Israel's Civil Service Reform Means Getting Bureaucrats to Work

The government's second attempt in 25 years to improve motivation among its bureaucrats must succeed - or Israel will continue its slide down the ladder of global competition.

The Bank of Israel recently checked and found that after the government approves construction on a piece of land, it takes an average of 14 years for the project to be completed. The central bank obviously highlighted this finding in an attempt to redirect criticism over skyrocketing housing prices away from itself by implying the blame rests with government bureaucracy.

Without getting into the blame game, there is no doubt that Israel's government bureaucracy is atrophied. The World Bank ranks Israel as the 38th best country in the world for doing business, but in some areas, we are right at the bottom: 81st in tax bureaucracy, 94th in contract enforcement and 139th in obtaining construction permits. Israel's government abuses its citizens for no reason and, in doing so, crushes productivity, free enterprise and growth potential.

Almost certainly contributing to Israel's dishonorable rank of 139th in obtaining construction permits is mismanagement by the Israel Lands Authority, previously known as the Israel Lands Administration, and the Housing and Construction Ministry. These names are misleading, though: There's no such thing as the Israel Lands Authority, just as there's no Housing and Construction Ministry. Rather, there are thousands of clerks working at the authority and the ministry, as well as at other ministries, and it's they who turn the wheels of government bureaucracy. When an Israeli developer gets stuck for 14 years before managing to finish building his homes, it's because for 14 years, thousands of government clerks don't bother lifting a finger to help him: They're busy watching out for themselves, their authority and status, their paychecks and their labor rights.

The government is no more than the clerks who work there, and as 67,000 government clerks keep busy mainly with watching out for themselves and the status quo, the State of Israel is sliding down the ladder of global competition. The high cost of living and poor quality of life are due to those same 67,000 clerks, who are doing too little for the public and too much for themselves. Until we motivate those 67,000 bureaucrats to start acting differently, Israel doesn't stand a chance.

This week, the government approved its second attempt to improve motivation among its bureaucrats. The first attempt was in 1989 with acceptance by then-Prime Minister Yitzhak Shamir's government of a report written by a committee headed by Haim Kovarski. Over the interim 24 years, the Kovarski Committee report has been gathering dust in government filing cabinets, while the problems it warned about – a fossilized government administration shackled by restrictive collective labor agreements without any ability to attract and promote good employees and provide them with incentives, fire the bad ones or make any changes in human resource management whatsoever – just grew increasingly worse.

The second attempt was made this week, when director-general of the Prime Minister's Office Harel Locker and civil service commissioner Moshe Dayan submitted their committee's report on reforming the civil service for government approval. The document includes recommendations that should have been considered quite obvious – except for the tricky issue of work relations.

The report's most important proposals are extending the two year probation period before the granting of locked-in employment security in a government job to a period of five years and having promotions based on performance rather than tenure. For determining employee promotions, regular annual performance assessments will start being conducted and measured along a normal distribution curve. This was necessitated by the fact that the current assessment mechanism gives civil servants an average 9.62 score out of 10, and that incentive pay – meant as a motivation for excellence – has become a routine part of fixed salaries for most of the government workforce.

The report parenthetically notes that the lowest-graded 15% of government employees will be subjected to a "suitability review" process. This is obviously a euphemism for the road to being dismissed. The word "dismissed" itself only appears in the report in the sense of a general reservation, as in, "It should be clear that a dismissal procedure isn't a goal and only becomes necessary as a last resort," in an attempt to dodge the wrath of the Histadrut labor federation, which represents the civil servants.

The report also proposes doing away with tenure among senior government officials from the rank of deputy director and instead appointing them only according to their qualifications to terms no longer than six to eight years. On completion of their terms in office, competent officials will transfer to parallel jobs in other ministries, while less competent ones will be sent packing. This change was proposed after it turned out that 36 percent of current deputy directors have been at their jobs more than 12 years, which goes to show that the senior government administration is worn out, stagnant and impedes the promotion of younger people.

"Would it be acceptable for an Israel Defense Forces' general to serve in a position for 12 years?" the reform committee rhetorically asked. But what sounds unacceptable when it comes to Israel's security is the crushing reality in all other areas of government activity. This despite the fact that senior officials in the Health, Social affairs, Transportation, Education and Public Security Ministries can influence life nearly as much as army generals with their decisions.

The reality the reform committee report is meant to fix is the criminal neglect of Israeli government administration – criminal, because for at least the past 24 years since the Kovarski report came out, all of Israel's governments knew how bad the situation is and what is needed to fix it. But generations of governments allowed the situation to keep deteriorating just so they wouldn't have to confront forces within the government opposed to change and particularly to avoid a battle with the Histadrut. The Histadrut always opposes any change to labor relations in the government; even though it's clear these relations had already become obsolete 24 years ago and that each passing year without change causes the state irreversible damage.

The Histradrut's motivating interest, its desire to reinforce its own power at any price, is at odds with the national interest of improving the functioning of Israeli government. There could be a way to preserve the government's collective labor agreements while still making them more reasonable and allowing for motivating personnel and providing incentives, firing the worst of them and giving the ministries the tools they need to manage themselves. Otherwise, if we continue surrendering to the forces in Israel's labor unions lined up against change, our fate of becoming atrophied will be sealed. There are plenty more world ranking that need a 139th slot filled.

Eyal Toueg