Charting a New Course for Israel’s Civil Service

In recent years, public sentiment has grown stronger about the need for a substantive improvement in the operative capabilities of the civil service —inter alia, by modifying the mechanisms of labor relations and management. The question of work relations and management in the civil service has been the focus of numerous committees that were formed to examine alternatives to the structure of civil service and administration, and to define an agenda for implementing reforms. Ideas proposed for structural reforms in the civil service via academic research and the activity of these and other committees have attracted attention and interest for over a decade. This is beneficial in keeping the subject of change and reform on Israel’s public agenda and offering up-to-date and creative ideas for enhancing administration.[1]

However, upon close examination, we see that these proposals focus on the organizational, structural, and monetary array of the branches of government. None of them include an approach that says: Through cooperation and building trust between all of the parties involved (the public, the government, and the sides in labor relations), it is possible to arrive at reforms and achievements. Civil service reform is now being discussed in negotiations between the government teams that worked to formulate this reform and the Histadrut labor federation. In our view, this reform also misses a key aspect: trust between the public, the government, unions and all of the parties involved in the labor relations. This trust is the key to the implementation and success of any reform.

The goal of this document is to propose a general policy outline and recommendations for action in order to improve the efficiency of the civil service in Israel and in order to enhance the level of service for the citizen. The outlines of the proposed reform are based, first and foremost, on discussion and relations of trust between all of the parties cited above. Indeed, without this, joint action is impossible and there is no pooling of forces and resources for creating real change in any social area that could be called a "dramatic change in policy." It is difficult for unilateral reforms to succeed, even when they reflect, objectively, the right thing to do. This document represents the approach that says: Only with cooperation and increased trust between all of the parties involved—the public, the workers, the employers, and the government—is it possible to reach reforms and achievements.

This document discusses the two sides of the relations of trust that any reform must focus upon—between the civil service and the civil society it comes to serve;[2] and, primarily within the civil service, between the sides involved in labor relations. The generally negative image of government and public administration in the eyes of the citizenry, and the relatively low level of trust in them are often explained as if they were a direct result of the civil service’s performance, of convoluted processes associated with it, of its lack of flexibility and sensitivity to the needs of the public, and of the "bureaucratic sluggishness" it represents in providing suitable solutions for urgent problems. One of the important steps in boosting trust between the public and the government is to restore trust between the parties involved in labor relations in the economy and to encourage cooperation between them in order to better utilize the society’s public and collective resources and in order to provide improved service for the citizenry. Cooperation between the sides is what is needed in order to introduce reforms and modernization in the civil service in Israel.

In this document, several reasons are suggested for the loss of trust between the sides in the system and for the decline in the quality of the services provided:

• Commitments in agreements whose feasibility was not sufficiently checked by the parties to the agreement.
• A mutual failure to comply with signed agreements—by both the employers and the unions.
• Lack of desire by the Histadrut to enforce the local union’s compliance with agreements.
• Abuse of the mechanism of tenure for workers and lack of incentive for excellence.
• Outdated work agreements that harm productivity and the ability to manage, create a wage structure that lacks incentive, and hamper the organization’s ability to manage and innovate in a changing environment.
• Technological innovation that has not been absorbed in the civil service (unsuitability of the public service for the modern economy).
• That is, in order to get the Histadrut to accept changes in the wage structure (a critical condition for implementing any change), we must build a model in which the Histadrut has an incentive to cooperate.

Recommendations

The team’s conclusion—based on many studies emphasizing the centrality of trust as an essential tool in processes of reform and the significant leverage it creates for the success of the processes of change—is that cooperation between the parties involved in labor relations must focus on eight activities:

1. Changing the old and cumbersome wage structure.
2. Creating a connection between the individual’s performance and advancement, salary, and continued employment in the public service, as well as strengthening the connection between compensation for the group as a whole and its performance, as measured in structured methodology.
3. Improving mechanisms of selection, recruitment and termination of employment.
4. Improving managerial abilities in the civil service.
5. Improving the mechanisms for termination of work, voluntarily or at the employer’s initiative—for retirement, prior to retirement age or for severance pay—without payment of an allowance prior to the age of pension entitlement.
6. Decentralizing the regulatory mechanisms.
7. Shifting power from the leaders of the Histadrut to the local organizations in regard to the authority to reach agreements and manage the labor relations.
8. Privatization and structural changes.

1. For example, see D. Nachmias, M. Danon-Karmazin and A. Yar’oni, Toward Structural Change in the Public Sector in Israel, Policy Research 5, Jerusalem: Israel Democracy Institute, 1997 [Hebrew]; A. Ben-Bassat, Report of the Public Committee for Income Tax Reform, Ministry of Finance, 2000 [Hebrew].
2. For more on this subject, see the document Democratic Governance: Integration and Inclusion in the Civil Service, which was also written for the 2013 Eli Hurvitz Conference on Economy and Society [Hebrew], and the English abstract above.

Head

• Mr. Ilan Levin, Economic Consultant; Head of Labor and Human Resources Division, Manufactures Association of Israel; Former Head of Wages, Ministry of Finance

Members

• Mr. Moshe Behar, Ministry of Finance
• Ms. Ester Dominissini, Chair, Hadassah Medical Organization Board of Directors
• Prof. Abraham (Rami) Friedman, Dean, Sarnat School of Management
• Ms. Alex Kaganov, Referent of Macroeconomics and HR Policies, Budget Department, Ministry of Finance
• Ms. Dorit Perchik, Adv., Tene-Perchik Consulting Ltd.
• Mr. Yuval Rachlevsky, Chair, Executive Committee, Jezreel Valley College
• Mr. Udi Remer, Manager of Macroeconomics and HR Policies, Budget Department, Ministry of Finance
• Shlomo Shani, Chairman, Technological and Engineering Education Center
• Prof. Eran Vigoda-Gadot, Chair, School of Political Science, University of Haifa
• Mr. Mazar Yuval, Economist, Research Division, Bank of Israel

• Full Hebrew Report
• English Abstracts