sector, once they are in the system they are usually secure until retirement. “Government employees should face los­ing their jobs if they don’t measure up,” he says. At present, those who have passed the national civil service examina­tions are protected by a government employee law that stipulates detailed layoff measures to be taken if an employee does not fulfill his job specifications or is ren­dered jobless because an office is elimi­nated and its staff is unable to transfer to other offices. But the procedures are rarely implemented. “The reality is that once you become a government employee, you have an iron rice bowl,” Chang says. “You don’t have to worry about losing your job.”

The iron rice bowl is a legacy from the past, Chang explains. “In the days before Taiwan’s economic takeoff, if you fired people from government jobs, chances were they wouldn’t be able to find work somewhere else. Since the social security system was also undevel­oped, the government almost never laid anyone off, even unsuitable personnel.” But with today’s severe shortage of labor in the marketplace, Chang says this policy has got to change. “Only worthy employ­ees should be retained,” he says. “Those who aren’t worth their salary shouldn’t be protected.”

Chang agrees with the government’s downsizing plan. “Modern governments have a new image,” he says. “They are not expected to be omnipotent. Instead, government should only do what the private sector can’t or won’t do.” Chang says the idea of “let the government do it” is out of date. “In the past, our government tended to take on all kinds of responsibilities, including trivial ones that consumed too much money, time, and energy. This has to change.”

One possible model, he says, is the current attempt in the United States to reinvent government by reducing its size while increasing the quality of its serv­ices. He says the American strategy of pri­vatizing government services deserves particular attention. “We should take more advantage of the private sector by privatizing all public enterprises that don’t concern national security or a market monopoly,” he says. In fact, some privatizing steps are already under way.

According to the CPA’s Chen Kang-chin, “Downsizing is going to be a long-term policy. But we also have to take it step by step. We have advised against taking drastic measures when laying off employees.” In fact, most government agencies have been able to meet the mandated cuts by not budgeting for positions already vacant and by not adding personnel to fill new vacancies created by retiring civil servants. Offices have also met their quota by cutting the contracted em­ployees hired for specific projects after they have completed their tasks.

In the first year of the downsizing plan (1993-94), the government as a whole eliminated 11,885 positions. Central government agencies, including ministries and their affiliated bureaus, commissions, and administrations, cut 4,539 positions, a 4.3 percent downsizing. Quasi-governmental enterprises, including the Taiwan Power Co., Chinese Petroleum Corp., China Steel Corp., and others, cut 4,480 employees, a 2.5 percent downsizing. And the provincial and county governments cut 2,866, or 2.4 percent.

As the statistics indicate, local governments are having the most difficulties, primarily because many were already understaffed. You Ching (尤清), the Taipei county magistrate, for one, is troubled by the downsizing policy. He says that lower-level agencies always have more tightly controlled personnel budgets and caps on the number of employees, while the central agencies tend to be over­staffed. “County governments don’t have as many designated positions as the [Kaohsiung and Taipei] metropolitan districts administered by the central government, even though the county might have as large a population or area,” he says. “Taipei county is eight times larger than Taipei city and has 600,000 more people, but our government has less than half the number of employees.”

You Ching and other local officials consider the 5 percent across-the-board cut inequitable because the offices pinched hardest are those that have kept a tighter rein on personnel costs, while those with excessive personnel have a larger buffer before the knife cuts into flesh. “Our office is not overstaffed,” You says. “We are allowed 688 positions, but since I assumed office five years ago, I’ve kept about eighty positions vacant. Actu­ally, I’ve already done an 11 percent downsizing. I’ve also avoided hiring tem­porary and contract employees.”

Despite the inequity, the provincial government has ordered the county government to make the mandated cuts. “The only way I can do it is not to hire any new personnel to fill budgeted positions that have been vacated,” You says. “And basically, I prefer this to laying off personnel.”

For Taipei county, the downsizing policy has already had an impact on serv­ices. Tseng Wen-pen (曾文攀), the coun­ty’s acting personnel director, says: “Due to the lack of hands, last year the Taipei county government ranked last in processing official documents among all county and county-administrated agen­cies in the annual evaluation conducted by the government evaluation commit­tee.” But Tseng points out that the simpli­fication of documentation requirements and the computerization of offices now under way will help take the pressure off administrative personnel. “When these measures pick up speed and are finally completed, downsizing will have fewer negative side effects,” he says.

Mayor Chen Ching-chun (陳景峻) of Sanchung, in Taipei county, also com­plains about an employee shortage. “Sanchung’s population has increased tenfold over the last decade, but there has been no increase in city government posi­tions,” he says. “For instance, we still have only one person in charge of city beautification, and we have only ten per­sons to handle social services for a city of 387,000 people.”

Chen stresses that besides the in­creasing number of problems resulting from the growth in population, people are also expecting more and better government services than before. “We are starting up a large number of projects for sen­ior citizens, children, and the handi­capped,” he says. “So our overall workload has increased. Frankly, our employees are exhausted dealing with routine business. How can they also be expected to do follow-up work, evaluation, analysis, re­search, or future planning?”

Chen points out another problem: “Local governments can’t retain enough talented people. For instance, Sanchung needs many civil engineers for its public works section, but most engineers prefer working for a central agency because they offer better pay and better chances for promotion. As a result, they take the first opportunity to jump to a central agency or a highly paid job in the private sector. That leaves vacancies at the local govern­ment level.”

Chen also criticizes the questionable practice in some local governments of re­warding campaign fund contributors with temporary or contract positions. This is one way, he admits, local govern­ments become overstaffed. “For in­stance, the [city-operated] Sanchung Fruit and Vegetable Market originally had 130 employees because former mayors tended to put temporary hires there­—it was a way to prepare for the next election,” he says. “This was just excess baggage. I don’t believe in this tactic. Citizens will elect a mayor who really does something. So when I took office three years ago, I laid some of these peo­ple off.”

At roughly midstream in the current downsizing program, most offices at the central government level seem to have succeeded without much pain, lead­ing observers to predict additional mandated cuts in the future. In fact, many agencies surpassed the mandated first­-year cut in personnel. The Ministry of Economic Affairs (MOEA), for example, downsized 3 percent. The agencies under MOEA administration cut 2.27 percent, and the ten public enterprises under its administration cut up to 3.18 percent.

Jeng Sheng-long (鄭勝龍), director of the MOEA’s personnel department, says downsizing is a good idea. “The general lack of overall planning, regulating, and pe­riodic review of human resources has ossi­fied the personnel system,” he says. “Whenever a new project comes up, agen­cies just ask to hire new people instead of taking advantage of existing employees. Our government has therefore accumulated more and more unnecessary employees. This downsizing project is a good opportu­nity for us to correct the situation.”

The MOEA’s primary means of imple­menting the policy has been to restructure or eliminate some offices. “It’s easier to downsize through eliminating units than by laying off individuals,” Jeng says. “But we’re still taking mild measures. In our ministry, approximately 2 percent of our employees retire annually, and we don’t fill these vacancies. This way is slow, but it’s also more humane.”

The Medium & Small Business Ad­ministration under the MOEA has also stopped filling the vacancies created by retirements. But Shih Yen-shiang (施顏祥), the administration’s director-general, says this approach is inadequate. “A previous director-general of personnel once said that the root of our personnel problem lies in the fact that we don’t have a ‘weed-out’ system,” he says. “That’s why junior employees sometimes have trouble getting promoted. Our system sets the retirement age at 65, and there’s no way to get rid of unsuitable persons be­fore that.”

Shih says the Japanese model may be worth adapting to local needs. “I’m im­pressed by the youth of Japanese govern­ment employees,” he says. “Most of them stay in a junior position for around twelve years, then start climbing the ladder, mov­ing upward to a new position each two or three years. Along the way, those who have no way to move up after being in a position for more than two or three years have to resign. This frees higher positions for younger and brighter people, and those who leave government can still find jobs elsewhere. Best of all, the government is not burdened with people just waiting to retire.”

The downsizing plan has already demonstrated some additional benefits. The mandated constriction of personnel is forcing many agencies to be more flexible and creative. Some, for instance, have started shifting selected responsibilities to the private sector. Mayor Chen of Sanchung has turned management of the city-owned swimming pool over to a pri­vate company. The pool had never made money. But now, after freeing itself from personnel costs, the city government’s share of the profits was NT$3 million (US$110,000) the first year and NT$4 million (US$147,000) the second. Priva­tizing the management has turned the pool into an asset for the city instead of a liability. Chen says he will entrust more businesses to the private sector, including eventually privatizing the city-run fruit and vegetable market. Other counties are starting to follow suit.

Shih Yen-shiang says more agencies should think about changing their organi­zational structure. “There are too many levels inside government agencies,” he says. “To get things done, you need too many name chops and signatures. At a certain point, adding yet one more signa­ture doesn’t provide any more guarantee. We need to flatten agencies a little bit­—get rid of some unnecessary levels and positions. This also means giving the peo­ple who are doing the work additional au­thority. Then we can greatly simplify government procedures.”

One attempt at flattening organiza­tion is under way at the central government level. The Directorate General of Posts, in the Ministry of Transportation and Communications, started experimenting with a more corporate structure in July 1994. It divided the island’s postal service into fifty-six centers, allowing each to manage its own business independently, thereby flattening its old three-level hier­archical organization.

“We started dividing all the post of­fices around the island into the responsi­bility centers in July 1994,” says Cheng Li-chuan (鄭麗娟), the administrator in charge of the project. “Our goal is to cut personnel costs, earn larger revenues, and increase overall productivity. Be­cause the evaluation of each center determines the employee bonuses, it puts pressure on them—just like a private company. Last year, because of compe­tition from private postal services, our revenues dropped. But after implementing the new system, we’ve already seen a sharp increase in revenues. So, the plan is really working.”

Casper Shih (石滋宜), president of the China Productivity Center, a corpo­rate consulting company often used by government agencies to handle training programs, says the downsizing program is headed in the right direction. “Some agen­cies are really changing,” he says. “Under the pressure of downsizing, they figure out one way or another to deal with their workload. The pressure pushes them to think in different ways.”

But Shih also advocates a major shift in attitude. “All government agencies have to change their perception of the people they deal with—they should avoid treating most citizens as villains,” he says. “Bureaucrats spend too much time mak­ing complicated regulations that will help them catch a few bad guys, a few cheat­ers. As a result, honest people, the majority, don’t get all the services and resources they need. If government offices shifted their attitudes, it would also reduce their workload.”

Shih says a change in attitude toward work is needed as well. “Government employees should shed the old mentality that they can survive only if they follow stand­ard operating procedures. Instead, they need to question procedures, start finding out what needs improvement, and start figuring out themselves how to make government more efficient. If this downsizing program can help government employees change their attitudes and perceptions, it will be an especially good exercise for everyone.”