OECD Reviews of Human Resource Management in Government Brazil 2010 by OECD

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This review of human resource management (HRM) in the federal government of Brazil provides a detailed diagnosis of the management of government employees, and solutions for improving it. The assessments and the recommendations are based on the lessons learned from the experience of OECD member countries. 
This review assesses whether: the federal government is managing the size, skills, and competencies of its workforce in a sustainable manner; the HRM system in government is strategic and performance oriented; there is a balance between the flexibility and consistency of HRM practices; the values promoted by the government are consistent with management rules and practices.

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									OECD	Reviews	of	Human	Resource	
Management	in	Government

BRAZIL	2010
FEDERAL	GOVERnMEnT	
OECD Reviews of Human
Resource Management in
     Government:
      Brazil 2010

     FEDERAL GOVERNMENT
               ORGANISATION FOR ECONOMIC CO-OPERATION
                          AND DEVELOPMENT

     The OECD is a unique forum where the governments of 30 democracies work together to
address the economic, social and environmental challenges of globalisation. The OECD is also at
the forefront of efforts to understand and to help governments respond to new developments and
concerns, such as corporate governance, the information economy and the challenges of an
ageing population. The Organisation provides a setting where governments can compare policy
experiences, seek answers to common problems, identify good practice and work to co-ordinate
domestic and international policies.
    The OECD member countries are: Australia, Austria, Belgium, Canada, the Czech Republic,
Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea,
Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic,
Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The Commission of
the European Communities takes part in the work of the OECD.
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standards agreed by its members.




                 This work is published on the responsibility of the Secretary-General of the OECD. The
               opinions expressed and arguments employed herein do not necessarily reflect the official
               views of the Organisation or of the governments of its member countries.




ISBN 978-92-64-08221-2 (print)
ISBN 978-92-64-08222-9 (PDF)
DOI 10.1787/9789264082229-en


Series: OECD Reviews of Human Resource Management in Government
ISSN 2074-3335 (print)
ISSN 2074-3327 (online)




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© OECD 2010

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                                                                                            FOREWORD – 3




                                                         Foreword


            The OECD Review of Human Resource Management (HRM) in the federal
        government of Brazil (executive branch) builds on the work conducted over the years by
        the OECD Public Employment and Management Working Party (PEMWP, formerly
        Human Resource Management Working Party, HRMWP), under the leadership of the
        OECD Public Governance Committee. This report including the assessment and
        recommendations was discussed at the annual meeting of the OECD PEMWP that was
        held on 15-16 December 2009 at OECD headquarters in Paris.
            While policy options presented in the review are based on the lessons learnt from the
        experience of other OECD member countries, the review process has ensured a high level
        of consultation with multiple stakeholders so that policy options are relevant and
        attainable within the specific context and policy priorities of the governments under
        review.
            This review was produced by the OECD Public Governance and Territorial
        Development Directorate in co-operation with the federal government of Brazil
        (executive branch) and the World Bank. The OECD is grateful to all those in government
        and non-government organisations who went to great lengths to provide the OECD with
        the necessary information and analysis for the review in a very open and transparent
        manner, including: Parliament officials; the Executive Secretariat in the Ministry of
        Planning; the Secretariats of Human Resources, of Public Management, of International
        Relations, and of the Federal Budget in the Ministry of Planning; the Department for
        Coordination and Control of Government Enterprises in the Ministry of Planning; the
        Ministries of Foreign Affairs, Education, Social Security, and Finance; the Ombudsman
        Office; the National School of Public Administration (ENAP); the Court of Accounts; the
        Vargas Foundation; Banco do Brasil; Petrobras; Empresa de Correios e Telégrafos
        Empresa Brasileira de Infraestrutura Aeroportuária (INFRAERO); public service unions
        (CONDSEF – Confederação Nacional dos Trabalhadores do Serviço Público Federal;
        SindiReceita – Sindicato Nacional dos Analistas-Tributários da Receita Federal do
        Brasil Fórum de Entidades Sindicais de C§ T; CUT – Central Única dos Trabalhos; and
        Departamento Intersindical de Estatística e Estudos Sócio-Econômicos); the Bank of
        Social and Economic Development (Banco Nacional de Desenvolvimento Econômico e
        Social – BNDES); the Municipality of Rio de Janeiro; the Institute of Social Security of
        São Paulo; the Institute of Social Security of Municipal Civil Servants (Municipality of
        São Paulo); and the University of São Paulo. Most of the work in preparation for the
        review was carried out by the Secretariat of Human Resources in the Ministry of Planning
        who has shown a tremendous commitment to the success of the review.




OECD REVIEWS OF HUMAN RESOURCE MANAGEMENT IN GOVERNMENT: BRAZIL – © OECD 2010
4 – FOREWORD

           A team of international senior practitioners from OECD member countries
       participated in the peer review process:
           •   Mr. Bunzo Hirai, Ministry of Internal Affairs and Communication, Japan;
           •   Mr. Kevin Mahoney, Office of Personnel Management, United States;
           •   Mr. Jacky Richard, Council of State, France;
           •   Mr. Xavier Sisternas, Antifraud Office of Catalonia, Spain;
           •   Ms. Tatyana Teplova, Treasury Board Secretariat, Canada.
           The OECD is grateful to their governments for allowing these high-level officials to
       participate in the review. Their participation has substantially contributed to the quality of
       the review.
          In addition, the project was conducted in full collaboration with the World Bank.
       Mr. Jeffrey Rinne led the exercise for the World Bank, whose team included
       Ms. Evelyn Levy and Mr. Mariano Lafuente, under the supervision of Mr. Nick
       Manning.
           The project was led and co-ordinated by Ms. Elsa Pilichowski (OECD Secretariat).
       The report was written by Mr. Oscar Huerta Melchor (OECD Secretariat – introduction,
       pensions, division of responsibilities), Ms. Maria Maguire (Consultant – competencies,
       job categories, training and learning, core values and reform implementation strategies),
       Ms. Elsa Pilichowski (workforce planning), and Mr. Knut Rexed (Consultant –
       performance management and acquiring human capacity). Mr. Barry Anderson (OECD
       Secretariat) supervised the project. Statistical data and analysis were produced by
       Mr. Jani Heikkinen (OECD Secretariat – quantitative data and analysis), and
       Mr. Emmanuel Job (OECD Secretariat – qualitative data). Ms. Doranne Lecercle
       (Consultant) edited the publication.
          In addition to the project team, very useful comments were received from Nadim
       Ahmad (Statistics Directorate, OECD Secretariat); Luiz De Mello (Economics
       Department, OECD Secretariat); Stéphane Jacobzone, Janos Bertok and James Sheppard
       (Public Governance and Territorial Development Directorate, OECD Secretariat).




                                           OECD REVIEWS OF HUMAN RESOURCE MANAGEMENT IN GOVERNMENT: BRAZIL – © OECD 2010
                                                                                                                                   TABLE OF CONTENTS – 5




                                                               Table of Contents


Executive Summary ................................................................................................................ 11
Synthèse .................................................................................................................................... 15
Assessment and recommendations ........................................................................................ 21
    Notes .................................................................................................................................... 37
Introduction............................................................................................................................. 39
    I.1. The federal government – general characteristics ......................................................... 39
    I.2. Structure of the executive federal government .............................................................. 40
    I.3. General economic situation ........................................................................................... 43
    I.4. An overview of Brazil’s public management reforms................................................... 45
    Notes .................................................................................................................................... 51
Chapter 1 Workforce planning and management ................................................................ 53
    1.1. The size and cost of the workforce in the federal government of Brazil ...................... 54
    1.2. Accounting for public employees and their costs ......................................................... 63
    1.3. Strategic workforce planning ........................................................................................ 67
    1.4. Promoting whole-of-government goals regarding efficiency and costs ....................... 83
    1.5. Salary setting and careers ............................................................................................. 88
    1.6. The role of unions ......................................................................................................... 96
    1.7. Adjusting an ageing public service to an ageing society .............................................. 98
    1.8. The Brazilian public service’s pension system ........................................................... 101
    1.9. Promoting government’s goals regarding diversity .................................................... 113
    1.10. Conclusion ................................................................................................................ 116
    Notes .................................................................................................................................. 118




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6 – TABLE OF CONTENTS

Chapter 2 Strengthening government capacity .................................................................. 123
    2.1. Managing competencies ............................................................................................. 124
    2.2. Job categories and career paths................................................................................... 141
    2.3. Acquiring human capacity and talent ......................................................................... 161
    2.4. From training to learning ............................................................................................ 173
    Notes .................................................................................................................................. 185
Annex 2A.1 Job profile template.......................................................................................... 187
Chapter 3 Enhancing performance orientation and building leadership......................... 189
    3.0. Introduction................................................................................................................. 190
    3.1. Enhancing performance orientation ........................................................................... 191
    3.2. Managing senior management .................................................................................... 208
    Notes .................................................................................................................................. 223
Chapter 4 Strengthening human resource management reform in the Brazilian
          federal government ............................................................................................. 225
    4.1. Core values ................................................................................................................. 226
    4.2. The division of responsibilities in human resources management ............................. 246
    4.3. Reform implementation strategies .............................................................................. 272
    4.4. General conclusions .................................................................................................... 293
    Notes .................................................................................................................................. 296
Bibliography .......................................................................................................................... 297

Tables

Table I.1.       Staffing levels in the federal government of Brazil .............................................. 41
Table I.2.       Ministries and secretariats (with secretaries of ministerial status) in the
                 Brazilian federal government ................................................................................ 42
Table 1.1. Employees, retirees, and pensioners in the civil servant pension scheme ........... 106
Table 2.1. Integrated view of corps, positions and salaries in the Spanish civil
           service after the 1984 reform (simplified). Example with corps and
           positions belonging to group A1 ......................................................................... 158
Table 4.1. HR Professional standards in the UK Cabinet Office ......................................... 261
Table 4.2. Public administration reform challenges and possible policy tools .................... 279




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                                                                                                                                 TABLE OF CONTENTS – 7



Figures

Figure 1.1.       Share of public sector employment in total employment in Brazil over time ..... 55
Figure 1.2.       Public sector employment as a share of total employment, the labour force
                  and population in selected countries ................................................................... 55
Figure 1.3.       Compensation of general government employees as a percentage of GDP ........ 57
Figure 1.4.       Compensation of general government employees as a percentage of GDP
                  (2006) and share of general government employment in total employment
                  (2005) .................................................................................................................. 57
Figure 1.5.       Share of compensation of general government employees as a percentage of
                  GDP divided between social employer’s contributions and wages and
                  salaries ................................................................................................................. 58
Figure 1.6.       Compensation of employees and output at basic prices between general
                  government and total economy in selected countries .......................................... 59
Figure 1.7.       General government production costs as a percentage of GDP .......................... 59
Figure 1.8.       Costs of goods and services produced by non general government
                  organisations (mostly private sector) and funded by government (general
                  government intermediate consumption and social transfers in kind) as a
                  share of GDP ....................................................................................................... 60
Figure 1.9.       Share of public sector employees at different levels of government in
                  selected federal countries .................................................................................... 61
Figure 1.10. Number of federal government employees in the executive branch of
             government .......................................................................................................... 61
Figure 1.11. Selected federal expenditures including personnel ............................................. 62
Figure 1.12. Casual employees in the central government of selected OECD member
             countries (2005) and in Brazil (2009) ................................................................. 69
Figure 1.13. Short-term employees in the central government of selected OECD member
             countries and Brazil ............................................................................................. 70
Figure 1.14. Mapping human resource management strategic management in Petrobras ....... 74
Figure 1.15. Total rewards in the United Kingdom ................................................................. 94
Figure 1.16. Percentage of workers aged 50 years or over in the central/federal
             government in OECD member countries (2005 and 1995) and in Brazil
             (2005 and 2008) .................................................................................................. 99
Figure 1.17. Percentage of workers aged 50 years or over in central/federal government
             and the wider labour force ................................................................................. 100
Figure 1.18. Proportion of workers at the national/federal level aged between 40 and 50
             years and over 50 years ..................................................................................... 101
Figure 1.19. Percentage of women in senior positions in OECD member countries in
             2005 and in Brazil ............................................................................................. 114
Figure 3.1.       Criteria used for assessing performance of employees in central
                  governments of selected OECD member countries........................................... 193

OECD REVIEWS OF HUMAN RESOURCE MANAGEMENT IN GOVERNMENT: BRAZIL – © OECD 2010
8 – TABLE OF CONTENTS

Figure 3.2.     Degree to which senior civil servants are managed by separate HRM
                policies in central government .......................................................................... 214
Figure 4.1.     Frequently stated core public service values ..................................................... 227
Figure 4.2.     Countries that offer protection for whistle-blowers .......................................... 230
Figure 4.3.     Extent of delegation of HRM authority to line ministries in OECD member
                countries and Brazil ........................................................................................... 250

Boxes

Box 1.1.      The integrated database for personnel administration in Brazil ............................. 65
Box 1.2.      The public service observatory in France............................................................... 67
Box 1.3.      Staff reductions and workforce reallocations in Japan ........................................... 71
Box 1.4.      United States: The strategic alignment system and workforce planning................ 77
Box 1.5.      Workforce and competency planning arrangements in France .............................. 78
Box 1.6.      Workforce planning in Canada............................................................................... 80
Box 1.7.      Expenditure and Workforce Reduction in the Canadian Public Service in the
              1990s ...................................................................................................................... 87
Box 1.8.      France’s General Review of Public Policies (RGPP): consequences for human
              resource management ............................................................................................. 89
Box 1.9.      Australian bargaining parameters ........................................................................... 95
Box 1.10. New Zealand bargaining parameters ...................................................................... 95
Box 1.11. Past reforms to civil servants’ pension schemes (prior to 2003) .......................... 107
Box 1.12. Belgium’s experience with age-based supplements ............................................. 110
Box 1.13. The UK Partnership Pension Scheme for civil servants ....................................... 112
Box 2.1.      Examples of competency management systems in PETROBRAS and BNDES
              and the Ministry for Finance ................................................................................ 130
Box 2.2.      Competency management in Belgium.................................................................. 133
Box 2.3.      The Professional Skills for Government framework in the United Kingdom ...... 136
Box 2.4.      Leadership competencies in the Canadian public service .................................... 138
Box 2.5.      Australia’s Integrated Leadership System ............................................................ 139
Box 2.6.      Development of competencies in the public service in Canada and
              New Zealand......................................................................................................... 140
Box 2.7.      Organisation of job categories in some OECD member countries ....................... 144
Box 2.8.      Canada: Occupational group structure in the core public administration............. 153
Box 2.9.      Spain: Main elements of the reform of the corps system in 1984 ........................ 154
Box 2.10. France: Répertoire interministériel des métiers de l’État (RIME) ....................... 156
Box 2.11. Career System in the Canadian public service ..................................................... 160


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                                                                                                                               TABLE OF CONTENTS – 9



Box 2.12. Recruitment in the Belgian government ............................................................... 168
Box 2.13. Recruiting organisation and processes in Belgium and Ireland ........................... 171
Box 2.14. Training and learning in governments of selected OECD member countries ...... 175
Box 2.15. Development of senior civil servants: examples from OECD member countries 181
Box 2.16. OECD survey of central government KM practices............................................. 182
Box 3.1.      Conclusions of a study on collective performance-related pay ............................ 196
Box 3.2.      General trends in the management of senior management in OECD and
              European Union countries .................................................................................... 209
Box 3.3.      Senior managers in the United States ................................................................... 216
Box 3.4.      Senior managers in the Netherlands ..................................................................... 217
Box 3.5.      Managing senior managers in Chile ..................................................................... 218
Box 3.6.      The Canadian Career Assignment Program and follow ups................................. 219
Box 4.1.      OECD Principles on Ethical Conduct in the Public Service (1998) .................... 229
Box 4.2.      France: Clarifying, diffusing and bringing to life the values of the public
              service................................................................................................................... 238
Box 4.3.      Finland: Values to be Part of the Daily Job .......................................................... 239
Box 4.4.      Values of the Canadian Federal Public Service.................................................... 240
Box 4.5.      How are core values integrated in HRM management in the federal
              government of Canada? ........................................................................................ 240
Box 4.6.      Australia: Values enshrined in public service legislation ..................................... 243
Box 4.7.      Australian Public Service (APS): Get it Right: a recruitment kit for managers ... 244
Box 4.8.      Responsibilities and organisational design of the SRH ........................................ 251
Box 4.9.      The Brazilian Federal Civil Personnel Administration System (SIPEC) ............. 252
Box 4.10. The management of the French civil service, the DGAFP ................................... 256
Box 4.11. The Chilean agency for the management of the civil service............................... 257
Box 4.12. Examples of the design of central HRM bodies in OECD member countries ..... 258
Box 4.13. Delegation of HRM responsibilities to deputy ministers in Canada .................... 262
Box 4.14. The US strategic alignment system: human resources as strategic partner .......... 264
Box 4.15. The British Civil Service Capability Group and the Capability Review
          Programme................................................................................................. 265
Box 4.16. The Canadian Management Accountability Framework ...................................... 266
Box 4.17. Civil service governance in the United Kingdom ................................................ 270
Box 4.18. Strategic leadership programme in Norway ......................................................... 271
Box 4.19. France: National debate on the future of the public service ................................. 280
Box 4.20. Spain: The consultation process for the Basic Statute for the Public Employee .. 281


OECD REVIEWS OF HUMAN RESOURCE MANAGEMENT IN GOVERNMENT: BRAZIL – © OECD 2010
10 – TABLE OF CONTENTS

Box 4.21. Mexico: Building ownership of change ............................................................... 282
Box 4.22. The social partnership approach in Ireland .......................................................... 284
Box 4.23. Leadership for reform: Development strategies in selected OECD member
          countries ............................................................................................................... 287
Box 4.24. Public Service Renewal in Canada (2001-09) ...................................................... 289
Box 4.25. Canada: Reporting progress on public service renewal........................................ 292
Box 4.26. Characteristics associated with the success of independent and permanent
          organisations in sustaining reforms ...................................................................... 292




                                                            OECD REVIEWS OF HUMAN RESOURCE MANAGEMENT IN GOVERNMENT: BRAZIL – © OECD 2010
                                                                                    EXECUTIVE SUMMARY – 11




                                                 Executive Summary


            Brazil has recently delivered a remarkable performance in economic, social and
        financial terms. However, Brazil still faces a number of challenges if the path to growth
        and prosperity is to be consolidated. The Brazilian public sector has played a crucial role
        in promoting stability and setting up the conditions for economic and social development,
        even more during the two successive Lula administrations. In trying to assess the state of
        its public employment at the federal level of government (executive branch), Brazil
        shows its commitment to a modern and dynamic human resource management system
        that underpins national economic and social development. The OECD Review of HRM in
        the Federal Government of Brazil aims at contributing to the design of the future
        workforce management reforms by the federal government. Its conclusions are drawn
        from a systematic comparison of the situation in Brazil with the experience of the 31
        OECD member countries, with a specific emphasis on examples that are the most
        relevant to Brazil considering the size, constitutional and cultural basis, and values
        underpinning the HR system. The review is based on concrete case studies, and
        experiences throughout the report can inspire Brazil on its path to reform.
            Total government employment in Brazil (federal, state and municipality) is rather
        limited in terms of size (11-12% including state-owned enterprises) compared to OECD
        member countries (22% on average) but it is rather costly in the economy (12% of GDP,
        which is just above the OECD average, and 28% of all compensation costs of employees
        in the Brazilian economy). In recent years, government employment has been expanding
        to ensure improvements in access to public services and to overcome capacity
        weaknesses. As a consequence it has also become more expensive.
            Although employment in the federal government represents only 15% of total
        government employment in Brazil, its size and costs have grown rapidly in recent years,
        and this rising trend is expected to continue in the near future. This tendency needs to be
        closely monitored in the future to ensure that proportional improvements in policy
        making and service delivery are made. Strengthening federal government capacity to plan
        and reallocate its workforce should also help the government to be more responsive to
        policy priorities in an efficient manner.
            As in all OECD member countries, the management of the public workforce in the
        federal government of Brazil is a reflection of national political and economic priorities,
        and administrative culture. However, the focus of past public employment policies and
        reforms has changed successively resulting in a series of disconnected, fragmented and
        incomplete reforms with little overall strategic direction, and “stop and go” policies
        regarding staff numbers and remunerations. Hence, the priority for Brazil is to define an
        HRM strategy based on a solid long-term vision integrated into overall public
        management reform efforts.




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12 – EXECUTIVE SUMMARY

0.1. Towards a modern and dynamic HRM system

           At present, HRM practices in the federal government tend to focus more on
       controlling compliance with basic rules and standards with little room for strategic
       management based on competencies and performance. The progress made by the
       Brazilian federal government in ensuring merit, staff continuity, impartiality and
       professionalism in the public service, and for keeping tight control over the size of the
       workforce, now place Brazil in a position to focus more on managing the workforce
       according to the strategic needs of government with more attention to efficiency
       concerns.
           Strategic workforce planning should be a priority. The federal government has a
       good record in tracking staff numbers and costs, as well as outsourced activities, and is
       able to prepare good projections for the future. However, workforce planning is currently
       mostly input and process-driven and largely focused on responding to new policy needs
       by allowing new hiring. This is potentially a costly practice, especially as the upcoming
       large wave of staff departures on retirement could provide a unique and possibly
       inexpensive opportunity to adjust and reallocate workforce size and competencies across
       sectoral priorities. Workforce planning needs to be made part of organisations’ strategic
       documents and of managers’ accountability, and be supported by a continuous dialogue
       between sectoral ministries and the Ministry of Planning. Changes are underway that aim
       at strengthening workforce planning, but they should be reinforced so that workforce
       planning becomes mainly based on an analysis of all changes affecting government
       organisations, of the possibilities for staff reallocation and outsourcing, as well as of
       technological changes. Government should also increase its efforts in the systematic
       search for workforce management efficiency in terms of numbers and competencies,
       possibly through general policy reviews. Flexibilities in the management of government
       capacity could also be developed by increasing staff mobility through a thorough reform
       of the job category system (the “career” system), and the development of a more
       prioritised and transparent outsourcing system.
           Staff compensation should be rationalised. Today, decisions on staff compensation
       are not yet sufficiently based on a strategic view of salaries and benefits. Many
       improvements have been made in recent years but successive negotiations and
       adjustments to salaries by groups of employees with different lobbying power continue to
       produce unnecessary costs, opacity and complexity in the remuneration system. In
       addition, despite significant recent improvements in staff performance assessment,
       performance bonuses have for most become part of regular salaries, thus losing their
       original purpose of rewarding outstanding performance. The federal government would
       thus gain in strengthening its methodology for salary increases based on criteria of
       affordability, integrity, social acceptability and attractiveness. Salaries should be set
       through the definition of an overall envelope for the whole of government, and
       negotiations on a job category by job category basis with clear negotiation criteria. There
       is no need to continue to implement performance-related bonuses at their present level in
       those administrations where it has not been functioning properly as good implementation
       would require important management investments with uncertain results. Although the
       pension system has already been reformed, it will also require further adjustments in the
       future to ensure its financial sustainability.
           Improvements in the management of staff capacity require thorough changes to
       the career and DAS system… The Brazilian job category (“career”) system has
       certainly helped ensure a transparent and merit-based HR system, but it is also
                                          OECD REVIEWS OF HUMAN RESOURCE MANAGEMENT IN GOVERNMENT: BRAZIL – © OECD 2010
                                                                                     EXECUTIVE SUMMARY – 13



        characterised by its rigidity and high transaction costs. Staff enter the public service
        through a competitive selection into a specific and often narrow career and cannot change
        to another career without passing another entry-level competitive examination. Horizontal
        and vertical career opportunities are limited in Brazil, and performance requirements are
        minimal for staff to move up within job categories. The job category system is also
        complex and expensive to administer as it is subject to corporatist pressures from various
        groups driving salaries up and undermining attempts to reallocate the workforce across
        sectoral priorities. Reforming the job category system could be the opportunity to develop
        a strategic view of how the public service should group and organise jobs. It will be
        necessary to eliminate the differentiation in the way similar job categories are managed
        across government organisations, reduce the number of job categories by widening their
        scope vertically and horizontally which will create more possibilities for mobility, and
        build a real pyramidal career progression. In this context, career progression should be
        organised around the acquisition of competences and performance. Reforms to the career
        system should also be the opportunity to reintegrate the approximately 70 000 positions
        called Commissioned functions (which benefit from privileges in terms of remuneration)
        into the job category system (excluding the DAS system from this reform). This reform
        can be implemented relatively slowly by closing positions as staff leave on retirement.
            The DAS system (Direção e Assessoramento Superiores), which comprises about
        22 000 positions including most management and senior management positions and also
        less senior positions, allows for a welcome degree of flexibility in the system, as entry is
        open to applicants coming from outside the public service (with some quotas). This
        practice is in line with developments in OECD member countries including in more
        “career-based” systems such as Belgium, France, Ireland, and Korea. It is, however,
        necessary to improve the transparency requirement for appointments to those positions
        which, apart maybe from the very top senior management levels, need to be
        systematically based on an assessment of candidates’ competency profiles and transparent
        recruitment procedures (but appointments outside of the public service can remain).
        Establishing new recruitment procedures for DAS positions could be used as a pilot
        experience to modernise the recruitment processes for the most qualified public service
        positions.
            …And an emphasis on the management of competencies especially in
        recruitment. The federal government should continue its efforts to increase the role of
        competencies in staff management through the establishment of a competency framework
        for the whole administration that will provide for a common reference framework for
        recruitment, performance management and promotions. Improving recruitment methods
        would be an appropriate entry point for establishing competencies in the management of
        staff. It is strongly recommended that the federal government start moving beyond
        recruiting staff by testing academic skills and basic knowledge only, especially for the
        more qualified positions. The introduction of modern recruitment methods means
        focusing on measuring competencies and past experiences without undermining
        transparency and merit.
            Staff performance management can be made more effective. Performance
        management plays a minor role in people’s career and compensation within their job
        category despite improvements to the staff performance assessment system. The
        implementation of the recommended changes to the job category system is a prerequisite
        to a stronger emphasis on staff performance management, in order to allow performance
        assessment to play a role on staff careers and promotions and to allow broader
        responsibility and pay bands within certain job categories. Seniority can still be
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   14 – EXECUTIVE SUMMARY

          considered as the main qualifying factor for salary progression and promotion but only in
          job categories without a clear career dimension and at the beginning of the career.
              Strengthening the management of the senior managers will help increase
          management capacity and trust, and build leadership for achieving better results.
          The management of managers and senior managers in the federal government of Brazil
          receives less attention compared to the situation in most OECD member countries. At
          present, the system hampers the necessary growth of a professional cadre of non-political
          managers specialised in public administration that could co-exist with discretionary
          appointments for the most senior and political positions. Senior managers should be
          managed as a cohesive group with clearly defined competencies. To achieve this, it is
          necessary to delineate between positions to which appointments can remain fully
          discretionary (mostly top-level positions) and those that require a higher level of
          transparency in the recruitment process based on the assessment of competencies. It
          would also be appropriate to establish a system which helps identify potential future
          managers from all types of careers, to provide them with opportunities for development,
          and to regularly assess the development of their leadership potential.
              Modernising HRM will require strengthening the capacities in HRM. It is
          necessary for HRM units in the central HRM body and sectoral ministries and agencies to
          acquire more strategic management and strategic reform management capacity to ensure
          the establishment of a modern HRM accountability framework. An assessment of the
          capacity needs of the central HRM units and of their corresponding units in line
          ministries and agencies would help.
              A cultural change needs to take place that significantly lessens the recourse to
          regulation for implementing HRM reforms. Instead, the Ministry of Planning should
          develop managerial guidelines (with common standards) and accountability frameworks,
          and HRM should become part of regular and documented managerial accountabilities.
          This will allow the level of details in HRM regulations to lessen significantly.

0.2. Towards successful and sustainable reforms

              In order to move towards a modern workforce management, the experience of OECD
          member countries shows that core values will have to evolve to underpin changes in staff
          management. Values such as performance and efficiency have started to make their way
          into the system but not in a clear-cut fashion. They should be widely discussed by both
          public servants and society, and reforms should derive from those accepted changes.
          Reforms should not imply a major upheaval, as these would create unnecessary staff
          insecurity and reform transaction costs. On the contrary, it is recommended to develop a
          step-by-step approach to build consensus around new values; to review how management
          tools can be adjusted to these new values; to realistically plan what can be done in the
          short, medium and long run; as well as to acknowledge that reforms will have to be built
          gradually by taking into account the successive lessons learnt from their successes and
          failures.
              The chances of achieving sustainable reforms would be enhanced by the
          consolidation of a stable and mature method of engaging with unions. As the negotiation
          process for work conditions is being developed by the federal government, there is an
          opportunity to build a constructive dialogue with unions on the future of the public
          service.


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                                                           Synthèse


            La récente réussite du Brésil est remarquable en termes économique, financier et
        social. Néanmoins, le Brésil doit encore relever plusieurs défis s’il souhaite pérenniser sa
        croissance et sa prospérité. Le secteur public a joué un rôle déterminant pour favoriser la
        stabilité et instaurer les conditions indispensables au développement économique et
        social, et ce de manière encore plus marquée lors des deux mandats successifs du
        Président Lula. En évaluant la situation de l’emploi public dans l’administration fédérale
        (pouvoir exécutif), le Brésil montre son engagement à moderniser et dynamiser son
        système de gestion des ressources humaines (GRH), qui est essentiel pour asseoir les
        fondements du développement économique et social sur le plan national. L’examen de
        l’OCDE sur la gestion des ressources humaines dans l’administration fédérale brésilienne
        a pour objectif de contribuer à l’élaboration des prochaines réformes de la gestion des
        ressources humaines. Ses conclusions s’appuient sur une comparaison systématique de la
        situation observée au Brésil et de celles rencontrées dans les 31 pays membres de
        l’OCDE, avec un accent particulier mis sur les examples les plus intéressants pour le
        Brésil en termes de taille et de valeurs constitutionnelles et culturelles. Des études de cas
        et des expériences concrètes sont proposées tout au long du rapport, afin de guider le
        Brésil dans ses efforts de réforme.
            Si l’emploi total dans les administrations publiques au Brésil (au niveau central,
        régional et local) est relativement limité en termes de taille (11-12 %, entreprises
        publiques incluses) par rapport aux pays membres de l’OCDE (22 % en moyenne), il
        représente un coût relativement important pour l’économie (12 % du PIB, ce qui place le
        Brésil juste au dessus de la moyenne des pays membres de l’OCDE, et 28% des coûts de
        rémunération dans l’ économie). Ces dernières années, l’emploi dans l’administration
        publique s’est développé pour garantir une amélioration de l’accès aux services publics et
        un renforcement des capacités. Parallèlement, il est aussi devenu plus coûteux.
            Si l’emploi dans l’administration fédérale ne représente que 15 % de l’emploi total
        dans l’administration publique au Brésil, sa taille et son coût ont augmenté rapidement
        ces dernières années et cette tendance devrait se poursuivre à court terme. Il conviendra
        de suivre avec attention l’évolution de cette tendance à l’avenir, pour s’assurer qu’elle
        s’accompagne d’une amélioration proportionnelle du processus d’élaboration des
        politiques et de l’offre de services publics. En renforçant la capacité de l’administration
        fédérale à planifier et à redistribuer ses effectifs, le gouvernement devrait être mieux à
        même de traiter efficacement les priorités de l’action publique.
            Comme dans tous les pays membres de l’OCDE, la gestion des effectifs dans
        l’administration fédérale au Brésil est le reflet des priorités politiques et économiques
        nationales, ainsi que des traditions de l’administration. Cependant, les priorités des
        politiques et des réformes de l’emploi public ont beaucoup changé au cours des dernières
        années, ce qui a donné lieu à une série de réformes isolées et inabouties faute d’une
        orientation stratégique globale, ainsi qu’à des politiques alternées de freinage et de
        relance en matière d’effectifs et de rémunération. Dans ces conditions, la priorité pour le

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        Brésil consiste à définir une stratégie de gestion des ressources humaines fondée sur une
        vision solide à long terme, intégrée à d’autres réformes de la gestion publique.

0.1. Vers un système moderne et dynamique de gestion des ressources humaines

             À l’heure actuelle, les pratiques de gestion des ressources humaines dans
        l’administration fédérale sont principalement axées sur le respect de la réglementation de
        base et accordent peu de place à la gestion stratégique fondée sur les compétences et les
        performances. Compte tenu des progrès accomplis par l’administration fédérale
        brésilienne pour préserver les principes du mérite, de la continuité, de l’impartialité et du
        professionnalisme dans la fonction publique, ainsi que pour exercer un contrôle strict sur
        la taille des effectifs, le Brésil est désormais en mesure de se concentrer davantage sur la
        gestion des ressources humaines en fonction des besoins stratégiques de l’administration,
        en accordant une attention particulière aux obligations d’efficience.
            La gestion prévisionnelle stratégique des effectifs devrait être une priorité.
        L’administration fédérale a montré qu’elle est capable de suivre l’évolution des effectifs
        et de leurs coûts, ainsi que des activités sous-traitées, ce qui lui permet d’établir des
        projections fiables. Toutefois, la gestion prévisionnelle des effectifs est actuellement pour
        sa plus grande part fondée sur l’attribution de ressources et le respect des processus, et
        s’efforce principalement de répondre aux nouveaux besoins en autorisant de nouvelles
        embauches. Or cette pratique peut s’avérer coûteuse, d’autant plus que la prochaine vague
        massive de départs à la retraite pourrait se révéler une occasion unique et bon marché
        pour ajuster et réorganiser les effectifs et les compétences en fonction des priorités par
        secteur. La gestion prévisionnelle des effectifs doit être intégrée aux documents
        stratégiques et aux responsabilités des cadres de la fonction publique, tout en étant étayée
        par un dialogue permanent entre les ministères fonctionnels et le ministère de la
        Planification. Des réformes sont en cours pour renforcer la planification des effectifs,
        mais elles devraient être étendues afin que la planification des effectifs soit désormais
        principalement fondée sur l’analyse des changements subis par les organismes publics,
        des possibilités de redéploiement des effectifs et de sous-traitance et des progrès
        technologiques. L’administration devrait en outre renforcer ses efforts dans la recherche
        systématique de l’efficience dans la gestion des effectifs, tant en termes de taille que de
        compétences, peut-être par le biais de revues des politiques. La gestion des capacités de
        l’administration pourrait par ailleurs être assouplie en accroissant la mobilité des effectifs
        via une réforme en profondeur du système des catégories d’emplois (système de
        « carrière ») et la mise en œuvre d’un système de sous-traitance plus transparent fondé sur
        une hiérarchisation des priorités.
            Le système de rémunération devrait être simplifié. Actuellement, les décisions
        relatives à la rémunération du personnel ne sont pas suffisamment fondées sur une vision
        stratégique des traitements et avantages. Beaucoup d’améliorations ont été faites au
        système ces dernières années, mais les négociations et des ajustements successifs des
        salaires sous l’effet de pressions plus ou moins importantes se sont traduits par des coûts
        et un niveau d’opacité et de complexité dans le système qui ne sont pas nécessaires. En
        dépit des progrès importants enregistrés dans l’évaluation des performances, les primes
        ont généralement été intégrées progressivement au salaire normal, perdant ainsi leur
        fonction d’origine destinée à récompenser des performances exceptionnelles.
        L’administration fédérale aurait donc à renforcer sa méthodologie pour les augmentations
        de salaire, fondée sur des critères de capacités budgétaires, d’intégrité, d’acceptabilité sur
        le plan social et d’attrait de l’emploi public. Les salaires devraient être fixés en fonction

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        d’une enveloppe globale attribuée à l’ensemble de l’administration, par le biais de
        négociations par catégorie d’emplois reposant sur des critères précis. Il n’est pas
        nécessaire de poursuivre la mise en œuvre des primes de performance à leur niveau actuel
        dans les administrations dans lesquelles le système fonctionne mal. Améliorer le système
        nécessiterait en effet d’importants investissements en termes de gestion pour des résultats
        incertains. Le système de retraite a déjà fait l’objet d’une réforme mais de nouveaux
        ajustements seront nécessaires à terme pour garantir sa viabilité financière.
            L’amélioration de la gestion des effectifs implique une véritable refonte du
        système de carrières et du système DAF… Le système de catégories d’emplois
        (« carrière ») adopté par le Brésil a très certainement été instrumental dans la mise en
        place d’un système de recrutement basé sur le mérite, mais il se caractérise par sa rigidité
        et des coûts de transaction élevés. Les agents entrent dans la fonction publique après un
        concours pour occuper une catégorie d’emploi précise et ne peuvent changer de carrière
        sans passer un autre concours d’admission. Les possibilités d’évolution horizontales et
        verticales sont limitées au Brésil. Par ailleurs, les obligations de performance sont
        minimales pour progresser au sein d’une même catégorie d’emploi. Le système de
        catégories d’emplois est également difficile et coûteux à gérer, puisqu’il est soumis aux
        pressions exercées par divers groupes, qui entraînent une hausse des salaires et font
        échouer toute tentative de redéploiement des effectifs dans les activités prioritaires. La
        réforme du système de catégories d’emplois pourrait être l’occasion d’élaborer une vision
        stratégique de l’organisation des emplois au sein de la fonction publique. Il sera
        nécessaire d’homogénéiser les modalités de gestion des catégories d’emplois similaires
        entre les différents organismes publics, ainsi que de réduire le nombre de catégories
        existantes en les élargissant à la fois sur le plan vertical et sur le plan horizontal afin de
        favoriser la mobilité, et de mettre en place une structure pyramidale pour l’avancement
        professionnel. Dans ce contexte, l’évolution professionnelle devrait s’appuyer sur
        l’acquisition de compétences et sur les performances. La réforme du système de carrière
        devrait également permettre de réintégrer les 70 000 emplois fondés sur des commissions
        (qui bénéficient d’avantages en termes de rémunération) au sein du système de catégories
        d’emplois (à l’exception du système DAS). Cette réforme peut être menée
        progressivement en supprimant les postes au fur et à mesure des départs en retraite.
            Le système DAS (Direção e Assessoramento Superiores), qui compte 22 000 emplois
        environ dont la plupart des fonctions d’encadrement mais aussi des postes moins haut
        placés, offre une souplesse bienvenue au système, dans la mesure où les candidats
        extérieurs à la fonction publique y sont acceptés (dans le respect de certains quotas). Cette
        pratique est conforme à la situation observée dans les pays membres de l’OCDE, y
        compris dans des systèmes dits « de carrière » comme en Belgique, en Corée, en France
        et en Irlande. Il est toutefois nécessaire d’améliorer les obligations de transparence pour
        les nominations à ces postes qui, à l’exception peut-être des plus hautes fonctions
        publiques, doivent systématiquement s’appuyer sur une évaluation du profil de
        compétences des candidats et des procédures de recrutement transparentes (tout en
        conservant la possibilité de nommer des candidats extérieurs à la fonction publique). La
        mise en œuvre de nouvelles procédures de recrutement pour les emplois du système DAS
        pourrait servir de projet pilote à la modernisation des procédures de recrutement pour les
        postes les plus qualifiés dans la fonction publique.
            …et une attention particulière à la gestion des compétences, plus spécialement
        dans le recrutement. L’administration fédérale devrait poursuivre les efforts engagés
        pour renforcer le rôle des compétences dans la gestion des ressources humaines en
        établissant un cadre de compétences à l’échelle de l’administration dans son ensemble,
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        afin d’instaurer un dispositif de référence commun pour le recrutement, la gestion des
        performances et les promotions. L’amélioration des méthodes de recrutement
        constituerait un bon point de départ pour l’intégration des compétences à la gestion des
        ressources humaines. Il est vivement recommandé à l’administration fédérale d’aller au-
        delà du recrutement uniquement fondé sur l’évaluation des compétences scolaires et des
        connaissances de base, particulièrement pour les postes nécessitant les plus hautes
        qualifications. Les méthodes modernes de recrutement visent à mesurer les compétences
        et l’expérience sans nuire à la transparence et au mérite.
            La gestion de la performance du personnel peut être améliorée. La gestion de la
        performance joue un rôle accessoire dans l’évolution professionnelle et la rémunération
        des individus au sein de leur catégorie d’emploi, en dépit des améliorations apportées au
        système d’évaluation des performances. Il est indispensable, pour accorder plus de poids
        à la gestion de la performance du personnel, de mettre en œuvre les réformes
        recommandées au sein du système de catégories d’emplois, de manière à ce que
        l’évaluation des performances joue un rôle dans l’avancement professionnel et les
        promotions des agents tout en élargissant les responsabilités et les fourchettes de
        rémunération au sein de certaines catégories d’emploi. L’ancienneté peut rester le
        principal critère d’octroi des augmentations de salaire et des promotions, mais
        uniquement dans les catégories d’emplois sans dimension de carrière précise et en début
        de carrière.
            Une gestion renforcée des hauts fonctionnaires permettra d’améliorer les
        capacités d’encadrement et la confiance, pour obtenir de meilleurs résultats. La
        gestion des hauts fonctionnaires de l’administration fédérale du Brésil est l’objet de
        moins d’attention au Brésil que dans les pays membres de l’OCDE. À l’heure actuelle, le
        système freine la croissance nécessaire d’un cadre professionnel de dirigeants non
        politiques spécialisés dans l’administration publique, parallèlement aux nominations
        discrétionnaires pour les postes les plus élevés et les plus politiques. Les hauts
        fonctionnaires doivent être gérés comme un groupe cohérent aux compétences clairement
        définies. Pour y parvenir, il est nécessaire de déterminer les postes pour lesquels les
        nominations peuvent rester totalement à la discrétion politique (principalement les postes
        les plus hauts placés) et les postes qui impliquent un processus de recrutement plus
        transparent fondé sur l’évaluation des compétences. Il conviendrait également de mettre
        en place un système permettant d’identifier les futurs dirigeants potentiels dans tous les
        types de carrière, afin de leur offrir des perspectives d’évolution et d’évaluer
        régulièrement le développement de leurs capacités d’encadrement.
            La modernisation de la gestion des ressources humaines implique un
        renforcement des capacités. Il est nécessaire que les services du personnel de l’organe
        central de GRH et des ministères fonctionnels renforcent leurs capacités en termes de
        gestion stratégique et de gestion des réformes stratégiques, afin de garantir la création
        d’un cadre de responsabilité moderne dans le domaine de la gestion des ressources
        humaines. Une évaluation des besoins en capacités des services de GRH centralisés et de
        leurs homologues dans les ministères fonctionnels serait utile à ce titre.
            Un changement de mentalité s’impose afin de diminuer sensiblement le recours à la
        réglementation pour la mise en œuvre des réformes dans le domaine de la gestion des
        ressources humaines. Dans cette optique, le ministère de la Planification doit élaborer des
        lignes directrices pour la gestion (comportant des normes communes) et des cadres de
        responsabilité. Par ailleurs, la gestion des ressources humaines doit être intégrée aux
        responsabilités courantes et documentées des dirigeants. Ces réformes permettront de

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        réduire considérablement le degré de précision de la réglementation relative à la gestion
        des ressources humaines.

0.2. Vers des réformes efficaces et durables

            Pour moderniser la gestion du personnel, l’expérience des pays membres de l’OCDE
        montre que les valeurs essentielles doivent évoluer parallèlement aux réformes de la
        gestion des ressources humaines. Les valeurs comme la performance et l’efficience
        commencent à s’imposer dans le système, mais de manière relativement vague. Une vaste
        consultation des agents de la fonction publique et de la société dans son ensemble devrait
        intervenir sur ces valeurs, afin que les réformes s’appuient sur les changements acceptés.
        Les réformes ne doivent pas engendrer un remaniement majeur qui créerait un sentiment
        d’insécurité au sein du personnel et des coûts de transaction inutiles. À l’inverse, il est
        recommandé d’opter pour une démarche progressive visant à : dégager un consensus
        autour des nouvelles valeurs; examiner les possibilités d’adaptation des outils de gestion
        aux nouvelle valeurs; planifier de manière réaliste les mesures envisageables à court,
        moyen et long terme; et prendre conscience du fait que les réformes devront être adoptées
        progressivement en tenant compte des enseignements tirés au fur et à mesure des succès
        et des échecs.
            L’adoption de méthodes définies et avisées pour la négociation avec les syndicats
        augmenterait les probabilités d’aboutir à des réformes viables. La procédure de
        négociation sur les conditions de travail étant actuellement mise au point par
        l’administration fédérale, elle offre l’occasion de nouer un dialogue constructif avec les
        organisations syndicales sur l’avenir du service public.




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                                      Assessment and recommendations


 Total government employment in Brazil (federal, state and
municipality) is rather limited in terms of size, but is expanding and
increasingly costly.
            In Brazil, total government employment (federal, state and municipality) accounts for
        a relatively limited percentage of total employment.1 In 2008, it represented
        approximately 10-11% of total employment2 compared to about 20% for the OECD
        average.3 When taking state-owned enterprises into account, the percentage increases
        slightly to about 11-12%,4 compared to an OECD average of about 22%. These
        percentages are small in comparison to other Latin American countries such as Argentina
        and Chile.
            Government employment (excluding state-owned enterprises) has increased
        significantly in absolute numbers, by more than 12% in the 1990s, and by more than 15%
        between 1999 and 2003. Total public sector employment (including state-owned
        enterprises) increased by more than 15% between 2003 and 2007. Very recently, the
        increase in government employment (excluding public enterprises) has accelerated at
        least at the federal level and in municipalities (by 10% between 2005 and 2008).
            These rapid increases have been justified by the recognised need to improve access to
        public services, especially in the health and education sectors, and to overcome pre-
        existing weaknesses in government capacity, but the situation should be monitored
        closely. It deserves attention for two main reasons:
             •    First, although the government workforce (including federal government, states
                  and municipalities) is relatively small in terms of numbers of employees, it is
                  expensive in the Brazilian economy. It represents 12% of GDP5 (excluding
                  employees of state-owned enterprises), which is just above the OECD average,
                  and 28% of all compensation costs of employees in the Brazilian economy.6 This
                  does not necessarily mean that salaries in the public sector are always higher than
                  salaries in the private sector. The situation is certainly due to a combination of
                  factors including the structure of salaries in Brazil with very low remunerations in
                  the private sector for certain tasks, and a much higher proportion of qualified
                  positions in the public sector, but also to a choice that has been made that public
                  servants in core positions be relatively well paid to motivate their commitment
                  and to attract and retain a highly qualified workforce.
             •    Second, a large share of government resources in Brazil, representing over 14% of
                  GDP, goes to private sector organisations7 that supply goods and services to the
                  government and citizens.8 When compared to OECD member countries, Brazil
                  ranks second in this respect (the OECD average is less than 10% of GDP).
           In Brazil today, the combination of the costs of government employment and those of
        public services produced by the private sector and paid by government means that
        approximately 27% of GDP is dedicated to producing public services and goods that are
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       government funded, placing Brazil fifth when compared to OECD member countries.
       Considering the important role attributed to government action in the economy and the
       society by the Lula Government, the trends regarding government employment are not
       surprising, but the data should encourage detailed attention to the evolution of the
       productivity of government actions and, as a consequence, to the efficiency of staff
       management. As noted in the OECD Economic Survey of Brazil (OECD, 2009b), there is
       much room for improvement in the efficiency of government spending in Brazil today,
       and improved human resource management would contribute to this.

The size and costs of federal government employment9 have grown
rapidly in recent years.
           The federal executive workforce represents only 15% of the government workforce in
       Brazil. Until recently, federal government employment had been a limiting factor in the
       growth of government employment in Brazil as a whole. The number of employees in the
       federal government declined between 1995 and 2000, stabilised between 2000 and 2003,
       and started to increase after 2003. Workforce costs as a percentage of GDP began to rise
       after 2006, owing not only to increases in staff numbers but also to reforms in career
       streams, a shift towards a more qualified workforce, and changes in the level of salaries
       and pensions. This rising trend will continue over a number of years as the federal
       government has locked itself into new financial commitments until 2012 and the number
       of retirees will grow rapidly. Employer social contributions may thus also rise.
           These increases have taken place after years of restrictions on staff numbers and costs
       that added to the existing capacity gaps in government. Under the Lula administration,
       most of the new posts have been created in the priority policy areas of education, health,
       security and infrastructure. Officials report that increases in compensation were also
       necessary as civil servants tended to be underpaid. Like for the rest of government
       employment in the country, there needs to be a clear understanding of these cost increases
       which must be justified in the end by improved access to, and better quality of,
       government services, regulation and policy making.

Managing the federal government workforce effectively will become
even more important in the coming years because of the demands on
public services for the further development of the economy.

           Recent high levels of economic growth have made it possible to overlook increases in
       staff numbers, compensation costs and the overall costs of producing goods and services
       funded by government. In addition, federal workforce performance is all the more
       difficult to measure as a good part of its work is not involved in easily measurable service
       delivery. There is not yet any solid methodology to compare its performance to that of
       other countries. However, its management serves as an inspiring model for the rest of the
       public service in the country, and successful reforms will have spillover effects
       throughout states and municipal governments in Brazil.
           Given the financial investments made in the workforce, it is appropriate to have high
       expectations regarding improvements in staff performance. These will not be automatic,
       however, and will require progress in the management of the workforce, by improving the
       ability to reallocate and redeploy staff across government areas and sectors, by
       strengthening performance and competency management to better adapt the workforce to
       the needs of government organisations, and by reforming the compensation system.

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The federal government should be praised for its achievements in
ensuring merit, staff continuity, impartiality and professionalism in the
management of public servants and for keeping tight control over the
size of the workforce.

            The principles of merit and morality are firmly enshrined in the Constitution and in
        all regulations affecting the management of the public service. Entry into most public
        service positions requires passing a public service competitive examination, and the
        management of staff careers leaves little room for patronage. Thus, academic merit
        assurance is robust and there are ample oversight and recourse mechanisms. Legal and
        constitutional provisions relating to employment in the public service, such as implicit
        tenure, reinforce the independence, political neutrality and continuity of the public
        service. The government also relies on a combination of compliance and awareness
        raising instruments to prevent breaches in the integrity framework, although some
        improvements should be envisaged. Exceptions to the requirements for full transparency
        in appointments and the system of job categories concern approximately 70 000 positions
        which include the so-called DAS positions and the commissioned functions.10 These are
        important areas for reforms in the job category systems (see below).
            Over a number of years, the government has undertaken considerable efforts to
        strengthen human capacity in the public service by increasing the level of qualifications at
        entry and emphasising continuous training, with qualification plans for employees,
        strengthened learning networks, and modern methods of learning and development.
            The government maintains good control over workforce numbers and costs. The
        tracking of employee numbers and costs as well as those of outsourcing is excellent and
        there is no real room for bypassing the policy of the Ministry of Planning regarding staff
        numbers and costs. Processes are also in place to ensure good accountability for future
        pension costs of employees and these are tracked in all documents covering employee
        numbers and costs.

These achievements now allow a workforce management that is less
focused on input and process controls but more tied to the strategic
needs of government.

            Presently, human resource management in the executive branch of the federal
        government of Brazil mainly focuses on controlling compliance with basic rules and
        standards of merit and integrity and maintaining tight controls on costs. While Brazil’s
        past history of political patronage and fiscal unbalance makes this understandable, the
        system of staff management is now inflexible and fragmented with little room for
        strategic management or focus on competency and performance.
            There is no doubt that past reforms have tried to tackle these issues. Since the 1980s,
        Brazil has been through various phases of reform of the public administration. Their main
        emphasis has changed under successive governments: first the re-establishment of
        traditional values such as merit, continuity and probity; then a focus on cutting staff
        numbers at the beginning of the 1990s; followed by a restructuring of the public
        administration and the introduction of performance incentives. Owing to a lack of
        implementation capacity and continuity in reforms, many of these reforms have remained
        incomplete.



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            The result today is a mosaic of tools for modernising the management of human
        resources. They are sometimes inconsistent and disconnected, and send weak messages
        about the priorities in staff management. In this context, the focus of recent and present
        changes in the management of public servants has been more on adjusting the system
        than on long-term strategic reforms.
            With traditional values now well ingrained in the public service culture, the federal
        government can afford to move towards methods of staff management that will require
        system reform with a clear value focus. Brazil is currently at a point in its political and
        policy planning cycles when, with solid economic growth as well as political and
        macroeconomic stability, there is a window of opportunity to build the case for reform
        and plan a set of integrated changes to modernise HRM as part of the government’s new
        programme and the new multi-annual plan.

Strategic workforce planning should be made a priority.

            At present, workforce planning in ministries is still input- and process-driven, focused
        mainly on tracking staff numbers and costs, but changes are underway and should be
        expected to bring improvements. Current strategic workforce planning does not really yet
        go beyond ministries’ indications of future hiring needs as new priorities arise, to which
        the Ministry of Planning reacts. The ministry’s focus is on controlling the size of
        organisations, monitoring compliance, and providing staff in policy priority areas. In
        good times it allows hiring and in bad times forbids it. The dialogue between the Ministry
        of Planning and other ministries about choices and trade-offs regarding workforce
        planning is not yet sufficiently based on a strong analysis of the present and future jobs
        and competencies required to meet the present and future goals of the government
        organisations, and on the trade-offs involved. A very recent provision of a workforce
        planning methodology by the Ministry of Planning goes in the right direction, and should
        be paralleled with the strengthening of ministries’ and agencies’ accountability for
        workforce planning.
            In combination with the shortcomings regarding planning methodology, the
        movement of staff can only be limited, there is no process allowing for mobility across
        narrow job categories, and relatively restricted possibilities for outsourcing. Policy
        changes and the identification of new needs almost systematically involve new hirings.
        The conditions are thus not in place for making less costly and more effective choices in
        terms of workforce numbers and qualifications. The experience of OECD member
        countries shows that workforce planning can be a very useful part of the strategic
        documents of organisations (strategic and performance plans) in which present and future
        needs in terms of staff numbers and competencies in light of the changes affecting
        organisation, outsourcing possibilities and technological changes should be analysed. As
        part of the accountability framework for the strategic management of their organisations,
        managers can then be held accountable for their management of their workforce. It is the
        responsibility of the Ministry of Planning to provide for such a framework and to
        establish continuing discussions with ministries on workforce planning as part of their
        strategic planning and reporting obligations. Once the accountability framework is in
        place and the discussion process is functioning properly, the Ministry of Planning may
        reconsider its level of input control on staff numbers and positions. Although the relations
        of state-owned enterprises (SOEs) with the Ministry of Planning regarding workforce
        planning seem similar to those of ministries, at least some SOEs have established


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        processes for strategic workforce planning that could serve as a source of inspiration to
        ministries.
            At the same time, it is recommended that the government increase pressures for the
        search of efficiency in the management of the workforce. The measures that have so far
        helped to keep costs down in the federal government have been restrictive, based on stop-
        and-go policies on staff numbers and salaries which have undermined capacity in
        government and have unsettled staff. The search for efficiency should systematically be
        part of organisations’ strategic framework, and directors and managers should be held
        accountable for the implementation of measures to increase efficiency, notably in terms
        of workforce numbers and competencies. In addition, the government could consider
        following the example of many OECD member countries and carry out general public
        policy reviews. These can help design policies to address long-term needs in terms of
        capacity and staff reallocation across sectors. They can also be used to develop a shared
        long-term view of the strategic management of organisations across government
        departments.
            Today, close to 40% of the federal government workforce is over 50 years old and
        will soon retire. The ageing of the government workforce, much more rapid than the rest
        of the labour force, gives Brazil a unique opportunity to adjust the size and allocation of
        its workforce across sectoral priorities through good long-term planning of staff needs
        and reallocation across long-term sectoral priorities. The federal government should also
        recognise that significant departures will create capacity difficulties, and every effort
        should be made to retain staff that are difficult to replace for a few additional years.
        Processes should also be in place to improve the transmission of knowledge, to accelerate
        training for some staff, and to improve in career planning. The pension system has
        already been reformed but will also require further adjustments in the future.
            Finally, workforce planning would be made fully effective with more flexibility in the
        management of the pool of workers. Increasing mobility through changes to the job
        category system should be a priority (see below). The issue of contracting out is more
        complex, and the lessons of experience are not straightforward. The practice is still highly
        contested in the federal government of Brazil, especially as a significant part of
        outsourcing involves contracting manpower firms for hiring labour outside of public
        service regulations rather than contracting out the delivery of goods and services to
        companies with the idea that some services are provided more efficiently by the private
        sector. Clarifications and guidance on the purposes of outsourcing should be provided by
        the Ministry of Planning. Non-core services can legally be provided by the private sector.
        However, the definition of core services or core missions is bound to evolve over time
        and managers could be given more flexibility to contract out other services, provided it is
        done for the right reasons and the necessary controls are in place. In any case, decisions
        for contracting out should be part of workforce planning and developed in the various
        accountability documents. This should allow good tracking of the costs of producing
        services, whether produced by government employees or outsourced.




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 The decision-making process on the level of staff compensation should
be further rationalised to manage costs more effectively.
            As currently designed, staff compensation is not yet based enough on a strategic view
        of what salary levels should be, and inevitably leads to salary increases that are not
        necessarily justified. Recent efforts to rationalise staff compensation increases should be
        praised. The decision-making process, however, is still fragmented by career or groups of
        careers and subject to pressures, resulting in an opaque and complex remuneration system
        in which salary levels in one job category tend to be determined by the need to catch up
        with salaries in another job category (although the Ministry of Planning has also used
        comparisons with private sector pay). They also vary according to the political strength of
        the various groups. In addition, despite improvements in staff performance assessment,
        performance bonuses that represent a very large part of compensation have in many cases
        simply become part of salary. Finally, the 70 000 staff (DAS and commissioned
        positions) who are selected through discretionary processes receive salary supplements
        that are not part of the regular salary structure. These supplements are probably necessary
        to attract and retain the right staff at mid- and senior-level management positions, but
        may not be justified for many of the lower positions.
            Although it is difficult to modify the design of compensation, it is strongly
        recommended that compensation should be increasingly viewed as a tool to improve the
        management of public servants.
            First, the role of Congress in establishing details of salary levels and changes to these
        levels by job category could be modified so that salaries become a more technical and
        managerial issue and are less subject to the strength of lobbies. Should a law remain
        necessary for setting salary levels and increases, the proposals of the Ministry of Planning
        should be very well grounded technically so that Congress is not involved in the detailed
        management of salary levels (but only on overall compensation costs).
            Second, the Ministry of Planning should aim to establish a solid methodology for
        salary increases that is based on clear criteria which include affordability, comparisons
        with total compensation in the private sector (including the many advantages of the public
        sector), an understanding of the levels of compensation acceptable to society, and
        compatibility with maintaining high levels of integrity. Many OECD member countries
        have improved their salary-setting processes in the past two decades to include
        parameters that are not linked solely to the macroeconomic situation and political
        willingness to increase the wage bill. Reviews of total real compensation such as those
        carried out in Canada and the United Kingdom could be a starting point for the federal
        government of Brazil.
            Third, it would be more effective to set salaries not primarily on a job category by job
        category (or by group of job categories) basis but by a two-phase process: a whole-of-
        government process defining the overall envelope (with some technical criteria to define
        those) and the use of pay bargaining parameters for negotiations on a job category by job
        category basis.
            Finally, the poor functioning of the performance bonus system and the limitations of
        the staff performance management system indicate that it is probably counterproductive
        to make the effort necessary to implement performance-related pay in all government
        organisations and at present levels, especially considering the large part of remuneration
        supposedly linked to performance.

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 Focusing on competency management and reforming the job category
as well as the DAS systems would improve the strategic management of
staff and the governance of the HR system.
            The management of competencies is at its early stages. There is a narrowly defined
        merit system for entry into the public service, and a rigid system of job categories (the so-
        called “careers” in the federal government) that prevents a career system based on
        performance and undermines mobility.
            In theory, a well-designed and well-implemented job category system is indispensable
        in a career-based system and should allow for mobility. However, the way the federal
        government has implemented its career system has resulted in a rather rigid system with a
        myriad of employment conditions for different groups of staff. Upward and horizontal
        mobility within the career system are limited, resulting in unnecessary barriers to the
        optimal allocation of human resources and unduly high transaction costs. Indeed, apart
        from specific positions (the DAS system and commissioned functions, most importantly,
        but also some positions in the education sector), all public servants are hired at entry level
        and move up in their job categories as they acquire more seniority. It is impossible to
        move across narrow-based job categories without passing the entry-level competition in
        the new job category with all entry level applicants and starting at entry level.
        Performance requirements are minimal for staff to move up within their careers.
            Job categories are complex not only because they are numerous but also because their
        design and compensation systems have been determined by the way different benefits
        have been allocated on an organisation by organisation or sectoral basis. They are
        expensive to administer because of their complexity. There is also duplication and
        overlap of job categories, while some categories no longer meet the operational needs of
        the public service.
             Overall, the way the job category system is managed today is an impediment to
        reform aimed at modernising the management of the public service to make it more
        professional, more performance-oriented and more flexible. It creates serious barriers to
        mobility, provides limited opportunities for career progression outside the DAS system,
        promotes corporatist attitudes, and supports a complex and expensive remuneration
        system. While it has limited individual favouritism, it has helped rigidify corporatist
        attitudes, discouraged staff mobility and undermined staff performance management. This
        highly centralised system has shown limitations in its capacity to prevent fragmentation
        and the result is a situation in which civil servants identify less with the federal
        administration as a whole than with their ministries and job categories.
            The federal government has struggled to improve the job category system by
        reorganising job categories and groups, reducing the emphasis on seniority in career
        management, increasing mobility through the establishment of job categories that cross
        ministries, and rationalising salary structures. Reforms have been implemented
        piecemeal, however, job category by job category, and have come up against the interests
        of various ministries and organisations. The improvements have probably not led to
        results that are proportional to the efforts made.
            The situation calls for a broad reform of the job category system. This does not imply
        a “big bang” reform but changes that are driven by a strategic view of how the public
        service should group and organise jobs. It should improve career opportunities so as to
        provide the flexibility and capability needed to respond to emerging challenges. There is
        a need to eliminate differentiation in the way similar job categories are managed across

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       government organisations, significantly reduce the number of job categories, create more
       possibilities for mobility, develop a standard and centralised way to identify and describe
       positions and classify jobs, and create a real pyramidal career progression based on a
       system of internal competitive selection. This would improve the career structure and
       allow for more performance orientation and mobility within and possibly across job
       categories. In such a system, the procedures for mobility and promotion need to be
       transparent and based on competitive processes. Listings of openings should be publicly
       available.
           The implementation of such changes is difficult not only for technical reasons, but
       mostly because of complex and differentiated corporatist benefits, both financial and in
       terms of career path. The federal government might draw inspiration from similar reforms
       implemented over time in OECD member countries such as France and Spain which have
       adopted broader occupational groupings and given greater importance to the position than
       the group. Other countries with career-based civil services such as Ireland and Japan have
       grouped civil servants along service-wide grades. While no system is perfect and career-
       based civil services are all striving to increase the fluidity of their systems, major
       improvements can be made. It is important to recognise that this means a greater role for
       the Ministry of Planning in managing and providing coherence across the whole job
       category system.
           Positions that are part of the DAS system allow for a degree of flexibility in the
       system. Appointments and promotions to these posts are discretionary and not subject to
       well-defined, competitive and transparent procedures although some organisations have
       put in place such procedures on their own. A good proportion is open to outside
       applicants although the majority of appointees are regular civil servants.
           The flexibility provided by the DAS system is necessary at present, in some cases to
       allow more rapid advancement for high-performing individuals, to facilitate the entry of
       individuals who are not civil servants into the system, to give managers the possibility of
       acquiring different sets of skills and competencies, and to allow some discretion in the
       choice of senior managers. This flexibility, however, should not come at the expense of
       transparency in the system, with a differentiation between posts at top levels that require
       discretionary appointments and those that require processes to ensure that the best staff
       are recruited in a transparent manner. This transparency is necessary for both internal
       (existing civil servants) and external candidates. This will help not only to ensure equity
       and trust but also to strengthen the professionalism of the senior civil service.
       Transparency does not mean that staff should be hired through exams that mainly test
       their academic skills and knowledge, as in the case of other job categories. Instead,
       recruitment should rely most on comparing job requirements with candidates’
       competency profiles. Reforming recruitment for DAS positions can be a good trial
       exercise for the future reform of all recruitment processes in the public service to give
       more weight to competencies and experience than to academic skills. Keeping a
       proportion of DAS positions for outside applicants is in line with reforms in all career-
       based systems in OECD member countries, but the DAS system also needs to be aligned
       with the job category system (although not integrated into it to avoid reinforcing the
       difficulties of the job category system) and to adopt transparent job descriptions. The
       question of mid-level and senior-level management positions is different and is discussed
       further below.




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            The system of commissioned functions for staff outside of DAS positions is slightly
        different in that it does not help bring in skills from the outside or build a senior civil
        service. The federal government could usefully re-examine the legitimacy of these
        discretionary appointments which receive preferential treatment in terms of remuneration.
            In line with the structural reform of the job category system, the federal government
        should continue its efforts to increase the role of competencies in staff management. For
        the moment, competencies have mostly been viewed in terms of training. Although a
        difficult task, modern staff administration systems involve the definition of competency
        frameworks for public administration that apply to the systems of recruitment,
        performance management, and promotion. Competencies provide a common reference
        framework for the whole administration. They are used to recruit the right people, better
        focus their training, serve as a basis for staff performance assessment, and promote the
        right persons. A competency framework has to be decentralised to ministries and
        agencies, which have to be empowered to define competencies for their staff.
        Implementing competency-based management requires considerable investment in time
        and effort. It can be developed through workforce planning as in France, through
        development and career planning as in the United Kingdom, or more immediately to
        improve recruitment as in Belgium.
             Improving recruitment methods would be a good entry point for establishing
        competencies in the management of staff. It is very strongly recommended that the
        federal government start moving beyond recruiting staff by testing academic skills and
        basic knowledge in a rather unsophisticated manner, mostly through multiple choice
        questions. While the present system prevents accusations of patronage, it is not the best
        way to select the most competent person for a job, especially for positions that require a
        higher level of qualifications. Recruitment methods can be based on measuring
        competencies and past experience without undermining transparency and merit in
        appointments. In OECD member countries, this has been easier in countries with more
        position-based systems. However, even in career-based systems such as Belgium or
        France, recruitment systems have evolved or are evolving quickly. Today, advanced
        OECD member countries have overwhelmingly ceased to use academic multiple choice
        questions as their principal basis for recruitment. Computer-based competency testing,
        written practical cases and panel interviews have become regular parts of exams for many
        posts and are no longer contested as reliable recruitment methods, even in countries with
        very legalistic HRM processes. There is no doubt, however, that it is first necessary to
        raise awareness and get consensus within the judiciary that multiple choice academic
        testing is not the only way to prevent nepotism and that it certainly works against optimal
        recruitment.

 The management of staff performance needs to be made more
consistent to be effective.
            The notion of staff performance management is not new to the federal government of
        Brazil and many reforms have taken place in this area since the 1960s. On paper,
        performance evaluations exist and good performance is necessary for promotion.
        However, in reality, and despite recent improvements, performance management plays a
        minor role in most people’s careers and compensation.




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           Some preconditions that would facilitate the appropriate functioning of these tools,
       however, have not yet been met. Indeed, although this is not the object of this peer
       review, performance management at the level of government organisations is under
       development but is not yet firmly established. It is difficult to envisage a formal
       performance management system in which staff assessments determine part of
       remuneration and people’s careers when the organisation does not have a strong
       performance management system with clear definitions of objectives and reporting on
       achievements, as well as a good acceptance of those by staff. Moreover, as presently
       structured, the job category system prevents using staff careers as an incentive for good
       performance. The only room for manoeuvre lies with the DAS and commissioned
       functions, to which appointment is mostly outside the job category system and is at the
       discretion of senior management and ministers.
           In addition to these general difficulties, specific staff performance management policy
       and practices have not necessarily always been co-ordinated across public administrations
       and capacity for their implementation has sometimes been lacking. Recent efforts at
       providing guidance to ministries on how to conduct staff performance assessments should
       be praised, but their implementation seems to remain quite rudimentary in many
       organisations. Performance pay is not functioning properly in many cases, and the
       performance element of conditions for staff promotion has been reduced to its very
       minimum. Staff performance management is limited and varies tremendously depending
       on the organisation’s performance management capacity, although some cases of good
       practices are emerging.
           At the same time as the job category system is being re-structured and competencies
       defined, the federal government should thus strengthen the performance assessment
       system. The revamped job category system should leave room for performance
       assessment to play a role in staff careers and should be based on competencies. The
       Ministry of Planning has the responsibility for ensuring the coherence of reforms and
       credible recourse mechanisms.
           The salary structure should be modified in line with changes in the job category
       structure, with wider bands between the first step in the first class and the last step in the
       final class. Seniority can continue to be the main qualifying factor for salary progression
       and promotion to a higher class, but only in job categories without a career dimension and
       at the beginning of a career. It is recommended that in job categories with a clear career
       dimension, seniority should gradually be de-emphasised as the employee progresses up
       through the system, with competencies and performance playing a larger role.
           There is no urgency to implement a performance-related pay system which requires
       very sophisticated staff management practices. Many OECD member countries, including
       some of the most advanced, have chosen not to go in this direction because of the
       complexity and the attendant risks.11 It is thus recommended that the federal government
       review its salary structure to eliminate ambiguities regarding the allocation of bonuses to
       staff and reduce or eliminate performance bonuses in favour of base pay in organisations
       that are not ready for performance-related pay. A system of performance bonuses for
       improvements in their management might be retained for senior managers, but this might
       require legal changes that may not be well accepted.
          In terms of incentives and rewards, changes to the job category system and
       management of staff careers according to performance should thus be the priority with
       improved possibilities for career progression through enlarged job categories.


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The level of professionalism of senior managers could be enhanced by
developing a solid management of their group.

            Over the past two decades, OECD member countries have focused much of their
        reform efforts on senior managers. This has been considered a priority in view of the
        delegation of managerial authority, which has called for managers with increased
        capacity to enhance the performance management of their organisation.
            Despite attempts by the National School of Public Administration (ENAP – Escola
        Nacional de Administração Pública) to create a common culture in the federal
        government, notably through training of senior managers, senior managers in the federal
        government of Brazil are undermanaged compared to those in many OECD member
        countries. The group of senior managers in the DAS system is not well defined and the
        management system is similar to that of non-managerial employees. The fact that
        discretionary appointments can be made down to mid-level and even relatively low-level
        positions in the DAS system and in commissioned positions blurs the interface between
        the political and the administrative levels.
            Overall, the system hampers the growth of a professional cadre of non-political
        managers specialised in public administration and loyal to the credo of public servants
        that could co-exist with discretionary appointments for more political positions at the top
        levels. There is no systematic system of appointments that provides a sound basis for
        choosing the most qualified and competent managers, and this raises suspicions that
        potentially undermine trust in the professionalism and objectivity of the public
        administration.
            Considering the rigidity of the employment system in the federal government of
        Brazil today, more rigid management of senior managers would be inappropriate.
        However, senior managers should be managed as a group, as they are in many OECD
        member countries, with clearly defined competencies, opportunities to develop cohesion,
        as well as induction and training opportunities. Cultural differences between civil
        servants and those appointed from the outside should be addressed in order to favour
        group cohesion and the definition of competency profiles for all.
            The DAS system provides for a welcome possibility to bring in different skills from
        outside and increase the level of competition for posts, but the delineation between
        political appointees (at the very top level) and staff appointed on merit only should be
        made clearer. The appointment system of mid- to senior level managers (possibly
        excluding top levels) should be more transparent, based on criteria such as experience,
        competencies and past records of performance for staff who are not political appointees.
        Managers appointed on transparent merit criteria should be a priority group for defining
        competencies and making efforts to improve their performance assessment and career
        development across government organisations. Discretionary appointment could remain
        for the top levels, but all positions can remain open to applicants coming from outside the
        public service (possibly with some quotas remaining that define a ceiling percentage of
        non public servants).
            The first steps in reforming the management of senior management should be to
        define the competencies needed for managerial groups and to a draw a clear boundary
        between positions that may remain at the complete discretion of politicians (usually the
        top level only, level 1 – or DAS 6) and the positions that should be based on merit
        appointment. Appointments to the latter (perhaps managerial levels 2 to 4 – or DAS 5 and
        4) should require at least a shortlist of adequate candidates based on an assessment of
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       their past experience and performance as well as their competencies through a transparent
       procedure (panels, recruitment agency, etc.). All other positions should be filled on the
       basis of a ranked shortlist established by the panel or the assessment centre. This leaves
       the recruiting manager significantly less discretion.
           In parallel, efforts should be made to start identifying potential future managers and
       provide them with opportunities for development. Managers and senior managers could
       be drawn from all types of careers which require higher level education, provided they
       have benefited from previous development opportunities within their careers and the DAS
       system to become managers. Some careers with general management functions within
       government will inevitably provide a good number of the managers, but it is important
       that possibilities remain open for other careers not only for equity purposes but also to
       provide for professional diversity and sectoral policy knowledge in the top levels of
       government. For this grooming of leadership potential to take place, leadership should be
       one of the competencies analysed in performance assessments, and sectoral ministries and
       the Ministry of Planning be jointly in charge of preparing future talent. Given the job
       category system, the DAS positions are the most important tool for providing growing
       opportunities for high-potential staff (they are already used in this way to a certain extent,
       but the system is opaque and informal). Australia, Canada and the United Kingdom
       constitute interesting examples of proactive identification of managers that may inspire
       Brazil.

In order to carry out the above reforms and move towards more
modern workforce management, core values will have to evolve….

           The evolution of core values underpins all significant changes in staff management.
       Successful reforms in OECD member countries have managed to make core values
       evolve. In recent years, although measures aimed at strengthening core values such as
       merit, ethics, integrity and legality have increased, the importance of new core values
       such as efficiency and performance has also grown in most countries. It is when
       traditional values are considered sufficiently solid and ingrained in the culture of
       organisations that governments have felt able to move towards promoting newer values
       such as performance orientation and citizen focus which require alleviating some input
       and process controls. This has inevitably created tensions between traditional and new
       core values.
           Human resource practices in the federal government of Brazil have made traditional
       values a part of the culture of the public service, and with some caveats regarding DAS
       employees and commissioned functions as well as outsourcing, there is little room for
       nepotism and favouritism. This is a remarkable achievement in a country with such a
       recent history of meritocratic entry and with large numbers of staff that have not been
       hired through competitive processes (a historical legacy). In addition, Brazil has taken
       action to promote ethics and integrity in the public service as part of its overall effort to
       modernise the state and reduce corruption. This is an area that will be examined in the
       OECD Integrity Framework Review of Brazil in 2010.
           Newer values such as performance and efficiency have started to make their way into
       the system but not in a clear-cut fashion. Successive waves of management reform which
       have emphasised different sets of values have created confusion as to what the core
       values are today. Moreover, the rules-based processes that ensure traditional values have
       also had negative effects and created perverse incentives that run counter to core values,
       such as corporatist attitudes, and the fragmentation created by the job category.

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            With well-established traditional core values, the federal government should feel able
        to move towards management methods that emphasise newer values and alleviate some
        ex ante controls on processes. This will require modernising recruitment and promotion
        practices, deregulating the job category system, and increasing the role played by
        performance and competencies in staff management. A core part of the reform will be to
        move from a control-based, centralised and fragmented system to a more decentralised
        but strongly integrated public service. This is a goal to be achieved through sustained
        reform over time.
            Using core values to better root reforms in the organisational culture will require a
        definition of the new values and their use in the design of reforms. The process by which
        core values are clarified and renewed is crucial in terms of building a shared ethos. These
        values should be debated in a forum which brings together both public servants and other
        actors in society.
            In addition to performance, customer focus and efficiency, promoting diversity in the
        public service is another value that calls for attention. Brazil does not have a history of
        legal discrimination based on race or ethnic group, but it has serious difficulties in terms
        of equity in access to wealth and education. This has inevitably led to a lack of social
        diversity in the public service as well as gender imbalances in access to senior positions
        and difficulties of access for handicapped persons. The federal government has a special
        responsibility in the area of social diversity and should lead the way, but its present
        diversity policy appears weak compared to that of many OECD member countries. While
        data about the appointment of social minorities are difficult to compare across countries,
        data on women in top positions show a rising trend but also continuing weaknesses. The
        government needs to emphasise that social diversity is important not only for equity
        purposes but also to promote efficiency and effectiveness. It also needs to make it
        understood that merit at entry, as presently defined by basic knowledge and academic
        skills, while it promotes equality of access to public services, does not necessarily mean
        equity and even less promotion of diversity. While quota policies are not possible in
        Brazil for constitutional reasons, funding minority groups to get training for exams,
        reviews of cultural biases in exams, and promotion of different skills sets in exams could
        help to promote diversity. Coaching and mentoring programmes, career pathway
        planning, and development and provision of qualifications for underrepresented
        categories could help in post-entry management of diversity.

…and the capacity of HRM departments and staff will have to be
reinforced to ensure the establishment of an HRM accountability
framework.

            For the system of HRM to evolve in the directions developed above, building strong
        HRM units should also be a priority. At present, HRM managers do not have the training
        or experience needed to carry out the necessary reforms. Most of their work presently
        focuses on negotiations regarding job categories and payroll issues. HRM decisions are
        very centralised by OECD standards, and the legal framework focuses on inputs,
        processes and controls rather than on efficiency and effectiveness. The government
        should carry out an assessment of capacity needs both for units in charge of various HRM
        responsibilities in the Ministry of Planning (SRH and SEGES) and for their
        corresponding units in line ministries in view of the strategic changes to be made in
        relation to HRM in government.


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           One priority should be for units in charge of HRM responsibilities in the Ministry of
       Planning to acquire more HR strategic management and strategic reform management
       capacity. This will require redefining HRM responsibilities in the Ministry of Planning to
       ensure that those in charge of HRM look beyond daily operational issues to strategic
       reforms, on the one hand, and to monitoring, evaluation and reporting progress on HRM
       in the various ministries, on the other. It is also important that in building HR capacity,
       special attention be paid to the necessity to isolate internal strategic management
       processes from corporatist influences. It may require, in the short run, keeping an
       organisational separation of HR units.
           A cultural change needs to take place that significantly lessens the administration’s
       recourse to regulation for implementing HRM reforms. Instead, central HRM
       departments should concentrate their efforts in the development of HRM policies through
       managerial guidelines and accountability frameworks, while the level of details in HRM
       laws and regulations should be decreased significantly. This should also help reduce the
       level of judicialisation of labour grievances and disputes.
           Another priority should be to remove HRM regulations that are not working, are not
       functioning properly or constrain the dynamics of HRM processes while maintaining core
       values. This should apply in priority to workforce planning, recruitment and the
       management of the job category system. It would give managers and HR units in
       ministries and organisations greater flexibility to define staff profiles and their
       recruitment, training and promotion strategies.
           In parallel, the Ministry of Planning should ensure that systems are in place in other
       ministries to manage the workforce strategically. Past experience has shown that
       delegating the HRM function will succeed only if accompanied by greater accountability
       for managing HRM. This will not make the work of the Ministry of Planning easier. On
       the contrary, mechanisms for ensuring accountability and transparency in the field of
       HRM will require the definition of common standards and shared systems, on the one
       hand, and vertical accountability mechanisms for the individual performance of the unit,
       on the other. This involves not only well-integrated and mutually reinforcing
       government-wide HRM tools, but also an accountability framework for sectoral managers
       that puts the management of their workforce in the context of the strategic management
       of their organisations. Such management accountability frameworks are used in OECD
       member countries such as Canada and the United States as part of the planning and
       reporting requirements of government organisations and can serve as inspiration to
       Brazil.
           As HR professionals take on a new role, they should have the opportunity to develop
       an HR career path. They may prefer to stay in their position, move laterally to get broader
       experience, accept a bigger role in a different ministry, or even temporarily leave the civil
       service.
           This, however, should not mean the creation of another career in a system where the
       number and fragmentation of careers are already a problem. It is also important that HRM
       professionals are not stuck in an HR career and may move to other management
       positions. It is thus recommended that special development opportunities be provided to
       individuals within general public management careers or careers from which future
       managers are often drawn in order to build future capacity in HRM. Ideally, future
       capacity should also draw from those organisations of state-owned enterprises and the
       private sector where HRM capacity is already strong and which can provide a wealth of

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        ideas for HRM within direct administration. ENAP has already developed courses in
        HRM, which is an excellent start and all managers should also be trained in HRM, but
        preferably when the accountability framework for HRM has been designed.

The history of past reforms calls for a serious effort to develop a vision
for the civil service, a step-by-step reform approach, and special
attention to building ownership of the reform.

            Past reforms have essentially been top-down with successive changes in direction.
        The result has been an accumulation of disconnected reforms, several of which have
        remained incomplete. The present government has focused on case by case adjustments
        to address a number of specific issues. This approach is probably due to the legacy of past
        reforms and a wish to rebuild confidence and capacity, as well as to maintain stability.
        However, this means that current changes lack a strategic focus and this will undoubtedly
        weaken their impact on the overall performance and effectiveness of the public service.
        Contradictions and unclear messages abound, for example: staff performance
        management is not linked to organisational performance; bonuses for performance have
        become meaningless in terms of performance management; outsourcing is encouraged in
        some circles and discouraged in others; careers are constantly being reorganised to
        improve mobility and horizontality but salary adjustments have in many cases rigidified
        the system; and, the government has promoted increased qualifications for entry and
        professionalism in the career structure, but at the same time has provided special
        incentives for commissioned functions without any clear strategic reason.
            The priority for Brazil should thus be to define an HRM strategy based on a solid
        long-term vision of how core values should evolve. The HR reform should be integrated
        with other management reforms. To build the case for reform, it is recommended that the
        government involve various stakeholders in the conception and planning phase. The long-
        term strategy should also identify potential winners and losers and consider compensation
        for losers, as well as establish processes and institutions to follow reforms over time to
        ensure their sustainability. This does not imply a major upheaval. On the contrary, what is
        recommended is a step-by-step approach to build consensus around new values, a review
        of how management tools can be adjusted to these new values, and an effort to plan
        realistically what can be done in the short, medium and long run, as well as an
        acknowledgement that reforms will have to be built gradually by taking account of
        successes and failures.
            The scale and pace of reform will depend on factors relating to human resources
        management but also to political priorities and the economic situation. In all cases,
        however, it is recommended that the government avoid a piecemeal reform in which
        elements of reforms are unrelated to each other and not strategised, and move forward on
        the basis of a clear vision underpinned by core values that have evolved and have gained
        consensus. Priority actions should target issues such as changes to the career system to
        create more motivating career paths, a well-founded compensation system, the
        establishment of a professional system for recruiting and managing middle-level and
        senior-level managers, and the introduction of competencies in the management of civil
        servants, especially in recruitment. The minimum would be to improve alignment and
        convergence in reforms across the areas, and make sure that consistent actions are carried
        out over time.



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In the long run, to support a move to more modern management of
human resources, the federal government would certainly gain from
continuing to strengthen its framework for industrial relations.

           The chances of achieving sustainable reforms would be enhanced by the
       consolidation of a stable and mature method of engaging with unions. Until 2003, there
       were no systematic negotiations with unions. In 2003, the federal government established
       the “permanent negotiation table”, and 77 agreements have since been signed.
       Negotiations have mainly concerned base salary and social benefits, although some are
       taking place on additional remuneration, work conditions, the employment framework,
       and the introduction of new management tools. Negotiations are centralised and the
       results are not legally binding (but they are presently politically binding).
           This negotiation process is still being developed. It is fragile as its continuation
       depends on the good will of the government. As more than 400 unions represent the
       federal public service, any departure from a stable negotiation system would inevitably
       result in a situation in which different unions pursue different interests. To a certain
       extent, this is already the case in the negotiations on individual job categories. This
       weakens any whole-of-government approach, tends to drive costs up and further
       differentiates salaries and benefits for the different job categories.
           The federal government would gain from discussions between the executive
       government and unions on general matters and on the future of the civil service. It is even
       possible to envisage, as in some OECD member countries, negotiations on the agenda for
       modernising the civil service. This means, however, that the government has to devise
       transparent processes for selecting a representative core of unions to negotiate with, as it
       is impossible to negotiate on whole-of-government issues with 400 stakeholders. Unions
       would naturally gain by joining efforts on whole-of-government issues. Negotiations job
       category by job category could then take place on the basis of a general agreement on the
       modernisation agenda and on principles for determining levels of compensation. At
       present the negotiation process with unions is rather open and not very confrontational.
       There is thus an opportunity to build a constructive dialogue through the establishment of
       a healthy framework for negotiations.




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                                                              Notes


        1.        In Brazil, retirees and pensioners are often counted as part of the public sector
                  workforce. They are not included in the data here, which, according to the Brazilian
                  Institute of Geography and Statistics (Instituto Brasileiro de Geografia e Estratística
                  – IBGE), follow international methodologies and the classification of the System of
                  National Accounts. The data are thus comparable with those of OECD member
                  countries.
        2.        This is an estimate due to the unavailability of some data after 2005.
        3.        This average is for 2005. Averages for subsequent years cannot yet be calculated but
                  there is evidence that the average has not changed significantly.
        4.        Data for 2005 indicate approximately 11% for 2005. Data for 2008 are estimated
                  between 11% and 12%.
        5.        In the System of National Accounts (SNA), the compensation of employees (always
                  active employees) includes salaries and wages paid in cash or in kind (including the
                  values of any social contributions, income taxes, etc., payable by the employee even
                  if they are actually withheld by the employer for administrative convenience or other
                  reasons and paid directly to social insurance schemes, tax authorities, etc., on behalf
                  of the employee) and employers’ social contributions. Like in other countries, part of
                  government compensation costs is constituted by imputation for social contributions
                  (pension benefits from unfunded pension schemes). In Brazil, retirees and pensioners
                  are often counted as part of the public sector workforce. However, according to
                  IBGE, pensions and other transfers for inactive employees and pensioners are not
                  included in these data that follow international methodologies of the SNA. Doubts
                  remain regarding how data are compiled in reality, especially concerning in which
                  category the benefits of retirees and pensioners have been included. Clarifications and
                  further work by IBGE would help refine analysis in the future, and full consistency of
                  the data with the number of employees in general government will have to be
                  ensured.
        6.        The situation is similar when taking only wages and salaries into account and
                  excluding employer’s social contributions.
        7.        Both the private sector and state-owned enterprises, but the private sector accounts for
                  the larger part.
        8.        See Figure 1.7.
        9.        In Brazil, the federal government is divided into different branches which are
                  administered differently, including the executive branch which is the subject of this
                  review, the judiciary, the legislative branch, and the military. This review only
                  addresses the federal executive workforce, which includes the “direct” administration
                  (ministries and secretariats) and “indirect” administration (autarchies, public
                  enterprises, mixed economy societies and foundations).


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       10.     The 22 000 DAS positions include the most senior positions in ministries and
               agencies and include management and supervisory functions down to relatively low-
               level positions. Mandatory quotas for public servants exist except for the most senior
               levels. Appointments are left to the discretion of the recruiting authority. The
               approximately 50 000 positions include mostly relative low-level positions that have
               to be filled by civil servants only, but the appointment to these positions is left to the
               discretion of the recruiting authority. Both types of positions receive compensations
               outside the regular salary scales.
       11.     In 2006, central governments of Austria, Iceland, Luxembourg, Mexico, Poland,
               Portugal, the Slovak Republic, and Sweden, reported not having performance-related
               pay for their employees. Canada, France, Ireland, Italy, the Netherlands, and Norway
               only had performance-related pay for senior management levels.




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                                                                                           INTRODUCTION – 39




                                                       Introduction


            Brazil is South America’s most influential country, an emerging economic giant, and
        one of Latin America’s biggest democracies. Although Brazil has not been able to avoid
        the global financial and economic crisis, it has weathered its effects reasonably well
        owing to continuing macroeconomic consolidation, an improved external liability
        position and an adequate short-term policy response (OECD, 2009b). The improvement
        in fiscal stability since the economic stabilisation of the mid-1990s has made it possible
        to use the budget and financial management system as an instrument of managerial
        control.

I.1. The federal government – general characteristics

            The Federative Republic of Brazil, commonly called Brazil, is made up of 26 states,
        the Federal District in which the capital Brasilia is located, and over 5 500 municipalities
        (the smallest unit of political division). In 2008, Brazil had a population of approximately
        191.9 million.
            Brazil’s 1988 Constitution provides for three independent governing branches: the
        executive, the legislature and the judiciary. Like most Latin American countries, Brazil
        has a presidential political system. The President performs the functions of head of state
        and head of the federal government. The President and Vice-president are popularly
        elected to no more than two consecutive four-year terms. The President is assisted by the
        state ministries with the subordination of the government bureaus, autarchies,
        foundations, public companies and other directly and indirectly controlled bodies.
           Brazil’s bicameral National Congress (Congresso Nacional) consists of the Federal
        Senate (Senado Federal) with 81 members (three for each state and Federal District)
        popularly elected to eight-year terms, and the Chamber of Deputies (Camara dos
        Deputados) with 513 members popularly elected to four-year terms. The Congress uses a
        committee system: there are six Senate committees and 20 House committees.1
             The judicial branch is composed of federal and state courts. Only appointments to the
        superior courts are political and subject to approval by the legislature. The minimum and
        maximum ages for appointment to the superior courts are 35 and 65 years; mandatory
        retirement is at age 70. The federal courts have no chief justice or judge. The two-year
        presidency of each court is by rotation. The president of the court is elected among the
        members who are in line to the presidency considering their time of service.
            Since the end of military rule in 1985, unionisation, collective bargaining and strikes
        have become commonplace among federal employees in all three branches. The 1988
        Constitution granted job stability to all civil servants at all levels of government with
        more than five years of service, including those who were hired without public
        examination. All new hiring must be done through civil service examinations, and job
        stability comes after three years of probation. Mandatory retirement for all public
        servants, except for those elected to political office, is at age 70.
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           The level of public spending is particularly high in relation to GDP for a country of
       Brazil’s income level and in comparison with its emerging-market peers. Government
       outlays on education and health care alone account for nearly 9% of GDP, the second
       largest item of spending after social protection (OECD, 2009b). But, as the OECD
       Economic Survey of Brazil (OECD, 2009b) notes, outcome indicators are not always
       commensurate with the country’s high level of government-financed spending,
       suggesting that service delivery might be underfunded, with ample scope for efficiency
       gains in government operations.
          For the execution of programmes, the federal government establishes priorities for the
       use of public resources, with planning over a four-year period. These priorities are
       described in the Pluriannual Plan (PPA), which is submitted by the President to the
       Congress. The PPA establishes the liaison between the long-term programmes and the
       Annual Budgetary Law.
           It is not clear how Brazil’s political system affects the capacity of civil servants and
       ministries to work without deferring excessively to particularistic pressures. Fragmented
       parties, a coalition government and the strong constitutional role of Congress and state
       governors might be expected to add to these pressures. It appears that political pressures
       affect financial resource allocations, yet it seems that the Brazilian administration may
       not face the same level of day-to-day politicisation experienced by some other countries
       in the area.

I.2. Structure of the executive federal government

           In Brazil, the federal government is divided into different branches which are
       administered differently, including the executive branch which is the subject of this
       review, the judiciary, the legislative branch, and the military.2 The executive branch is
       headed by the President of the Republic, supported by the ministers of state.
          The Brazilian public administration in the executive branch of government is divided,
       according to Decree-Law No. 200 of 1967 into:
           •   a) Direct public administration: the services located in the administrative
               structure of the Presidency and the ministries.
                In the Presidency structure, organisations are legally classified as essential, of
                immediate guidance to the President, consultative and integrating. For example,
                the Presidential Staff Office (Casa Civil) is recognised as essential and works on
                the co-ordination and integration of governmental actions.
                Since the 1950s the federal public administration has adopted the practice of
                councils (conselhos) as organised and institutionalised spaces for the co-
                management of policy-making decisions. A wide range of councils, such as the
                Council of the Republic, the Government Council and the Council for Economic
                and Social Development, provide assistance or advice to the President. In the
                current administration, there are about 90 councils or permanent committees in
                the federal administration with some participation from non-governmental
                members that participate in the formulation of public policies with deliberative or
                consultative powers. Most of them have a sectoral function and many operate in
                the welfare and economic areas. Among the organisations of immediate guidance
                are the Government Council, the General Attorney of the Union (Advocacia
                Geral da União – AGU) and the Office of the General Comptroller. The National

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                    Defence Council and Council of the Republic are consultation entities. The
                    Commission for Public Ethics of the Presidency of the Republic is in charge of
                    reviewing standards of ethical conduct in the federal public administration and of
                    elaborating the institution’s proposals for the Code of Conduct to Senior
                    Government Officers. The Secretary of Social Communication is an essential
                    body of the presidency as it provides information on the different governmental
                    policies being implemented.

                  Table I.1. Staffing levels in the federal government of Brazil (August 2009)

         Branch in the public administration                                       Staffing levels
         Executive branch                                                            1 021 160
               Civil service                                                          544 671
                      Direct administration                                           220 101
                      Autarchies                                                      217 093
                      Foundations                                                     107 477
               Central Bank                                                             5 015
               Public prosecution of the Union Office                                   8 384
               State-owned enterprises (SOEs)                                          22 218
               Mixed economy societies                                                 12 147
               Military                                                               428 725
         Legislative                                                                   24 608
         Judiciary                                                                     93 882
         Federal District                                                              99 139
         Note: Numbers include only active public servants. The number of employees in SOEs and mixed economy
               enterprises (MEE) refers only to those paid by the Treasury. The total number of employees in SOEs
               and MMEs is 460 866.
         Source: Ministerio do Planejamento, Orçamento e Gestão (2009c), Boletim Estatístico de Pessoal, Vol. 14,
                 No. 161, September.


                    In the federal government the 37 ministries and secretariats (secretaries with
                    ministerial status) develop standards, establish strategies, directions and priorities
                    for the use of public resources. These ministries are part of the direct public
                    administration as they depend on and report to the President.3
              •    b) Indirect public administration: entities with legal personality, such as agencies
                   (autarchies), public enterprises, mixed economy societies, and public foundations.
                   In general, these units or bodies are federal entities implementing policies on the
                   instruction of their “parent” ministries.
                    The agencies (autarchies) are responsible for delivering essential public services
                    to the population.4 Ten “special autarchies” (regulatory agencies) were created
                    between 1996 and 2005 but do not all conduct control activities. They were
                    created to: i) control public services delivered by private firms in areas such as
                    electricity, telecommunications, transportation and health; ii) control the quality
                    of public services; and iii) establish rules for each sector to provide security to
                    investors. In addition to regulatory agencies, there are 155 autarchies for
                    statistics, pensions, property rights, regional development, research, etc.5
                    Nine banking institutions linked to the federal government compose the national
                    financial system. They include the Central Bank of Brazil which is an autarchy,
                    and the Bank of Brazil and the National Bank for Economic and Social
                    Development which are state-owned enterprises.


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                 Public enterprises are agents of the federal government that are part of the
                 indirect administration and most are linked to ministries. Although they are under
                 private law, they are submitted in some cases to the ceiling of compensation and
                 employees are hired through a public selection, which are rules that apply for the
                 civil service. Each of these enterprises is part of a specific productive sector, for
                 example: airport administration, communications, mining, regional development.
                 The federal government also participates, indirectly, in industrial production in
                 certain sectors through public enterprises or mixed economy societies such as
                 Petróleo Brasileiro (Petrobras) which is active in different areas of the energy
                 sector, from exploration and extraction to distribution. These enterprises are
                 managed by fiscal and administration councils whose members are appointed by
                 the President following recommendation of the ministry of the sector.
                 Public foundations are non-profit organisations and perform activities that do not
                 require the intervention of entities of public law. Although they have
                 administrative autonomy a large number of them are funded by the Treasury.

        Table I.2. Ministries and secretariats (with secretaries of ministerial status) in the Brazilian
                                             federal government

       Agrarian Development                            Health
       Agriculture Livestock and Supplies              Justice
       Cities                                          Mines and Energy
       Communications                                  National Integration
       Culture                                         Planning, Budgeting and Management
       Defence                                         Science and Technology
       Development, Trade and Foreign Trade            Social Development and Hunger Reduction
       Education                                       Social Security
       Environment                                     Sports
       Finance                                         Tourism
       Fisheries and Aquaculture                       Transport
       Foreign Affairs                                 Work and Employment
       Chief of Staff Ministry (Casa Civil)            Secretariat of Communications
       General Attorney office                         Secretariat of Human Rights
       General Controller office                       Secretariat of Institutional Relations and Federal Affairs
       General Secretariat of the Presidency           Secretariat of Ports
       Institutional Security Office                   Secretariat of Racial Integration
       National Economic Development Council           Secretariat of Strategic Affairs
                                                       Secretariat of Women Affairs
       Source: Brazilian government web portal www.brasil.gov.br/governo_federal/estrutura/ministerios and
               mission notes.




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                                                                                          INTRODUCTION – 43



I.3. General economic situation

            Brazil is currently one of the world’s strongest emerging economies. The Brazilian
        economy has a good record of strong stock markets, decreasing unemployment, low
        lending rates and a proactive government. Brazil also has strong gross domestic product
        (GDP) figures. Over the last five years, GDP grew by 4.7% on average; agriculture
        represents 6.7% of GDP, industry, including construction, 28% and services 65.3%.
        Historically, Brazil holds high international reserves (USD 192 844 million in 2008). The
        Brazilian export industry has been growing; exports represented 12.6% of GDP in 2008
        against imports of 11%.
            However, domestic financial conditions tightened considerably as the global financial
        and economic outlook deteriorated from mid-September 2008. The supply of foreign
        credit to Brazilian enterprises, including exporters, was abundant before the crisis but
        dried up rapidly. The cost of domestic borrowing rose sharply, and the real depreciated
        by 40% from the highs of mid-2008 through year-end. Industrial activity plummeted,
        dragged down by a collapse in industrial production, notably in the motor industry, and a
        rundown in inventories. However, pressures have been much lower than those
        experienced by other large emerging market economies.
            The significant improvements in Brazil’s fiscal performance, expansionary fiscal
        policy, strong monetary easing, the expansion of credit supply from public banks and
        financial stability over the last decade have underpinned the economy’s resilience. The
        fiscal measures introduced by Brazilian authorities – macroeconomic consolidation based
        on a sound policy framework that includes inflation targeting, a flexible exchange rate
        and rules-based fiscal management – have resulted in strong fiscal performance. The
        policy framework has delivered gradually falling inflation and public indebtedness and
        has reduced external vulnerabilities. These factors have been crucial for increasing
        resilience to external shocks and have laid the groundwork for raising the economy’s
        growth potential. Another positive factor is, as mentioned before, a strong banking sector,
        and the fact that the non-financial corporate and households sectors do not suffer from the
        balance-sheet weaknesses that are at the heart of financial distress elsewhere. The short-
        term policy response to the global financial and economic crisis has been appropriate.
        Fiscal policy has been relaxed on cyclical and discretionary grounds without
        compromising longer term debt sustainability.
            The OECD Economic Survey of Brazil (OECD, 2009b) concluded that despite
        considerable progress in many areas, there remains substantial scope for making
        government operations more cost-effective. Indeed, Brazil spends a high share of GDP on
        selected government-financed programmes in comparison with many OECD member
        countries and its emerging-market peers, but outcome indicators are often comparatively
        poor. As a result, in the absence of efficiency gains, further increases in spending would
        need to be financed through additional tax hikes and, most importantly, would likely fail
        to deliver proportional improvements in outcomes. Incentives to enhance the efficiency of
        government operations are therefore necessary and call for concerted action in many
        policy areas. For example, much has been done in education to raise enrolment rates to
        equalise spending capacity among the sub-national jurisdictions and introduce systematic
        performance assessments for students and innovations. These initiatives have been highly
        successful, particularly in terms of delivering near-full enrolment at the primary and
        lower secondary levels. However, the performance of Brazilian students remains
        comparatively low when judged on the basis of standardised international tests, such as

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44 – INTRODUCTION

       PISA. Thus, policy action is needed to improve the quality of services for those levels of
       education where full or nearly full coverage has been assured.
           As in other federal countries, mechanisms for financing decentralised provision often
       rely on intergovernmental transfers. The bulk of federal transfers to states and
       municipalities are in the form of block grants related to the sharing of revenue collected
       by the federal government. Sub-national governments have full autonomy to use these
       resources, a prerogative awarded to them by the 1988 Constitution. Voluntary grants,
       which may be conditional, account for a small share of intergovernmental transfers. The
       OECD 2009 Economic Survey concluded that, on the face of it, the Brazilian federal
       government could strengthen incentives to enhance efficiency by making more extensive
       use of conditionality in voluntary transfers and by introducing rewards for performance.
           Brazil’s budget institutions have been strengthened since the mid-1990s as an integral
       part of structural reforms in the macroeconomic area. Years of chronic inflation had
       favoured short-term financial management to the detriment of long-term planning and
       performance orientation in budgeting. A number of budget instruments are now available,
       including the four-year budget envelope or Pluriannual Plan (PPA), which lays out the
       government’s longer term policy priorities, and a three-year budget guidelines law
       (LDO),6 which sets fiscal targets and government priorities for the annual budget law.
       However, as the OECD stated in its 2003 budget review of Brazil and the recent
       Economic Survey, the flexibility required for performance-oriented budgeting is
       constrained by a number of institutional rigidities. Thus, one of Brazil’s challenges is to
       make budgeting more flexible by gradually eliminating revenue earmarking and
       aggregate spending floors. This would allow budget making and planning to be guided
       more by efficiency considerations and the government’s policy priorities, rather than
       historical costing and short-term revenue trends.
           According to the latest OECD Economic Survey of Brazil (OECD, 2009b), the
       discovery of large oil and gas fields in deep waters off Brazil’s south-eastern coast may
       well double the country’s proven reserves. Options are being considered for developing
       these fields. The current exploratory regime is based on concessions and the transfer of
       property rights for hydrocarbon reserves to concessionaries. Authorities are considering
       the introduction of production-sharing arrangements to develop these new fields, because
       production costs are high and exploration risks relatively low, while maintaining the
       concessionary regime for the blocks that have already been auctioned.7 Hence, the OECD
       survey concluded that for Brazilian authorities, the definition of the regulatory framework
       for the new fields is important to ensure that their development is not delayed by
       regulatory uncertainty.
           A further challenge for the Brazilian authorities, according to the OECD Economic
       Survey of Brazil (2009b), is to prepare better arrangements for sharing the revenue arising
       from the exploitation of the new offshore oil and gas reserves among different levels of
       government. Currently, the bulk of revenue from royalties and other levies accrues to the
       coastal municipalities and states with proprietary rights over the offshore fields. Only a
       limited proportion of the revenue is shared with non-producing jurisdictions. Maintenance
       of the current regime would likely exacerbate this concentration of revenue in a handful
       of municipalities. In addition, the recipient localities tend to use hydrocarbon revenue
       predominantly to finance operating expenditure with little long-run return. Thus, the
       OECD Economic Survey came to the conclusion that Brazil needs to introduce a new
       mechanism for sharing the revenue associated with the new oil fields among the different


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        layers of government to ensure that it is saved or spent on programmes that could
        generate returns for future generations.

I.4. An overview of Brazil’s public management reforms

            During the military regime (1964-1985) there was a process of concentration of
        powers and resources at the federal level, but a delegation of authority to lower
        administrative levels. The military regime deepened state intervention in the economy
        through the expansion of the “indirect administration” through Law Decree 200/1967,
        which is still partly in force today. Since the re-establishment of democracy in 1985,
        Brazil has made tremendous progress in the economic area, and governments have
        implemented numerous reforms, some of which have not resulted in the expected changes
        in part due to the lack of continuity. Successive governments have adopted different
        approaches to public management reforms that can be classified in five distinctive phases:
             •    The 1988 constitutional reform aimed at re-introducing discipline in the federal
                  public sector.
             •    President Collor’s efforts (1990-92) to cut back the size of the federal
                  government, in particular public employment.
             •    During the first Cardoso Administration (1995-99) there was a programme to
                  make service delivery more effective by changing incentives and structures along
                  managerialist lines. Under the second Cardoso Administration (2000-03) there
                  was an ambitious attempt to use a planning mechanism to introduce programme
                  budgeting and associated managerial reforms.
             •    The focus on improving institutional capacity and transparency as well as the
                  democratisation of labour relations under the Lula Administrations (2003-07, and
                  2007-10).

        The 1988 Constitution
            The new Constitution, enacted in 1988, attempted to address the legacy of the military
        regime. Four main changes can be highlighted. First, the democratisation through the
        establishment of external controls on the public administration gave a new role to the
        Ministério Público (Public Prosecutor’s Office). Second, after 20 years of political,
        financial and administrative centralism, a process of decentralisation offered new
        possibilities for broader citizen participation in public discussions and decision making.
        Third, a unique legal regime for civil servants, with a common salary scale and equal
        costs of living adjustments between military personnel in government and civil servants
        was established, in parallel with the constitutionalisation of the requirement of merit
        selection and competitive examination in the recruitment of all public servants.8 Finally,
        the Constitution has required organisational accountability for any single assignment of
        resources originating in the budget, and the inclusion of all agencies’ detailed budgets in
        the federal budget. The creation of the National School of Public Administration in 1986
        to reinforce the training of senior officials and of a Public Policy and Government
        Management Specialists Career was in line with these efforts.
            However, the public service was soon under pressure from corporatist attitudes, real
        salaries decreased significantly, and gratifications based more on political considerations
        than on good performance increased.


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          The provisions of the 1988 Constitution, including strong fiscal decentralisation,
       contributed to the federal government’s chronic deficit. Fiscal decentralisation to states
       and municipalities went very far under the new Constitution. However, it was not
       properly linked with decentralisation of responsibilities and this contributed to the
       government’s fiscal imbalance.

       The Collor Administration
           President Fernando Collor (1990-92) was the first directly elected President since the
       1964 military coup. His work programme aimed significantly at controlling inflation. The
       civil service reform plan under President Collor was very simple and aimed at privatising
       state-owned enterprises and reducing by 360 000 the number of federal employees; this
       meant cutting 30% of the staff of each ministry. Since ministries did not meet the target,
       the government froze the salaries of public employees to encourage them to leave. In a
       highly inflationary environment, the constitutional protection against salary reductions
       meant little and by the end of 1990 salaries had lost a large part of their value.
           The measures adopted to eradicate patrimonialist and nepotistic practices led to the
       implementation of the Regime Jurídico Único (Single Judicial Regime) under Law
       No. 8.112/1990, which established a unified hiring procedure for all civil servants in the
       direct and indirect public administrations. This law also included a section that allowed
       more than 500 000 civil servants from the old regime who had been hired without passing
       a competitive examination to become regular civil servants. One of the consequences of
       this measure was that all those new civil servants were granted full retirement benefits
       creating pressures for public finances. Another was that the measure started the separation
       of the public service into multiple groups by first creating two groups – those that had
       passed the competitive examination and those that had not.
           Moreover, the salary policy of the Collor Administration had a negative impact on the
       morale of public employees and led many of the most experienced and skilled civil
       servants to resign their posts. By the time President Collor was forced from office by
       impeachment more than 100 000 civil servants had left the direct administration,
       autonomous agencies, and state-owned enterprises, although part of this was due to the
       changes to the civil service retirement policy.9 The capability of the civil service was
       seriously damaged.
           In September 1992, Vice-president Itamar Franco assumed the powers of the
       presidency following the impeachment of President Collor on corruption charges.
       President Franco created a special commission to investigate the dismissals of the Collor
       period and sent a bill to Congress offering amnesty to all public employees who had been
       fired. Brazil’s Congress approved this law (Law 8.878 of 1994) and ordered reinstallation
       in their previous jobs or an equivalent position for all former employees that were
       dismissed with violation of constitutional or legal provisions, or against any regulatory
       rules or clauses of agreements, conventions or normative decisions of the courts, or
       dismissed by political motivation, plainly characterised, or as a result of a strike.

       The Cardoso Administrations
          With the election of President Fernando Henrique Cardoso in 1994, political debates
       concerning civil service reform were renewed. The stabilisation policy (the Plano Real)
       was very effective and the policy agenda was no longer monopolised by the fiscal crisis.
       During this administration, one of the most notable transformations of the state reform
       was the continuation of the privatisation process that began in 1990 with the Ordinary
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        Law 8.031/1990; this was later replaced by Law No. 9.491/1997 establishing the National
        Programme for Privatisation. The privatisation process for major infrastructure was
        characterised by the granting of concessions rather than a permanent transfer of assets.
        The administration of concession contracts was entrusted to special regulatory institutions
        (or line ministries in a few cases), modifying the institutional setting and the culture of
        public sector management in the country.
            In the administrative reform area, the Guiding Plan to the Reform the State Apparatus
        (Plano Diretor da Reforma do Aparelho do Estado) produced by the newly created
        Ministry of Federal Administration and State Reform (MARE – Ministério da
        Administração e Reforma do Estado) specified the objectives and guidelines for
        redefining Brazil’s public administration. The Plan identified a series of bottlenecks like
        the increasing costs of bureaucracy and of bureaucratic and legal controls over public
        administration, and the reduced capacity of ministries to formulate policies and to control
        the central units of the administration. The Bresser Reform, as the reform was commonly
        known,10 was marked by a tendency to draw lessons from international experience and
        New Public Management (NPM) ideas. The creation of MARE was instrumental in
        placing public management issues on the executive’s reform agenda. The original reform
        proposal included dividing the public sector into areas that should remain under state
        control, those that should be transformed into public but not state-owned organisations,
        and those that should be privatised. The Guiding Plan proposed a reorganisation of the
        state’s responsibilities: separation between policy formulation, regulation and control and
        service delivery. The Plan also anticipated setting up executive agencies in charge of the
        operation services, and regulatory agencies for the control of the markets. However, this
        proposal was not fully implemented as the Brazilian Supreme Court (ADI No 2.135)
        declared the introduction of different labour regimes in the direct administration,
        autarchies and public foundations to be unconstitutional. Constitutional Amendment 19
        from 1998 came into force and ended the single legal regime for public servants, which
        opened the possibility of having different alternatives of reorganisation of civil servants
        in the three levels of government. In the area of human resource management, this
        administration did not seek to shrink the overall size of the federal government per se,
        although by not allowing the opening of competitive examinations, it ended up doing so.
        The main focus of reforms was to improve the professionalisation of civil servants,
        increase the managerial room for manoeuvre of public-sector managers, and facilitate the
        sectoral and regional distribution of civil servants. Reform proposals also included the
        removal of tenure; the adoption of mechanisms for dismissal owing to poor performance
        and redundancy situations; a limit to public wages in the three powers; a review of
        distortions in the human resource legislation; the creation of new forms of public
        organisations such as executive agencies, social organisations and others. To translate
        these ideas into practice required constitutional amendments to eliminate constraints that
        blocked the adoption of an agile form of administration with a greater degree of
        autonomy.
            Some of the main achievements of MARE were the generation and publication of
        data about the federal payroll; the use of information technology systems to manage the
        payroll, which played a positive role in the fight against corruption and in the generation
        of savings; the establishment of annual public examinations for strategic careers such as
        public managers; and the alignment of the National School of Public Administration
        (ENAP) with MARE for the provision of training based on new public management
        ideas. At the end of President Cardoso’s first term in office, Congress approved reforms
        that included the creation of new forms of public sector organisations and the mitigation

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48 – INTRODUCTION

       of tenure constraints to government employees. Nonetheless, changes to the different
       forms of employment relationships within the public sector did not reach the number of
       votes required. In 2007, the Supreme Court ruled that changes to Article 39 of the
       Constitution were invalid and thus re-established the unified regime for civil servants.
       Also, MARE did not find enough political support for establishing limits to the
       remuneration of the judiciary and Congress, which were removed from the reform
       agenda. At the beginning of the new Cardoso Administration, MARE was abolished and
       its functions were absorbed by the Ministry of Planning and Budget, thereby creating the
       Ministry of Planning, Budget and Management. This ministry had two new areas: the
       Secretariat of State for Public Administration and Public Property (SAP) and the
       Secretariat of Management (SEGES). The rationale was to link planning and budgeting
       with public management. Although the 1995-99 experiment did not move as far as hoped
       towards creating a results-oriented culture, the government’s efforts succeeded in putting
       performance-based management reform on the agenda.
           The second Cardoso Administration (1999-2003) was characterised by continuing
       efforts to achieve performance-based administrative reform, but with a substantial change
       in thrust. The 2000-03 Pluriannual Plan, “Advance Brazil”, intended to drive a fairly
       ambitious public sector management reform with a gradualist approach to
       implementation. It sought to reorganise the way government business is done around
       clearly defined programmes, rather than restructuring organisations per se.
           Despite its achievements, during the Cardoso Administration there was a reluctance
       to hire civil servants for line ministries, resulting in increasing resort to UN organisations
       such as UNESCO, UNDP, FAO and WHO to take care of its manpower needs, and to
       procurement transactions creating distortions in the practice of international co-operation.
       Moreover, there was a large use of outsourcing including sometimes always using the
       same service providers, which was very much criticised for depriving government of
       intelligence and know-how in certain areas (such as ICT). Officials often report that
       capacities were lacking after the Cardoso years to carry out good policy making and
       service delivery.

       The Lula Administrations and the challenges ahead
           The administrations of President Lula da Silva (2003-06, 2007- ) have prioritised
       macroeconomic stabilisation, the promotion of social inclusion, recovery of growth,
       investment in infrastructure projects, and the fight against corruption. Public management
       reforms to improve the public sector’s performance, however, have not been at the top of
       the government’s agenda due, very likely, to extensive reform fatigue regarding public
       management policy inside and outside Brazilian government (Gaetani, 2008).
           Nonetheless, this government has made efforts to strengthen public administrations in
       a different manner, with a very strong positive emphasis on capacity and transparency.
       First, it has aimed to strengthen the General Comptrollership of the Union (Controladoria
       Geral da União, CGU) as an important element in the fight against corruption and
       inefficiency. During President Lula’s first term in office there was a vigorous recruitment
       policy based on merit principles to empower the CGU. Moreover, the Secretariat for
       Transparency and Corruption Prevention was created which joined the international
       debate on corruption and established co-operation relationships with international
       organisations dealing with this issue.
           One of the main priorities of this administration has also been the democratisation of
       labour relations in the public service, in order to reinforce the democratic state and the
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        value of the role of civil servants in public service. The emphasis on negotiation is
        reflected in the establishment of a permanent negotiation table. Relations with unions are
        based on an ongoing dialogue that aims to promote better understanding between political
        leaders, public servants, unions and society. Since the establishment of the negotiation
        table in 2003, 77 agreements have been reached that cover 1.3 million civil servants. In
        2008 alone, 33 agreements were signed and it is expected that for 2010 the results of
        these negotiations will have an annualised financial impact of BRL 29.1 billion. The
        permanent negotiation table is considered a fundamental tool for redefining the role of the
        state.
            Another priority has been the strengthening of government capacity by increasing
        staffing levels in priority areas such as education, health, security and infrastructure
        sectors, and attracting and retaining a highly qualified workforce by offering competitive
        wages. Government has favoured the employment of public servants through regular and
        transparent hiring procedures in order to provide long-term government capacity, and has
        significantly increased the level of qualifications of new employees. Indeed, in the area of
        social development, for example, President Lula’s Administration created the Career for
        Social Policies Development with 2 400 positions to be filled by line ministries:
        Education, Health, Social Development, Agrarian Development, Human Rights, Women,
        Racial Integration and Employment. Public servants who belong to this career are in
        charge of implementing the social agenda which, among other things, includes the
        operation of the Family Cash Transfer Programme aimed to reduce poverty and
        inequality. Education development has been another strategic objective of this
        administration which aims to extend the coverage and quality of education at all levels.
        To enable the implementation of the Education Development Plan, more than 28 000
        public servants have been hired of which almost 18 000 are teachers, which represents an
        increase of over 8% since 2002. Moreover, government created new careers and posts in
        the areas of transport, energy and mineral production as part of the efforts to reorganise
        the infrastructure services increasing the labour force in this area by more than 60%
        (7 862 public servants in 2009).11 To attract and retain highly qualified staff in all priority
        areas, government has negotiated new pay levels with trade unions and national
        associations that have led to sometimes large increases in remunerations. Moreover, the
        current administration established the System for Institutional Organisation and
        Innovation of the Federal Government (Sistema de Organização e Inovação Institucional
        do Governo Federal – SIORG) to organise the activities for the organisational
        development of the organisms and entities of the federal public administration. The aim is
        to build collaborative networks to improve public management, develop quality
        standards, reduce operational costs and secure the continuity of the processes of
        institutional organisation and innovation. The Ministry of Planning is the central body
        with direct responsibility for the definition and co-ordination of methodologies for the
        planning, execution, and control of the activities for institutional organisation and
        innovation.
            Two other important initiatives of this administration are: the National Programme to
        Support the Management and Planning of Modernisation in States and Federal District,
        and the Programme to Modernise the External Control of Brazilian States and
        Municipalities. These two programmes aim to modernise public administration in sub-
        national government, particularly at the local level, in the areas of planning, human
        resources and communication with citizens. The major achievement here is that these
        programmes were designed with broad participation and discussion with the different


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50 – INTRODUCTION

       states and count tribunals. This more inter-institutional and intergovernmental model
       works as a network in marked contrast to the old centralised tradition.
           Several measures were also adopted to increase transparency and integrity, such as
       the portal of Transparency, which makes all the expenses of the executive branch on line
       on the internet, and the Bill of Law sent to Congress in May 2009 that aims at introducing
       a comprehensive Law of Access to Information in Brazil.
           A Programme for Strengthening the Institutional Capacity for Regulatory
       Management (PRO-REG) was established by the President of the Republic in order to
       implement measures aimed to increase transparency, efficiency and professionalism in
       the regulatory process; foster the implementation of regulatory impact analysis; and to get
       better quality of regulation (see OECD, 2008f). Careers have been created to strengthen
       regulatory agencies and public selections have been introduced for those positions.
           Finally, a “Group of Notable Jurists” has been commissioned to make proposals to
       reshape the administrative legislation of the Brazilian public sector, which is made of
       layers of sometimes inconsistent legislation and, at the same time, quite rigid frameworks
       that treat all forms of public sector organisations (line ministries, autarchies, foundations,
       agencies, SOEs, social organisations, autonomous social services, etc.) in a relatively
       similar manner. Their report with proposals has been sent to the Presidency to be
       analysed and discussed.




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                                                              Notes


        1.        For further information see www2.camara.gov.br/comissoes/permanentes/index.html.
        2.        The military is part of the Executive Branch but does not belong to the civil service.
        3.        By law, the Central Bank is an autarchy but its president has ministerial status (he is
                  the only minister of state that has to be approved by the Senate before taking on his
                  position).
        4.        In 1998 Congress enacted Law No. 9.649 which authorised the President to decree the
                  transformation of an autarchy into an executive agency. The first executive agencies
                  established under this statute were regulatory bodies such as the National
                  Telecommunications Agency (ANATEL) and the National Electric Energy Agency
                  (ANEEL).
        5.        For a full discussion of these regulatory agencies, please see OECD (2008f), p. 210.
        6.        The LDO must be approved and enacted by Congress annually.
        7.        On 31 August 2009 four bills were sent to Congress to introduce partition-sharing
                  agreements in Brazil and to create a new SOE to manage those agreements and a new
                  sovereign fund to deal with the future revenues of oil and gas.
        8.        In 1987 there were 750 000 civil servants and public employees of which only
                  120 000 had been hired after passing a competitive examination.
        9.        Law 8112/1990.
        10.       It was named after Luiz Carlos Bresser Pereira, Minister of Federal Administration
                  and State Reform during the Cardoso Administration.
        11.       In order to improve the state’s capacity in infrastructure, the Brazilian government
                  created the careers of Infrastructure Analyst and Senior Infrastructure Specialist with
                  initially 300 positions for both in 2007. In 2008, this figure increased to 884 positions.




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                                                                                1. WORKFORCE PLANNING AND MANAGEMENT – 53




                                                Chapter 1
                                     Workforce planning and management



            Good workforce planning is a characteristic of modern and dynamic human resource
        management. This chapter analyses the main strengths and windows of opportunity of
        workforce planning in the Brazilian federal government, in the light of the experience of
        OECD countries. The discussion includes: the size and costs of the workforce in the
        federal government; the accounting methodology of public employees and their costs; the
        challenges for proper strategic workforce planning; the promotion of a whole-of-
        government approach for increasing efficiency and reducing the costs of the public
        workforce; the pay-setting process as part of the cost management strategy; the role of
        the unions in setting employment conditions; the need to adjust the public service to an
        ageing society and workforce; the modernisation of the public service pension system;
        and the promotion of diversity as a strategy to ensure the right competences and skills in
        the public service.




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          The government workforce is in constant flux: employees flow into, out of and across
       government organisations, and the competencies and qualifications of the workforce
       change. The government workforce is affected by changes in the general labour market,
       which may, in turn and by its size, also affect labour supply, both qualitatively and
       quantitatively.
           Good workforce planning is indispensable if governments are to maintain a structured
       and representative workforce of appropriate size, which is able to meet the changing
       needs of government organisations in a cost-efficient manner. Good workforce planning
       requires high-quality information and discussion that are linked to organisational
       strategies and efficiency concerns, and organisational arrangements that support
       workforce decisions efficiently.
           The goals of strategic management of the workforce are to:
           •   strengthen departments’ and ministries' capacities for strategic workforce
               management and make managers accountable for the strategic management of
               their workforce;
           •   ensure the adequacy of the workforce with the mission of the organisations;
           •   promote whole-of-government goals in terms of workforce planning, especially in
               terms of numbers and costs;
           •   promote whole-of-government goals in terms of diversity, competences and level
               of education.
          Workforce planning requires good tracking of employee numbers, costs and
       competencies; alignment of workforce planning strategies with the strategy of each
       government organization; flexibility in the management of the workforce; a whole-of-
       government perspective on allocations across sectors and on the size and costs of the
       workforce; and managers’ accountability in terms of workforce planning.

1.1. The size and cost of the workforce in the federal government of Brazil

       A relatively small total government workforce (all levels of government,
       including federal government, states and municipalities)
           Employment in general government and public corporations (the “public sector” in
       the System of National Accounts1) has been quite stable in Brazil. Between 1995 and
       2005, it represented approximately 10% of employment in the economy (see Figure 1.1)
       Although relevant data are not available for the state level, the evidence indicates that this
       percentage has probably increased since 2005: data for the federal level and
       municipalities indicate more rapid increases in general government employment than in
       the rest of the economy (an increase of over 10% between 2005 and 2008 against an
       increase of over 4% in employment in total economy). In total, government employment
       can be estimated at approximately 10-11% of total employment in Brazil in 2008, and,
       when taking into account public enterprises, at approximately 11-12%, compared to an
       average of about 22% for OECD member countries.2




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             Figure 1.1. Share of public sector employment in total employment in Brazil over time

                                                                       G eneral G overnment                                               P ublic C orporations

           14%

           12%

           10%

            8%

            6%

            4%

            2%

            0%
                           1990                   1995                 1996                       1997                       1998                        1999                      2002                             2003                  2005*


         * Data for 2005 are drawn from Pessoa, Eneuton et al. (2009), “Emprego público no Brasil: comparação
           internacional e evolução recente”, Comunicado da presidência, Instituto de Pesquisa Econômica Aplicada
           (IPEA), No. 19, 30 March. Data are for employment in both general government and public corporations,
           and are not differentiated.
         Source: ILO Labourstat, UN UNSD Demographic Statistics, IBGE.

            Compared to OECD member countries, the proportion of the public sector workforce
        in total employment is rather small (see Figure 1.2).

           Figure 1.2. Public sector employment as a share of total employment, the labour force and
                                        population in selected countries
                                                                                                                      2005

                                                   Total E mployment                                          Total L abour F orc e                                  Total P opulation
           40%
           35%
           30%
           25%
           20%
           15%
           10%
            5%
            0%
                                                             S lovak




                                                                                                                                Ireland




                                                                                                                                                                                                                                          J apan
                                                                                                                                                                                                                       New


                                                                                                                                                                                                                                         *B raz il
                                                                                                                                                 Italy




                                                                                                                                                                                                                    T urkey


                                                                                                                                                                                                                              Mex ic o
                             S weden




                                                                                  C z ec h




                                                                                                                       United




                                                                                                                                                         United




                                                                                                                                                                                                                                                     O E C D (27)
                                                  P oland




                                                                                                                                                                                S pain
                                                                                                                                                                                           S witz erland
                                                  F inland




                                                                                 G reec e
                                       F ranc e




                                                                                                                                                                                                           C hile
                                                                                                           B elgium


                                                                                                                      C anada


                                                                                                                                           A rgentina




                                                                                                                                                                             A us tralia
                            Denmark
                  Norway




                                                                                                                                                                  G ermany
                                                                       Hungary



                                                                                             Netherlands




         Note: Data for Brazil on employment in the public sector are drawn from Pessoa, Eneuton et al. (2009),
               “Emprego público no Brasil: comparação internacional e evolução recente”, Comunicado da
               presidência, Instituto de Pesquisa Econômica Aplicada (IPEA), No. 19, 30 March.
         Source: OECD Labour Force Survey, ILO Labourstat.


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           However, headcount numbers for public-sector employment tend to give an erroneous
       picture of governments’ room for manoeuvre in Brazil compared to OECD member
       countries, for the following reasons:
           •   First, the stability of general government employment as a percentage of total
               employment hides the fact that general government employment has actually
               increased in absolute numbers, by 12% from 1990 to 1999, by over 15% between
               1999 and 2003, and by 10% between 2005 and 2008 at the federal level and in
               municipalities.3 Some argue that as employment and population increase, the
               number of government employees should increase accordingly. However, unless
               there are quantity or quality improvements in service delivery, there is no need for
               the number of public employees to increase at the same rate as employment in the
               economy because government affairs and public service delivery benefit from
               economies of scale. In Brazil, the increase in general government employment
               may be legitimate in the context of past history regarding capacity building in
               government and with the aim to improve access to services, in particular in the
               health and education sectors, but these increases need to be monitored very
               closely.4
           •   Second, with the increases in employment in the public sector (including
               employment in general government and public enterprises), employment in
               government strictly speaking has increased significantly more, as employment in
               government enterprises has decreased, probably mainly owing to extensive
               privatisation since the early 1990s.

       A relatively costly government workforce for the economy
           In addition, although government employees represent a relatively small share of total
       employment, the government workforce is expensive. Compensation costs approach 12%
       of GDP (public enterprises excluded),5 a rather high figure compared to OECD member
       countries (see Figures 1.3 and 1.4). However, since 2000 the cost of the government
       workforce has increased only moderately in absolute terms,6 and this is probably mostly
       due to the increase in the number of employees.
           Even when considering wages and salaries only, and excluding employer’s social
       contributions (including to pensions), the situation remains relatively similar, showing
       that it is not only the level of Brazilian government contributions to social security and
       pensions that makes a difference in the compensation costs of government employees
       compared to OECD member countries (see Figure 1.5).




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                                                                                                                                                                                                    1. WORKFORCE PLANNING AND MANAGEMENT – 57


              Figure 1.3. Compensation of general government employees as a percentage of GDP
                                                                                                                                     2006

                                                                                                           Compensation of employees

           18%
           16%
           14%
           12%
           10%
            8%
            6%
            4%
            2%
            0%
                                                                    France




                                                                                                                                    Italy
                            Iceland




                                                                                                                                                                             Poland
                                                                                                                                                                     Spain
                                                          Finland




                                                                                                                                                                                                              Ireland
                                                                                                                                                                                      New Zealand
                                                                                                                   United Kingdom
                                                                                                Belgium




                                                                                                                                                                                                                                                                                                        Japan
                                                                                                                                                                                                                                                                            Slovak Republic
                  Denmark




                                                                                                                                            Greece
                                               Portugal



                                                                             Hungary



                                                                                                          Brazil




                                                                                                                                                                                                    Austria




                                                                                                                                                                                                                                                                                              Germany
                                                                                                                                                                                                                                      Czech Republic
                                                                                       Norway




                                                                                                                                                                                                                        Netherlands




                                                                                                                                                                                                                                                                                                                OECD Average
                                                                                                                                                                                                                                                                    Korea
                                                                                                                                                                                                                                                       Luxembourg
                                      Sweden




                                                                                                                                                     United States



         Sources: OECD, IBGE.


          Figure 1.4. Compensation of general government employees as a percentage of GDP (2006)
                  and share of general government employment in total employment (2005)

                                                                                       Compensation of employees                                                                      Employees

           40%
           35%
           30%
           25%
           20%
           15%
           10%
            5%
            0%
                                                          Finland




                                                                                                                                                                                                              Ireland
                                                                                                Belgium
                                                                    France




                                                                                                                                    Italy
                            Iceland




                                                                                                                                                                                                                                                                                                        Japan
                                                                                                          Brazil




                                                                                                                                                                                                                                                                            Slovak Republic
                                                                             Hungary




                                                                                                                                                                             Poland
                                                                                                                                                                     Spain



                                                                                                                                                                                                    Austria



                                                                                                                                                                                                                                      Czech Republic
                                                                                       Norway



                                                                                                                   United Kingdom




                                                                                                                                                                                                                                                                                                                OECD Average
                                                                                                                                                                                                                                                                    Korea
                                                                                                                                                                                      New Zealand




                                                                                                                                                                                                                                                       Luxembourg
                  Denmark




                                                                                                                                            Greece
                                               Portugal




                                                                                                                                                                                                                                                                                              Germany
                                                                                                                                                                                                                        Netherlands
                                                                                                                                                     United States
                                      Sweden




         Sources: OECD, IBGE.




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58 – 1. WORKFORCE PLANNING AND MANAGEMENT

        Figure 1.5. Share of compensation of general government employees as a percentage of GDP
                  divided between social employer’s contributions and wages and salaries
                                                                                                                                               2006

                                                                            Wages and salaries                                                           Employers' social contributions

         18%
         16%
         14%
         12%
         10%
           8%
           6%
           4%
           2%
           0%
                                                                   France




                                                                                                                                                         Italy



                                                                                                                                                                                          Poland
                          *Iceland



                                                         Finland




                                                                                                                                                                                  Spain




                                                                                                                                                                                                                                                                                                                                       *Chile
                                                                                                Belgium



                                                                                                                              United Kingdom




                                                                                                                                                                                                                                          *Ireland
                                                                                                          Brazil




                                                                                                                                                                                                   *New Zealand




                                                                                                                                                                                                                                                     Switzerland
                Denmark




                                                                                                                                                                                                                                                                                    Slovak Republic
                                              Portugal



                                                                            Hungary




                                                                                                                                                                                                                                                                                                                                                *Japan
                                                                                                                                                                                                                  Austria
                                                                                                                                               *Greece




                                                                                                                                                                                                                            Netherlands
                                                                                                                    *Canada




                                                                                                                                                                                                                                                                   Czech Republic




                                                                                                                                                                                                                                                                                                                            *Germany
                                                                                      *Norway
                                     Sweden




                                                                                                                                                                                                                                                                                                               Luxembourg
                                                                                                                                                                                                                                                                                                      *Korea
                                                                                                                                                                 *United States




        * Includes employers’ social contributions.
        Sources: OECD, IBGE.


           Today, 28% of compensation costs in the Brazilian economy as a whole are paid to
       government employees (excluding public enterprises), again a high share compared to
       OECD member countries. Yet government output7 represents only 11% of total economic
       output, and only approximately 10% of the population are general government employees
       (public enterprises excluded) (see Figure 1.6). This situation is mainly due to differences
       in average salaries between the public and private sectors,8 that result from a combination
       of factors that include the particular structure of salaries with some very low
       remunerations in the private sector for certain tasks, a much higher proportion of
       qualified positions in the public sector, but also a mostly recent choice that has been made
       that public servants in core positions be relatively well paid to attract the best suited
       candidates, motivate their commitment and reduce turnover.
           However, the share of compensation costs in general government output is quite
       similar to that of OECD member countries (see Figure 1.6); this indicates that other types
       of government spending are relatively high.
           The cost of producing government-funded services as a percentage of GDP9 is also
       high in Brazil compared to OECD member countries. In addition to the high
       compensation costs of general government employees, the cost of the goods and services
       produced by non-general government organisations and companies (mostly private
       sector) but funded by government as a share of GDP is also high (see Figures 1.7 and
       1.8).10




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                 Figure 1.6. Compensation of employees and output at basic prices between general
                                government and total economy in selected countries
                                                                                                      2005

                                                                       Compensation of employees                                 Value of output

           35%

           30%
           25%

           20%

           15%
           10%

            5%
            0%                                                                                       Italy

                                                                                                             France
                                                                        Poland




                                                                                                                                          Spain
                                                                                 Finland




                                                                                                                                Ireland
                                                                                                                      Belgium




                                                                                                                                                                                                                       Switzerland

                                                                                                                                                                                                                                     Japan
                                                                                                                                                  Slovak Republic
                      Denmark



                                          Portugal



                                                              Brazil




                                                                                           Hungary




                                                                                                                                                                                  Austria



                                                                                                                                                                                                             Germany
                                                                                                                                                                                            Czech Republic
                                 Norway




                                                                                                                                                                    Netherlands
                                                     Sweden




         Source: OECD, UN National Accounts Official Country Data.


            The cost of producing goods and services funded by government has also increased
        since 2000 as a percentage of GDP and in volume, mostly owing to the increased costs of
        goods and services funded by government and produced by the private sector and public
        companies.

                            Figure 1.7. General government production costs as a percentage of GDP
                                                                                             2000 and 2006

                                Intermediate c ons umption                  C ompens ation of employees                   S oc ial trans fers in kind                         G ros s c apital formation

          35%


          30%


          25%


          20%


          15%


          10%


           5%


           0%
                 2000
                 2006
                 2000
                 2006
                 2000
                 2006
                 2000
                 2006
                 2000
                 2006
                 2000
                 2006
                 2000
                 2006
                 2000
                 2006
                 2000
                 2006
                 2000
                 2006
                 2000
                 2006
                 2000
                 2006
                 2000
                 2006
                 2000
                 2006
                 2000
                 2006
                 2000
                 2006
                 2000
                 2006
                 2000
                 2006
                 2000
                 2006
                 2000
                 2006
                 2000
                 2006
                 2000
                 2006
                 2000
                 2006
                 2000
                 2006
                 2000
                 2006
                 2000
                 2006
                 2000
                 2006




                 S W E IS L NL D DNK B R A HUN F IN F R A C ZE G B R B E L P R T NZL NOR P O L E S P ITA US A DE U A UT IR L S V K J P N L UX G R C K O RO E C D


         Sources: OECD, IBGE.




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60 – 1. WORKFORCE PLANNING AND MANAGEMENT

         Figure 1.8. Costs of goods and services produced by non general government organisations
            (mostly private sector) and funded by government (general government intermediate
                        consumption and social transfers in kind) as a share of GDP
                                                                                         2000 and 2006

                                                                        Intermediate consumption                   Social transfers in kind

         0.18

         0.16

         0.14

         0.12

          0.1

         0.08

         0.06

         0.04

         0.02

           0
                2000

                       2000

                              2000

                                     2000

                                            2000

                                                   2000

                                                          2000

                                                                 2000

                                                                        2000

                                                                               2000

                                                                                       2000

                                                                                              2000

                                                                                                     2000

                                                                                                            2000

                                                                                                                   2000

                                                                                                                          2000

                                                                                                                                 2000

                                                                                                                                        2000

                                                                                                                                               2000

                                                                                                                                                      2000

                                                                                                                                                             2000

                                                                                                                                                                    2000

                                                                                                                                                                           2000

                                                                                                                                                                                  2000

                                                                                                                                                                                         2000

                                                                                                                                                                                                2000

                                                                                                                                                                                                       2000
                NLD BRA SWE CZE GBR DEU FIN NZL ISL FRA HUN BEL DNK SVK AUT JPN USA POL ITA NOR LUX PRT ESP IRL KOR GRC OECD


        Sources: OECD, IBGE.


           In Brazil therefore, the management of the workforce and in particular the allocation
       of staff across policy sectors and priorities are important structurally as the cost of the
       workforce and the overall costs of producing goods and services funded by government
       weigh heavily on the economy. This places a great responsibility on governments at all
       levels in Brazil to manage the size, composition, and allocation of the workforce
       effectively by what is commonly called strategic workforce planning. Considering the
       overall productivity gains in the economy, increases in the costs and size of the
       government workforce should be matched by more than proportional improvements in
       access to and quality of public services, in regulation, and policy making.

       The size and cost of employment in the federal government
           Brazil has a share of public sector employees employed at the federal level that is
       quite similar to that of other federal countries (see Figure 1.9). This share decreased from
       about 20% to about 15% between 1990 and 2003 (including state companies) and has
       since probably remained the same. Data are missing beyond 2003. Moraes et al. (2008)
       found that in late 2008, federal employees represented approximately 15% of public
       sector employees (Moraes, M., T. Silva, and P. Costa, 2008).




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            Figure 1.9. Share of public sector employees at different levels of government in selected
                                                federal countries
                                                                 2003

                                                         C entral     S tate      L oc al
          100%

           90%
           80%

           70%
           60%
           50%

           40%
           30%

           20%
           10%

            0%
                     A us tralia      C anada              Mex ic o         United S tates           B raz il           S pain

         Source: OECD LFS, ILO Labourstat.


           The number of federal government employees in the executive branch of government
        decreased significantly between 1995 and 2003 and has increased steadily since then (see
        Figure 1.10).

                 Figure 1.10. Number of federal government employees in the executive branch of
                                                  government
                                                               1995-2008

             580.000

             560.000

             540.000

             520.000

             500.000

             480.000

             460.000

             440.000
                                                                      01
                        95

                               96

                                      97

                                             98

                                                    99

                                                            00




                                                                             02

                                                                                    03

                                                                                              04

                                                                                                     05

                                                                                                            06

                                                                                                                   07
                      19

                             19




                                                  19

                                                          20

                                                                    20

                                                                           20

                                                                                  20
                                    19

                                           19




                                                                                            20

                                                                                                   20

                                                                                                          20

                                                                                                                 20




         Source: Moraes, M. et al (2008), “O mito do inchaço da força de trabalho do Executivo Federal” (The Myth
                 of the Expansion of the Federal Executive Workforce), Revista Res Publica, Vol. 7, No. 2, July-
                 December.




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           At the same time, expenditure on personnel (including pensions) has increased
       steadily since 2004, after a contraction in the early years of the Lula Administration due
       to a rise in inflation coupled with nominal wage restraint in support of fiscal
       consolidation (OECD, 2009b: 54) (see Figure 1.11).

                          Figure 1.11. Selected federal expenditures1,2 including personnel

           8 % GDP, 12-month flows
                                      Personnel³
                                      Private-sector pensions
           7                          Non-mandatory programmes


           6


           5


           4
               2003




                               2004




                                                  2005




                                                                    2006




                                                                                    2007




                                                                                                    2008




                                                                                                                    2009
        1. For reference, total primary spending is calculated as tax revenue minus the general-government primary
           budget surplus.
        2. For reference, total spending is calculated as tax revenue plus the general-government overall (nominal)
           budget balance.
        3. Includes pensions to retired civil servants.
        4. Refers to “Other OCCs” in Brazilian budget documentation and also includes selected mandatory spending
           on means tested social assistance transfers to the elderly and the disabled (RMV and LOAS).
        Source: IPEA (IPEADATA), OECD (2009b) OECD Economic Surveys: Brazil, p. 55.


           The recent increase in federal government personnel expenditures has been due to
       various factors, including increases in workforce numbers in priority policy areas,
       changes in the level of staff qualifications, salary negotiations and increases in pension
       payments. Since 2008, in line with reforms that have affected career streams and
       increases in compensation, compensation costs have increased remarkably and will
       continue to do so as changes announced are implemented through 2012.
           Overall, the number and cost of government employees in Brazil (at all levels of
       government) have been relatively stable over the years, and until recently, the federal
       government was a stabilising factor in overall government employment (at all levels of
       government). However, as mentioned, the costs of government employees (at all levels of
       government) are high, especially in view of the fact that a relatively large proportion of
       government-funded goods and services are provided by the private sector. High economic
       growth in recent years has obscured this issue. In the future, however, as the government
       locks in new commitments about compensation and as pension payments increase, the
       cost of the federal workforce may be a growing burden, especially if economic growth
       slows.
           This is not to say that increases in costs in the federal government have not been
       legitimate. A large part of the increases in staff numbers have taken place in the
       education, health, security and infrastructure sectors and may be entirely legitimate
       considering better access to and possible improvements in service delivery. They also
       follow decades-long history of under-investments in capacity either because of the

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        regularisation of large numbers of employees through non competitive procedures (after
        the establishment of the unique regime for civil servants in 1987 and later decision in
        1990), and who may not all have had the necessary qualifications, and through successive
        firing and hiring freezes policies. Officials report that salary increases were also
        necessary as civil servants tended to be underpaid. Like for the rest of the government
        employment in the country, however, there needs to be a clear understanding of these
        increases in costs that have to be justified in the end by improved access to and better
        quality of government services, regulation and policy making.

1.2. Accounting for public employees and their costs

        The experience of OECD member countries
            Workforce planning starts with good accounting in terms of numbers and costs. For
        most of the advanced OECD member countries, and unlike a number of transition
        economies, accounting for the size of the employment workforce is not a significant
        challenge. Most national governments know how many employees they have and many
        employees other levels of governments may have. Data are centralised by the labour
        ministries and often also by the national statistical agency, although often with different
        methodologies and thus different numbers.
             Remaining challenges regarding these data across OECD member countries include:
             •    Few countries have data in full-time equivalent. This means that data do not
                  account for differences in the level of part-time employment.
             •    In some countries, there are methodological problems with the compliance with
                  the definition of “general government” for employee numbers, making data
                  sometimes difficult to compare across countries and statistical analysis of the size
                  of government employment very complex (see Pilichowski, E. and E. Turkisch,
                  2008).
            Today, one of the challenges for central organisations is to control staff numbers in
        the context of increased use of contracted out services, and short-term employees. With
        increased use of the private sector for the production of goods and services funded by
        government, the numbers and costs of government employees should decrease
        (considering similar levels and quality of goods produced).
            Ideally, government organisations should track production costs of goods and services
        over time, including staff costs and costs of goods and services produced by the private
        sector and funded by government. Changes to the workforce should take this information
        into account. A number of countries are making efforts to count all their short-term
        consultants, but there is as yet no good example of a country that has tracked the
        production costs of government-funded goods and services for strategic workforce
        planning. There is an agreement among OECD member countries, however, that
        countries should be moving in this direction in order to avoid unplanned increases in the
        cost of service production.

        The situation in Brazil

        Data about the federal government
            Brazil’s federal government has impressive public service data sets at the federal
        level, which show a clear picture of staff numbers and total compensation costs. Detailed
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       data are available on the Internet, including data on public enterprises. Data are not in
       full-time equivalent, but this may be less important in Brazil than in other countries as the
       percentage of staff with part-time employment is very limited.
           The Integrated System of Human Resource Administration (SIAPE) was created in
       1989, and is used by human resource managers of federal government institutions. It
       works in a decentralised manner under central control and has been constantly improved
       to enhance transparency, access by public servants and efficiency.
          Although the system is not compatible with the payment system of the Ministry of
       Finance and with the integrated system of budget data as it is in many OECD member
       countries, the system works very well for tracking information on the federal civil service
       and accounting for the size and cost of the federal public service and for payroll.
           Workforce planning also seems quite transparent, as workforce projections are
       included in a specific part of the Annual Budget Bill (Annex II of the Budget), which is
       discussed and approved by the National Congress. The Secretariat of the National
       Treasury of the Department of Treasury is the central body of the federal financial
       management system and of the federal accounting system. It makes available online staff
       numbers in each body of the federal administration, including bodies of the federal
       judiciary, the Chamber of Deputies and the federal Senate.
           In addition, compared to many OECD member countries, the federal government
       tracks contracted out services very well. Ministries, and even public enterprises, seem to
       know relatively well the extent of services contracted out. This is also the object of
       numerous controls including by the Court of Accounts. Costs and historical data can thus
       be integrated into strategic workforce planning processes in order to track the overall
       costs of producing services.
           The federal government systematically counts retired employees and pension
       beneficiaries with its present workforce. In fact, they are included in the payroll and
       personnel expenses (as the Fiscal Responsibility Law establishes a ceiling of payroll costs
       and demands that their remuneration be accounted in the same way as active personnel
       compensation). While many other countries are striving to make the public employer
       more responsible and accountable for future pension costs, Brazil is exceptional in that
       public-sector pension holders and pensions are managed by individual departments and
       ministries. While this certainly helps improve managerial accountability for future
       pension costs, it also probably dilutes managerial responsibility for workforce planning to
       the extent that a large part of workforce costs is fixed. It is also a source of confusion
       regarding workforce numbers and costs in general.
            Finally, the federal government is putting a lot of resources into auditing and
       controlling the regularity of payments. While the computerised systems are now quite
       sophisticated, different organisations are in charge of controlling the regularity of
       payments, including the Secretariat of Human Resources (SHR) of the Ministry of
       Planning, which carries out monthly audits, and the Court of Accounts, which controls
       110 000 personnel actions a year (out of which 60 000 are computer-controlled). This is
       still a rigid control process which the government may want to make more flexible in
       order to increasingly move towards more efficient and risk-based audits to increase
       efficiency and allow more focus on strategic issues. Efforts have been made in this area
       and should be further developed.



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                 Box 1.1. The integrated database for personnel administration in Brazil

             The Integrated System of Human Resource Administration (Sistema Integrado de
         Administração de Recursos Humanos, SIAPE) is an on-line database and is the main tool for the
         management of the civil personnel of the federal administration. Today, it contains information
         about 1.3 million active personnel, retired personnel (aposentados) and dependants of deceased
         personnel (pensionistas) in 231 organisations, including the federal administration, federal
         educational organisations, ex-federal territories, agencies (autarquias), foundations, public
         enterprises and mixed economy societies (sociedades de economia mista). It does not include the
         Public Prosecutor’s Office (MPU – Ministerio Público da União), the Banco Central, the public
         enterprises and mixed economy societies that do not receive money from Treasury for the
         payment of their staff, or embassy staff.
             Data from SIAPE are published each month by the SHR in the Boletim Estatístico de
         Pessoal. Both the latest numbers and previous numbers can be downloaded from
         www.servidor.gov.br/publicacao/index.htm. The publication is organised in sections with data on
         payroll expenditure, number of persons on the payroll, remuneration levels for each cadre,
         competitions, and retired personnel.
              There is also a section with data on positions of trust (Cargos e Funções de Confiança e
         Gratificações), which involves 78 269 persons. Among these are the 20 664 persons in the
         special management cadre (Grupo-Direção e Assessoramento, DAS). In addition 22 787 are
         listed as trainees (estagiários). Table 2.22 in this publication contains the number of persons on
         the federal payroll broken down into the different cadres and sub-cadres, and into active
         personnel, retired personnel and surviving dependants for each cadre. Table 3.4 contains
         information on the pay structure in the federal administration, with initial and final pay levels for
         each cadre (cargo/carreira).
         Source: Mission discussions.



        Data on other levels of government
            The size and cost of the federal public service are only meaningful when compared to
        the federal government’s responsibilities. In addition, the federal government has a
        special responsibility for maintaining the fluidity of the labour market across the country,
        and thus has a strong interest in tracking public employment in the country as a whole
        (OECD, 2008g).
           In terms of the control of employment levels in Brazilian states and municipalities,
        caps on workforce costs have been established to avoid excessive long-term growth in
        government employment. While reporting of numbers seems weak, a recent
        communication from the Instituto de Pesquisa Econômica Aplicada (IPEA) is a
        counterexample as it gives a rather detailed analysis of changes in total public
        employment (IPEA, 2009).

        Suggestions for future reforms
            As mentioned earlier, the federal government efficiently tracks the size and cost of
        public employment in the federal government. The government also has good data on
        contracted-out services which can help track the overall costs of production of its goods
        and services, including by the private sector, and link public employment numbers with
        changes in the allocation of responsibilities for the delivery of government-funded
        services to the private sector.

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           The issue for the federal government will be to continue keeping a detailed account of
       staff numbers and costs in the context of the modernisation of government processes,
       especially as Brazil moves towards increased delegation of authority for human resources
       to managers and directors of ministries and agencies. In particular, governments such as
       Canada report that since salary and non-salary budgets have been managed together, it
       has become more difficult to track the number of persons employed.11
           Another challenge for the government is to put the accounting of public sector
       employees in a more strategic perspective. This is not only an issue of control and
       regularity. These are data that have to be used by decision makers when deciding on how
       to deliver services and how to manage their workforce. One possibility would be to create
       a public service observatory like that of France, which follows general trends in terms of
       public employment, public service demographics and the allocation of the workforce
       across sectors. It is an important actor in efforts to modernise government and has
       developed many initiatives in the field of workforce planning (see Box 1.2). Such an
       observatory is credible if it reports not only to its immediate minister and director, but
       also to a “board” with a wider range of actors that represent the whole of government. It
       should also be involved in most government public management reforms that affect
       personnel management.
           In addition, as mentioned earlier, Brazil could develop state-of-the-art tracking of the
       cost of producing goods and services funded by government, which would include
       compensation costs of government employees and the cost of producing services by the
       private sector. This initiative can be made part of the ongoing efforts under the auspices
       of the Ministry of Finance to produce an overall accounting system for the Brazilian
       public administration (including personnel).
           Ideally, it could also play a role in tracking the number of government employees in
       the country as a whole with a view to assessing the weight of government employment in
       the labour market. OECD member countries such as Belgium, Denmark, France, and
       Spain are carrying out whole-of-government assessment and analysis of the number of
       government employees. The purpose is to keep track of overall numbers and thus be in a
       position to assess the impact on the wider labour market, as well as develop a dialogue on
       human resource management across levels of government.




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                               Box 1.2. The Public Service Observatory in France

             The Observatory was created in 2000 to collect, analyse and disseminate information about
         France’s public service for the national government, but also for hospitals, regions and local
         government.
               It is considered a forum for dialogue and exchange among decision makers and is composed
         of:
               •   an orientation council presided by the Minister for the Public Service and including
                   parliamentarians, directors of various ministries, elected officials from local
                   governments, and various organisms and unions;
               •   a technical committee, co-presided by the director general in charge of the public
                   service and the head of the national statistical agency and the different technical
                   administrations.
             The general secretariat of the observatory is administratively below the director general of
         the public service.
               Its main functions have been:
               •   to ensure a higher degree of transparency and understanding of public service numbers
                   and trends through the design of new ways of counting public employees and by linking
                   these numbers to changes in the economy, in competency requirements, etc. The
                   Observatory also has a proactive publication policy, with an annual publication on the
                   state of the public service, which has become a reference for decision makers engaged
                   in government reforms.
               •   to put in place the new workforce planning for positions, number of employees and
                   competences.
            In addition, the Observatory participates in many networks and working groups on the
         modernisation of the public service as part of the initiatives to modernise government in France.
         Source: www.fonction-publique.gouv.fr, accessed August 2009.



1.3. Strategic workforce planning

        The experience of OECD member countries

        Linking workforce planning to the strategies of organisations
            In the past two decades, most OECD member countries have moved towards
        measuring the performance of their organisations, including through performance
        budgeting. This is not an easy process, as establishing objectives and measuring progress
        require great managerial skills and processes in place to maintain coherence. Performance
        management also requires increasing managerial flexibility, without which performance
        indicators may become just another layer of control and further restrict managerial
        freedom. If not implemented properly, ministries and agencies may in fact search for
        opportunities to set their own targets at the expense of whole-of-government strategies
        and seek to decrease their accountability for the use of government resources.
           Where in place, performance results are used both internally by ministries and
        agencies to set programme priorities, allocate resources (including personnel) and change
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       work processes, but also for outward-oriented accountability to the whole of government
       and to society.
           Human resources, and in particular workforce planning, have been made an integral
       part of the performance management framework of organisations. This has been easier in
       position-based systems and in countries with traditionally decentralised human resource
       management systems, such as Canada, New Zealand, Nordic countries of the European
       continent and the United States, than in traditionally more centralised countries, such as
       Belgium and France, where it has slowly taken place only recently.
           Many countries have been establishing procedures and processes that link workforce
       planning to the strategic planning of organisations, including accountability mechanisms
       for managers to report on their workforce planning. Strategic planning devices include
       strategic plans that describe human resource management strategies and personnel plans.
       Ministries and agencies also report on human resource achievements in terms of numbers,
       competencies and costs, and their allocation to the different targets and achievements of
       their organisations in various performance documents. Finally, workforce planning is part
       of the reporting on their human resource strategy for which managers are accountable.
           The tendency has been to decentralise workforce planning, although central
       guidelines on how to conduct workforce planning are often established and whole-of-
       government priorities clearly stated. These establish the objectives of departments’
       workforce planning. Strategic workforce planning thus requires empowering heads of
       departments and agencies with the design of their human resource management strategy
       and establishing a dialogue between them and central reporting departments (Ministry of
       Finance, Ministry of Home Affairs or Personnel). Managers are thus held fully
       responsible for the results of their workforce planning, as it is part of their accountability
       framework.
           Strategic workforce planning, like most management tools, should not be overly
       sophisticated. Its purpose is to avoid rough back-of-the-envelope calculations about future
       staff needs and encourage more professional linking of human resource management to
       strategic management of the organisation. Frameworks for workforce planning help
       increase managerial accountability for human resource management, allow the
       establishment of government-wide analysis and targets in terms of workforce size,
       competences, and allocation across sectors. This is especially important in career-based
       systems, in which employees are usually employed for their entire working life in specific
       career groups. Good workforce planning, however, does not necessarily involve detailed
       long-term forecasts.

       Strategic competency management
           Strategic competency management is an important part of strategic workforce
       planning. As described in Chapter 2, most OECD member countries have made efforts in
       this field in order to better adapt their workforce to the needs of organisations. Good
       competency management has allowed for more subtle strategic workforce planning than
       simply numbers and costs.

       Managerial flexibility
          The outcome of the process of workforce planning also depends, to a certain extent,
       on the government’s flexibility for hiring new types of employees, decreasing the
       workforce, and reallocating it across sectors. Tight ex ante controls on and regulation of

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        the management of the workforce tend to inhibit workforce planning and lessen the role
        of human resource management in government reform strategies. It is not easy to dismiss
        staff on employment contracts in any country, even if it is legally possible. Moreover, the
        percentage of staff on short-term contracts or who are casual employees (i.e. outside of
        the general employment framework) is limited in OECD member countries (see
        Figures 1.12 and 1.13).

              Figure 1.12. Casual employees in the central government of selected OECD member
                                     countries (2005) and in Brazil (2009)

                                S pain

                              Aus tria

                     United K ingdom

                                  Italy

                       United S tates

                             P ortugal

                               J apan

                             B elgium

                              F inland




                        B raz il (2005)

                        B raz il (2008)

                                          0   10        20        30         40         50         60           70   80   90   100
                                                                                                                      %
                                              C ontractual or cas ual s taff under different employment rules
                                              E mployees under general employment framework for government


         Source: OECD (2008b), The State of the Public Service, OECD Publishing, Paris, p. 24.


            It is important to note that while difficult, it is often easier to hire, dismiss and
        reallocate employees in position-based systems with common law legislation for public
        employees than in career-based systems to which administrative law applies. The reasons
        are that the latter tend to protect better against dismissals, and employees tend to belong
        to groups that make staff reallocation difficult. This is one of the reasons why, over the
        years, a number of countries have moved towards more position-based systems. In recent
        years, for example, Italy has done so in order to increase flexibility.
            The flexibility of position-based systems in workforce planning, however, should not
        be overestimated. For various reasons, including industrial relations, it is often more
        difficult to dismiss or reallocate government staff than staff in private-sector companies.




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          Figure 1.13. Short-term employees in the central government of selected OECD member
                                          countries and Brazil
                                                                        2005



              Netherlands

                     Spain

           United Kingdom

                   Ireland

             United States

             New Zealand

                 Australia

                  Portugal

                  Belgium

                   Finland

              Luxembourg



              Brazil (2005)

              Brazil (2008)

                              0   10   20            30            40            50           60            70            80   90   100
                                                                                                                                     %
                                       FTC (fixed-term contract)        OTC (open-term contract) or lifelong guaranteed


        Source: OECD (2008b), The State of the Public Service, OECD Publishing, Paris, p. 24.


           In more traditional career-based systems – Belgium, France, Ireland, Japan and
       Korea – the government’s flexibility often comes down to mobility tools, which tend to
       be well developed in some countries, especially at times of downsizing and reallocation
       of staff across sectors.
           Overall, however, OECD member countries also recognise that flexibility is not an
       end in itself, as too much flexibility may undermine cohesiveness and ethical standards
       (see OECD, 2008b). However, it is recognised that decreased managerial flexibility in
       career-based systems makes it more difficult to link workforce planning to the strategic
       management of the organisation. On the other hand, career-based systems tend to protect
       the neutrality of the civil service and increase the government’s return on investment in
       training and job experience, as employees usually remain longer than in position-based
       systems.
           Flexibility can also be found through the use of casual staff and contracting
       out/outsourcing (not in the sense of leased labour as described in the next section on the
       situation in Brazil, but in the sense of firms being contracted for the delivery of goods and
       services). Contrary to some beliefs, there is no evidence that the number of staff
       employed under rules that are different from general public service labour laws, or the
       number of staff with short-term contracts, has increased in OECD member countries in
       recent years. In order to increase flexibility, a number of countries have made all or some
       of their public sector staff subject to general labour laws and recruited them for specific
       positions rather than specific job categories.




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                       Box 1.3. Staff reductions and workforce reallocations in Japan

              In Japan, workforce reduction has been achieved through natural attrition. However, owing
         to recent fiscal constraints, the Japanese government has had to reduce the number of personnel
         more drastically. Thus, between the fiscal years 2006 and 2011 the central government, which
         currently employs around 332 000 people, expects to reduce the number of staff by 5.7%
         (approximately 18 900 people). Since natural attrition is not enough to reach this target, the
         Japanese government intends to reallocate staff across sectors, for instance from staple food
         control and agriculture, forestry and fisheries statistics to other sectors. The Japanese
         government set up the Headquarters for Redeployment of National Civil Servants under the
         Cabinet chaired by the chief cabinet secretary (Minister of State) and composed of the Minister
         of Administrative Reform, the Minister of Public Service System Reform, the Minister of
         Internal Affairs and Communications, and the deputy chief cabinet secretaries and deputy
         ministers of all office and ministries. The headquarters secretariat provides services such as
         providing information for target staff, collecting their wishes, matching staff and new employer
         ministries, providing training for redeployed staff as well as human resource managers in the
         new employer ministries.
         Source: Information provided by Bunzo Hirai, peer reviewer from Japan.



            Many OECD member countries have increased outsourcing, as this is sometimes
        considered more efficient than public sector labour for certain activities, and more
        flexible. In fact, experience shows that decisions about outsourcing should be taken
        strategically, both because private sector prices may not make it worthwhile to outsource
        and because outsourcing requires significant in-house investments in monitoring
        contracts. This also implies that service delivery must be “readable” to monitoring
        ministries and departments, which may have to closely monitor many contracts of
        different types with different private sector partners.
            Outsourcing requires strategy in order to avoid increased production costs when
        outsourcing is not accompanied by changes in the level of public employment.
        Outsourcing in this case may only become shadow public employment and may be the
        source of increased production costs rather than efficiency gains.

        The situation in Brazil

        Linking workforce planning to organisational strategies
            Like other countries, Brazil has started to establish forward-looking and performance-
        based budget processes and institutions. Brazil now has a Pluriannual Plan that sets out
        the priorities, goals and programmes for a four-year period, a budget guidelines law that
        sets out government priorities for the next year to be observed in the formulation of the
        budget law, and the annual budget law details the expenses and revenues for the period.
        The SIGPLAN, a management information system, provides a consolidated picture of
        budget allocations and performance targets. In addition, over 90% of government
        spending is subject to performance targets.12
            Practitioners seem to agree that a performance culture is taking root in the federal
        government, with comprehensive performance assessments for most programmes.
        However, the sequestering of budget appropriations for discretionary programmes has
        created uncertainties in programming, and earmarking and mandatory allocations of
        budgetary resources have created a sense of managerial rigidity for the whole of
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       government (OECD, 2009b: 110). In addition, research carried out by the European
       Commission emphasises the lack of connection between the planning and budget
       processes, the weak information basis of performance management, and an excessive
       number of programmes (Almeida Fortis, 2007).
            Because Brazil is currently in the process of consolidating performance management,
       it is understandable that strategic workforce planning is not yet fully developed. Strategic
       workforce planning is particularly important, however, as a significant proportion of staff
       are not directly involved in service delivery. There is a natural tendency in non-service-
       delivery areas to grow beyond what is needed. Also, as output and outcome tend to be
       more difficult to measure, strategic allocation and reallocation of staff is very difficult.
           The government should certainly be praised for having significantly improved its
       capacity to forecast the need for new priorities. The Ministry of Planning has made
       significant improvements in its planning of increases in competitive examinations and
       number of posts. This has been an important step even if all ministries and organisations
       do not have the same level of planning capacity and strategic orientation. As the budget
       documents include the details of changes in recruitments, pensions and wage adjustments,
       comprehensive forecasting of new needs and their budget implications is possible.
           A dialogue between ministries/agencies and the Ministry of Planning is taking place
       on workforce numbers and grades, but it focuses mostly on new needs based on a
       definition of new activities and products according to new priorities. There is no
       indication that ministries/agencies have an overall strategic view of their workforce that
       would involve hard choices based on an analysis of trade-offs involving:13
           •   jobs and competencies critical to the mission of organisations, and critical for the
               achievement of targets;
           •   future changes in staff numbers and competencies depending on future changes in
               priorities or organisations;
           •   present and future in-house or outsourced activities;
           •   reflections on technological changes and their impact on the government
               workforce;
           •   strategies to increase efficiency and savings on workforce numbers and costs.
           Workforce planning, although it is discussed between the ministries (administrative
       units) and the Ministry of Planning, is very centralised. In theory, foundations and
       independent agencies (sectional bodies) are supposed to be more autonomous. In fact, the
       workforce planning processes are the same, and their autonomy is similarly limited. This
       essentially involves departments and agencies discussing with the Ministry of Planning
       their wish to open competitive examinations and opening of posts. Guidance is now
       issued by the central HR body, following Decree 6.944 passed in 2009 which has outlined
       workforce planning features that the Ministry of Planning is responsible for implementing
       including: organising government action by programme, avoiding duplication and
       fragmentation, increasing the efficiency and effectiveness of administrative action,
       reinforcing the results orientation, rationalising hierarchical levels, focusing on
       government priorities, and aligning proposals with the mission of organisations and the
       results they are to achieve. These changes are interesting developments that need to be
       confirmed and reinforced over time so that all criteria affecting choices regarding the
       workforce numbers and allocation of competencies are systematically taken into account
       through strong and well accepted methodology. Discussions are indeed still affected by a
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        sense of urgency, and by the corporatist requests and demands by ministries. In the end,
        reporting on workforce planning as it relates to the strategic documents of organisations is
        still weak. The Ministry of Planning (Management Secretariat, SEGES) assesses all
        requests made to the Ministry of Planning. Some ministries have started to establish
        indicators; the education and health sectors have indicators on numbers of teachers and
        health professionals, but most do not. As a consequence, managers are not formally held
        accountable for workforce planning. Some units and departments are more advanced than
        others, but there are no incentives for units to improve workforce planning.

        Competency management
            Strategic workforce planning suffers from weaknesses in competency management
        (discussed in Chapter 2). Competency management is in the early stages in Brazil and has
        been thought of as a way to develop staff rather than to help organisations plan their
        workforce needs. It is thus too early for competency management to guide workforce
        planning, although this is clearly a priority in the future.
            The absence of strategic workforce planning is evident in how the government
        accounts for staff numbers to the legislature. The legislature authorises a maximum
        opening of positions, over a few years, but the government rarely authorises the full
        number, which is very high. The implementation of performance management suffers
        from the absence of workforce planning in organisations’ strategic planning as managers
        are not held responsible for how they manage staff numbers, costs and competencies in
        light of their organisation’s priorities.
            The situation is significantly different in some public enterprises, however. In
        Petrobras, for example, the so-called HR strategic map is fully aligned with the
        company’s strategy and values, and it is a good basis for workforce planning (see
        Figure 1.14). While the management of public employees in Petrobras is fundamentally
        different from that of core ministries, it may provide an example of the direction in which
        core ministries might want to move towards that is culturally feasible in Brazil.
            Like with sectoral ministries, the discussions with the Ministry of Planning, however,
        are not focused on the overall strategy, but are similar to those with sectoral line
        ministries and agencies and focused on control.

        Managerial flexibility in hiring and reallocating
            The labour contract for regular government employees imposes a public law contract
        that is open-term and guarantees against dismissals. In theory, the Constitution allows the
        dismissal of employees for poor performance, but, in the absence of clear complementary
        regulation, this rarely happens, as in many OECD member countries. Government
        reorganisation is not a case for dismissal either. Today, it is virtually impossible to
        dismiss federal government civil servants except for serious misconduct. When an
        organisation needs to reduce its staff, staff are put in a pool “at disposition” and then
        reassigned according to their competency profile.




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           Figure 1.14. Mapping human resource management strategic management in Petrobras




        Source: Presentation by Petrobras to OECD team, July 2009.


           In addition, the employment framework is quite rigid and does not allow for much
       mobility. Civil servants are hired in one job category and must sit competitive
       examinations to change job category. Many job categories, even for similar functions, are
       ministry-specific, and sectoral pressures have resulted in differentiated work conditions
       across different bodies even for similar functions (see Chapter 2). Mobility has thus been
       made impossible across those job categories, and seems also to be very difficult in some
       horizontal job categories. Overall, this means that most new needs have to be filled by
       new openings, competitive tests, and, sometimes, the design of new job categories, and
       reallocation has been made extremely difficult. However, within job categories, the
       ministries and agencies can in theory reallocate the workforce. This would imply that
       they have developed strategic workforce planning.
           Job categories are more flexible in some public enterprises. There is no doubt that this
       is easier in a business in a given sector with a few products than for the whole of
       government. Nevertheless it points to what might be accepted in Brazil’s culture. Today,
       with only one entry point for recruitment in Banco do Brasil (there is only one level of
       entry into the workforce) and a sophisticated talent bank, Banco do Brasil can inspire the
       federal government, although of course, the challenges of HRM in a bank are very
       different from those of a government. Staff move around mostly by moving up, but
       almost all moves are allowed. The monitoring of individuals’ competencies and potential
       is impressive in an organisation with some 100 000 employees.
          Having a single entry point would not be possible for the direct administration
       (mainly core ministries) of the federal government, as a number of positions require
       special qualifications. However, Banco do Brasil can be a powerful example of how to

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        manage competencies and allow for real careers to take place within enlarged job
        categories (see Chapter 2).
            In addition, possibilities for hiring manpower outside the rigid employment
        framework of careers are limited and the government has not shown any willingness to
        move in this direction:
             •    The proportion of short-term staff is very small in the federal government today,
                  as well as that of private law employees whose employment regime is considered
                  a legacy of history in some sectors. Together they amounted to around 6% of the
                  federal government workforce (excluding SOEs) in 2008, up from around 3% in
                  200014 (see Figures 1.12 and 1.13). There is an upwards trend in the use of casual
                  employees, but reports note that they do not fill long-term positions. Some note
                  increased hiring of staff from international organisations. Government, unions and
                  staff are concerned that this proportion should not continue to increase.
             •    The level of outsourcing by the federal government is difficult to measure. As
                  mentioned earlier, the level of government-funded goods and services, as a
                  percentage of total production costs of government, is high in Brazil compared to
                  OECD member countries. It has also increased in recent years. A decree of 1997
                  established that only material and accessory services can be outsourced.15 Civil
                  servants report a rise in outsourced services to compensate for the non-
                  replacement of a public servant especially during the Cardoso years or to increase
                  manpower flexibility. Activities related to the core purpose of the organisation
                  must be carried out by public servants and the National Court of Accounts, Public
                  Prosecutors and the Ministry of Transparency and Control have issued formal
                  guidelines and rules on the areas in which the use of contracted out services is
                  allowed. A 2008 survey concluded that 12 000 positions in direct administration
                  (a third of which are in the hospital sector) and 30 000 in indirect administration16
                  were “irregular” outsourced positions. It is unclear however, how “irregular”
                  these positions are considering that oral reports from public servants point to
                  positions such as drivers, cleaners, security staff, caretakers, etc. It seems
                  however, that those are related to the hiring of employees through manpower
                  firms (or similarly through contracts with firms whose only aim is to provide
                  labour rather than goods and services) rather than through contracting out of
                  services. These employees come under the hierarchy of the ministry in reality,
                  when employees in really contracted out firms for the delivery of services remain
                  under the hierarchy of their firms. In the case of employees through manpower
                  firms or hidden in contracts, this seems to be used mainly for bypassing
                  employment regulations, as many are not hired for temporary purposes only. In
                  other cases, outsourcing seems to be used to put pressure on the Ministry of
                  Planning to authorise additional hiring for replacing staff working for private
                  firms under ministerial hierarchy.
            Overall, ministries’ flexibility for managing workforce numbers is very limited
        compared to OECD member countries, owing to a rigid employment framework by job
        category, no process to allow for systemic mobility across job categories and across
        organisations with similar job categories, and an unclear framework for outsourcing. DAS
        (Direção e Assessoramento Superiores) positions17 and horizontal job categories allow
        for mobility but are not used in a proactive systemic manner by the centre of government.
        Moreover, it is difficult to gain a clear picture of the consequences of this poor strategic
        workforce planning, since financial constraints on the government have been limited,

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       both because of past human resource management policies and because of the good
       economic situation. Some officials report significant capacity gaps in the federal
       government. The growth acceleration plan and the policies in the education sector, for
       example, are reported to lack implementation capacity in the context of them having been
       prioritised during Lula’s presidency. Others note that careers are not adapted to the
       strategic orientation of some ministries. There is little doubt also that more strategic
       workforce planning would help to improve the management of organisations’
       performance.

       Suggestions for future reforms
           In terms of planning future increases in posts, achievements have been made.
       Strategic workforce planning, however, is in the early stages. More emphasis needs to be
       put on integrating workforce planning in the strategic documents of ministries and other
       government organisations. Realistic workforce planning could help strengthen the overall
       planning and budgetary cycle, which suffers from a lack of strategic management.
           The Ministry of Planning has a responsibility to develop a framework for holding
       ministries and agencies accountable for strategic workforce planning. The federal
       government could certainly profit from examples of workforce planning in some OECD
       member countries. For example, the United States has made an effort to align workforce
       planning with the strategic management of organisations. Human capital strategies are
       integrated into strategic plans, performance plans and budgets. The Office for Personnel
       Management (OPM) has identified criteria for the effectiveness of human capital strategic
       and workforce planning. Workforce planning is one of the four pillars of the human
       capital and accountability framework, which is assessed every year by OPM, which then
       provides guidance, options, good practices and a forum for exchange of practices among
       practitioners in US agencies.
           Ministry and agency heads should be held responsible for how they plan for the
       workforce, including the design and implementation of strategies to fill competency gaps
       in line with changes in missions and targets; their process for deciding what should be
       implemented by public servants and what should be outsourced or covered by short-term
       employment; and also for their analysis of the consequences of changes in the use of
       technology on human resources.
           Workforce planning in France, although a quite lengthy and difficult process, is a
       good example of centralised workforce planning, and may be better adapted to the
       situation in Brazil today, even though in the longer run a model like that of the United
       States might be more flexible. Centralisation of workforce planning has two advantages:
           •   It helps gain a better view of internal mobility and can plan for presently non-
               existent functions, whereas the agency system has an incentive to perpetuate
               functions unnecessarily and does not offer a perspective on new functions to be
               performed by government.
           •   It would allow linking workforce planning the necessary changes in the job
               category system (see Chapter 2).




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            Box 1.4. United States: The strategic alignment system and workforce planning

             Workforce planning is part of the strategic alignment system which focuses on a human
         capital strategy aligned with mission, goals and organisational objectives of federal departments
         and agencies. It is implemented by the senior management, and in particular the chief human
         capital officer (CHCO), through analysis, planning, investment, measurement and management
         of human capital programmes.
             Human capital management strategies are integrated into strategic plans, performance plans
         and budgets and are organised around: human capital planning, workforce planning, human
         capital best practices, knowledge sharing, and human resources as strategic partner. Each has
         several key elements that indicate effectiveness and is linked to suggested indicators that identify
         how well the agency is doing relative to key elements.
             Activities and outcomes of this system are assessed through documented evidence of a
         Strategic Human Capital Plan which includes human capital goals, objectives and strategies; a
         workforce plan; and performance measures and milestones.
             Agencies are required under OPM regulations implementing the CHCO Act to submit the
         Strategic Human Capital Plan described by this system to OPM on an annual basis.
         Effectiveness results of workforce planning
             The agency approaches workforce planning strategically and in an explicit, documented
         manner. The workforce plan links directly to the agency's strategic and annual performance
         plans and is used to make decisions about structuring and deploying the workforce.
             Mission-critical occupations and competencies are identified and documented, providing a
         baseline of information for the agency to develop strategies to recruit, develop and retain talent
         needed for programme performance.
             The agency’s documented workforce plan identifies current and future workforce
         competencies and the agency is closing identified competency gaps through implementation of
         gap reduction strategies such as:
              •    restructuring;
              •    recruitment;
              •    competitive sourcing;
              •    redeployment;
              •    retraining;
              •    retention (e.g. compensation, quality of work life);
              •    technology solutions.
             A business forecasting process identifies probable workforce changes, enabling agency
         leadership to anticipate changes to human capital which require action to ensure programme
         performance.
              Based on functional analyses, the agency is structured to achieve the right mix and
         distribution of the workforce to best support the agency’s mission.
             Based on analysis of customer needs and workload distribution, the agency has the right
         balance of supervisory and non-supervisory positions to support the agency mission.
         Source: www.opm.gov/hcaaf_resource_center/7-1.asp#item1.


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           In France, the implementation of a workforce planning strategy has taken place at the
       same time as that of the LOLF (Loi organique relative aux lois de finances – the
       implementation of performance-based budgeting). This helped give more coherence to
       the strategic management of organisations and later to the implementation of the large
       programme and policy review. The role of the GPEEC (Gestion Prévisionnelle des
       Effectifs, des Emplois et des Compétences – Employment, Workforce and Competency
       Planning) (see Box 1.5) has been to analyse the government’s current staffing and future
       needs by functions and categories through the use of a common cross-ministry
       methodology. Ministries have been responsible for implementing the GPEEC in their
       ministries and have had to report on their progress. This has reinforced discussions
       between the Ministry of Public Service and sector ministries on human resource
       management issues. Data for the whole of government have been centralised. In addition,
       a major effort has been made in parallel to create a cross-ministry competency dictionary
       for the different jobs and functions to which all ministries are supposed to refer.

               Box 1.5. Workforce and competency planning arrangements in France

        Snapshot of current challenges
            Workforce planning arrangements are changing for two reasons:
            1. An ageing civil service: like a large majority of OECD member countries, France faces
               a demographic shift which creates a window of opportunity to increase public sector
               productivity. Consequences on workforce planning require adjustments in three
               directions: i) to manage a large flow of civil servant departures in a very condensed
               period of time (45% of current state civil servants will have retired by 2012) by
               reforming the current public sector retirement laws and pension benefits and by
               adjusting human resource management policies to retain older workers longer; ii) to
               redesign human resource management strategies with a view to maintaining capacity
               while ensuring an appropriate use of competencies based on functional needs and while
               reallocating resources across departments or sectors; and iii) to implement cost-
               containment policies to face long-term financial needs, including potential workforce
               downsizing and pension liability reforms.
            2. Institutional changes: strategic state missions will be restructured on the basis of
               changed needs of the population, on innovative technologies, on the consequences of the
               devolution process and on what is expected of civil servants.
        A new integrated approach
            A holistic approach to workforce planning was adopted in recent years to face these
        challenges. This approach includes a significant change in hiring policies, the adjustment of
        medium-term recruitment strategies, and the use of new workforce planning instruments.
            The first key instrument is the GPEEC (Gestion Prévisionnelle des Effectifs, des Emplois et
        des Compétences). Introduced in the early 1990s and restructured in 2001, the GPEEC is an
        ambitious government-wide strategy which analyses the current staffing picture by functions and
        categories (corps and job families). It aims at forecasting adjustments of staffing needs in order
        to improve the efficiency of the public service, adapt recruitment to the demographic context,
        increase government’s accountability to citizens concerning changes in public workforce
        numbers, and finally to nurture social dialogue by opening discussions with the unions.




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            Box 1.5. Workforce and competency planning arrangements in France (cont’d)

              The GPEEC is a cross-departmental methodology which has established a common
         framework across government, although each ministerial department is responsible for its own
         GPEEC plans, under the supervision of the central human resource management body. In the
         state civil service, the GPEEC has become a key lever of the human resource management
         reform agenda and a key ministerial strategy. The evaluation of current GPEEC plans shows that
         all ministries have made progress in aligning staff with missions and integrating human resource
         management strategies in their GPEEC plans.
              In 2006, the GPEEC process was strengthened by the addition of annual conferences on HR
         workforce planning (CGPRH) which aim at establishing a dialogue between the human resource
         management central body and each department on specific GPEEC plans. Discussions focus on
         long-term workforce planning strategies and on management priorities for the year. They result
         in a road map which sets mutual commitments on workforce planning. Thematic working groups
         are being established to identify good practices that could be used in all ministries.
              A third workforce planning instrument – the RIME (Répertoire interministériel des métiers
         de l’État) was launched in November 2006 to provide a catalogue of competencies to be used by
         all departments. The RIME reviews the different job types and functions within the state
         administration in order to reinforce linkages with the competency needs analysis and to increase
         cross-departmental staff mobility. The RIME creates a clear picture of the public-sector labour
         market and may be an important added value in a context of increasing competition for skills
         with the private sector.
         Source: OECD (2007a), OECD Reviews of Human Resource Management in Government: Belgium, OECD
                 Publishing, Paris.



            The French model was originally quite cumbersome from a bureaucratic point of
        view because of the size of the centrally managed civil service and because of
        simultaneous reforms in performance budgeting. There is no doubt that the GPEEC has
        since become more streamlined in government organisations.
           Canada is another example of the integration of workforce planning into the broader
        government planning and reporting cycle, which aims to align an organisation’s
        workforce with the government’s priorities and the organisation’s missions, strategic plan
        and budgetary resources (Box 1.6.).




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                                 Box 1.6. Workforce planning in Canada

             The foundation for shaping the public service workforce in Canada is a clear understanding
        of the skills and knowledge needed to meet departments’ business objectives, both now and in
        the future. Thus the Canadian public service is moving towards using integrated human
        resources and business planning as the foundation for assessing and understanding current and
        future needs of departments, agencies and the public service as a whole. Integrated planning is
        one of the core pillars of the Public Service Renewal in Canada, which maintains that good
        planning allows for a better sense of organisational strengths and of the gaps that need to be
        filled, whether through recruitment or development or by bringing in specialised skills at mid-
        career.
            Integrated planning aligns an organisation’s workforce with the government’s priorities, and
        the organisation’s mission, strategic plan and budgetary resources. It forms the basis for
        assessing and understanding current and future needs of departments and agencies and supports
        the achievement of business excellence by promoting initiatives to attract and retain an engaged,
        sustainable, competent and diverse workforce. All departments and agencies are expected to
        establish integrated human resources and business plans to guide their activities and resource
        requirements.
            There are five key steps to integrated planning at the departmental level:
            •    determining organisational business goals;
            •   analysing the organisational environment to see if there is the right mix of skills and
                people to meet current and future needs of the organisation;
            •   assessing the gaps or surplus in the organisation’s workforce – what is missing or what
                is no longer required from an HR perspective in order for the organisation to achieve its
                goals;
            •   setting priorities and taking action – initiating strategies to close the gap and help get
                quantity and quality of the resources required; and
            •    reviewing, monitoring and measuring whether efforts were successful.
            Integrated planning is an essential component of the broader government planning and
        reporting cycle, which consists of the following core parts:
            •   Annual departmental Reports on Plans and Priorities (RPPs) are individual expenditure
                and business plans for each department and agency. They elaborate on a department’s or
                agency’s priorities, strategic outcomes and planned activities to achieve those outcomes.
                Reports also contain information on priorities and planned results including links to
                related resource requirements, such as human resource requirements, major capital
                projects, and financial resources over a three-year horizon. They provide increased
                levels of detail regarding planned spending, on a strategic outcome and activity basis,
                and describe planned priorities and expected results, and the match between their
                required resources and the business results of government. These documents are
                normally tabled in Parliament in the spring.
            •   Annual departmental performance reports are individual department and agency
                accounts of results achieved against planned performance expectations, as set out in
                respective reports on plans and priorities. They provide information on how the
                department or agency is progressing towards its strategic outcomes and how the
                resources were spent. The departmental performance reports cover the most recently
                completed fiscal year and are normally tabled in Parliament in the autumn.


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                                Box 1.6. Workforce planning in Canada (cont’d)

              In addition, several workforce planning efforts are taking place at the central level:
              •    Through the analysis of the data in the central compensation system, the Office of the
                   Chief Human Resources Officer located within the Treasury Board Secretariat generates
                   demographic assessments of the current and future workforce needs for the public
                   service, on an “as needed” basis, including identification of system-wide gaps, which
                   may pose a risk for the delivery on the government-wide objectives.
              •    These data feed various stakeholders, including the Clerk of the Privy Council (head of
                   the Canadian public service), and central agency policy centres (e.g. those responsible
                   for HR, finance or policy analysis), as a basis for future analysis of demographic needs
                   across various occupational groups in the public service.
              •    Based on this and other information, in the areas which appear to pose a risk to the
                   sustainability of the system, the Clerk, central agencies or other players (such as groups
                   of deputy ministers) may take a range of actions to build the required workforce
                   capacity at the system-wide level, such as:
                   − collective recruitment to fill the current and potential workforce gaps;
                   − capacity building initiatives, including leadership and skills development
                        programmes;
                   − talent management programmes.
              •    In some cases, the Clerk of the Privy Council includes some priorities in his annual
                   Public Service Renewal Action Plan. This plan is government-wide and establishes core
                   priorities for human resources management in the public service, including targeted
                   recruitment in certain areas to fill strategic government capacity gaps. For instance, in
                   2008-09 and 2009-10, the public service was required to hire about 8 000 recent
                   university graduates to address the anticipated demographic crisis created by the ageing
                   of the Canadian population and public service workforce.
              •    Where specific targets are set by the central policy centres or the Clerk of the Privy
                   Council, the extent to which these targets have been met is included in the annual
                   assessment indicators of departmental performance.
              •    Moreover, efforts are currently underway to design a horizontal human resource plan
                   for the public service, which would identify areas of human resources requiring
                   attention and include action to help close the gap.
         Source: Information provided by Tatyana Teplova, peer reviewer from Canada.


            For workforce planning to be effective in Brazil, however, there is a very strong need
        to provide for flexibility in the management of the pool of workers. As discussed in
        Chapter 2, the way the job category and career system has been implemented with the
        creation of differentiated conditions of work for staff across organisations and the large
        multiplicity of careers, is extraordinarily rigid and disempowers directors and managers.
        Decisions made in recruitment today for a specific job category create a very inflexible
        situation in terms not only of the total number of employees but also of their allocation
        across and within the different sectors of government. A job category system with a
        reduced number of job categories and a larger scope for performance-based promotions
        could help improve managerial flexibility, provided managers show sufficient capacity in
        their use of these new flexibilities.
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           The main flexibility measures that could be taken to help improve workforce planning
       include:
           •   The number of short-term and temporary staff could be increased to provide
               managers with some flexibility regarding staff numbers and competencies, but
               only for urgent and temporary necessities. OECD member countries with
               relatively rigid career systems make greater use of short-term staff with similar
               legal constraints on the use of short-term staff. However, this should be done very
               carefully to avoid the well-known tendency in the federal government of Brazil to
               employ short-term staff on long-term positions.
           •   In addition to the reform of the job category system, with broader and lesser job
               categories that are not tied to specific organisations, mobility within government
               could be systematically encouraged by decoupling job categories from specific
               positions in a ministry and by providing possible bridges across job categories
               based on work experience, although it is important that this remains within
               constitutional boundaries. Once this has been done, mobility opportunities could
               be advertised and managed centrally through some kind of talent bank. Staff
               could be encouraged to apply for those positions.
           •   Another way to improve mobility would be to broaden entry categories, which are
               very narrow by international standards. Job categories in Brazil are basically
               narrowly defined occupational groups or even types of positions (see Chapter 2).
           •   Considering that employees spend their entire careers in government, it would be
               worth opening mobility opportunities to SOEs, although care has to be taken to
               avoid conflicts of interest. In the same vein, specific programmes for staff
               exchanges with private sector companies could be established, again provided that
               this does not create conflicts of interest. Mobility presently takes place within
               commissioned functions and should be encouraged within this framework.
           •   It would also be worth exploring how to further develop the existing system that
               allows a few government employees at one level of government to work at
               another, like with the DAS system.
           The issue of contracting out is complex and politically charged in Brazil today.
       Generally speaking, the level of outsourcing and contracting out varies tremendously in
       OECD member countries. However, in the past 20 years, as in Brazil, countries have
       generally agreed that non-core services can be provided more efficiently by the private
       sector as long as the contract is properly managed in the long run. What is non-core is
       generally understood to be, at a minimum, low-skilled work not immediately related to
       the organisation’s mission (for example canteen, drivers, cleaning). There seems to be
       some confusion around what contracting out or outsourcing should bring to public
       administrations. There is a need for the Ministry of Planning to differentiate between:
       i) contracting out for labour, in case of temporary shortages, which may be through firms,
       but should be strictly limited in time (the Constitution only allows temporary employment
       contracts rather than contracting out to firms in such cases); ii) contracting out to firms
       for the delivery of goods and services with the idea that such goods and services, because
       of their nature and the capacity in government, are delivered more efficiently by private
       firms.




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            While there is no indication that the federal government of Brazil would like to go
        beyond the minimum outsourcing described above (for “non-core services”), policy
        regarding outsourcing should be clarified, and a minimum of outsourcing should be used
        for non-core services unrelated to organisations’ missions. This will require changes in
        the legal interpretations of existing texts.
            Decisions about outsourcing should be made part of workforce planning and
        described in the various accountability documents. In The Workforce Scorecard:
        Managing Human Capital to Execute Strategy (Huselid, Becker, and Richard, 2009: 22),
        “the authors suggest categorising jobs as A positions, B positions and C positions based
        on their importance to the business strategy. The A positions are strategically important
        and warrant policies intended to attract and retain high calibre talent. The B positions are
        basic; incumbent performance is important but developmental investments are not high
        priority. The C positions are those in which performance is not an issue and only minimal
        training is warranted; these are candidates for outsourcing.”

1.4. Promoting whole-of-government goals regarding efficiency and costs

        The experience of OECD member countries
            Promoting a cost-effective government in terms of staff costs is the responsibility of
        the central ministries for budget and personnel, and central human resource management
        bodies such as Brazil’s Ministry of Planning are thus at least partially directly or
        indirectly responsible for the overall numbers and costs of public employees. In all
        OECD member countries, central budgetary ministries place spending limits on ministries
        and agencies, and in many countries the number and costs of public employees remain
        centrally controlled.
            As part of the general tendency to increasingly delegate human resource management
        to managers and directors of ministries and agencies, they have been accorded more room
        for manoeuvre and, in a few countries, are free to choose the number and grades of their
        employees, either within a general recurrent spending envelope or an envelope for the
        overall payroll.
            In addition to these managerial accountability rules and the limits imposed on
        ministries and agencies, many countries have implemented whole-of-government policies
        aimed at decreasing the size of the public service and increasing the efficiency of service
        delivery, including adjusting manpower through policy reviews and automatic
        productivity cuts. These instruments, if used properly, not only help think more
        strategically about human resource management, but also provide an avenue for good
        workforce planning and can help government be more efficient by using fewer personnel
        resources or by reallocating them to more strategic priorities. This is particularly
        important at the central and federal levels of government, which have vast numbers of
        policy staff and control agents who are easier to move around than those in service
        delivery bodies (notably health and education).

        Productivity operations and policy reviews18
            Many OECD member countries have carried out ad hoc productivity operations in
        times of fiscal stress. Some (e.g. Australia, the Netherlands, the United Kingdom, the
        United States) have also set up policy review procedures or programmes to monitor
        productivity in a more institutionalised setting or to review what savings could be made
        through restructuring and government reorganisation (e.g. Canada, France, New
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       Zealand). The procedures differ from sector policy evaluation, in that: i) they focus on
       savings; ii) they not only review, they also develop reform proposals; and iii) they take
       place under the responsibility of a co-ordinating ministry or body (e.g. Ministry of
       Finance, Ministry of Public Administration, Treasury, State Services Commission), rather
       than the sector minister.
           Decisions on personnel cuts should be taken from a strategic viewpoint and very
       carefully. As in Canada and France, they should be accompanied by other changes in
       personnel policy to enhance the attractiveness of the public employer, improve skills and
       competencies, and make mobility much more dynamic. Too often, cutbacks in staff
       numbers based on across-the-board targets and in the absence of policy reviews have
       resulted, a few years later, in increases in the number of staff and productivity losses due
       to the human costs of reforms and the loss of well-trained personnel, often in the most
       sensitive areas.

       Automatic productivity cuts in the longer run
           Other countries have used so-called automatic productivity cuts (APCs), which
       assume that the public sector can deliver the same output with fewer inputs each year,
       including personnel. When properly focused, APCs not only reduce public expenditures,
       they also tend to force ministries and sub-units to think more strategically about their
       workforce allocation and to plan for the future (OECD, 2009g).
           APCs use this rationale to cut operating budgets of agencies and/or ministries by the
       amount of the targeted/estimated productivity gains. The rate of productivity gains can be
       a forward-looking target (usually political) that is generally related to the estimated rate
       of growth of productivity in the private services sector or it can be re-calculated each year
       based on estimates and measures of past productivity gains, as in Sweden. Denmark
       changed from a flat 2% rate to an estimation-based system, but found that targets were
       the object of lengthy discussions and negotiations, resulting in a final rate very close to
       2%; in the end, it re-established the flat 2% rate.
           APCs are usually applied across the board on operating expenses, but in Finland, rates
       may differ from one ministry or agency to another. Estimation of past productivity
       increases allows more room for differentiated rates according to sectors or organisations.
           Departments and agencies can always re-negotiate the scope of their tasks to avoid
       APCs and exceptions are granted through political negotiations. In Denmark, for
       example, APCs do not apply to multi-annual agreements, such as those concerning the
       police, defence, education, etc., so that 80% of total operating expenses are not subject to
       APCs.

       The situation in Brazil
           As mentioned, Brazil’s federal government is very centralised in terms of staff
       numbers and costs and has managed to maintain tight control on costs as a percentage of
       the budget and GDP over time. This has been achieved first through fiscal adjustment,
       which has maintained budget surpluses in recent years, although, as noted in the OECD
       Economic Review of Brazil (OECD, 2009d), this has been due more to increases in tax
       revenues than to decreases in expenditures. The study also argues that the contraction in
       personnel costs at the beginning of the first Lula presidency “owes much to a rise in
       inflation following a sizeable exchange-rate depreciation in the run-up to the 2002
       presidential election, coupled with nominal wage restraint in support of fiscal

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        consolidation” (OECD, 2009d: 54). In addition, after the first competitive examinations
        for selection into the public service at the beginning of President Lula’s first term, a good
        number of newly appointed staff left the public service right away because of low wages.
            The government has nonetheless established measures to control and limit increases
        in employment costs. These have included (Dias, 2002: 69):
             •    Registration by SIAPE of all civil servants and personnel in foundations and
                  agencies, monitoring of holders of more than one job and of undue advantages,
                  and implementation of an identification system which blocks payments over the
                  wage ceiling.
             •    The fiscal responsibility law of May 2000 established principles and rules
                  regarding public revenue, expenses, debt and properties, for the three levels of
                  government. It imposes limits on personnel expenses as a percentage of net
                  income (including pensions to retirees and dependants of deceased retirees) at
                  60% for all three branches of government and a specific ceiling of 49% for the
                  federal executive.
             •    In addition, the rigid pay grids based on seniority in the centralised career system
                  maintain strong ex ante control on expenses.
             •    A project to cap yearly increases in payroll spending at no more than 1.5
                  percentage points above inflation in the previous year awaits congressional
                  approval (OECD, 2009b see Chapter 1).
            Although the fiscal accountability law has had concrete effects mainly on states and
        municipalities which have not yet achieved what has been achieved at the federal level,19
        the evidence points to an overall level of internalisation of the fiscal constraint in
        government that is very positive and will help alleviate some central controls. These caps
        and other employment level controls, while certainly necessary, are not strategic
        workforce planning tools.
           The cap aside, central controls do not have a very strategic view of workforce
        numbers and there are no processes for systematically seeking efficiency.
            Recent Brazilian history has shown, however, that when the government has decided
        to cut personnel costs, it has been able to do so through cuts in staff numbers and salary
        freezes. Under the Cardoso Administration, the policy was to decrease staff numbers, and
        these declined from 1995 to 2003, mostly through the non-replacement of retiring staff.
        Previously, the Collor Administration (1990-92) had carried out a large-scale decrease of
        public sector employees, with government-wide targets for staff decreases, dismissal of
        non-tenured personnel, reduction of commissioned jobs and people placed in availability
        positions with proportional compensation, and a salary policy that resulted in major losses
        of income for those remaining in the public service. Most public officials dismissed by
        the Collor Administration were later readmitted into the civil service.20
            Since 2005, the number of civil servants has increased steadily, notably in education
        but also in the federal police, social security, tax inspectors, and public attorneys. Given
        recent strong economic growth, it is understandable that there has been little pressure for
        strategic thinking about efficiency in the workforce.
            Overall, although the government has managed over time to maintain the growth of
        personnel costs within limits, this has been done in a stop-and-go manner in the absence
        of a managerial approach to strategic workforce planning. Past blunt cuts have also left a

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       sense of anxiety and have probably made future attempts at decreasing staff numbers
       more difficult.
           It is also remarkable that the government has not taken a strategic approach to using
       casual staff and outsourcing to save costs21 (see Section 1.3). However, since the
       percentages have slowly increased over time, it can be assumed that bodies have used
       outsourcing in their own ways to follow individual necessities. Some use outsourcing as a
       way to put pressure on the Ministry of Planning to eventually replace those hired through
       outsourcing by regular staff and thus authorise new hiring.

       Suggestions for future reforms
           Efficiency and cost effectiveness are not yet integrated as long-term priorities in
       Brazil’s workforce planning. The danger is that the federal government may continue its
       stop-and-go hiring policy although this is a blunt and non-strategic way to manage
       workforce numbers and costs. Such policies create a climate of insecurity in which staff
       focus on their immediate future rather than their work and result in cuts that may not be
       necessary in certain sectors. Moreover, they often lead to new hiring a few years later.
           Policy reviews are more appropriate instruments than such blunt policies, although
       they require careful attention and strategic capacity. The choice of implementing such
       reviews is not the object of the OECD Review of Human Resource Management. The way
       the job category system in the federal government has been implemented is such,
       however, that present decisions about staff hiring and allocation have long-term
       consequences beyond the most rigid practices in OECD member countries. Policy
       reviews could help put pressure on vested interests and soften the rigidities of the job
       category system.
           Following decentralisation of responsibilities to states and municipalities, policy
       reviews could certainly help determine human resource needs per policy and level of
       government and useful efficiency measures. Canada’s experience (see Box 1.7) is helpful
       in this regard. The result in Brazil would not necessarily be a reduction in personnel
       numbers, but a strategic view of the allocation of the workforce across government
       priorities and a better understanding of future needs in terms of overall numbers and
       allocations. The governance arrangements and the accountability framework for
       managers in Canada could be a source of inspiration for Brazil, as well as the recent
       experience of general policy reviews in France.
           For its general review of public policies (see Box 1.8) France emphasises mobility of
       staff and career moves. A new mobility framework, new compensatory tools, the
       establishment of career management tools and career advisors, training tools, inter-
       ministerial public employment exchanges (launched on 5 June 2008) and regional
       exchanges have been established. Regional platforms are being designed to encourage
       mobility within a single employment pool and to put personalised human resources
       management on a professional footing. To put such tools in place, Brazil, which, like
       France has a rigid career system, also needs measures to favour mobility across
       government bodies within a restructured job category system.




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          Box 1.7. Expenditure and Workforce Reduction in the Canadian Public Service in
                                           the 1990s

             In February 1995, the Minister of Finance announced that the programme review would
         result in CAD 17 billion in reduced expenditures over three years. Many departments saw their
         spending levels cut by 20% or more. It was also announced that the review would result in
         structural changes to the public service, such as the commercialisation of air navigation services,
         the privatisation of the Canada Communication Group, the creation of new agencies such as the
         Canadian Food Inspection Agency, and the abolition or restructuring of some 120 government
         agencies. In the 1996 budget, the Minister of Finance estimated that second part of the
         programme review would result in further expenditure reductions of some CAD 2 billion by
         1998-99.
              To facilitate departments’ implementation of the result of the programme review and other
         expenditure reduction decisions, the government approved two special departure incentive
         programmes for parts of its workforce for a three-year period to end in 1998, one for early
         retirement and one for early departure. The goal of these programmes was to minimise layoffs.
              The number of employees was reduced by 60 723, or 15.5% of the workforce. Based on a
         cost of CAD 4.2 billion and 60 000 recipients, the average cost per participant of the departure
         incentive programmes in the federal public sector was CAD 69 828 (EUR 48 000). This was
         relatively expensive compared to the private sector average of CAD 54 000 (-20%). The
         evidence shows that the incentive measures, as planned and designed, ensured that layoffs were
         kept to minimum of about 970 employees.
             A number of tools and mechanisms were put in place. The Treasury Board Secretariat
         developed an accountability framework for the management of workforce adjustments as well as
         a number of measures and tools. The tools included a manager’s guide and an audit guide on
         workforce adjustments. The proposed framework required an audit of the administration of the
         programme in midcourse and the provision of accurate, accessible, timely and reliable
         information, as well as a monitoring framework aimed at ensuring that incentive programmes
         were contributing to departments’ progress toward targets set out in their business plans.
             Committees were created, including union-management committees. Among the
         committees created were the National Joint Adjustment Steering Committee, the Committee of
         Departmental Workforce Adjustment Co-ordinators, and joint adjustment committees composed
         of management and union representatives.
         Weaknesses – general risks
              The incentives had a negative impact on natural attrition in the Executive group and
         the Computer Systems Administration group but not in the Audit group, although the total
         departure rate for that group was relatively high. The management of workforce reductions for
         critical occupational groups such as Computer Systems or Executive, where there are shortages
         in some departments and surpluses in others, may require a more global approach than is used
         for core occupational groups in departments. Special interdepartmental mechanisms may have to
         be created to manage the process for critical occupational groups. Joint adjustment committees
         facilitated the placement of surplus employees among departments in the regions, but this
         mechanism was less effective in the National Capital Region.




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         Box 1.7. Expenditure and Workforce Reduction in the Canadian Public Service in
                                      the 1990s (cont’d)

             The age structure of the public service has also been affected considerably, although the
        average age has remained substantially unchanged. As a group, the public service is now more
        middle-aged, the result of many older and more experienced employees having opted to retire or
        to leave the public service at the same time as many younger employees. The change in the age
        profile represents a significant challenge for the future and will require work on succession
        planning and recruitment.
            The employment profile of the public service, that is, the ratio of indeterminate staff to
        other forms of staff employment, has also changed, but it is not clear whether this will be
        temporary or lasting. For example, after an initial reduction, the number of casual and short-term
        employees increased.
            From 1994-95 to 1996-97, costs for contracting or consulting services increased relative
        to costs of salary and wages. Contracting and consulting services increased by some 14%,
        while salary and wages decreased by 9%. Some CAD 2.2 billion was spent on contracting and
        consulting services in 1996-97.
             Present efforts: Canada is currently undertaking another wave of reviews of programme
        spending over a four-year cycle to assess whether programmes are achieving intended results,
        are managed efficiently and are aligned with the government’s priorities. These reviews assess
        all existing programmes and spending to ensure alignment with overall priorities and results,
        relevance, effectiveness, efficiency and economy, and decision-making based on objective
        evidence-based information.
        Source: Scott-Douglas, Roger (2009), presentation given to the 5th Regional Meeting of the Working Group
                on Civil Service and Integrity, OECD-MENA Initiative, Rabat 16 June 2009; and contribution by
                Tatyana Teplova, peer reviewer from Canada.



           Considering Brazil’s difficulties in terms of strategic workforce planning, APCs
       should probably not yet be implemented. Once more strategic workforce planning has
       been implemented and the government is sufficiently confident that its workforce is
       optimally allocated, APCs might be put in place to force productivity improvements and
       diminish the costs of its workforce.

1.5. Salary setting and careers

       The experience of OECD member countries
           Pay is of course an important part of workforce planning and an important part of cost
       reduction strategies. A good pay-setting process should make possible:
           •    pay levels that reflect different levels of skills, competences and performance;
           •    pay levels that make public service jobs attractive to well trained and motivated
                staff;
           •    pay levels that are economically sustainable.




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            Box 1.8. France’s General Review of Public Policies (RGPP): consequences for
                                   human resource management
             The role of the RGPP is to review what the government is doing (what services for what
         purposes and what beneficiaries), what the needs and collective expectations are, whether the
         same things should continue to be produced, who should do so, who should pay and whether they
         can be done more cheaply, and finally what scenarios for change can be envisaged.
             Chaired by the French President, the Public Policy Modernisation Council (Conseil de
         modernisation des politiques publiques – CMPP) brings together the government and the
         members of the monitoring committee. It is the body that approves the decisions made by the
         monitoring committee (and sub-ministerial groups and auditing committees). It sets guidelines
         and defines the stages in the process. The Minister for the Budget, Public Accounts and the Civil
         Service is its general rapporteur. The CMPP has met three times: 12 December 2007,
         4 April 2008 and 11 June 2008.
             All RGPP measures adopted by the Public Policy Modernisation Council are mentioned in
         the 2009–11 Multiannual Sectoral Estimates Act.
              Many CMPP decisions have an impact on human resources: changing the scope of missions
         (e.g. MEEDDAT: development of activities concerning sustainable development and withdrawal
         from competitive public engineering), removing structures (e.g. contraction of central
         administrations), streamlining organisations (e.g. reform of decentralisation), streamlining
         organisations’ operations, and streamlining procedures.
             Each ministry defines and implements an HR action plan within the framework of the social
         dialogue to follow up decisions made by the CMPP, and optimises career management within the
         corps in the ministry, taking account of the challenges posed by the new territorial organisation.
             Each departmental prefect defines and implements a new organisation chart for state
         departmental services within the framework of the social dialogue, optimises the organisation of
         human resources management through pooling, and keeps staff and trade unions informed about
         RGPP actions.
              Each regional prefect supports the implementation of the General Review of Public Policies,
         implements initiatives to pool human resources management, encourages the local mobility of
         staff, and keeps staff and trade unions informed about RGPP actions.
              The government-wide unit in charge of personnel management in the Ministry of Economy
         and Finance (DGAFP) contributes to the necessary changes in human resources management,
         provides support and tools to those responsible for RGPP measures, and prepared the 2008–11
         action plan.
             The action plan for implementing the CMPP’s decisions must be prepared by each ministry
         with a specific framework and with the involvement of trade unions and staff, while seeking to
         reconcile the interests of the services and the wishes of staff in terms of career paths and
         attempting to find the most acceptable solutions in terms of employment relations (new mobility
         tools).
             The RGPP effort has been accompanied by wider human resource management reforms
         including a new mobility framework, new compensatory tools, the establishment of career
         management tools and career advisors, training tools, inter-ministerial public employment
         exchanges (launched on 5 June 2008) and regional exchanges. Regional platforms are being
         designed to encourage the development of mobility within a single employment pool and to put
         personalised human resources management on a professional footing.
         Source: Clergot, Philippe (2008), presentation given at the Annual Meeting of the Public Employment and
                 Management Working Party, OECD, 4 December, Paris. OECD (forthcoming), OECD Public
                 Management Review – Greece.

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           Pay setting in OECD member countries varies tremendously. In some countries it is
       totally decentralised to ministries and agencies, which decide the pay scales for each
       position; in others it is entirely centralised at least for base pay.
           While decentralising base pay is an attractive option, it is very difficult to implement
       and requires, to be effective, that the gains from decentralisation exceed the increased
       transaction costs and the difficulties engendered by differences in pay across ministries.
       In any case, the decentralisation of pay is hard to envisage in a career-based system as it
       would undermine mobility across government organisations.
           The situation regarding maximum increases or set increases for all government
       employees varies depending on the country and on the economic, social and political
       atmosphere. In addition, over the years, the percentage of base pay in overall pay has
       decreased, thus effectively allowing more differentiation per organisation and per
       “career”.
           Most countries undertake annual pay reviews, although Germany, Ireland and
       Sweden have varying multi-annual pay reviews and Italy has them twice a year. In, Japan,
       Korea, Mexico, Switzerland, and the United States, pay is not negotiated, but elsewhere it
       is at least partially negotiated for the whole of government (except in Australia, New
       Zealand). Only in a few countries is pay indexed to inflation. Criteria for pay increases
       have generally become more flexible and include the economic situation and private
       sector pay, among others.
           Countries’ mechanisms for large pay reviews are sometimes implemented by outside
       consultants. They compare public sector pay with similar groups in the private sector. It is
       important to keep in mind that in most countries less-skilled workers tend to be better
       paid in government than in the private sector, while senior management is underpaid
       compared to the private sector.
           However, a number of advantages in public-sector employment are considered to
       make up for a degree of pay difference. These usually include a higher level of job
       security (in legal terms or in reality), possibilities of training and competency
       development, horizontal careers, and, for senior management, a gratifying sense of
       serving citizens and being close to the centre of power. The United Kingdom’s
       experience with “total rewards” (see Box 1.9) shows government’s increasing willingness
       to underscore the package of advantages that government employees receive and to try to
       cost these benefits.
           Countries such as Ireland have managed to tie pay increases to the implementation of
       reforms in the public service.

       The situation in Brazil

       Pay-setting process
           In Brazil, pay setting in the federal government revolves around two main factors:
           •   A strong commitment not to affect the main macroeconomic indicators, including
               debt and inflation, owing to the country’s recent hyperinflation and deficits. This
               is a self-imposed restriction. The Constitution mentions, however, that an annual
               review of salaries should take place to adjust salaries on the basis of inflation
               rates. This has not been implemented.


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             •    A career-by-career pay-setting process that examines each career closely, and a
                  willingness to decrease pay compression, i.e. to increase the difference between
                  higher and lower wages within a career, because during the second half of the
                  1990s, compression had increased to the point where the word “career” was
                  losing its meaning (Dias, 2002). The government has made very clear that they
                  have increased pay for many job categories because many of them, due to the
                  management in previous government, were lagging behind others and lagging
                  behind increases for similar positions in the private sector.
            Today federal government base pay represents approximately 40% to 60% of public
        servants’ remuneration, with the rest due to a myriad of differentiated benefits.
        “Performance-related pay” is mentioned as representing the largest part of the remaining
        remuneration, although, in spite of real achievements in the conduct of performance
        evaluations in some areas of government, in reality it appears in many cases not to be
        performance-related but guaranteed additional pay (although there are reports of some
        public servants not getting the full benefit because of insufficient performance). This is
        not an uncommon experience as performance-related pay is extremely difficult to
        implement even in countries with solid performance management systems, and many of
        the latter have even decided not to implement performance-related pay yet.22 A recent
        change in the pay structure has also decreased performance-related pay when base pay
        was lower than some benefits.
            Like the rest of workforce planning, pay setting is centralised by the Ministry of
        Planning and the presidency, although increasingly based on a dialogue between different
        units in the Ministry of Planning and with sectoral ministries. The first part of the process
        is carried out by the SOF (Budget Secretariat) which determines, based on economic and
        budgetary projections, what can be allocated to public servants. Line ministries are then
        involved, with some only at the margin, and others powerful enough to impose their
        views. By doing so, they also undermine attempts to establish a coherent salary setting
        process for the whole of government.
             Recent years have seen only two general increases in pay, one in 2001 of 3.5% and
        another in 2003 of 1%. Since the Cardoso Administration, the Ministry of Planning has
        been assessing whether pay in a job category is adequate by using as comparators mostly
        other categories in the same branches, other categories, similar categories at other levels
        of government, and a degree of comparison with the private sector. These are
        improvements worth underlining, even if the road to full rationalisation of salary setting
        is still long. The government mentions that certain careers have not had salary increases
        for a number of years and are falling behind other careers. Some call the pay-setting
        process a “patchwork exercise”. Unfortunately, despite these significant improvements in
        the governance of salary setting, salary levels in one job category still seem to be
        disproportionately guided by the need to catch up with salaries in another job category,
        and to vary according to the political strength of the various groups.
            With a centralised job category by job category pay-setting process, in which job
        categories are used by individual organisations to attribute advantages to different types
        of staff, Brazil accumulates the disadvantages of a decentralised system, i.e. the absence
        of a whole-of-government perspective, and not always legitimate differentiated levels of
        remuneration across job categories and ministries without the advantages of a
        decentralised system, i.e. the delegation of managerial responsibility to managers and
        directors of ministries and agencies. Even for ministries, departments and agencies, there
        are reports of similar positions with different pay scales.

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           Apart from the perspective of equity, there are also reports of broken salary
       hierarchies, with an unclear correlation between salaries paid and organisational
       responsibilities and hierarchy (Marconi, Carrillo and Cavalieri, 2004).
           This has led to an excessive number of components in the salary structure and the
       increased use of fringe benefits to compensate for the deficiencies of the pay-setting
       process. There are, in addition, around 170 different plans for “performance bonuses”,
       which as described above, would require an extraordinarily sophisticated management
       system that many OECD member countries with strong public service systems do not
       have, and extraordinary efforts and attention that may in any case be better used for other
       purposes. In too many settings, these bonuses have become part of regular pay although
       organisations differ widely in their attribution of performance pay according to good
       performance assessment processes. This reward system overall increases the opacity of
       the pay system that remains based too much on additions of layers of benefits and
       comparisons than on a fundamentally rational level of pay that is commensurate with the
       needs of the public service in terms of its quality, its attractiveness and the motivation of
       public servants.

       Attractiveness
           Regarding the attractiveness of the public service, Brazil does not seem different from
       some OECD member countries with career-based systems. An analysis carried out in the
       early 2000s shows that public sector salaries, especially in the federal government, are
       very favourable compared to pay conditions in the private sector (this is less clear for the
       state level and even less so for municipalities). When taking sectors into account, and
       thus levels of education, the public-private-sector wage gap still exists, although to a
       lesser degree (Foguel et al., 2000; Marconi, 2004). Data and analysis are lacking for the
       end of the 2000s, notably after the late Cardoso and the early Lula years during which
       civil servants at the federal level experienced a net loss of pay.
           In Brazil, pay disparities in the larger economy between higher and lower pay and
       across professions vary more than the average in OECD member countries. As a result,
       for certain professions, the government has difficulty recruiting. The Ministry of
       Education, for example, reports that whereas 168 new recruitments were authorised in
       2008-09, only 81 positions could be filled because of difficulties in recruiting staff such
       as engineers or computer scientists. It is difficult to conclude whether salaries are the
       heart of the problem or whether the lack of career opportunities for such staff, who, in a
       less rigid career system, might reach the top managerial levels of their organisations, most
       discourages them from entering public service.
           The situation is said to be critical for senior civil servants, although this is the
       assessment of senior civil servants themselves and should be treated with caution. There
       is no clear evidence that lower salaries have created difficulties for hiring high potential
       staff who can become senior civil servants, and no evidence that they have undermined
       motivation at the highest level of government. Recent pay increases in certain elite
       careers have made salaries very competitive in such categories of public servants. As in
       most countries, senior managers respond to a complex array of incentives, including
       career opportunities and proximity to politicians. Considering the inequities in Brazil
       between low and average salaries and the salaries of the best paid workers, closing this
       gap is quite inconceivable, and not necessarily socially acceptable. It is also possible that
       it may not even be necessary if government is able to attract the right skills at senior
       management levels.

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            Unless there are proven difficulties for attracting good personnel and promoting good
        managers, the experience of OECD member countries has often shown that managers are
        attracted to public sector jobs for career opportunities, lifelong benefits (pension, leave)
        and prestige. A good analysis of these factors is needed before setting pay for each
        employment category.

        Suggestions for future reforms
             The federal government pay-setting process suffers from two structural weaknesses:
             •    Despite recent impressive attempts at rationalising pay increases that should be
                  praised, salary levels still lack in practice a solid strategic basis based on a
                  systematic analysis of what salary levels should be, considering various
                  parameters (attractiveness of pay, social acceptance of high salaries in the public
                  service, other benefits of government employment, including prestige).
             •    Salary setting is still subject to lobbying pressures from various groups that
                  further increases the fragmentation of the job category system.
            The federal government could first attempt to establish the total real compensation of
        employees as compared to similar groups in the private sector, as is done in Canada or the
        United Kingdom. The Canadian 2006 review of the federal public sector compensation
        policy and comparability intended to “give ministers and senior officials, as well as other
        stakeholders an accessible, integrated and coherent presentation of the federal public
        sector compensation field in all its complexity”. It covered 351 000 staff (of which one-
        quarter were Canadian military forces) out of about 500 000 employees. It included
        components such as salaries and wages, performance pay, recruitment and retention
        allowances, all allowances and premiums, overtime, retroactive payments, pensions,
        employer life and disability insurance premiums, employer payments for health and
        dental plans, severance pay, all leave usage and cash-outs of unused leave entitlements.
        The review concludes on the comparability of salaries and other benefits, and calls for
        many changes in the governance and management of employee compensation.
            In the United Kingdom, financial constraints in the wake of the financial crisis mean
        that the government has had to focus on other elements of the reward package. The “total
        rewards” strategy is a response to this challenge.
            In the past decade or so, pay policy has been concerned primarily by the influence on
        the macroeconomic situation (inflation and deficit) or by the balance across job
        categories. It would now be worth furthering present efforts to develop a view of pay that
        is also based on human resource concerns. The government should take into account not
        only macroeconomic issues but also attractiveness, transparency and changes in society
        that will affect pay policy (ageing of the public service, changes in the labour market).
        This would help build a long-term view of pay levels and help develop a strategy. Rather
        than focusing on performance pay, the government should focus its efforts on
        comparability with private sector employment, social acceptance, and a level of pay that
        is compatible with high integrity.




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                               Figure 1.15. Total rewards in the United Kingdom




        Source: McDonald, Paula (2009), presentation given at 5th Regional Meeting of the Working Group on Civil
                Service and Integrity, OECD-MENA Initiative, 16 June 2009, Rabat, Morocco.


           The second priority for the federal government will be to improve its pay-setting
       process to avoid the costly job category by job category approach, which, as mentioned,
       combines the negative aspects of a centralised and a decentralised pay-setting process.
       While it is not desirable to recommend a fully centralised whole-of-government pay
       process, Brazil could probably implement a two-level process, with separate timing for
       the two parts:
            •   First, the government would determine an envelope for pay increases for the
                entire public service based on budget predictions, and, importantly, on the
                conclusions of total rewards studies. Depending on the results, it could, or could
                not, set a whole-of-government increase. At the same time, the Ministry of
                Planning could establish a pay negotiations framework for ministries and agencies
                to follow, although the remuneration for exactly similar positions across
                government organisations would have to be negotiated in a horizontal or co-
                ordinated manner. Bargaining parameters can be much more detailed in a country
                like Brazil which may wish to limit ministries’ and departments’ room for
                manoeuvre. The parameters should be used to increase transparency in the pay-
                setting process, to establish priorities for the whole of government and, also, to a
                certain extent, to provide a framework for negotiations with unions and other
                representatives of the workforce.
            •   Second, negotiations could take place between sectoral ministries and the
                Ministry of Planning on decisions about increases by job category. Extreme care
                should be taken to avoid sectoral fragmentation and base these negotiations on job
                categories that involve all concerned ministries and organisations. These decisions
                should be based on sound studies of pay levels in each job category and a sound
                methodology. In the much longer run, when the job category system has been
                reorganised, negotiations could follow bargaining parameters to be established by
                the Ministry of Planning. Examples of bargaining parameters in Australia and
                New Zealand are described in Boxes 1.9 and 1.10.

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                                    Box 1.9. Australian bargaining parameters

              1. Agreements are to be consistent with the government’s workplace relations policies.
                 These include: i) compliance with the Workplace Relations Act; ii) direct relations
                 between employers and employees; iii) protecting freedom of association; iv) simple,
                 principles-based agreements; v) making Australian Workplace Agreements available to
                 all staff; and vi) giving employer and employees primary responsibility for resolving
                 workplace disputes (including industrial action).
              2. Improvements in pay and conditions are to be linked to improvements in organisational
                 productivity and performance. Other than in exceptional circumstances, pay increases
                 are to apply prospectively.
              3. Improvements in pay and conditions are to be funded from within agency budgets.
              4. Agreements are to include compulsory redeployment, reduction and retrenchment
                 provisions, with any changes not to enhance existing redundancy arrangements. An
                 agency minister may, in consultation with the minister assisting the Prime Minister for
                 the public service, approve separate financial incentives to resolve major organisational
                 change. Such incentives are to be cost-neutral to the agency in the context of the major
                 organisational change.
              5. Agreements are to facilitate mobility across the public service by: i) maintaining
                 structures that are consistent with the Classification Rules, with salary advancement to
                 be guided by performance; and ii) retaining portability of accrued paid leave
                 entitlements.
              6. Agreements are to include leave policies and employment practices that support the
                 release of defence reservists for peacetime training and deployment.
         Source: Slightly edited version of the original document Workplace Relations Policy Parameters for
                 Agreement Making in the Australian Public Service, cited in Rexed, K. et al. (2007), “Governance
                 of Decentralised Pay Setting in Selected OECD Member Countries”, OECD Working Papers on
                 Public Governance, 2007/3, OECD Publishing, Paris.




                                 Box 1.10. New Zealand bargaining parameters

              General government policy on remuneration is:
              Departments’ remuneration systems should be focused on contributing to achieving
         outcomes and maintaining/improving output performance by: i) developing and maintaining the
         organisational capability to achieve the outcomes set out in their statements of intent;
         ii) providing incentives and opportunities for employees to develop the required skills/expertise,
         and/or to improve performance.
             The government should pay levels of remuneration that are fair (to employees) but not
         extravagant (in fairness to the taxpayer).
             Remuneration systems must be fair and transparent and linked to a transparent and fair
         system for adjusting salaries to reflect increases in skills/competence (whether generated through
         experience or training), and/or improved performance.
              Remuneration principles should be agreed with employees and unions.
             In general, the government expects that minimum pay rates will be a matter for negotiation
         and that, unless there is a good reason not to, these will be included in the collective agreement.

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                         Box 1.10. New Zealand bargaining parameters (cont’d)

            The government does not generally favour remuneration systems which allow salary
        progression solely for time spent in the job – in general, it is expected that progression beyond
        the minimum rate be based on merit.
            Departments should set remuneration levels taking into account:
            • market demand for the relevant skills/capabilities, experience, and responsibilities;
            • recruitment and retention factors;
            • ability to pay within approved baselines;
            • comparisons with other groups within the department;
            • any government policies, from time to time, aimed at achieving wider outcomes for
                employees generally or for particular groups of employees, for example policies and
                processes relating to pay and employment equity;
            • other factors relevant to the particular department.
            Employment agreements should contain provisions setting out what happens in restructuring
        and redundancy situations. This should include a “technical redundancy” clause so that staff who
        are offered positions in a new agency (and their terms and conditions of employment remain
        largely unchanged) will not be entitled to redundancy payments.
            Departments must get State Services Commission approval before developing proposals to
        relax current sick leave provisions through the introduction of open-ended sick leave.
            Departments must consult with the State Services Commission prior to developing any
        significant proposals:
            • to significantly improve annual, parental or other leave entitlements;
            • to significantly improve benefits or employee entitlements under the State Sector
                Retirement Savings Scheme or to otherwise provide for (or alter arrangements for) other
                superannuation or retirement-related payments;
            • regarding allowances or pay differentials for employees in particular localities/regions;
            • regarding pay and employment equity initiatives
        Source: Edited excerpt from The Government’s Bargaining Parameters, cited in Rexed, K. et al. (2007),
                “Governance of Decentralised Pay Setting in Selected OECD Member Countries”, OECD Working
                Papers on Public Governance, 2007/3, OECD Publishing, Paris.



1.6. The role of unions

       The experience of OECD member countries23
           In recent years, there has been an extension of collective bargaining in the public
       sector, following the alignment of employment conditions in government with those of
       the public sector and the changing role of government. The unilateral setting of
       employment conditions by the public employer is being replaced little by little by more
       collective bargaining (Ministère du budget, des comptes publics et de la fonction
       publique, 2008b; OECD, 2006b). In addition, in relatively flexible public employment
       systems, the tendency in recent years has been to delegate collective bargaining to
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        directorates or units. This is not a simple issue as decentralisation of pay setting brings a
        new array of challenges for maintaining coherence in salaries and cost restraints. For
        example, in the Netherlands, the public sector has 12 or 13 bargaining sectors, in the
        United Kingdom, there are 90, of which four major ones, while in Finland, there can be
        up to 57.
            In many countries, however, centralised and delegated systems now co-exist, and in
        career-based systems, collective bargaining tends to be less extensive and not necessarily
        legally binding. Even in delegated systems, there is some whole-of-government co-
        ordination, either through the human resource ministry or a special body such as the
        Swedish Agency for Government Employers (SAGE). In addition, in Australia and New
        Zealand, coherence is ensured by a set of common bargaining parameters and a remit
        process, while in countries such as Denmark, Finland and Sweden, a central agreement is
        followed by a second level of agreements (OECD, 2006b).
            In terms of the institutional strength of unions, most OECD member countries have
        allowed the largest part of their public service to unionise, although Korea and Mexico
        have important restrictions. However, the right to strike is more limited, with exceptions
        in many countries for the judicial service and security forces or civil servants involved in
        state security or some senior civil servants, and minimum rules of service in a number of
        sectors. In countries, such as Hungary, Ireland, Italy, Korea, Japan, Mexico, Poland and
        the United States, the right to strike is very limited or forbidden (OECD, 2006b).
            The rates of unionisation vary between 30% and over 90% in OECD or EU countries;
        in a number of countries, unions are partially or totally funded with public funds.
            Collective negotiations on working conditions and wages and remuneration take place
        in most cases, whether mandatory (as in Finland, Hungary, the Netherlands, Norway,
        Spain) or not (Austria, Belgium, France, Ireland, Japan). Some agreements are binding
        collective agreements, others have to be implemented by law, others are political
        commitments, and still others are voluntary collective agreements.

        The situation in Brazil
            As elsewhere, labour relations in Brazil are the result of a complex history and most
        importantly of a relatively recent return to democracy. The rate of unionisation in the
        federal government (excluding public enterprises) is relatively high, at around 55%
        (including retirees).
            The Constitution guarantees every public servant (excluding the military) the right to
        unionise and the right to strike,24 with minimum service rules in the sectors of security,
        health and transport. While the Constitution provides for the right to negotiate in the
        private sector, there is no mention of it for the public sector.
            Until 2003, there were no systematic negotiations with unions in the public service.
        Since 2003, when the government established the “permanent negotiation table”,
        77 agreements have been signed, including 33 in 2008 alone. The 2007-08 agreements
        resulted in annualised financial impacts of BRL 7.6 billion in 2008 (EUR 2.8 billion),
        BRL 21 billion in 2009 (EUR 7.8 billion) and BRL 29.1 billion in 2010
        (EUR 11.4 billion), covering 1.3 million civil servants.




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           Negotiations are reported to mainly concern base salary and social benefits, but some
       discussions take place on additional remuneration, work conditions, the employment
       framework and the introduction of new management tools. There are also discussions of
       how collective negotiations can lead to improvements in society. Negotiations are
       completely centralised, the results are not legally binding, and have to be voted into law
       to be implemented. Compared to other countries, and especially compared to countries
       with more traditional career-based systems, the collective negotiation process is rather
       open and relatively less confrontational. It certainly offers an opportunity to build a
       constructive dialogue.
           Because pay is managed on a career by career basis, the situation in Brazil is
       relatively unbalanced. Negotiation processes for the whole of government are weak and
       there is no decentralised process. The process is in fact so centralised that the ministry in
       charge of managing the specific career is not necessarily invited to the negotiation table.
       This is probably one of the reasons behind the proliferation of unions: there are more than
       300 today for the federal public service.
           The result is probably continuing long-term upward pressure on salary costs owing to
       competition among unions on salary and compensation increases and to a strengthening
       of the trend of differentiated payments for careers. Drawing on lessons from OECD
       member countries, and considering the centralised division of responsibilities in the
       government, it is likely that the federal government would gain by developing a whole-
       of-government negotiation process on general matters and a vision of the future public
       service. The job category by job category negotiation process could then take place
       according to these principles and general agreements.

       Suggestions for future reforms
           The Irish partnership approach (see Chapter 4), with first a collective agreement that
       sets out the basis for an institutional framework for labour relations in the public sector
       and agreements on a modernisation agenda that includes pay increases (to be attributed
       when the conditions of reforms have been met) is certainly an approach that could
       usefully be considered by Brazil. This approach has helped modernise the Irish public
       service, while reinforcing the role of unions.
            Indeed, with relatively new labour relations in the public service, it would be
       interesting to establish a framework for collective negotiations agreed by all stakeholders.
       It is also an opportunity to establish a framework that puts pay negotiations and increases
       in the context of other possible reforms. Linking pay increases to the achievement of
       reforms is an idea that could be negotiated in subsequent rounds of reforms (see
       Chapter 4).
           In addition, the government has to choose the kind of system it wants to use for pay
       increases. Centralised job category pay setting, as mentioned earlier, is probably a rather
       unsustainable solution.

1.7. Adjusting an ageing public service to an ageing society

       The experience of OECD member countries25
           In the longer term, the public sector must respond to the changing demands of an
       ageing society. At the same time, civil servants are themselves ageing and the retirement
       of a large number of experienced staff in the relatively near future must be managed.

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        Significant staff departures are an opportunity to bring staff with new skills into
        government, decrease staff numbers and staff costs (entry level salaries are lower), and
        change the allocation of staff across sectors. However, they are also a challenge, because
        they mean the loss of key capacity and the need to postpone the retirement of some key
        staff.

          Figure 1.16. Percentage of workers aged 50 years or over in the central/federal government
                  in OECD member countries (2005 and 1995) and in Brazil (2005 and 2008)


                 Iceland
                Sw eden
           United States
                Norw ay

                  Spain

                Portugal
                 Finland
                 Canada
                 France

          United Kingdom
             Netherlands
                  Japan
                 Austria

               Germany
               Australia

                  Korea
                 Ireland
                 Turkey


                  Brazil

                           0    5        10       15        20       25           30        35      40      45
                                                                                                            %
                                                 1995       2005      2008 (Brazil)


         Source: Data for Brazil and OECD member countries are from the OECD 2006 Survey on Strategic Human
                 Resource Management. Data for OECD member countries published in OECD (2009c), Government
                 at a Glance 2009, OECD Publishing, Paris.


            OECD member countries’ experience shows that only a few countries have devised
        strategies that take advantage of the opportunities created by an ageing civil service. The
        OECD strongly recommends that countries with rapidly ageing public services adopt such
        strategies quickly so as not to waste the opportunity created by large departures and be
        faced with major institutional memory losses and major pension costs. Such strategies
        should address the challenges of maintaining capacity in government without creating
        tensions on the labour market, while reducing costs and reallocating resources and staff
        across priorities areas (i.e. adapting public services to the ageing of society).

        The situation in Brazil
            Like that of many OECD member countries, Brazil’s public service is ageing rapidly
        and much more rapidly than the wider labour market, although the general population is
        ageing less rapidly than in most OECD member countries (however, as in Ireland, this is

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       changing fast). This situation provides Brazil with a unique historical opportunity to
       adjust its workforce using lessons learnt from OECD member countries.
           The challenges and difficulties are widely ackowledged by the Brazilian government,
       although an ageing society is a new phenomenon in Brazil and has not received as much
       attention as it has in many OECD member countries.

        Figure 1.17. Percentage of workers aged 50 years or over in central/federal government and
                                          the wider labour force
                                                                       2005


                  Belgium
                  Iceland
                      Italy
                 Sw eden
                  Greece
            United States
                 Hungary
                 Norw ay
                    Spain
                 Portugal
                  Finland
                  Canada
             Sw itzerland
                  France
           United Kingdom
             Netherlands
                   Japan
                  Austria
                Germany
                  Mexico
             Luxembourg
                 Australia
                   Korea
                   Ireland
                   Turkey


             Brazil (2005)
             Brazil (2008)

                              0   5   10            15            20       25       30             35         40   45   50
                                                                                                                        %
                                       Total labour force                                Central government



        Source: OECD (2008b), The State of the Public Service; OECD (2009), Government at a Glance 2009; data
                for Brazil come from the OECD 2006 Survey on Strategic Human Resource Management.




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        Suggestions for future reforms
            Like many OECD member countries, Brazil has not yet addressed the issues raised by
        an ageing public service. The level of future recruitments makes it especially important to
        modernise the recruitment and career systems, as the government will be hiring large
        numbers of staff who will probably remain in government throughout their career.
        Improved workforce planning will be necessary. Specific measures for retaining senior
        staff and preparing for a good transition between departing staff and incoming staff will
        also be necessary.

         Figure 1.18. Proportion of workers at the national/federal level aged between 40 and 50 years
                                              and over 50 years

                                                                                                      2008 (B razil)                                           2005                                   1995
            %
            45

            40

            35

            30

            25

            20

            15

            10

             5

             0
                 40-50

                         above 50

                                    40-50

                                            above 50

                                                       40-50

                                                               above 50

                                                                          40-50

                                                                                  above 50

                                                                                             40-50

                                                                                                      above 50

                                                                                                                 40-50

                                                                                                                         above 50

                                                                                                                                    40-50

                                                                                                                                            above 50

                                                                                                                                                       40-50

                                                                                                                                                                above 50

                                                                                                                                                                           40-50

                                                                                                                                                                                   above 50

                                                                                                                                                                                              40-50

                                                                                                                                                                                                      above 50

                                                                                                                                                                                                                 40-50

                                                                                                                                                                                                                         above 50

                                                                                                                                                                                                                                    40-50

                                                                                                                                                                                                                                            above 50



                                                                                                                                                                                                                                                           40-50

                                                                                                                                                                                                                                                                   above 50
                 J apan             Norway             S weden            F inland               UK                US A             K orea             Australia P ortugal                    Ireland Netherlands Aus tria                             -    B razil




         Source: OECD (2008b), The State of the Public Service; OECD (2009c), Government at a Glance 2009; data
                 for Brazil come from the OECD 2006 Survey on Strategic Human Resource Management.


             Lessons from OECD member countries show that human resource policies to address
        ageing should include a complex array of tools for retaining older workers beyond
        retirement age, improving recruitment especially in areas where there will be skills gaps,
        attracting good young graduates, developing fast-track careers to fill in gaps in
        management and senior management positions, and of course adapting the pension
        system to the new ageing challenges.
            An ageing public service is not only a challenge but also a good opportunity to
        restructure the workforce. OECD member countries are well aware of this, and it is
        understandable that some workforce planning and competency management initiatives
        have been pushed ahead in light of the coming opportunity to adjust the workforce to the
        future needs of society. The federal government in Brazil has a unique opportunity to
        change the composition of its workforce and make reallocations across sectors through
        good workforce planning.

1.8. The Brazilian public service’s pension system

        The experience of OECD member countries
           A particular problem for an ageing civil service is the fact that public service pension
        schemes have traditionally been more generous and less well-funded than private-sector
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       schemes (OECD, 2007c). Moreover, an ageing public service tends to be more costly as it
       includes more senior staff on average.
           At present, over half of OECD member countries have special pension schemes for
       public servants. They generally tend to be more generous than schemes for private-sector
       workers. However, public-sector pension schemes are being reformed largely to address
       concerns about affordability in the face of ageing populations. Financial issues and
       changes in public-sector employment are at the heart of the reforms in a number of
       OECD member countries. The measures adopted by countries have not generally sought
       to overhaul old-age pension schemes completely but to ensure the long-term survival –
        and thus the financial viability – of pay-as-you-go schemes. Reforms aim to limit the rise
       in compulsory levies and to make schemes more contributory.
          One of the trends in public-sector pension scheme reforms is to do away with the
       special status of public-sector employees in favour of equal treatment for all workers.
       This has been done by extending ordinary law to civil servants and therefore giving
       public and private sector employees the same status.
            Pension scheme reforms have also meant reassessing the welfare benefits of public
       employees. The generosity of the pensions is being contested as public sector pension
       schemes are generally based on final salary rather than contribution, provisions for early
       retirement, and generous recognition of non-contributory periods such as childcare and
       education. In many OECD member countries the social welfare protection afforded to
       public-sector employees is generally considered more advantageous than that of the
       general population. This is the case in Belgium, Denmark, Germany, France, Japan and
       the Netherlands.

       Reforms
           OECD member countries use a wide variety of methods to reform pension schemes
       but the underlying objectives are often the same. Some of these methods are described
       below.
            Revision of the formulae for calculating old age pensions. Contribution periods
       have been extended to 40 years in a large majority of OECD member countries. Reforms
       are generally implemented gradually, with a preference for long transition periods
       involving the co-existence of different systems of calculation, therefore complicating the
       determination of retired workers’ pension entitlements. Extensions of contribution
       periods have often been accompanied by cuts in pension benefits and the calculation
       formulae have been changed to align them with rules applying in the private sector. As a
       result, final salary is increasingly being replaced by average salary, or even by average
       lifetime earnings so as to encourage people to remain in formal employment.
           Raising the retirement age. Changes to how pensions are calculated have in many
       cases been accompanied by changes to the rules for eligibility. The age at which pensions
       may be drawn has been raised in most OECD member countries. In the Netherlands, the
       age has been raised from 62 to 65; in Austria and Portugal from 60 to 65; and in Finland
       from 63 to 65. Most countries have harmonised retirement ages for men and women.
       Normal retirement age is also increasingly being replaced by a minimum age. For
       instance, in Sweden it will be possible to draw a pension at age 61 if the individual has
       made the requisite number of contributions for entitlement to full pension.



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            Reduced compensatory entitlements. Women are in many cases entitled to
        particular benefits to compensate for their low labour market participation and modest
        earnings compared to those of men. The purpose is to ensure that older women have an
        adequate standard of living. However, a number of countries are cutting those benefits,
        arguing that women’s participation in the labour market has increased. In Sweden, for
        example, survivors’ pensions were gradually abolished. In Austria, a woman’s
        individualised survivor entitlements are suppressed if her other income is sufficient;
        previously, a woman was entitled to 60% of her late spouse’s pension. In the Netherlands,
        survivors’ benefits have been cut in half. These provisions aim to encourage women to
        enter the labour market.
             Limiting early retirement. OECD member countries such as the Czech Republic,
        Denmark, Finland and the United Kingdom have taken steps to restrict eligibility and
        limit access to benefits such as disability or sickness in pension schemes due to increases
        in the number of beneficiaries. The institutional structure of pension systems and other
        benefit schemes has often encouraged individuals to withdraw from the labour market
        prematurely. In many OECD member countries, early retirement is possible but strictly
        regulated, if not sanctioned. The intention is to discourage workers from retiring early by
        reducing their pensions by a percentage proportional to the missing years of service. This
        is the case in Finland, France, Germany, Hungary, Italy and the Netherlands.
            Encouraging deferred retirement. In response to the challenges posed by an ageing
        population and civil service, many OECD member countries have altered their policies on
        early retirement and now seek to retain older workers. Governments are introducing
        financial measures, such as bonuses, to encourage public sector employees to remain on
        the job longer. The generosity of the bonuses varies, and they do not always enable a
        maximum replacement rate. The Austrian government, for instance, has instituted
        financial incentives for deferring retirement beyond the normal age. Government
        employees can collect 2% more for each additional year they work, although pensions are
        capped at 90% of the final salary. At the same time, the pension annuity can vary
        according to the contributor’s age. Rates have been set in a number of countries in such a
        way as to keep government employees on the job, as early retirement can bring about a
        reduction in these rates.
            Development of funded schemes and contributions by civil servants to their
        pension schemes. In a number of OECD member countries, the state seems to be
        partially withdrawing from participation in mandatory schemes through the development
        of occupational schemes or supplemental pension plans as a way to limit government
        funding of pensions and benefit-related expenses but also to compensate for the declining
        level of worker pensions, in the public sector in particular. In some OECD member
        countries, the high replacement rates that public employees obtain from their basic
        pension do not justify the institution of supplemental schemes. At present, the
        replacement rate varies between 60% and 100% of final salary in Belgium, Finland,
        France, Greece, and Luxembourg. Thus, basic pensions account for the bulk of retirees’
        incomes. In fact, in France, the statutes governing civil service pay explicitly preclude
        payment of contributions to a supplemental scheme.

        Challenges
            In OECD member countries, like Belgium, France, Japan and New Zealand, the
        majority of pension reforms are adopted within the framework of policies linked to active
        ageing as they attach importance to employee retention.

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           In many OECD member countries the composition of the public sector is changing.
       Some countries are moving away from the notion that the public service provides a job
       for life. Lateral hiring is increasing at all stages of careers, and the use of part-time,
       temporary or casual employees is growing, as in Australia. This reflects the desire to
       make public employment more flexible. Recourse to temporary work is also sometimes
       justified by the need to recruit skilled labour to perform certain tasks in the civil service,
       as in Japan. However, pension reforms have not generally targeted atypical staff in
       particular. This is because some countries make no distinction between permanent and
       other workers.
           Mobility between the private and public sectors, depending on the direction, may be
       facilitated or hindered by the pension system. Mobility is encouraged as a way of
       enabling private sector workers to join the public sector easily, and their experience may
       be sought for specialised tasks in the public sector, as in Australia and Belgium. The
       situation is different for public employees wishing to join the private sector either
       temporarily or permanently. In Austria, Finland, France, the Netherlands, Norway and
       Sweden, there are special rules for public employees, and mobility between the two
       sectors is facilitated by bringing the relevant legislation closer together or even
       harmonising it to facilitate the transition from the public to the private sector.
           In the case of mobility within government, pension rights are generally maintained, as
       the official remains employed by the civil service. A problem arises when an official
       leaves the public sector to work permanently in the private sector. This is because in
       countries where public employees contribute to a special scheme, the benefits paid are
       more generous than those paid in the private sector. Thus, basic pension rights are often
       not transferable because the schemes are incompatible. In Norway, for instance, there are
       no regulations at present providing for the transfer of rights between the private and
       public sectors. In Belgium, the different pension schemes are in theory completely
       independent, and if a person has had a mixture of careers, pensions are calculated
       separately by the various schemes.
           Pension reform has not, as yet, fully addressed the issues raised by workers who
       would join the public sector if they could work flexibly. Such employees, often those
       with care responsibilities, typically seek contract or part-time work and may need
       extended periods of leave. In countries with special schemes for public servants, the
       schemes are generally not well suited to employment flexibility. The desire for increased
       employment flexibility means that it should not be assumed that once such workers are
       recruited, government will wish to retain them for the rest of their working lives. Public
       pension schemes generally penalise mobile workers through long vesting periods and
       reduced pension entitlements for those who leave the scheme early. Thus, defined
       contribution schemes, widely used in the private sector, have the advantage of more
       easily accommodating employment flexibility and mobility.

       The situation in Brazil

       Social security in Brazil – the current structure
           In Brazil, there are four main social security regimes: the general regime, the social
       security regime for civil servants, that for the army, and the complementary pension
       funds.



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             The general regime (social security regime for private sector workers, RGPS) is a
        mandatory pay-as-you-go pension system financed by payroll contributions of workers
        and employers in the private sector and administered by the National Institute for Social
        Security (Instituto Nacional do Seguro Social, INSS). Pensions are paid to workers aged
        65 (men) and 60 (women) in urban areas, and to those aged 60 (men) and 55 (women) in
        rural areas, after a minimum period of 15 years of contribution. The length of
        contribution is 35 years for men and 30 for women. Those that achieve this length of
        contribution can retire early, but full pension is attributed only when “the retirement
        factor” of 1.0 is reached. In general, for someone that contributed for 35 years after
        entering the labour market at age 18, the retirement factor of 1.0 is only reached at age
        59.26 Employee contributions range from 8% to 11% of payroll and employers contribute
        a flat 20% of payroll.
             •    The mandatory social security scheme for civil servants (RPPS) is managed by
                  federal, state and municipal governments, and that of the armed forces and the
                  military police by the federal government (armed forces) and by state
                  governments (military police). It does not cover employees in state-owned
                  enterprises, political agents, temporary workers or workers under the general
                  regime. Retirement is compulsory at 70 years of age for both men and women,
                  and retirement for length of contribution is 35 years for men and 30 for women.
                  Until the 1993 reform, civil servants contributed 4% of their wages to finance
                  pensions. The 1993 reform required civil servants to pay 11% of their salaries to
                  be enrolled in the system. Moreover, after the 2003 reform retired civil servants
                  are also required to pay contributions (although at a lower rate than active civil
                  servants) on the value of pensions over the ceilings of the general regime. After
                  the constitutional reform No. 41/2003, the entrants after 1998 have to fill an age
                  rule to eligibility (60 years for men and 55 years for women).
             •    The complementary pension funds are optional, privately managed, mostly
                  centred on capitalisation and monitored by the Ministries of Social Security and
                  Finance. The benefits complement pay-as-you-go pensions to a predefined ceiling
                  based on the rules for each pension fund. This complementary pension fund
                  system is operated by closed and open pension funds. Closed pension operators
                  (Entidades Fechadas de Previdência Complementar, EFPC) are non-profit
                  organisations established by single employers, multiple-employers, trade unions,
                  or professional associations and financed by employers’ and/or employees’
                  contributions on occupational or associative basis.27 Open pension plans are
                  operated by financial institutions (Entidades Abertas de Previdência
                  Complementar, EAPC), generally insurance companies and banks. Contributions
                  are made on a personal, voluntary basis.28 The constitutional reform No. 20/2003,
                  41/2003 established the possibility to implement a complementary pension funds
                  to civil servants after the approval of a complimentary law, and to pay full
                  pensions by the special regime of civil servants only below the ceiling of pensions
                  observed in the general regime.

        An overview of the Brazilian civil servant pension scheme
            The public services pension scheme in Brazil is a complex chain of national and local
        systems that includes many federal employee categories (executive, legislative, judiciary,
        military police, armed forces) at different levels of government; 27 state pension systems
        (including the Federal District) with the same level of complexity as the federal level,

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       with the armed forces replaced by military state police; and employees of
       1 900 municipalities.29 The schemes differ slightly in terms of contribution rates, but in
       almost all cases they are considerably more generous than the general scheme that applies
       to workers in the private sector. The pension systems are regulated by the Constitution
       and various laws. As Table 1.1 shows, over 9 million civil servants are protected by this
       regime, which includes: active civil servants, retirees and pensioners30 in the three levels
       of government. In addition, the table shows that at federal level the number of active
       employees is small relative to retirees and pensioners; this compromises the sustainability
       of the system.

               Table 1.1. Employees, retirees, and pensioners in the civil servant pension scheme

                                                                     2008
        Government level           Active civil servants           Retirees             Pensioners                Total
        Union (federal) (1)             1 118 360                   529 563              448 376                2 096 299
        States (2)                      2 793 050                  1 144 698             384 509                4 322 257
        Municipalities (3)              2 156 676                   401 793              151 111                2 709 580
        Total                           6 068 086                  2 076 054             983 996                9 128 136
        1. June 2008; does not include public servants from SOEs or mixed economy societies.
        2. Data from the states.
        3. Refers to 1 900 municipalities with their own social security regime.
        Source: Ministério da Previdência Social (2008), Panorama de la Previsión Social Brasileña, Ministério da
                Previdência Social.


           In Brazil most pensions are pay-as-you-go (PAYGO) systems. Brazil has a large,
       socially inclusive, contributory system that requires large fiscal resources to finance
       expected benefits. The main advantages for civil servants are that: i) since 2003, entrants
       after 1998 receive the average earnings received since 1994; entrants before 2003 receive
       pensions equivalent to the last salary received if they meet specific criteria,31 while
       private employees, since 1999, receive pensions calculated as an average of contributions
       paid since 1994, after calculation of the retirement factor;32 ii) entrants to the civil service
       after 1998 have to prove that they have worked a minimum of ten years as public
       employees to achieve a pension equivalent to the last salary. Another feature of the
       pension system for civil servants is the high heterogeneity of benefits across professional
       categories. Civil servants who spend their entire career in the civil service receive
       benefits which are several times more than those received by civil servants whose career
       also include the PAYGO system, but that depends on the type of job in the civil service
       and the career trajectory.33
          The federal pension scheme is the most imbalanced among the three levels of
       government (Médici, 2004). Its dependency ratio is less than 1, which seriously
       undermines its financial sustainability, and the system cannot be sustained by payroll
       contributions. In addition, with a rapidly ageing civil service, the number of retirees is
       expected to increase dramatically.




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                  Box 1.11. Past reforms to civil servants’ pension schemes (prior to 2003)

              In 1998 the Brazilian government implemented reforms to increase the financial
         sustainability of its pension schemes, seeking to contain pension deficits without affecting
         acquired rights. Reforms approved by Congress fell significantly short of original proposals
         made by the executive. Although some tightening of eligibility requirements was approved and
         the worst abuses curtailed, most of the measures adopted apply only to civil servants joining the
         system after the implementation of the reforms. Thus, there is no immediate benefit for the
         sustainability of the pension system. Moreover, entitlements did not change significantly, with
         the result that little progress was made towards the financial and actuarial balance of the various
         public sector pension schemes.
              Some of the main pension reform measures in Brazil previous to the 2003 reform were:
              •    Institution of a minimum retirement age, starting at 53 years for men and 48 years for
                   women. Through a transitional formula linked to the years of contribution prior to the
                   approval of reform, this minimum retirement age will increase to 60 and 55 years
                   respectively. New entrants are automatically subject to the higher minimum retirement
                   age.
              •    A requirement that workers contribute for at least ten years to a public sector pension
                   scheme before drawing retirement benefits. The scope for early retirement before having
                   contributed for 35 years for men and 30 for women (including previous contributions to
                   the general scheme), has been limited for current workers and abolished for new
                   entrants.
              •    Abolition of favourable special regimes for certain categories of civil servants, such as
                   university teachers, judges, financial controllers and members of Congress.
              •    Elimination of the possibility of adding “bonus time” to the length of contribution
                   which used to considerably bring forward the average age of transition to retirement.
              •    Requirement that a worker remain five years in a post before drawing a pension
                   equivalent to the salary of that post. This eliminates the practice of fictitious promotions
                   close to retirement age.
              •    Institution of a ceiling on pension benefits, equal to the civil servant’s last salary. This
                   measure eliminated loopholes that allowed some civil servants to incorporate non-wage
                   advantages in their pension benefits, which in practice meant that their pensions could
                   be higher than their last salary.
         Source: Bonturi, M. (2002), “The Brazilian Pension System: Recent Reforms and Challenges Ahead”,
                 OECD Economics Department Working Papers, N°. 340, OECD Publishing, Paris.




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   The 2003 reform of the pension regime for civil servants
           A growing number of countries with separate civil service pension schemes are
       considering different reform options largely motivated by fiscal pressures. Pay-as-you-go
       civil service schemes are maturing, resulting in an increase in the ratio of pensioners to
       workers. OECD member countries currently spend an average of nearly 2% of GDP on
       pensions for civil servants and other public sector workers (Palacios and Whitehouse,
       2006). In 2008, Brazil spent 7.25% of GDP in pensions for the RGPS and 4% for the
       special regime of public servants – including military.
           The growing pressure of civil servants’ pensions on payroll expenditures led the
       Brazilian government to reform the pension system to reduce the huge deficits,
       standardise entitlements for entrants, introduce parametric changes for workers currently
       in active service, and bring pensions for government employees into line with those in the
       private sector.34 The introduction of standard rules for pensions is expected to improve
       flexibility and efficiency in the labour market.
            In December 2003, the Brazilian Congress approved constitutional reform
       No. 41/2003 regarding civil servants’ pensions. The reform was two-pronged. It adjusted
       the current PAYGO system for the civil servants currently in active service and created a
       separate regime for entrants after the reform. The three main goals of the reform were to:
       i) achieve a better balance in the system and guarantee its long-term stability; ii) reduce
       social imbalances in the use of public funds by providing larger income transfers to the
       poorest families; and iii) reduce pressures to cover system deficits and free public
       resources to support economic growth. The reform sought to respect already acquired
       rights and to create a new system aligned on the general social security system for new
       entrants to the civil service. The main points of the 2003 reform are:
           •   Current retirees and pensioners (including those who have the right to claim
               benefits) contribute the same payroll tax of 11%, except for those under the
               ceiling for income tax exemption.
           •   For civil servants currently in active service the new rules for benefits are the
               following: the minimum age for retirement changed from 53 to 60 for men and
               from 48 to 55 for women. The minimum length of service remained 35 years for
               men and 30 for women. To count the length of service period as 35 years of
               contributions in private or public pension schemes, at least 20 years of
               contributions must be in public schemes, ten years in the same job, and five years
               in the last civil servant position. Men and women can still retire below the regular
               retirement age of 53 (men) and 48 (women) with 35 years and 30 years of service,
               respectively but in this case the pension is an average of the contributions since
               1994 not the last compensation. However, in both cases a reduction will be
               applied to the benefit equivalent to no more than 5% for each year until 60 (men)
               and 55 (women). That means that the benefit for those retiring at 53 (men) and 48
               (women) will be equivalent to 65% of the last salary received before retirement.
               The idea behind these rules is to encourage later retirement.35 There is also a
               possibility to retire at 65 (men) or 60 (women), with less than 35 years of
               contribution, but the pension is proportional of the contribution period. The
               entrants before December 2003 have to fill several requirements to obtain full
               pensions at 35/30 years of total contribution, as a minimum period of service in
               the special regime (20 years of contribution, ten years in the same career and five
               years in the same job).

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             •    For future civil servants, the reform has been more comprehensive. They will
                  have their benefits calculated according to the contributions effectively made,
                  including in the PAYGO system. When retired or pensioners, future civil servants
                  will contribute the same payroll tax as active civil servants, except for those under
                  the ceiling for income tax exemption. Moreover, future civil servants will be
                  subject to the ceilings and sub-ceilings established by law, including for
                  accumulated received benefits. The reform contemplates that future civil servants
                  will lose the right of parity between pensions and salaries of active civil servants.
                  Thus, it is crucial for federal, state and municipal governments to create
                  complementary pension funds for civil servants so that they can increase their
                  benefits.

        Suggestions for future reforms
             It is hard to assess the 2003 civil service pension reform since the expected results
        will be seen in the long term and the reform is still relatively recent. The reforms
        implemented in 1998 and 2003 reveal considerable convergence with practices in many
        OECD member countries. For example, by extending the general pension law to civil
        servants, Brazil gives public and private employees the same status in order to make the
        pension systems more homogeneous. The adoption of measures to discourage early
        retirement and make eligibility rules stricter are also practices adopted by OECD member
        countries. Furthermore, the bridge between the general regime and the social security
        scheme for civil servants helps to enhance mobility. The new civil service pension
        arrangements adopted in the 2003 reform make them more in line with those of Finland
        and the Netherlands as both have separate civil service arrangements but the same
        benefits as those at the national level. However, the experience of OECD member
        countries may offer some suggestions to complement the measures already taken.
            The need to reduce privileges and to encourage working longer. Brazilian
        authorities have acknowledged the existence of inequities in the civil servants’ pension
        regime. The 2003 reform was designed to reduce these inequities by fostering a gradual
        convergence of public sector pension schemes with the rules applying in the general
        regime. This seems reasonable, but since measures apply only to new entrants, they will
        not significantly reduce the system’s financing requirements in the short or medium term.
        Moreover, if current demographic trends continue (population ageing) it is likely that the
        future retirement age (60 for men and 55 for women) for new recruits and the minimum
        contribution periods will not be enough to maintain fiscal balance. One possibility for
        more room of manoeuvre is to tighten eligibility requirements a little more. For example,
        most OECD member countries have a standard retirement age of 65 for men. Pension
        eligibility ages for women are lower in Belgium, Hungary and the United Kingdom, for
        example, but will gradually reach those of men. Iceland, Norway and the United States
        have a standard pension age of 67. At the other extreme, only France and Turkey allow
        normal retirement at age 60, the same age as for men in Brazil (see OECD, 2005a).
        Brazilian authorities might consider increasing the minimum age for retirement of staff in
        the near future. Brazilian pension authorities may also contemplate designing measures to
        encourage civil servants to work longer. Another case worth examining is the Japanese
        age limits for retirement; these set different age limits for national public service
        personnel depending on their tasks. For example, non-fieldwork general personnel retire
        at 60; medical staff at 65; self defence officials from 53 to 62; members of the science
        council at 70; and ministers, ambassadors and members of committees have no age limit.
        It should be mentioned, however, that in Brazil the rules for compulsory retirement are

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       only applied to career civil servants or military not for those in political positions or in
       free appointment jobs.

                      Box 1.12. Belgium’s experience with age-based supplements
            Belgium has introduced age-based supplements for employment and pensions for the federal
        public service.
        With regard to employment
             Beginning at age 55, a public sector employee may request half-time early retirement. In this
        case, apart from a salary for half-time work, the official receives an employer-paid allowance.
        This has been set up not as a pension, and thus not as an early retirement payment, but as
        compensation for “pre-retirement leave or availability”. During their periods of absence,
        officials at the end of their careers retain a statutory link to their employers, who may opt to call
        them back to work. At the same time, the officials retain their employment status and continue to
        accumulate pension entitlements.
            Prior to 1 January 2002, such periods of pre-retirement leave were fully counted for pension
        purposes and even for calculating the volume of authorised sabbaticals and unpaid leave counted
        as active service.
        With regard to pensions
             Without altering the current basic principles for pension entitlements and calculations
        (including the limitations imposed by the relative maximum and the absolute maximum),
        provisions for granting an age-based pension supplement were intended to encourage officials to
        keep working beyond the minimum retirement age (60).
            In respect of services rendered as from 1 January 2001, the nominal rate of pension resulting
        from the method of calculation has been increased by a pension supplement for each month of
        effective service beyond the age of 60.
            This supplement is equal to:
             •     0.125% of the annual rate of pension for each month of effective service between the
                   official’s 60th and 62nd birthdays (with a minimum of EUR 15);
             •     0.167% of the annual rate of pension for each month of effective service after the
                   official’s 62nd birthday (with a minimum of EUR 20).
             In all, the age-related supplement can be as much as 9% of the basic pension, as shown by
        the following table:
             Age 60-61: at least 1.5%;
             Age 61-62: between 1.5% and 3%;
             Age 62-63 between 2% and 5%;
             Age 63-64: between 2% and 7%;
             Age 64-65: between 2% and 9%.
            Supplements are granted only in respect of service effectively rendered, inclusive of periods
        of paid leave.
             It should be noted that to strengthen the incentive there are plans to amend the law so that
        the age-related pension supplement can cause the total pension to exceed the relative maximum
        (three-quarters of reference salary), although it could not exceed the absolute maximum value.
        Source: OECD (2007c), “Public Sector Pensions and the Challenge of an Ageing Public Service”, OECD
                Working Papers on Public Governance, 2007/2, OECD Publishing, Paris.



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            However, it is necessary to bear in mind that eligibility requirements and contribution
        rates alone are unlikely to eliminate the system’s financial and actuarial imbalances.
        These derive from the generosity of the entitlement system. For example, at the same
        income level, the pension of a male worker retiring at 55 today amounts to around 70% of
        his final salary (Ministério da Previdência Social, 2008) under the general regime and
        100% under the public sector special regime. The 2003 reform changed the rules for new
        entrants but did not address this issue in full. Previous OECD studies and information
        from Brazil show that the Brazilian public sector scheme is among the most generous in
        the world (further information can be found in Bonturi, 2002; and OECD, 2005a, 2007c).
            It is true that in many OECD member countries civil servants have special regimes
        which are generally more generous than private sector schemes. However, OECD civil
        servant pensions typically do not represent 100% of the final salary with such loose
        entitlement requirements. The replacement formulae generally consist of a share of the
        final salary (generally between 1.75% and 2%) per year served up to a maximum of
        between 35 and 40 years, so the most a retired public worker receives is 70% or 80% of
        his/her last salary. The PAYGO systems in OECD member countries are less generous
        than the Brazilian system but many are still under pressure as they have become very hard
        to sustain financially. As a result, countries such as Canada, Mexico, the Netherlands and
        the United States have started to move away from them, and civil servants already derive
        the majority of their pension earnings from a founded component. The experience of
        OECD member countries may be of value to Brazilian authorities.
            Reinforce the financing of the social security system. For PAYGO systems to
        work, they must be independent, have transparent accounts and clear mechanisms to
        finance benefits and identify benefits trends. Improvements can be made to ensure the
        sustainability of the pension system in Brazil.
            Develop a wider complementary pension scheme. Compared to OECD member
        countries, the Brazilian complementary system is relatively small. In OECD member
        countries as a whole, fund assets are generally in excess of 100% of GDP and coverage
        rates above 50% of total labour force (Bonturi, 2002). This is only partly related to the
        fact that in Brazil only about a sixth of higher income workers contribute to
        complementary pension regimes. The information provided by Brazilian authorities
        suggests that there is an ongoing debate regarding the development of the complementary
        pension scheme. Brazil may make better use of the potential of these funds by improving
        the regulatory framework and the supervisory structures.
            The creation of a complementary regime for civil servants, associated with capping of
        pension contributions and benefits for new entrants would go a long way towards
        removing the barriers to the development of a wider complementary pension scheme.
        Alternatively, Brazil might explore the possibility of adapting the UK Partnership
        Pension Sscheme to the Brazilian context as an option for civil servants’ pensions. The
        main advantage of this scheme is that it involves private providers, is low-cost and
        flexible, which is helpful for short-term and temporary employees.
             Supplemental schemes may cover public sector employees separately and Brazil may
        benefit from the experience of different OECD member countries in this respect. One
        plan may be set up for national government employees and another for local government
        staff like in Finland, Ireland and Sweden. A supplemental scheme may also cover
        different segments of the public service or certain types of employees such as teachers,
        fire fighters and health-care professionals as in the United Kingdom. In addition, a variety
        of supplemental schemes may top up income from basic pensions, which may be low
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       because the intended purpose is to provide only a minimum pension; such is the case in
       Sweden, the United Kingdom and the United States. Some supplemental schemes are set
       up by geographic areas, such as the ones for the autonomous communities of Spain.

                  Box 1.13. The UK Partnership Pension Scheme for civil servants

            UK civil servants have two options in terms of pension arrangements. The first, Nuvos, is a
        defined pension scheme to which the civil servant and the employer contribute. The annual
        pension amounts increase with the retail price index. The second is a partnership pension
        account, a stakeholder pension with an employer contribution. Civil servants do not have to
        contribute but the employer pays into the pension fund whether or not the employee contributes.
        These contributions are invested on behalf of the employee by a pension provider of his/her
        choice. Over the years, the pension fund should grow (the money earned by the invested pension
        contributions). The employee uses the resulting pot to buy a pension when he/she retires or to
        leave to someone when he/she dies. The choice of scheme depends on the personal
        circumstances of the civil servant and how long he/she sees his/her career progressing. It should
        be noted, however, that civil servants can only chose one scheme at a time; they can change
        schemes but cannot belong to both at the same time.
             The benefits of the partnership scheme are that the employer contributes, whether or not the
        employee does. The employer pays an age-related contribution of between 3% and 12.5% and a
        matching contribution, payable if the employee contributes, of up to an extra 3% of the
        pensionable earnings. There is tax relief on any contributions made to the fund. Employees
        receive a redundancy cover and access to a retirement lump sum for ill health. The pension can
        be taken at any age between 55 (from 2010) and 75, and employees can choose the type of
        pension they want. Each provider (Scottish Windows, Standard Life, TUC/Prudential) offers an
        extensive range of investment funds. When the employee draws the pension, he/she may be able
        to take up to 25% of the pension fund as a tax-free lump sum but the remainder must be used to
        buy a pension. The size of the pension will depend on the amount of money contributed by the
        employer and employee, the investment returns of the selected fund (or funds), the amount of
        lump sum taken by the employee, the type of pension chosen, and the rate used to convert the
        pension fund into an annual income for retirement.
        Source: Civil Service Pensions (2007), “Pension Choices Nuvos or Partnership”; and Civil Service
                Pensions (2008), “Partnership – An Overview”, www.civilservice-pensions.gov.uk.



           In discussing the complementary schemes for civil servants, Brazil may emulate the
       actions of some OECD member countries which introduced schemes for special cases
       like persons under contract to the civil service and schemes that add to basic pensions but
       are not considered supplemental schemes by member countries like Finland, Japan and
       Spain. In some countries, supplemental schemes have been set up for persons under
       contract to the civil service (Austria, France, and Germany, for example). The institution
       of such schemes has been motivated by a desire to narrow the gap between the (lower)
       pensions of these workers and the pensions paid to civil servants. In addition, these
       schemes also seek to compensate for the entitlements available to civil servants, such as
       job security. Thus the government of Brazil may draw from the experience of France
       where IRCANTEC (Institution de retraite complémentaire des agents non titulaires de
       l’état et des collectivités publiques) was initially created to provide people working under
       contract for the state or a sub-national entity with a pension similar to the plan available
       to civil servants. This scheme is compulsory and works on a point system. IRCANTEC
       was set up prior to the supplemental regime introduced for civil servants in 2005.
       Alternatively, Brazil may look at the German experience. In this country the

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        supplemental scheme for contract workers was instituted to give non-civil servants a
        pension equal to that of civil servants. Based on collective bargaining agreements, it is
        compulsory and provides benefits virtually identical to those paid out by the pension
        funds for federal and state government employees. In Austria, supplemental pensions are
        provided for contract workers only. These schemes are comparable to the ones in the
        private sector pension system in which employers and employees make joint
        contributions.

1.9. Promoting government’s goals regarding diversity

        The experience of OECD member countries
            OECD member countries’ experience with promoting diversity in the public service is
        mixed. Long-term policies and priorities have been put in place in many OECD member
        countries, with uneven results. In recent years, many countries have recognised the need
        to supplement traditional recruitment and promotion mechanisms with specific measures
        to make up for social inequities at entry which are due to inequalities in social
        backgrounds and the cultural biases that are inevitable in all recruitment and promotion
        procedures. It is now recognised that employers tend to recruit and promote staff who are
        similar to them or at least to their value system.
             Diversity programmes usually target women, persons with different social, cultural or
        ethnic backgrounds, and disabled persons. The emphasis on diversity is not only an issue
        of equity but also of efficiency and effectiveness. Recognising the value of diversity is the
        first step towards a sound diversity policy which does not oppose diversity and merit.
        Countries are striving to mainstream diversity policies into daily human resource
        management processes and to change the culture from seeing diversity as a problem to
        considering it an opportunity and a value. Apart from programmes aimed at employing
        disabled workers, quota systems and affirmative action programmes are rare.
            In addition to legislative and regulatory measures, countries are emphasising better
        understanding of diversity issues (surveys, exit interviews), equal access to training to
        prepare for public service examinations, mentoring programmes to favour careers of
        minority groups, and changes to recruitment systems. Most countries are also putting
        some emphasis on improving diversity at senior management levels, where the
        weaknesses are the most visible. This can help improve diversity in the public service.

        The situation in Brazil
            Brazil is structurally a very heterogeneous country with important challenges
        regarding equal opportunities among different social minorities, and the largest part of
        difficulties come from differences in levels of income, education, socio-economic levels
        and origins (urban, rural, popular or aristrocratic). Special secretariats attached to the
        Brazilian presidency are in charge of diversity issues, including human rights, women,
        and ethnic and racial equality.
            The proportion of women in top-level positions (21.9% in DAS 5 and 6 positions) is
        not high compared to OECD member countries, but has been increasing since 2000. In
        addition, the number of women at the level immediately below has also increased steadily
        since 2000.




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          Figure 1.19. Percentage of women in senior positions in OECD member countries in 2005
                                               and in Brazil

         % 40



           35



           30



           25



           20



           15



           10



            5



            0




                                              2005 (or closest year available)   2008 (Brazil)



        Source: OECD (2008b), State of the Public Service; OECD (2009c), Government at a Glance, 2009; and data
                for Brazil come from the OECD 2006 Survey on Strategic Human Resource Management.


           Regarding other minorities, and as in a number of OECD member countries, statistics
       on social and ethnic minorities or disabled staff or socio-economic backgrounds are not
       available. The government has a quota for disabled staff, with 2% to 5% of positions at
       the disposal of handicapped people for entry exams into the public service, a target that is
       said to have been achieved.
           There is some indication that diversity is slowly becoming a management concern in
       the government’s human resource management policy. In August 2009, the Ministry of
       Planning coordinated the first Forum on Discrimination and Prejudice within public
       administration. ENAP has established a round table of action-research on diversity and
       training in governmental schools, from which proposals for educational programmes for
       diversity within governmental schools have been made (the work was targeted to be ready
       by February 2010). These initiatives, however, remain limited. Government officials
       underline that public examinations, by focusing on an objective measurement of
       candidates’ skills and knowledge, hire staff on objective merit, and that this should
       provide as diverse a labour force as feasible given the level of education of different parts
       of the population.
           Many officials point to the fact that the relatively high percentage of entry-level
       exams open to non-university graduates helps foster diversity, especially in the more rural
       states. It is indeed a specificity of Brazil to have maintained a high percentage of entry
       points for people without advanced education, which allows for a level of diversity in the
       poorer parts of Brazil where competition is more limited. This is the case in government
       but also in state-owned enterprises. For example, in the Banco do Brazil, all recruitment
       for entry-level positions only requires a high school diploma. Today, 32% of entrants
       only have a high school diploma. The federal government policy that aims at decreasing

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        the number of applicants with high school diplomas, although probably necessary, should
        thus have a negative impact on diversity.

        Suggestions for future reforms
            Brazil’s diversity policy is relatively minimal compared to those of OECD member
        countries. The general argument is that there is no discrimination in recruitment as
        competitive merit examinations provide for equal access to the public service and should
        be the main tool for enhancing diversity. In many OECD member countries, however, it
        is now generally considered that equal access and transparency do not provide equity in
        the workplace. In fact, few OECD member countries use quotas, but most have equal
        opportunity policies in place.
            As a country with serious difficulties in the heterogeneous access to wealth and
        education, Brazil inevitably has diversity challenges in the public service, in addition to
        imbalances in gender access to senior positions and difficulties of access to the public
        service by handicapped persons. Building on the experience of OECD member countries,
        Brazil first needs to establish the value added of diversity (in terms of gender, social
        backgrounds) not only in terms of equity but also in terms of the government’s role in
        maintaining and strengthening social cohesion and setting an example as an employer for
        the rest of the country. The government should stress that diversity measures are to be
        temporary until diversity practices are a standard part of the daily functioning of public
        organisations. Second, the value of diversity in terms of the efficiency and effectiveness
        of policy making and service delivery needs to be recognised. Diversity campaigns will
        be important to raise awareness of these issues both in government and in settings such as
        universities. Then of course, there is a need to understand in depth the impediments to
        diversity through diversity audits and voluntary surveys. Progress has to be monitored
        and accountability developed through managerial reporting.
            The second issue for Brazil, as for OECD member countries with equal access to the
        public service through transparent, mostly written recruitment processes, is to state that
        equality as promoted in such entry exams does not necessarily promote diversity. Funding
        for minority groups to obtain training for exams, as in France and New Zealand, through
        a system of scholarships, reviews of exams, promotion of different skills in exams
        (different languages, special knowledge of an area or of an issue, life experiences) could
        be the first concrete steps towards increasing diversity. Belgium’s recruitment agency,
        SELOR, has launched “neutral and adapted tests to make sure that tests for selection do
        not contain any form of biases that could reduce the chances of certain groups of
        candidates”. France has also recently created the PACTE (path to the civil service career
        at national and regional levels and in hospitals) for young people aged 16-25 who leave
        the educational system without a degree or professional qualifications and get on-the-job
        training prior to possible appointment to a permanent post in the public service. The City
        of Vienna is another example of a government that is offering apprenticeship to students
        from different national origins. Ireland has developed a Traveller Internship Programme
        to provide quality temporary employment opportunities in the civil service for nomadic or
        itinerant people of Irish origin so that they develop new skills and are prepared for
        participation in the civil service open selection process.
           Like some OECD member countries, Brazil could develop coaching and mentoring
        programmes, career path planning, and development of qualifications focused on
        underrepresented categories. Some countries have also created networks of staff from
        minority groups.

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           In order to face discrimination during staff careers, an Ombudsman to deal with
       discrimination could be created, as in Sweden. There are also larger offices concerned
       with discrimination in society such as the special commissions in the United Kingdom or
       the Haute autorité de lutte contre les discriminations (HALDE) in France.
           The case of women is somewhat different as the issue in career-based systems is
       usually less about recruitment (especially if recruitment is mostly through written tests),
       than about careers and promotion. Most countries use a mix of coaching, training, flexible
       working hours, panel recruitment training and selection tests for promotion,
       communication tools around vacancy announcements, etc.
           Given the flexibility in recruitment at the DAS level, there is no doubt that DAS
       positions could constitute fertile ground for a diversity policy, especially for women. The
       government could give itself targets for recruitment of minority groups and women at
       each DAS level, report on such targets, show good practices, promote recruitment
       methods that are not biased against these groups, and promote coaching of those groups
       and women.

1.10. Conclusion

           Owing to recent high levels of economic growth, pressures for efficient workforce
       planning have been limited, and it is understandable that ministries have few incentives to
       focus on strategic workforce planning.
           Compared to OECD member countries, the proportion of Brazilians working in
       government throughout the country is relatively low, but the cost of this workforce
       weighs heavily in the economy. Moreover, the cost of services paid for by government
       and produced by the private sector also represents a high share of GDP. This means that
       governments at all levels in Brazil need to manage the size, composition and allocation of
       the workforce effectively.
           Brazil has made important steps towards ensuring the fiscal sustainability and fairness
       of the pension system for civil servants. Although the effects will only be apparent in the
       long term, Brazilian authorities may need to monitor the financial situation of the country
       and demographic issues in order to better adapt social security programmes to evolving
       lifecycle and labour market risks and changing demographic realities. For example, Brazil
       is currently discussing how better to organise complementary pension schemes. To this
       end, the Ministry of Planning and the Ministry of Social Security may need to consider
       the design, administration and financing of such programmes and the policy outcomes
       they seek to achieve. A further important question is how to co-ordinate such
       programmes with the existing social security programmes. Brazil should consider
       adopting a more dynamic than reactive approach.
            The effective management of the size, composition and allocation of the workforce is
       all the more important as the federal workforce is ageing rapidly and special workforce
       planning strategies will be needed to ensure continuity. The coming retirements from the
       federal public service offer a unique opportunity to restructure the workforce and adjust it
       to the future needs of society.
           At the federal level, workforce planning in most ministries and agencies is still input-
       driven and focused on tracking staff numbers and costs. Brazil has a very good record in
       this respect, and is now able to make very good projections of numbers and costs in the
       future. However, workforce planning is still not yet enough based on analysing trade-offs

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        in staff numbers and allocations, in the view of government priorities, outsourcing
        possibilities, and technological changes. It is still too focused on the recruiting
        organisation’s pointing future needs and the centre’s focus on controlling the size of the
        establishment and compliance monitoring. Recent positive changes on this matter should
        be encouraged and strengthened.
            Managers’ accountability for workforce planning is very weak. Workforce planning
        needs to be made part of strategic documents and managers need to focus on plans that
        take an overall strategic view of their workforce (jobs, competencies, future changes) in
        light of the changes affecting their organisations, outsourcing possibilities (understood in
        the sense of firms being contracted for delivering goods and services rather than “leased
        labour”) and technological changes. The experience of OECD member countries, but also
        good examples in Brazilian state-owned enterprises, could serve as inspiration.
            The way the job category system has been implemented, as well as the proportion of
        short-term staff and unclear rules regarding the level of authorised outsourcing give
        directors and managers extraordinarily little flexibility for workforce planning and the
        allocation of their workforce. To a certain extent these limitations have allowed for
        impartial recruitment and management of civil servants and ensured healthy ethical
        standards in the public service. These achievements allow Brazil to move towards a more
        flexible and competency- and performance-based model with greater delegation of
        managerial responsibility as it embarks on the modernisation of its administration.
            In parallel, it would probably be healthy for central ministries to increase pressures
        for more efficient management of the workforce. The measures that have helped maintain
        costs are good restrictive measures but are not strategic measures for workforce planning.
        In addition, Brazil has carried out stop-and-go policies for personnel and salaries which
        have created a lot of resistance and difficulties with capacity in the past. To exert pressure
        to increase efficiency, Brazil could follow the example of many countries and adopt
        policy reviews.
             In addition, instead of piecemeal career by career management of compensation costs,
        the federal government would gain by continuing its present efforts to devise a salary-
        setting approach that takes into account the “total real compensation of employees”
        (benefits, status, etc.) and provides clear criteria and parameters for salary increases that
        take into account affordability but also attractiveness (this requires a comparison with the
        private sector), and considerations such as increases in productivity, changes in
        competences, social acceptance, etc. Performance as such should not be the main focus of
        salary setting at this stage in Brazil (see Chapter 3).
           Workforce planning also raises issues regarding relations with unions. Brazil’s
        negotiation process with unions is still in its beginnings and is relatively non-
        confrontational. There is an opportunity to establish a constructive dialogue that may
        eventually be a good vector for reforms.
            Finally, in a diverse country such as Brazil, the federal government should be an
        example of good practice in promoting diversity. While equality and transparency are
        relatively well ensured by strict rules about recruitment and careers, they are not
        necessarily conducive to increased diversity. Policies that have rightly aimed to increase
        the level of competencies in government will only increase the importance of this issue in
        the future. Brazil could follow the example of many OECD member countries by
        establishing equal opportunity policies for disadvantaged groups and women. Special
        policies for disabled people are already in place.

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                                                       Notes


       1.      According to the definition of the System of National Accounts, general government
               includes core ministries, departments and agencies, non-market publicly owned
               hospitals, public schools, social security organisations, etc. It includes units at all
               levels of government, including regions, provinces and municipalities. It does not
               include retired employees or other pensioners. In Brazil, retirees and pensioners are
               often counted as part of the public sector workforce. According to IBGE, they are not
               included in the data below that follow the international methodologies and
               classification of the System of National Accounts.
       2.      This is for 28 countries.
       3.      Data for the state level are not available, but, as mentioned, the evidence indicates a
               relatively stable percentage of total employment since 2002.
       4.      In particular, the programmes for universal access to elementary education and the
               opening of new institutions in the higher education sector have involved the hiring of
               large number of staff (at the municipal level for elementary education and at the
               federal level for higher education). Changes in the allocation of responsibilities in the
               health sector from federal government to lower levels of government were, for a
               while, not entirely compensated in staff numbers, and states and municipalities have
               been catching up. Pressures for more police surveillance have also involved increases
               in workforce numbers in the military and civil police (state level).
       5.      In the System of National Accounts, the compensation of employees (always active
               employees) includes salaries and wages paid in cash or in kind (including the values
               of any social contributions, income taxes, etc., payable by the employee even if they
               are actually withheld by the employer for administrative convenience or other reasons
               and paid directly to social insurance schemes, tax authorities, etc., on behalf of the
               employee) and employers social contributions. Like in other countries, part of
               government compensation costs is constituted by imputation for social contributions
               (pension benefits from unfunded pension schemes). In Brazil, retirees and pensioners
               are often counted as part of the public sector workforce. However, according to
               IBGE, pensions and other transfers for inactive employees and pensioners are not
               included in these data that follow international methodologies of the System of
               National Accounts (SNA). Doubts remain regarding how data are compiled in reality,
               especially concerning in which category the benefits of retirees and pensioners have
               been included. Clarifications and further work by IBGE would help refine the
               analysis in the future, and full consistency of the data with the number of employees
               in general government will have to be ensured.
       6.      This shows that even when GDP growth is not taken into account compensation costs
               have moderately increased in volume.
       7.      General government output represents the value of goods and services produced by
               government and equals the cost of production. Produced goods may be consumed by


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                  other sectors (e.g. market goods), may be used as investments and consumed by
                  general government, or consumed as final consumption (e.g. as health-care services,
                  individual consumption, defence, or collective consumption).
        8.        The difference in average salaries between the government and the private sector is
                  likely to be even bigger because of the size of the informal economy (and likely over
                  reporting of private wages), but per definition, this is not possible to measure.
        9.        The approach and methodology that explain fully the notion of the costs of production
                  of government-funded services are developed in Pilichowski, E. and E. Turkisch
                  (2008), “Employment in Government in the Perspective of the Production Costs of
                  Goods and Services in the Public Domain”, OECD Working Papers on Public
                  Governance, No. 8, OECD Publishing, Paris. The cost of producing government-
                  funded services is approximated by adding the costs of general government
                  intermediate consumption (goods and services produced by non-general government
                  organisations and companies and consumed by government), the cost of contracting
                  out goods and produced for citizens and funded by government directly or indirectly,
                  and the compensation costs of general government employees.
        10.       This does not indicate that services are costly in themselves as it does not measure the
                  quality or the quantity of the services produced.
        11.       Presentation by Canada at the annual meeting of the civil service group of the OECD-
                  MENA initiative, Rabat, 2009.
        12.       Although the 90% do not include recurring expenses such as payroll, private pensions
                  that do not lend themselves to performance targets.
        13.       Based on the guidelines on workforce planning designed by the US Office of
                  Personnel Management, www.opm.gov/hcaaf_resource_center/assets/sa_wp_kepi.pdf.
        14.       Ministry of Planning, response to the Strategic Survey on Human Resource
                  Management.
        15.       Restrictions have been established in the law since 1967 and were not implemented,
                  with successive condemnations by the federal Court of Accounts (TCU, Tribunal de
                  Contas da União).
        16.       Direct administration is composed mainly of services located in the administrative
                  structure of the presidency and ministries. Indirect administration is composed mainly
                  of entities with legal personality such as agencies, banks, public enterprises, mixed
                  economy societies, public companies and public foundations.
        17.       DAS positions involve about 22 000 positions at lower and higher administrative
                  levels, with discretionary appointment to those positions although some quotas define
                  the minimum percentage of DAS positions that have to be filled by civil servants (see
                  Chapter 2 for a full description).
        18.       This part draws from OECD (forthcoming), OECD Public Management Review –
                  Greece.
        19.       In 1995, most states and municipalities had personnel expenses beyond the 60% limit,
                  but in a few years most had adjusted to this new requirement.
        20.       All dismissed were not simply readmitted. What the courts decided was that tenured
                  civil servants whose jobs were declared extinct or unnecessary had the right to full



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               remuneration (instead of remuneration proportional to time in service), until they
               were adequately placed in another office. Those that did not have tenure and were
               dismissed by the Collor Administration benefited from a law approved in 1994 that
               established conditions for their readmission. The implementation of this law created
               administrative disputes and (following a presidential decree by Fernando Henrique
               Cardoso) a revision process nullified almost every readmissions previously accepted.
               Unions demanded a revision of this process which President Lula committed to. A
               benevolent interpretation of the law permitted the reintegration of good number of
               staff.
       21.     The Constitution does not allow outsourcing to save costs but to fulfil the needs that
               do not have to be filled by career civil servants.
       22.     In 2006, central governments of Austria, Iceland, Luxembourg, Mexico, Poland,
               Portugal, the Slovak Republic, and Sweden, reported not having performance-related
               pay for their employees and those of Canada, France, Ireland, Italy, the Netherlands,
               Norway only having performance-related pay in place for senior management levels.
       23.     Country data in this section are drawn from the EU study by the Ministère du budget,
               des comptes publics et de la fonction publique, (2008b), “Comparative Analysis of
               the Social Dialogue in Central Public Administrations of the European Union
               Member States”, Études et Perspectives, and from the results of the OECD 2006
               Survey on Strategic Human Resource Management.
       24.     The right to strike still requires a specific law to be implemented. In the meantime,
               the Supreme Court has ruled that the rules that apply to the right to strikes in the
               private sector also apply to the civil service, with some adaptations.
       25.     Draws from OECD (forthcoming), OECD Public Management Review – Greece.
       26.     The retirement factor is the result of a mathematic formula that considers time on
               contribution, age and life expectancy. It can be accessed at
               www1.previdencia.gov.br/docs/excel/fatorprevidenciario_2008.xls.
       27.     The existing 360 operators (over 2 100 sponsors) had accumulated nearly 20% of
               GDP in assets in 2003. But coverage remains low, with only 2% of the labour force
               enrolled.
       28.     At end-2003, there were 43 EAPC providers, with nearly 2.5% of GDP in assets and
               6.5 million plans sold.
       29.     This represents 34% of the total number of municipalities in Brazil. The others are
               linked to the general regime applicable to private sector workers (Ministerio da
               Previdência Social, 2008).
       30.     The Portuguese term pensionistas has been translated as pensioners which means the
               dependants of civil servants (partner and/or children below 21 years of age) who
               receive the pension benefits in case of the civil servant’s death.
       31.     For public servants to have the right to obtain pensions equivalent to the last salary, it
               is necessary that they are protected by the rule of the “acquired right” (direito
               adquirido) as expressed in Art. 3 of the Constitutional Amendment 41 of 2003. For
               further details see also Constitutional Amendments 20/1998, 41/2003, 43/2003 and
               47/2005.




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        32.       The average retirement factor is the arithmetic average of the contribution
                  remunerations, using 80% of the contributing period composed by the highest
                  remunerations. For further information see Law 9.876/99.
        33.       A low paid civil servant, for instance a teacher, who worked his entire career in a
                  public school, obtains quite the same benefit of a private sector teacher.
        34.       In contrast, many Latin American countries have instead emulated the Chilean model
                  of privatisation of social security, and/or put in place some form of mandatory, fully
                  funded social security scheme. Chile pioneered the structural reform process in 1981,
                  replacing the pay-as-you-go system by privately run individual saving accounts.
                  During the 1990’s, Peru (1992-94), Colombia (1993-94), Bolivia (1997), and Mexico
                  (1995-97) implemented comparable reforms. However, the public system was not
                  phased out for those currently in the civil service. Reforms in Argentina (1994) and
                  Uruguay (1995-96) consisted of setting up mixed systems including a reformed pay-
                  as-you-go system and private individual saving accounts (OECD, 2005d).
        35.       These rules are not applicable to civil servants hired before December 1998.




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                                                  Chapter 2
                                       Strengthening government capacity



             Governments from OECD member and non-member countries need to improve the
        capacity, competency and efficiency of the public administration and public services if
        citizens’ expectations of good service and value for money are to be met. This chapter
        reviews the strategy of the Brazilian federal government to strengthen capacity. In the
        light of the experience of OECD countries, the chapter focuses on the management of
        competencies as a basis for integrating human resource management policies and
        practices into the government’s goals and performance. It also examines the structure
        and management of job categories and career paths and their implications for workforce
        flexibility and cost effectiveness, the employment arrangements to acquire human
        capacity and talent, and the training and development of staff strategies.




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            Governments play larger roles in the societies and economies of OECD member
        countries than they did half a century ago. A larger share of the national product is used
        for public consumption, public investments and public transfers to households, and public
        administrations are in charge of increasingly complex activities. Citizens’ expectations of
        good service and of value for tax money have increased.
            Governments thus need to improve the capacity, competency and efficiency of public
        administrations and public services. Efforts to achieve this cover a broad range of issues
        including how to organise and govern the public administration, how to budget, how to
        use modern information technologies, how to involve citizens and how to co-operate with
        private enterprises and organisations. The results of public activities are ultimately due to
        the efforts and the engagement of public servants in and for the public administration. At
        the end of the day, it is they who deliver the results.
            Consequently, the performance, effectiveness and efficiency of public servants have
        become key concerns for governments. Appropriate human resource management
        practices are increasingly seen as an essential aspect of the quest for enhanced
        performance. OECD member countries have a broad spectrum of human resource
        management arrangements owing to differences in cultural, historical, political and
        administrative contexts. Reforms debated or enacted broadly reflect a country’s current
        phase.
            One common thread running through reforms in all OECD member countries is,
        however, a greater focus on the competences of public servants. Countries that play a
        leading role in this respect develop and implement systematic competency management,
        linking recruitment, training and staff development to competency frameworks and
        competence profiles. Efforts have also been made to modernise recruitment processes and
        enhance the development of public servants throughout their careers. To achieve this
        goal, countries have often found it necessary to profoundly restructure their job categories
        and career paths.

2.1. Managing competencies

        The experience of OECD member countries
            Competency management is used in the public sector in many OECD member
        countries. Some, such as Canada, the United Kingdom and the United States have used it
        for several decades, and it is widely used and well embedded. Others, such as Belgium,
        Finland, the Netherlands, Sweden and Estonia, have introduced it more recently. In
        France and Germany it is limited and still at the experimental stage.1
            Competency management has spread in both the private and public sector because it
        has proved to be an effective way of:
            •   defining the abilities and behaviours needed for people to do their jobs well;
            •   linking a number of key human resource management activities to ensure that an
                organisation is staffed by competent people who perform effectively.
            Competencies can be a basis for focusing and integrating human resource
        management policies and practices around an organisation’s goals and performance. This
        is called strategic competency management.



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        What are competencies?
            Competencies are generally defined as the combination of knowledge, skills and
        behaviours that result in good performance in a job. These are usually identified and
        validated through observation and analysis of what it takes to perform well. The
        behavioural aspect is a crucial part of competencies: it is not only the knowledge and
        technical or specialist skills that people bring to their work that counts. Employers
        understand that behaviours, such as communication, teamwork, flexibility and
        interpersonal skills, play a crucial part in how people perform (Armstrong, 2001;
        Chartered Institute of Personnel and Development, 2008).

        Competency frameworks
            In order to use competencies as a strategic management tool, they need to be
        integrated into a framework and linked to other elements of human resource management.
        The links that most organisations tend to make are with recruitment and selection of staff,
        training and development, and succession planning or career planning, so that these
        activities are well aligned with the organisation’s needs and well integrated with one
        another. Competencies may also be used as an element of performance management.
        There has been increasing focus on this, as behavioural aspects of performance have
        come to be better understood: performance is not only a question of what people do, but
        also of how they do it in interaction with other people. Organisations may also use their
        competency framework to reward management, although competency-based pay systems
        are relatively rare and remain quite controversial (Hondeghem, 2002: 190).
           It is these linkages with other elements of human resource management (HRM) that
        enable organisations to use competency management to shape the organisational culture
        and create a strong performance orientation.
            Competency frameworks vary enormously in terms of how they are developed and
        structured. Some organisations use competencies to drive integration around core values
        and capabilities that are considered crucial to the organisation’s success by defining a few
        generic competencies that all employees are expected to demonstrate. Others focus on
        competencies for those in leadership and management positions. Competencies may also
        be defined along the lines of different job families or occupational groups. These
        approaches may also be combined, with both generic and job-specific competencies.
            However, as noted in the OECD Review of Human Resource Management in
        Government       Belgium, the key aspect of competency frameworks is not their structural
        design, but the fact that they enable the government to work more systematically and in a
        more goal-oriented way on workforce planning and on investments in human resources
        (OECD, 2007a: 60).

        Competencies and job profiling
            Job profiling is a valuable tool for applying competencies, particularly for purposes of
        recruitment, and for ensuring a clear link between competencies and outputs. A job
        profile is a way of combining a statement about what is expected from a job with a view
        of the competencies that the person doing the job must have in order to deliver the
        expected results (OECD, 2008c).




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            Many OECD member countries now use job profiles rather than job descriptions in
        order to focus attention on the outputs or results to be attained rather than on the tasks to
        be done. This signals a move away from rigid, mechanistic definitions of jobs to a more
        flexible, performance-oriented approach. The competencies required are determined by
        the job profile: for example, behavioural competencies may include aspects such as the
        ability to work in teams or build networks; if there are managerial responsibilities,
        competencies would typically include interpersonal skills and leadership abilities.
        Depending on the type of job, both generic competencies and job-specific competencies
        may be included in a job profile.

        Factors driving the use of competencies in the public service
           There have been several factors behind the spread of competency management in the
        public service:
            •   One has been the wish to inculcate managerial values and skills, especially among
                senior public servants, by using competency frameworks which define the generic
                leadership and management competencies senior managers should have. This
                was, for example, one of the reasons for introducing competency management in
                the UK civil service in the 1980s (Farnham and Horton, 2002). Such frameworks
                are generally used as a basis for selecting and training senior managers and in
                some countries for purposes of performance management.
            •   Competencies are often used as a tool to manage change – for example to create a
                common understanding of issues such as a focus on results and customer-
                orientation – and to introduce more flexible ways of working into the public
                service. An example is the reform of the Belgian federal government, in which
                competency management has been accorded a pivotal role. This is discussed in
                more detail later in this section.
            •   Another important factor has been the use of competencies to improve workforce
                planning and recruitment and selection processes, so that these critical activities
                are based on an analysis of the competencies needed by public services. For
                example, the GPEEC (Gestion prévisionnelle des emplois, des effectifs et des
                compétences) (Employment, Workforce and Competency Planning) initiative in
                the French civil service introduces the notion of competencies for the first time.
                This has raised the issue of how recruitment methods might be adapted to
                incorporate consideration of competencies without abandoning the basic principle
                of selection through competitive examinations.
            •   Competency management has also spread as public services have placed greater
                emphasis on upskilling their workforce, ongoing professional development and
                lifelong learning. Indeed, one of the most common uses is for staff development.
                Competency frameworks are used to ensure that training and development focus
                on the organisation’s business needs and to establish a culture of ongoing learning
                and development.
            •   Another factor has been the spread of performance management in the public
                sector. Competencies can be used as a way of defining what excellent
                performance looks like and what competencies employees need to have in order
                to perform well, although there can be problems for using competencies
                effectively in this way, as discussed later in this section.


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            Not all efforts to use competencies in the public sector (or indeed in the private
        sector) have met with immediate success. A review of competency management in the
        public sector in Europe carried out by the European Group of Public Administration
        (EGPA) notes a number of problems: competency frameworks can become too static;
        measuring competencies for purposes of performance management can be difficult and
        may lead to excessive focus on inputs rather than results; implementation can be difficult
        unless all stakeholders – top managers, line managers, staff and trade unions – are
        involved and supportive; and, finally, competency frameworks can become overly
        bureaucratic and run the risk of becoming ends in themselves (Hondeghem, 2002). The
        experience of public services that have been using competencies the longest is that
        frameworks need to be reviewed and revised regularly to ensure that they remain
        effective.

        The situation in Brazil
            The Brazilian federal administration has recently begun to introduce competency
        management as part of a strategy to strengthen the capacity of the public service. This is
        an important step in improving the ability of the administration to deliver on government
        priorities in key areas such as education, social policy and environmental protection. A
        government decree of 2006 (Decree 5.707, 2 February 2006), following a decree of 1998,
        outlines guidelines for the federal executive management development institutes and
        introduces the notion of a competency-based administration (Gestão por competências).
        It defines it as the management of training oriented to the development of knowledge,
        skills and attitudes for public servants to perform well and fulfil the objectives of their
        organisations. It stresses the need for the definition of competencies to be related to the
        goals of organisations within the Pluriannual Plan, and underlines that competency
        management should use different sorts of learning methodologies such as e-learning,
        workshops, exchanges and internship activities, seminars and coaching. A National
        Policy for Civil Servant Development has been established and a Steering Committee
        formed, comprising the Secretaries of the Human Resources and Management
        Departments, Ministry of Planning, Budget and Management, and the President of the
        National School of Public Administration (ENAP). This steering Committee has met 24
        times resulting in the establishment of a programme on human resource management at
        ENAP and of distance learning courses on social dialogue, as well as training activities
        and workshops aimed at preparing ministries for competency management.
             Competency management is being approached initially as a way of reorienting and
        strengthening training and development to upskill the public service and to instil a culture
        of ongoing development. The competency-based approach is being used to modernise
        training and development and target it to priorities identified through analysis of the
        competencies needed by individual public sector organisations. Given the need to raise
        skills and bring them into line with current and anticipated future needs and improve the
        cost-effectiveness of training, concentrating competency management in this area, as a
        first step, makes sense.
            However, from the outset the federal administration in Brazil has a broader, strategic
        goal. In the longer term, competency management is now generally considered as one of
        the pillars of strategic human resource management. Some authors (for example: Amaral,
        2006) consider that it changes the focus from the formal attribution of a position to the
        consideration of work as a combination of accumulated knowledge, know-how,
        experience and behaviour in specific contexts. The aim is, therefore, to use competencies
        to radically change the way people are managed and to extend the use of competencies to
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        the entire personnel management cycle: selection, assignment of staff, training and
        development, and assessment of performance.

        Developing competency management
            Approached in this strategic way, competency management has the potential to help
        the Brazilian administration improve its HRM in several key areas:
            •   by better defining training and development priorities, thereby making the
                investment in this area more cost-effective;
            •   by improving recruitment and selection methods through the use of competency
                profiling in the recruitment process;
            •   by helping to develop strategic workforce planning by defining competency
                needs, planning how to fill in competency gaps, and using competency
                frameworks to establish clear links between the business needs of each part of the
                administration and recruitment planning;
            •   by facilitating the introduction of more staff mobility by profiling positions and
                identifying opportunities for horizontal and vertical mobility based on a
                competency framework;
            •   by strengthening performance management through a link to competencies;
            •   by developing managers and inculcating common management skills and values
                on the basis of a set of management competencies applied across the public
                service.
            Because it is such a potentially powerful tool for the strategic integration of different
        areas of HRM, competency management should be regarded as a priority for the Brazilian
        administration. It is most important that competencies do not become an end in
        themselves, as can happen unless a clear strategic focus is maintained on how
        competencies contribute to the performance of the public service. To avoid this potential
        pitfall, it is essential to plan from the outset how competencies will gradually be
        integrated into different priority areas of HRM such as workforce planning and
        recruitment and performance management, in addition to the current focus on training.
        This should help to keep the implementation of competency management on track.
        However, a number of obstacles will have to be overcome in order to properly develop an
        integrated system of competency management, as discussed below.

        Challenges of scale and capacity
            In Brazil, issues of scale and of capacity to carry out human resource management
        need to be considered when deciding how to approach the implementation of
        competencies. At present, this is proceeding on an organisation by organisation basis in
        what is essentially a bottom-up approach. As a first step, every public institution is
        expected to map its competencies and to use this map to develop an annual training plan.
        This approach seems realistic, given the size and geographical dispersion of the public
        administration and the novelty of competencies in many parts of the public service. While
        this will inevitably lead to variations in the rate of implementation, it permits flexibility
        and provides opportunities for institutions to learn from one another. However, it runs the
        risk that implementation will be patchy and that competencies will come to be seen
        purely as a training instrument; both would severely limit the chances of developing

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        competency management as an effective instrument for workforce planning and HR
        management. The challenge for the government will be to move beyond this early phase
        and provide a framework for all ministries that is flexible enough but also supports
        competency management as a core element of human resource processes.
            The capacity of HRM units in most ministries and agencies to support the
        implementation of competencies is probably very limited, as they have so far dealt
        primarily with payroll and administration. It is likely that line managers also lack the
        necessary know-how and ability given their limited HRM responsibilities at present. The
        obvious next step is to link competencies to workforce planning and recruitment.
        However, workforce planning is not well developed. Managers and HR staff will need to
        develop the necessary skills and there appear to be both legal and cultural obstacles to
        reforming the recruitment and career systems.
            Integrating competencies into performance management and promotion systems or
        career management also creates challenges. Performance management is still at an early
        stage in most parts of the public sector. This may be an advantage, as it offers the
        opportunity to integrate competencies into performance management from the outset.
        However, this will require an integrated approach to implementation, which does not
        seem to be the case at the moment, as well as building up the necessary capability in
        HRM within ministries and agencies to manage such relatively sophisticated systems.
            The central HRM agency will need to guide, support and monitor implementation to
        ensure that competency management is adopted in a coherent manner across the
        administration. It is interesting to note that the UK government, which initially adopted a
        piecemeal approach, later introduced a standard framework for the whole civil service.
            Most progress in implementing competencies has been made in organisations that are
        exposed to the market – state-owned enterprises (SOEs) and banks, that have more
        flexible work conditions, professionalised HR units, and are exposed continuously to
        other practices in the private sector. In central ministries, competency management is still
        in its infancy, although some appear to have made good progress. Thirteen of the 24
        ministries in the direct administration have made a start on mapping competencies. There
        are some centres of excellence or promising practices which could serve as examples (see
        Box 2.1).

        Need for shared concepts
           Competencies are new to the Brazilian public service and it is important, therefore, to
        develop shared concepts so that there is a common understanding of the basic ideas and
        methods across different parts of the administration.
            ENAP is supporting the development of expertise in mapping competencies and
        competency-based training. One key initiative is to develop a common vocabulary of
        competencies so that shared concepts can serve to underpin a consistent methodology.
        ENAP is also developing training for ministries in competency-based management.
        ENAP is working with its partners in the network of public administration schools around
        Brazil to develop skills in competency-based training. Making the shift to competency-
        based training is regarded as a considerable challenge. ENAP is also, with the help of
        external experts, developing know-how in mapping competencies; this should be shared
        widely across the public service. ENAP has developed strong co-operating arrangements
        with foreign countries such as Canada, France, Ireland and Spain to develop competency
        management.

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            Box 2.1. Examples of competency management systems in PETROBRAS and
                               BNDES and the Ministry for Finance

             PETROBRAS, the Brazilian state energy company, has a sophisticated human resource
         management system that is shaped by the strategy, values and goals of the organisation, with the
         HR unit reporting directly to the CEO. HRM is well integrated with the company’s other
         business management systems and there is internal integration of the different elements of HRM,
         such as recruitment, employee development, performance management and compensation.
         Competency management is a key HRM system. PETROBRAS has defined eight organisational
         competencies, such as market orientation, technological innovation and managing personnel, and
         has linked these to nine individual competencies, such as creativity and innovation, teamwork,
         learning and sharing know-how, and the ability to make decisions. Staff are trained at the
         PETROBRAS university in both technical skills and competencies. Competencies are used in
         recruitment and career management as well as for performance management and compensation.
              BNDES (Banco Nacional de Desenvolvimento Econômico e Social) is at an earlier stage
         than PETROBRAS. The company has recently created a human resource unit and drawn up a
         strategic HR plan. Competency management is being approached as a central element of HRM,
         linked to HR planning, staffing, training and development, assessment and career development.
         The competency framework is still at the planning stage. Work has started on assessing
         competency needs and what is available in the company. The results will be integrated into the
         bank’s corporate plan and balanced scorecard, thereby ensuring strategic positioning of
         competency management. One of the challenges envisaged is to introduce competencies into
         staff selection arrangements.
             The Ministry for Finance started to develop management by competencies in 2007. There
         are some common competencies for the ministry as a whole, while each secretariat can also
         define its particular competencies. The ministry is analysing functions according to core
         competencies. The ministry considers that management by competencies has enabled it to attract
         better qualified people. When staff transfer from other ministries or agencies, their competencies
         are assessed. The ministry is developing a performance evaluation instrument to assess
         competencies. The ministry has a Talent Bank for management and professional development
         and the aim is to integrate competency management with talent management.
         Source: Presentations to OECD mission, July 2009.



        Executive competencies
            The issue of executive competencies will have to be addressed if competency
        management is to be developed as a strategic tool for HRM. While ENAP has defined a
        set of executive competencies which are used in training, there are no plans so far to
        develop a set of common leadership or executive competencies for the public service. Nor
        is there a requirement for people in executive roles to go through a specified training
        pathway. This is a main weakness in the Brazilian approach to competency management.

        Institutional obstacles
            The implementation of competency management faces difficulties arising from the
        strong legalistic framework and culture of the Brazilian public service. Personnel
        management is at an early stage of transition from a system based on detailed
        administrative regulations and procedures to results-based management. HRM is still
        highly centralised and line managers have very little control over recruitment, selection or
        promotion and therefore little incentive to engage with competency management. Another

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        institutional obstacle is the current way the system of job categories and associated
        recruitment rules have been used, which create severe barriers to movement of staff and
        the establishment of career paths, thereby limiting the extent to which organisations can
        match the assignment of personnel with the competency requirements of the job (see
        Section 2.2.). However, the approaches in PETROBRAS and the Ministry of Finance
        point to ways of making this link.
            One of the acknowledged problems with implementing competency management in
        Brazil is how to introduce competencies into the recruitment process for the public
        service so as to achieve a better fit between the needs of the organisation and the skills
        and capabilities of the people recruited. Presently, the Constitution does not allow
        recruitment on examination of experience only as it may allow the use of discretion in
        recruitment. It has been interpreted quite narrowly and entrance examinations mainly test
        candidates’ knowledge and are viewed as a legalistic exercise designed to protect merit
        and ensure transparency in recruitment rather than as a way to get the best person for the
        job. To deal with the fact that such recruitment methods are not suitable for meeting
        competency needs, some public service organisations use the probation period to assess
        competencies and close any gaps through induction training.
            A problem here is that recruitment covers only the entry-level grade in job categories,
        and it can be difficult to assess competencies when people are hired straight from school
        or university. Nevertheless, some OECD member countries have found ways to
        incorporate some general competencies, such as communication skills and interpersonal
        skills, at this stage. Moreover, as established civil servants compete in public
        competitions in order to move to another job category in the Brazilian administration,
        competency assessment would certainly add value to the selection process.
            In addition, Section 2.3. also points to the possibility of opening up some mid-level
        positions to external recruitment outside of the civil service, although this would have to
        be carried out outside of the job category system.2 To be effective, such recruitments
        would have to be carried out by testing competencies. The Brazilian government could
        look to the experience of OECD member countries such as Australia, Belgium, Canada,
        Ireland, the United States and others which successfully use competencies as a key part of
        the recruitment process for these types of recruitments.
            In the meantime, competencies could also be used to recruitment staff into DAS
        (Grupo-Direção e Assessoramento Superiores)3 positions, which need to be
        professionalised, especially for management.
            While merit must continue to be the cornerstone of recruitment to the public service,
        the issue of how to modernise methods of testing and assessment of candidates and how
        to incorporate competencies will have to be addressed. The recommendations regarding
        recruitment made in Section 2.3 suggest how this could be done; job profiling is
        discussed below as a possible way forward.

        Suggestions for future reforms
            The Brazilian government has already begun to develop competency management in
        the public service and its approach shows promise. Further developing competency
        management should be a priority for improving HRM in the Brazilian public service as it
        can serve as an integrating mechanism and a lever of change for other areas of HRM.
        Competencies can help to build skills and change behaviours, achieve a better fit between


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        recruitment and the needs of government organisations, contribute to inculcating a culture
        of management and performance, and increase mobility.
            To achieve these outcomes, competency management and performance management
        will have to be developed in a co-ordinated manner and changes will be needed in
        recruitment, workforce planning, and the grouping and classification of jobs, as discussed
        elsewhere in this report. The challenge is to develop competency management as an
        integrated, core part of HRM and to avoid the risk of its becoming an isolated tool or an
        end in itself. DAS positions, and more particularly, senior management positions, are a
        priority for the implementation of strategic competency management.
           Competency management is by no means an easy process and will require a cultural
        change on the part of the federal government and all major stakeholders. Measuring
        competencies is complex, both in the recruitment and the performance assessment
        process; they are less precisely measured than academic credentials or skills. Decisions
        can nonetheless be taken if processes are transparent and it is understood that
        competencies are more relevant for selecting and promoting staff than academic skills.

        Link competencies to other areas of HRM
           Currently, the focus in Brazil is primarily on linking competencies to training. If
        competency management is to become a lever for developing HRM and managing
        change, decisions will be needed on when and how to link it to other key areas. This
        should be done gradually, taking account of the capacity of managers and HR staff.
            Belgium’s experience with developing competency management as a central element
        in reforms of the public service is a useful example for the Brazilian government. There
        are some parallels with the issues that Brazil will face in implementing competency
        management: the Belgian federal administration also has a strong legalistic aspect, a
        tradition of a closed career system, and relatively short experience with results-based
        management methods (Hondeghem and Parys, 2002: 71). The competency management
        system developed in Belgium is a central element in the new federal HRM policy and is
        intended to integrate HRM processes. It is linked to workforce planning, recruitment,
        performance management, remuneration, career development and training.
            A key aspect of the Belgian system is a common competency framework across the
        federal public service. Another relevant feature is the fact that competencies are being
        phased in, with recruitment and training as the first steps, but there is an overall strategic
        plan for linking competencies to other elements of HRM. The methodology for making
        these linkages may provide some useful pointers for Brazil.4 For example, recruitment of
        civil servants is usually based on a combination of tests which measure for the
        competencies required and interviews, carried out by an external recruitment agency. The
        competencies required for particular positions are determined using a dictionary of
        competencies which has been developed for the public service. Linking competencies to
        pay and promotion is done via certified training courses aimed at developing specified
        competencies, with participants undergoing evaluation to determine that the competencies
        have been acquired. This results in payment of an annual bonus and there is also a link
        between acquisition of certified competencies and periodic promotions up the salary
        scale. The Belgian experience (see Box 2.2) also illustrates the importance of keeping a
        balance between competencies and other aspects of a performance-based approach to
        HRM. It is essential for managers and staff to focus on performance and the results to be
        achieved and to view competencies as a means and not an end (OECD, 2007a: 60).


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                                  Box 2.2. Competency management in Belgium

         Federal government
              Competency management is a central element of the Copernic Plan, launched by the Belgian
         federal administration in 2000 to drive a more integrated and strategic approach to HRM.
         Competency management has been used to fundamentally change employee resourcing through
         the introduction of workforce planning linked to organisational objectives and a radical change in
         recruitment and selection procedures. Human resource development has been another focal point,
         with competency management used to reposition training and development as strategic activities
         linked to organisational needs.
             The competency framework is described as a 5+1 model: it consists of five groups of generic
         competencies considered necessary for all functions (information management, task management,
         management, interpersonal relationships and personal qualities) plus one group of technical
         competencies which are specific to a type of work. Added to this model in a matrix structure are
         five key competencies that reflect the values of the federal government: service, co-operation,
         loyalty, results-orientation and self-development.
             For A-level staff (university-qualified) the competency framework has been developed
         around 17 groups of functions, each of which constitutes a career structure. For staff in Levels B
         and C there are 25 job families, each with its own competency profile. A competency dictionary
         has also been developed as a tool for managers.
              One of the first steps in implementing competency management was to make major changes
         to the recruitment system. The emphasis in entrance examinations shifted from testing knowledge
         to testing for competencies and new procedures were put in place using a professional recruitment
         agency. Line managers are responsible for providing a job description and a competency profile.
         At the time of the OECD Review of Human Resource Management in Government              Belgium in
         2007, some 70% of selections were specific to a certain experience and level of competencies.
              Improving the recruitment of managers has been a priority of the Copernic reform. A set of
         12 generic competencies is used for recruiting senior managers (mandataires), to which
         competencies specific to the position can be added. The competencies are: thinking (analysis,
         flexibility and innovation, vision and capacity for integration); human resource management
         (coaching, motivation and development of personnel, team management); interaction with the
         environment (collaboration and development of networks; orientation to citizens, internal clients
         and society); objectives (sense of responsibility, achievement of objectives, persuasion and
         negotiation); other (oral and written communication, loyalty and integrity).
              The other key area in which competency management has been implemented is training and
         development. Performance appraisal includes a discussion of competencies and leads to staff
         development plans; training has been reoriented around these. The OECD review noted, however,
         that this approach may have led to too little attention to performance outcomes. This is, however,
         a question of getting the appropriate balance rather than an inevitable result of linking
         competencies to performance management. Competencies are also linked to pay and promotion.
         Successful completion of certified training, which is subject to a rigorous evaluation that
         specified competencies have been acquired, results in payment of a bonus. Promotion also
         depends on having successfully passed through certified training.




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                         Box 2.2. Competency management in Belgium (cont’d)

        Flemish government
             The experience in the Flemish administration offers some valuable insights into sequencing
        the introduction of competency management. Priority in HRM reform was given to performance
        management, and a new performance appraisal system (PLOEG – Planning, Leadership, Follow-
        up, Evaluation and Reward) set up an integrated HR management cycle. Within this framework,
        families of functions were defined and job descriptions and corresponding competency profiles
        developed. This has helped remove barriers to mobility. Job descriptions and competency profiles
        were used as the starting point for the performance appraisal system, which contained both results
        objectives and development objectives. The PLOEG system is considered to have provided
        important leverage for establishing competency management.
        Source: OECD (2007a), OECD Reviews of Human Resource Management in Government: Belgium, OECD,
                Paris; Belgian federal government’s personnel website, www.fedweb.belgium.be/fr, accessed
                September 2009; and Hondeghem and Parys (2002).



        Competencies in workforce planning
            As recommended in Chapter 1, the Brazilian government needs to develop a system
        of workforce planning. The French experience with this, although still being developed,
        shows how competency management can improve workforce planning, be a tool for
        improving recruitment methods and open up better perspectives for mobility. The GPEEC
        system, introduced in the early 1990s and revised in 2001, and the RIME system
        (Répertoire interministériel des métiers de l’état), launched in 2006, are described in
        Chapter 1.

        Use of competencies and job profiling for recruitment
            The recruitment process for the Brazilian public service would be improved by
        developing standard job profiles which set out accountability, results and required
        competencies for jobs. The core of a job profile is a statement of the job’s purpose and
        expected outputs or key result areas. This is the essential starting point for defining what
        the organisation wants from the person who will do the job. The job profile should
        contain information about the requisite skills, knowledge and other requirements. A job
        profile can be developed for an individual position or for a job category. Annex 2A.1
        gives an example of a job profile template.
            Job profiles can also add value to other areas of HRM, including training,
        identification of career paths and workforce planning. A set of generic job profiles for
        different positions could help the Brazilian administration increase staff mobility. Job
        profiles can also help support performance management by setting out the key results
        expected and helping employees understand what competencies are required to perform
        well.




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        Competencies and performance management
            Competencies should also be linked to performance management and the two systems
        should be developed in tandem. This calls for a competency framework. Care is needed
        so that this does not lead to a focus on inputs rather than achievement of results or to an
        overly cumbersome approach. A well-designed performance management system should
        incorporate both results (the “what” of performance) and behavioural competencies (the
        “how” of performance). The skills of managers and HR staff and their willingness to
        engage with the system are critical for it to work well. This takes time and effort. A
        competency framework, such as the one as suggested below, would help.

        Competencies and job categories
            In the longer term, competencies should also be linked with the reorganisation of the
        system of job categories and improvement of career paths. This is a major undertaking.
        The section of the report dealing with career structures suggests possible approaches to
        restructuring the career system. In this context, competencies could be a lever for
        identifying how jobs could be regrouped, for example by defining competencies by
        métiers (the French approach) or by forming professional groupings for the civil service
        (as in the United Kingdom). Job profiling could be a way to approach this by developing
        generic profiles for key job categories. This can open up opportunities for mobility and
        career development.

        Competencies and remuneration
            Linking competencies to remuneration or rewards is not recommended. It is difficult
        to use competencies for pay purposes because it is difficult to measure competencies. It
        tends to lead either to a mechanistic approach that is of doubtful value and/or to lack of
        trust in the system which can undermine other aspects of competency management.
        Moreover, competency-related pay tends to lead to a focus on inputs in terms of
        competencies achieved rather than results and actual performance.

        Develop a competency framework for the public service
            Developing a competency framework is important if competency management is to
        become a key element of HRM. While flexibility is necessary, consistency, based on
        common concepts and approaches, is also important. Without a common framework,
        there is a danger that the different government organisations determine an unlimited
        number of different competencies that are inconsistent and undermine mobility.
            ENAP’s work on developing a common language around competencies is an
        important step towards a common approach. The next step should be to work with
        ministries and agencies to develop a framework for leadership and management
        competencies, as well as core competencies that are considered important and common to
        the public service as a whole. A consistent framework will facilitate implementation and
        should, in time, help to promote mobility by highlighting competencies that are common
        to different areas of work, particularly if staff are given opportunities to develop their
        competencies. The aim should be to keep the framework as simple as possible and limited
        to a few core competencies. Such a framework can also provide scope for professional or
        technical competencies, which would give individual organisations sufficient flexibility
        to tailor it to their needs. The framework should be supported by tools and guidelines
        developed by the Ministry of Planning.

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        Box 2.3. The Professional Skills for Government framework in the United Kingdom

             The Professional Skills for Government (PSG) competency framework is a structured way of
        thinking about jobs and careers for civil service staff at all grades. It sets out the skills people
        need to do their jobs well, no matter their grade or where they work. For managers and senior
        civil servants, the framework sets out common skills requirements. For other grades, a common
        framework was launched in July 2008 and will be embedded in departmental frameworks by
        2012. This is intended to ensure consistent professional standards across government and to aid
        transferability of skills both within the civil service and across the wider economy.
            The framework comprises four elements:
            •    Leadership competencies are at the centre of the framework and include providing
                 direction, delivering results, building organisational capacity and acting with integrity.
            •    Core skills are the generic, transferable skills required to work effectively in
                 government, such as leadership, financial management and communications. Core skills
                 are centrally defined by the PSG competency framework. Departments and agencies are
                 responsible for ensuring that their employees develop these skills.
            •    Professional skills are the skills required for a particular role or group of roles, e.g. legal
                 skills for lawyers or customer service and processing skills for contact centre staff.
            •    Professional standards are the skills standards appropriate to a particular role or level
                 of seniority within a professional grouping.
            An important step in setting up the framework has been to segment the workforce to ensure
        that the standards set are relevant for individual job roles. There are currently 25 recognised
        professions in the civil service and the vast majority of staff can be considered to belong to one of
        them; 75% of staff belong to the operational delivery or policy delivery professions, including
        over 200 000 staff working in administrative roles. It is in these two professions that the major
        implementation challenges are to be found. One is to review whether the 25 professions already
        in existence – which came into existence over many decades and in an ad hoc manner – do indeed
        segment today’s workforce in the most appropriate way.
             Staff are encouraged to use the framework to take responsibility for their own development
        and career planning – to find out what competencies they should have in their current job and
        what they might need to gain to change jobs or seek promotion. They are encouraged to do this in
        line with the performance appraisal cycle.
        Source: UK Civil Service, www.civilservice.gov.uk/people/psg/index.aspx, accessed in August 2009.



            The experience of the United Kingdom is useful in this regard. When competencies
        were first introduced in the 1980s and through the 1990s, the approach was not consistent
        across the civil service. As there was no central policy or standard framework, practice
        developed in an ad hoc and incremental way. The main lessons learned from this
        approach was that while it provided opportunities for organisations to learn from one
        another, it led to both successful and unsuccessful competency systems and some
        organisations did not adopt competencies at all. As the United Kingdom government
        embarked on major reforms of the civil service, a standard approach to competencies for
        senior servants was deemed necessary to inculcate cultural change across the senior ranks
        and to develop new leadership skills that were deemed essential to modernising
        government. In 2001 a common competency framework was introduced for the Senior
        Civil Service.5 The framework includes leadership competencies and core generic


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        competencies that are common to the whole public service, as well as professional
        competencies that may be specific to a particular type of work.

        Align professional development with competencies
            The UK example illustrates how professional development can be aligned with
        competencies. Progress has already been made in this area in Brazil through the
        requirement that all public service organisations develop their training plans on the basis
        of competencies. The next step is to ensure that all ministries and agencies actually
        establish competency-based training plans and to support those that may be struggling.
        Training needs to be linked to performance via competencies. To achieve this, discussion
        of competencies and development planning should be incorporated into the embryonic
        performance management system. This is a challenge in terms of the capacity of
        managers and HR staff to formulate and carry out training and development plans aimed
        at improving performance. It is also a challenge in terms of the capacity of government
        training schools to deliver competency-based training. There would appear to be scope
        for the Brazilian administration to develop partnerships with universities as a way of
        increasing the capacity to train staff, particularly for management development, as long as
        the government develops clear objectives and maintains some control over the methods
        used.

        Prioritise management and leadership competencies
            Equipping managers and leaders with the right competencies is critical for managing
        change in the public service. Competency frameworks for senior management have been
        used successfully to drive modernisation and reform in government in a number of OECD
        member countries. These frameworks provide a common approach to management and
        leadership by identifying core competencies, defining the expected standard and
        providing the basis for leadership development. This helps build a cohesive culture and a
        whole-of-government perspective among senior managers; these are considered critical
        for effective delivery of government policies.
            In putting in place a competency framework in the Brazilian public service, priority
        should be given to defining a simple, well-focused set of core management and leadership
        competencies. ENAP has already made a start in this regard, working in partnership with
        the Canadian government. The leadership competencies used in the Canadian public
        service provide a useful guide (see Box 2.4).
            Australia offers another way to use management and leadership competency
        frameworks to develop the skills of senior managers and to integrate a range of HRM
        activities, from selection and development of managers to career planning, strategic HR
        planning and performance management (see Box 2.5).




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                   Box 2.4. Leadership competencies in the Canadian public service

             In the Canadian public service, competencies are defined as the skills, abilities and
        characteristics which an employee draws on to perform his/her work and which are observable as
        behaviours or actions. The key leadership competencies are the competencies required of leaders
        at all levels and consist of the following core competencies:
             •    values and ethics – serving through integrity and respect;
             •    strategic thinking – innovating through analysis and ideas;
             •    engagement – mobilising people, organisations and partners;
             •    excellence – delivering results through:
                 − action management: design and execution;
                 − people management: individuals and workforce;
                 − financial management: budgets and assets.
            The competencies are tailored to each level of leadership and identify the specific behaviours
        required for each level in the profile. The detailed description of the associated behaviours for
        each competency for all levels can be found at: www.tbs-sct.gc.ca/tal/kcl/intro-eng.asp.
             The key leadership competencies profile serves as a tool for executive appointments in the
        public service and for the executive performance management programme, as well as the basis
        for executive qualification standards.
            Departments and agencies also use the profile in broader HR management activities,
        including departmental talent management and leadership development programmes, the
        development of competency profiles for departmental and functional community positions,
        learning and career planning, and establishing performance expectations. The key leadership
        competencies profile has been integrated into recruitment, staffing and promotion criteria.
           Departments can implement the profile as is, or adapt it and supplement the leadership
        competencies to reflect the particular requirements of their organisations.
            Key leadership competencies are relevant to the work of all employees.
             Staff are encouraged to use the framework to take responsibility for their own development
        and career planning – to find out what competencies they should have in their current job and
        what they might need to gain to change jobs or seek promotion. They are encouraged to do this in
        line with the performance appraisal cycle.
        Source: Treasury Board of Canada Secretariat, Office of the Chief Human Resources Officer, www.tbs-
                sct.gc.ca/tal/kcl/intro-eng.asp, accessed in August 2009.



             These types of competency frameworks comprise not only the capability profile or
        competencies for leadership, but also a set of leadership development programmes, tools
        and resources that are linked to the framework and accessed in a variety of ways,
        including through highly visible dedicated Internet sites for public servants that make it
        clear how the different elements join up and are to be used. Encouragement of networks
        is also an important element of the frameworks.




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                               Box 2.5. Australia’s Integrated Leadership System

              Since 1999 the Senior Executive Leadership Capability (SELC) Framework has become the
         standard for senior executive selection and development in the Australian Public Service (APS).
         Building on this framework, the Integrated Leadership System (ILS) has been developed to
         support a whole-of-government perspective and a foundation for leadership development. The
         framework applies to leadership at all levels from supervisors up to senior managers, with some
         distinctions as to what is expected at different levels. As well as setting expectations as to the
         capabilities and behaviours expected at each level of management, the framework provides a
         pathway for leadership development.
              The ILS is based on five core capability clusters: shapes strategic thinking, achieves results,
         cultivates productive working relationships, exemplifies personal drive and integrity;
         communicates with influence. It is used to integrate a range of HRM activities, including
         selection of managers, leadership development, performance management, planning for the
         Senior Executive Service and broader organisational development initiatives.
             An important aspect of the framework is a set of guides and tools to assist in professional
         development, capability planning and succession management. These include:
              •   APS leadership model: The APS leadership model assists agencies and individuals to
                  address their particular requirements for leadership, management and technical expertise.
              •   Leadership pathway: The leadership pathway identifies and describes leadership
                  capabilities at executive and senior levels. It illustrates the levels of complexity in which
                  the APS operates and identifies new behavioural elements for leaders at each stage of
                  their career path.
              •   Support tools: Practical tools have been developed to assist individuals, leaders and HR
                  practitioners. Agencies and individuals will select those tools that suit their requirements
                  and particular contexts.
              •   Programmes: Outlines information on leadership, learning and development
                  programmes.
         Source: Australian Public Service Commission, www.apsc.gov.au/ses/index.html, accessed in August 2009.

            Generally, a central department or agency is responsible for co-ordination and
        oversight. The key point to underline about central agencies is that they play a strategic
        role and do not get involved in micromanagement. For example, the United Kingdom’s
        Civil Service Capability Group in the Cabinet Office is responsible for the corporate
        development of senior leaders. In New Zealand, the State Services Commission has the
        lead role. In Australia this is done by the Public Service Commission, in Canada by the
        Office of the Chief Human Resources Officer, and in the United States, the Office of
        Personnel Management is the lead agency. Individual departments and agencies and
        public servants themselves are expected to play an active role in developing leadership
        capabilities.
            One of the challenges for the Brazilian government will be to put in place the type of
        senior management system in which such a competency-based approach can be applied.
        As discussed in Chapter 4, there are various ways to do this, without losing the flexibility
        that the DAS system affords. Whatever approach is chosen, competency-based
        management for the senior public service presupposes some form of open, competency-
        based selection system for professional managers (except maybe, at the very top of the
        hierarchy), a consistent approach to developing core competencies among senior
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        managers, and a link between competencies and performance management. This can,
        however, be balanced with the need to maintain some level of discretionary appointments
        for some senior civil servants. A framework of management and leadership competencies
        is also a valuable tool for identifying and developing people with potential and for
        strategic planning for leadership positions, provided the necessary support structures are
        in place.

        Create ownership and a roadmap
            Creating ownership of competency-based management across the public service is
        essential. One of the main reasons why competency management fails to achieve its aims
        is that managers and staff do not support it and top management does not make it a
        strategic priority. In such cases, a great deal of effort can be expended for little result.
        Involvement is the key to building ownership. The process of developing a competency
        framework is extremely important and, if done well, is itself a key step in building a
        leadership culture. Involving managers, staff and other key stakeholders (external clients
        of government services, unions, politicians and others) is critical. Box 2.6 illustrates how
        stakeholders were involved in developing competencies in the Canadian and New
        Zealand public services.

             Box 2.6. Development of competencies in the public service in Canada and
                                         New Zealand

            In Canada in spring 2008, consultations were held with a wide range of stakeholders and
        potential users. Valuable input was received from representatives of over 30 departments and
        agencies. Focus group sessions were held with a cross-section of employees at various levels,
        including employees without supervisory or managerial responsibilities. Employee-level effective
        behaviours were then finalised and added to the key leadership competencies profile.

          Development of competencies for chief executives in the New Zealand public service

            “The competencies definitions for New Zealand Public Service chief executives have
        emerged from an exhaustive and comprehensive process of interviews, focus group discussion
        and analysis. This involved gathering a wealth of data on a range of behaviours across a range of
        chief executives. The information was then analysed to identify key behaviours. It was taken to a
        higher level of abstraction by the consultants. As such, the competency definitions are far more
        than a simple listing or verbatim summary of the raw data gathered, reflecting rather the
        conceptual constructs overlaying the behaviours described in those data. Furthermore, they
        represent the combined view of a large range of people, including politicians, public service chief
        executives and senior managers in the public and private sectors.”
        Sources: Treasury Board of Canada Secretariat, www.tbs-sct.gc.ca/oro-bgc/im/im-stand-norm-eng.asp
                accessed in December 2009; New Zealand State Services Commission, New Zealand Public Service
                Chief Executive Competencies Profile, www.ssc.govt.nz/display/document.asp?docid=7477,
                accessed in December 2009.



             As a first step in building ownership of competencies in the Brazilian administration,
        it is recommended to involve senior managers from a cross-section of ministries and
        agencies in some of the meetings of the Steering Committee. The Steering Committee
        should draw up a roadmap for implementation which identifies critical linkages with
        other HRM reforms, such as recruitment, and sets out the key milestones. The roadmap
        should be developed in consultation with stakeholders and disseminated widely as a way

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        of building understanding and ownership. Heads of ministries and agencies, line
        managers and senior HR staff in ministries and agencies should be given well-defined
        responsibilities for implementation. The Steering Committee should also take on the role
        of monitoring implementation, and reporting, identifying and addressing the problems
        that inevitably arise in implementation.

        Build capacity for competency management
            While the goal in Brazil should be to use competency management as an integrating
        mechanism for developing HRM, there is a real risk of its becoming unwieldy and overly
        bureaucratic. There are numerous examples of organisations in both the public and
        private sectors with large competency handbooks that are not particularly useful to
        managers or staff. Ways to avoid this situation include: involving managers and staff in
        defining competencies; reviewing competencies periodically to ensure they are still
        relevant; focusing competencies on things that affect outcomes for users of public
        services; keeping it simple –not too many competencies; investing a lot in training
        mangers to work with competencies and in developing staff on the basis of competencies.
            Implementation in Brazil will need to be consistent with the administration’s capacity
        to deal with the changes, and the roadmap suggested above should make a realistic
        assessment of the sequencing of implementation. The skills of managers and HR staff
        will need to be built up. A start has been made in this domain with the courses in
        competency management offered by ENAP and other government training institutes.
        Sharing of experience within the Brazilian administration should be encouraged, for
        example through conferences, learning events, study trips for managers and short-term
        developmental placement of HR staff in organisations that are considered to be examples
        of best practice.

2.2. Job categories and career paths

            The structure and management of job categories and career paths have important
        implications for workforce flexibility and for the cost-efficient organisation of staffing.
        An effective system should enable the government to structure employment and deploy
        staff optimally to meet operational needs and to adapt to changing requirements. It should
        provide sufficient flexibility, in terms of staff mobility within ministries and between
        different parts of the public service, to meet the employer’s needs and to enhance career
        opportunities for staff. Fluid movement into and out of the public service is another
        important aspect of flexibility. A good system should also ensure that the public service
        can recruit and retain the talent it needs by offering sufficiently interesting and attractive
        jobs and career opportunities. Whatever approach is taken should also enable public
        service employers to manage their pay costs, for example by avoiding the undue
        fragmentation of job categories that leads to fragmented pay negotiations.
            The requirements for an effective system can be satisfied in a variety of ways. One
        useful way of thinking about possible approaches is to look at four inter-related
        dimensions:6
             •    how jobs are defined, classified and grouped together – for example in grades,
                  corps or occupational groups and the extent to which these are more open or more
                  compartmentalised;



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            •   how career development is organised – points of entry via external recruitment,
                rules about career progression and the extent to which more senior jobs are filled
                through internal promotion;
            •   job security – the extent to which employees can expect to make a longer term
                career in the organisation;
            •   how pay is determined – how jobs are classified for pay purposes, method of pay
                progression (salary scales, whether there is a link to performance).
            Each of these dimensions influences the others. For example, if job categories are
        narrowly defined, this tends to limit opportunities for career development through lateral
        mobility. To take another example, if there are multiple points of entry at different levels
        of seniority, this affects opportunities for internal promotion. Approaches to career
        management will differ depending on the extent to which there is a relatively closed,
        long-term career structure or a position-based system. In the former, career progression
        tends to be organised through internal promotion. In the latter, career management tends
        to take the form of counselling, grooming and training people to prepare them to compete
        for new job opportunities.
           This section of the report focuses primarily on the first two aspects: job categories
        and career paths. The other two aspects are dealt with in other parts of the report.

        Two main models in public administrations
            Different types of organisations need to find the right means of structuring jobs and
        career paths to meet their needs. Devising a suitable system should be a key element of an
        organisation’s human resource strategy. Public administrations will find it both necessary
        and rational to reduce transaction costs by dealing (as far as possible) with collectives
        rather than individuals. This means structuring the workforce in a number of sub-groups.
        This can be done on the basis of the job to be done by the employees (occupational
        groupings) or according to the professions to which employees belong (professional
        corps). Although the two are sometimes the same, this is not the norm. Also, a job
        category may sometimes be subdivided in terms of the ministry or department. This
        might be done to protect individual sub-organisations against competition for good staff
        from other sub-organisations and thus to enhance the stability of each sub-organisation’s
        workforce. However, the price may be reduced flexibility and possibly a non-optimal
        allocation of scarce skills and competencies.
            In terms of the two main models – occupational groupings and professional corps –
        there would typically be a central procedure for selecting and admitting new candidates, a
        procedure often called a competition. As a result, the public administration workforce
        would consist of a number of groups or categories. Some employment conditions and
        arrangements would be the same for all employees, while others could vary across the
        groups or categories.

        Vertical structuring of job categories
            To this horizontal structuring must be added vertical structuring based on the required
        levels of qualification. A typical approach uses the level of education required; for
        example, secondary school diploma, first university degree or post-graduate university
        degree. Professional qualifications and/or levels of competencies might also be used to
        differentiate among the levels of qualification required.

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             Job categories requiring only a basic education would normally not provide much
        opportunity for substantial functional promotion within the category. The main reason is
        that the jobs themselves are typically very homogeneous. Such jobs are becoming rarer in
        public administrations in OECD member countries as basic functions such as cleaning
        and maintenance tend to be outsourced and the knowledge content of much of the work
        has increased. Still, it would be rational for the organisation to set up a salary scale and
        reward employees that stay on with salary increases as they gain experience. There may
        also be opportunities for minor functional promotions. It would, however, be misleading
        to talk of these arrangements as “careers”.
            Categories requiring a university degree or jobs typically filled by people with
        university degrees open up a wider range of possible designs. In these cases, it is possible
        to set up an internal vertical hierarchy within the category and to allow for functional
        promotions within it. Such promotions should preferably be based on internal
        competitions, although there are also examples of systems in which seniority plays a
        central role. Ultimately, these hierarchies may reach up to the top and enable internal
        promotions to senior management positions. In these cases, the term “career” is of course
        appropriate.
            However, a public administration might instead use vertical layers of job categories
        and require a new examination or competition which is also open to external candidates
        for a functional promotion from the ordinary to the senior level, from the senior to the
        management level, and from the management to the senior management level. In these
        cases it would be misleading to talk of the arrangements as “careers”. In fact, as soon as
        open competition for promotion to a higher level is introduced, the job category is
        de facto divided into two. This reflects the fact that it is the procedure for entrance into a
        category that defines the category.

        The experience of OECD member countries
            The organisation of job categories and careers has evolved in many OECD member
        countries in recent years, as governments seek increased flexibility (ability to redeploy
        staff, reorganise how work is done, increase mobility) and more efficiency (reduce
        transaction costs associated with managing employees in different groups, introduce
        results-based management, improve performance incentives) (for an overview of trends
        see OECD, 2005b). Efforts to increase the flexibility of the workforce have led, for
        example, to the creation of broader occupational groups or the merging of professional
        corps and to the redesign of jobs to provide for more functional flexibility. In career-
        based systems, there has tended to be an opening to external recruitment at more senior
        levels, with performance, rather than seniority, more important for career advancement.
        Lifetime employment systems have been eroded by changes in the rules applying to
        tenure of civil servants. Examples of changes made to pay and grading systems in various
        countries include the replacement of incremental pay scales by broad salary bands,
        restructuring along the lines of job families, the introduction of performance-related pay
        or rationalisation of job classification systems. Other examples of the search for increased
        flexibility and efficiency would be the delegation of responsibility for pay and grading to
        individual ministries and agencies.
           Box 2.7 gives some examples of different ways of organising job categories,
        problems encountered and types of reforms introduced.



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              Box 2.7. Organisation of job categories in some OECD member countries
        France provides an example of recruitment and careers organised on the basis of a professional
    corps. Each corps has its own employment statutes regulating pay and promotion. Corps are usually
    subdivided into grades and a person’s grade is linked to their corps rather than their job. Corps may be
    based on professional or functional groupings and may be specific to one ministry or department, or they
    may be inter-ministerial. Recruitment generally occurs at base grade within the corps. These types of
    systems have tended to produce rigidities in terms of barriers to mobility, the multiplication of narrowly
    defined corps and the growth of corporatist interests that defend the advantages of the corps. The
    separation between the grade a person holds in their corps and the position to which they are assigned
    provides a degree of mobility although this has proved insufficient. Recent reforms therefore aim at
    increasing mobility by introducing an occupational element (l’approche métier) as well as merging corps.
    Spain has moved to a mixed system in which the position as opposed to the corps has become a key
    element of human resource management.
         Canada and the Netherlands are examples of systems in which job categories are structured
    according to occupations. Employment in this type of system tends to be position-based, with recruitment
    occurring at any level. A problem which has arisen in these systems is the fact that a large number of
    different occupational categories can create barriers to mobility and flexible work practices and lead to
    fragmented pay and industrial relations structures. Changes have aimed at reducing the number of
    occupational groups, as in Canada, creating new career pathways that cross occupational groups and
    integrating the senior management levels across the service as a whole, for example through the creation of
    a senior executive service as both Canada and the Netherlands have done.
        Ireland and Japan are examples of career-based systems in which most jobs are grouped into
    service-wide grades which form a career and pay ladder. Recruitment tends to be mainly or exclusively at
    entry level, with promotion linked to a series of grades. A clear distinction needs to be made in these
    systems between salary progression within the grade, which is not promotion in the real sense of the term,
    and functional promotion to a post with higher responsibilities. In Ireland specialist and departmental
    grades have tended to grow over time, leading to fragmentation and inflexibility, and careers have in
    practice tended to be managed on a departmental basis, thus reducing mobility. Changes have aimed at
    increasing flexibility and mobility, for example by integrating some specialist grades and opening up
    competition for promotion to higher grades. In Japan, careers tended to be managed on a departmental
    basis, but in April 2009, the career system based on grading was changed to a career system based on
    standard competencies for standard positions of job categories. Promotions are now mainly based on
    competency assessment (in addition to performance assessment) using standard competencies as criteria.
    Service-wide pay grades are now only used for pay.
         Australia, New Zealand and Sweden have decentralised, individualised systems, in which
    individual ministries or agencies have the flexibility to define their own structures. Incremental pay scales
    and career ladders based on grades have been replaced by more flexible, performance-based systems. In
    these systems, new approaches to career development have emerged, with employees developing their
    competencies, employers investing in learning and coaching for their staff, and identification of flexible
    career pathways that individuals may follow, subject to their capability and aptitude. Agencies may find it
    in their interest not to individualise and differentiate. In Sweden a number of government agencies that
    provide functions or services across the country have set up internally defined job categories and
    sometimes even careers. Among these are taxation, customs, social security administration, and labour
    market services. The same picture has emerged in Australia and New Zealand. One driver is the need to
    ensure equal service standards across the country and thus to set equivalent standards for skills,
    competencies and selection criteria when recruiting, rewarding and promoting. Another driver is the desire
    to create an esprit de corps, a shared feeling of belonging to a group with a shared mission, a shared
    commitment and shared values. It should also be noted that in these systems some careers may be
    governed by statutes, such as diplomats, police officers, military officers and judges (in Sweden).




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        Entry and promotion arrangements and career development
            Entry and promotion arrangements in the public service can be analysed in terms of
        the extent to which they are relatively closed or open and the extent to which career
        progression is more or less structured.
            In some public services, civil servants are hired at the beginning of their career at the
        lowest hierarchical level corresponding to their level of education and may expect to be
        promoted up through a series of levels of increasing responsibility provided they are
        reasonably competent. There are defined promotion structures, such as grades, although
        promotion opportunities are limited by the existence of a pyramidal structure, with fewer
        positions higher up in the hierarchy. Internal selection procedures ensure merit, although
        there is often a strong element of seniority in promotion arrangements. This sort of
        system is characterised by limited possibilities for entering the civil service at mid-career
        and a strong emphasis on career development. Examples include France, Greece, Ireland,
        Japan and Spain (OECD, 2005b).
             In another type of system all positions are open to competition, whether by external
        recruitment or internal appointment. External recruitment to higher levels of the hierarchy
        is relatively common. While individual positions may have grades for pay purposes, there
        is usually not a series of defined promotion grades or steps from lower to higher level
        positions. Examples include Finland, New Zealand, Sweden, Switzerland and the United
        Kingdom (OECD, 2005b).
            Both types of system are evolving as public services seek to achieve more fluidity and
        more internal mobility. The emphasis on performance and competency development is
        also changing the approach to career development:
             •    Public services that had closed career structures, such as Ireland, have opened up
                  opportunities for external recruitment to more senior levels as well as internal
                  promotion opportunities through the establishment of competitive, inter-
                  departmental selection procedures.
             •    There is an increasing focus on talent management in a number of public services
                  as a way to enrich the pool from which people are selected for more senior
                  positions and to retain talented people. Australia and Canada have systems linked
                  to leadership competency frameworks to identify people with the potential to
                  progress to more senior levels and provide them with mentoring and development
                  opportunities. This type of talent management is becoming increasingly important
                  as public services seek to retain the best people.
             •    There is increasing emphasis on self-managed career development, with a move
                  away from the notion of an assured or predictable career path. Competency
                  frameworks provide a structure for people to learn and develop and they are
                  encouraged to plan their own careers and apply for jobs that meet their career
                  development aims. This presupposes a relatively sophisticated annual
                  development dialogue within the performance assessment system, during which
                  the employee and his/her supervisor discuss development needs and agree on a
                  personal development plan. Lateral job moves, to a different job at the same level,
                  are encouraged as a way of expanding competencies and gaining experience.
                  Possible career paths may be identified in order to help people with their career
                  planning. In the United Kingdom, the Professional Skills for Government
                  competency framework provides the backbone of the system.

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        The situation in Brazil

        Job categories
            The organisation of job categories in the Brazilian federal government has been
        implemented in a complex and fragmented way by different ministries, making for an
        extremely rigid system compared to OECD member countries, and subject to lobbying
        and pressures from different groups to create differentiated employment conditions.
        Successive attempts at reform and solutions intended to address the changing needs of
        individual institutions have led to a wide variety of arrangements. This further contributes
        to complexity and rigidity.
            The federal government workforce is organised into the following job categories:
            •   The largest part of the workforce is grouped into 129 “careers” (carreira). While
                a few of these appear to be similar to the diplomatic or juridical careers that exist
                in most countries, and to provide for promotion to a succession of posts of
                increasing responsibility, the majority are not really careers in the proper sense of
                the term. Most consist of a narrowly defined occupational or professional job
                category, although some may contain more than one category for historical
                reasons. The only form of progression possible in most of these job categories is
                movement up the salary scale based on seniority or a combination of seniority and
                performance. Many “careers” appear to be specific to a ministry or agency. Each
                has its own salary scale and allowances.
            •   A number of “groups of jobs” (plano de cargos) are inter-ministerial job
                classification schemes developed in an attempt to rationalise the employment
                system and facilitate mobility between institutions. Around a quarter of the active
                workforce belongs to these job classification schemes. The largest group (around
                81 000 public servants) covers the Ministries of Social Security (except the
                National Institute of Social Security), Health and Labour. The other large group is
                the PGPE (General Group of Jobs of the Executive Branch) (around 43 000 public
                servants) which is related to administrative, manual operational, and technical and
                professional jobs in almost all public bodies. It was created in 2006 as a successor
                to a similar group, the PCC, created in the 1970s in an attempt to organise public
                service jobs into a general classification scheme (following another category that
                was created in the 1960s). The earlier attempt failed, as the most powerful groups
                started to exit this job system to create their own careers.
            •   There are 22 “special groups of jobs” (plano especial de cargos) attached to
                individual institutions. These were developed as ad hoc solutions to new demands
                on the public service and differentiated salaries for some groups. They have their
                own salary scales which are usually higher than those for similar jobs elsewhere.
            •   A few “job description plans” (quadro de pessoal) are attached to individual
                institutions. These are like establishment plans, again with their own salary scales.
            •   A few isolated positions.
            This system is complex and expensive to administer given the many different job
        categories. There is duplication and overlap and a number of job categories no longer
        meet the operational needs of the public service. Some groups’ preferential arrangements
        tend to give rise to competing claims from other groups, creating pressures for further
        ad hoc changes rather than systematic reform.

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            In the interest of clarity, the term “job category” rather than “career” will be used for
        the remainder of the discussion to describe the Brazilian arrangements. The term “career”
        will only be used in the generally understood sense of the word to discuss the HR policies
        and practices that determine how employees progress within the organisation and how
        management jobs are filled.

        Corporatist attitudes
            In theory, a well designed and well implemented job category system is indispensable
        in a career-based system and should allow mobility. In practice, the way it has been used
        in the federal government has rigidified the system by providing a myriad of different
        employment conditions that depend not only on the functional attributions of careers, but
        also on how they are adapted by each government organisation to adapt their organisation
        and favour their own employees.
             This has created a negative circle in which individual groups are favoured through the
        tailoring of employment conditions in their own groupings, and the differentiated
        employment conditions foster corporatist attitudes, with each group defending its interests
        and resisting changes which might disadvantage them. This hinders strategic management
        of the workforce and vests too much power in strong occupational or professional groups.
        As a result, much HRM attention appears to focus on restructuring salary scales for
        individual groups rather than rationalising the overall structure.

        Exceptions to the job category system
            In the Brazilian system, there is a separate system for a number of junior and
        management positions that is not linked to the job categories outlined above. The DAS
        system and other management categories are discussed in Chapter 4. Entry to and re-
        appointments to such positions are discretionary and appointments are not subject to well-
        defined, competitive, transparent procedures, although some parts of the administration
        have established such procedures. Employees’ position on the salary scale for their job
        category in many cases bears no relation to their position in the management structure.
            There is no mandatory process for the selection process for appointments to
        supervisory and management roles, which are part of the DAS system and management
        roles in other categories and functions of confidence (Cargos e Funções de Confiança e
        Gratificações), and it is left to the discretion of the recruiting supervisor. Some of them
        use some transparent competitive processes. The more senior appointments are at the
        discretion of the minister, while at lower levels appointments tend to be made by senior
        managers. There is therefore no formal system of career progression or career
        management for public servants in the true sense, although many are appointed to DAS
        positions. Moreover, as the DAS system extends down to junior supervisory and middle
        management roles, this means that most job categories do not contain a structure of
        higher level positions into which employees can be promoted. Recent regulatory changes
        that have made the filling of positions by a minimum of public servants mandatory,
        however, have improved the perception of public servants that DAS positions are part of
        possible career paths.
            DAS positions are not only for management and supervisory positions. The DAS also
        has positions that are used to provide mobility within the public service and lateral entry
        from outside the public service. While increasing flexibility and mobility are welcome, it
        is unfortunate that the processes for appointments are left entirely to the discretion of

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        recruiting supervisor without any requirement for transparency and competency-based
        process.
            In addition to the DAS positions, the so-called “Commissioned functions” (about
        50 000 posts) also involve discretionary recruitment procedures but those have to be
        made entirely within the group of existing civil servants. The Commissioned functions
        are outside of the regular pay scales for regular job categories and have been used mainly
        for boosting salaries of some positions that include few if any managerial or supervisory
        functions.

        Barriers to mobility
            Apart from the DAS, the current system results in an inflexible public service with
        high transaction costs attached to managing so many different groups of employees with
        different terms and conditions of employment.
            In general, opportunities for lateral mobility appear to be very limited, while
        arrangements for vertical career progression appear, for the most part, to be unstructured
        and lacking in transparency. Although there are isolated instances where people have
        been “borrowed” by central government from state-owned enterprises (though the formal
        employment link remains with the original employer), research indicates that there is little
        rotation of federal officials around the administration (Beltrão et al., 2005).
            Mobility is limited by the fact that many categories are narrowly defined and are
        specific to individual ministries or agencies, even for similar functions, without any
        general classification system that would allow determining equivalent positions across
        ministries. Constitutional provisions relating to recruitment into a job category are also an
        important brake on mobility. The 1988 Constitution does not allow a public servant to
        move from one job category to another without passing through a new public competitive
        examination, a provision probably aimed at preventing patronage in the management of
        the public service. Before the 1988 Constitution, it was possible to move from one job
        category to another within the same group by internal promotion; that possibility no
        longer exists, even though some groups contain more than one job category. When
        moving to a new job category as a result of passing a new public competitive
        examination, a public servant enters at the starting point of the salary scale for the new
        job category, regardless of his/her former position. This means that experience is not
        recognised as a factor for promotion to different categories, and the system counts on the
        un-transparent appointment to DAS positions to provide a level of “recognition” to those
        who cannot change careers through knowledge-based competitive examinations.7
            As an additional barrier to mobility, the functions and attributes of each job category
        are defined by legislation and tend to be interpreted narrowly. The result is that public
        servants effectively have tenure in an individual position and it is virtually impossible to
        redeploy unwilling staff to another ministry. The creation of a number of inter-ministerial
        job classification schemes (plano de cargos) provides for mobility for the functions or
        professions concerned, although it has not been possible to determine how much
        movement of staff actually occurs. Moreover, these arrangements only concern around
        25% of the workforce. This makes it extremely difficult to reallocate staff, with the result
        that new needs tend to be met by hiring more people rather than by redeployment or by
        creating special groups of jobs with more favourable pay and conditions (plano especial
        de cargos).



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            The DAS system enables mobility among staff at supervisory and management levels,
        as these staff can be appointed and removed from their positions at will. However, it is
        unclear to what extent mobility actually occurs, especially between ministries. Moreover,
        as discussed below, this approach to filling management jobs is fraught with
        disadvantages, although progress has been made in recent years. Mobility between central
        government and state-owned enterprises appears to happen, but only rarely through a
        “borrowing procedure”. The formal employment link is still with the “home” office.
            Efforts are being made to reduce the level of specialisation of job categories in order
        to increase flexibility. However, as it has proved very difficult to revise the legislation
        describing the attributes of existing job categories, this is primarily done by defining the
        functions of newly created categories as broadly as possible. Over time, some inter-
        ministerial job categories have also been created; for example, the Specialist in Public
        Policy and Government Management Career (EPPGG) and the Science and Technology
        group.

        Limited opportunities for career progression
            For vertical career progression, most job categories appear to offer few opportunities
        for a real career. Exceptions may include the Revenue Service, the Treasury, the
        Diplomatic Service and some state-owned enterprises, which appear to have career
        management systems in place.
            The only form of progression available in most job categories is movement up the
        salary scale. This is not career progression in the correct sense of the term. The job
        categories are generally divided into a number of classes. Within a class, progression up
        the scale is based on length of service as well as performance evaluation results and in
        some cases training hours. Progression between classes is generally related to the
        performance evaluation results and the time spent in the last pay step of the last class,
        usually 12 or 18 months. “Promotion” within one’s job category therefore merely means
        progression up the salary scale over time. Everyone can reach the top of the scale, usually
        in 13 to 20 years.
            For staff in this situation, who also face barriers to lateral mobility and the lack of
        transparency in the appointment process for the DAS, the lack of career opportunities
        must be demotivating. Many are at the top of their salary scale, with no prospect of
        promotion or transfer to another job category. From the point of view of the employer,
        this creates pressures to raise salary scales with pressure from staff and unions to
        “restructure careers”.
            DAS appointments may be made from within or outside the public service, although
        for less senior levels, there are ceilings on the proportion which may be filled from
        outside: 75% of the people in supervisory and junior management positions (Levels 1-3)
        and 50% of those in middle management positions (Level 4) must be permanent public
        servants (from federal government, states and municipalities, as well as retired public
        servants and employees of state-owned enterprises). Efforts are being made to increase
        the proportion of positions reserved for public servants and a draft bill to this effect is
        currently with the Congress. There is no ceiling on the number of persons who are not
        public servants who may hold positions at the most senior levels of the DAS (Levels 5
        and 6). Currently, around 39% of the positions are currently filled by such persons.
            While the DAS system facilitates lateral entry into the public service at more senior
        levels as well as internal mobility, the lack of transparency in the selection process means

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        that staff have no clear career perspective. It also means there is little incentive for the
        employer to engage in formal career management or succession planning to ensure that
        talented staff remain in the public service and have the opportunity to compete for more
        senior roles. The recent regulation that has required a minimum percentage of public
        servants in most DAS positions (except top levels) has improved the situation and public
        servants now consider these positions increasingly as potential development
        opportunities. There is thus scope for improvement.

        Opaque and complex remuneration arrangements
            The fragmented system of job categories combined with the weaknesses in the
        rationale for determining relative salary levels has led to an opaque and complex
        remuneration system (Chapter 1). Although the government has made important efforts in
        rationalising the pay determination system, the historical legacy and the remaining
        difficulties with lobby groups have resulted in salary scales that vary the group staff
        belong to with different rationales applying to these salary scales. This is an additional
        obstacle to mobility. Operational and administrative jobs with the same tasks may have
        different salary scales in different institutions if they belong to different job groups or if a
        special job group or plan has been created for the institution in which they work. While
        efforts are being made to bring salary scales for similar jobs into line with one another,
        there are still many disparities.
            Differences in the treatment of different groups are not only inequitable; they can also
        distort recruitment and retention of staff. Some ministries have difficulties as their jobs
        are viewed as less advantageous. Staff who are recruited often subsequently prepare for
        another public examination which will allow them to enter a “better” job.

        Suggestions for future reforms
            The current system of organising job categories and career progression has a number
        of serious drawbacks which need to be addressed as part of the overall strategic HR
        planning. The range of difficulties encountered as a result of the current arrangements
        points to the need for a comprehensive reform of job categories, changes to the way
        people progress within their job categories and more transparency in how appointments to
        management positions are made. A comprehensive approach is needed. The core issue is
        the fragmentation resulting from the grouping of jobs on the basis of narrowly defined
        occupations or individual institutions, and the resulting barriers to the optimal allocation
        of human resources and unduly high transaction costs.
            In discussions with the Brazilian administration during the course of the peer review,
        the desire to achieve changes in a number of areas was mentioned:
            •   reorganise job categories and groups;
            •   improve incentive structures and career structures, with more mechanisms to
                encourage performance;
            •   reduce the emphasis on seniority as the basis of moving up within job categories;
            •   increase mobility;
            •   rationalise salary structures.
          There is no doubt that reforms in these areas would greatly contribute to improving
        HRM in the Brazilian public service. It is crucial not to approach reforms in a piecemeal

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        way and a restricted further restructuring of individual job categories should be avoided at
        all costs.
            Changes should be driven by a strategic view of how the public service should group
        and organise jobs and improve real career opportunities in order to provide the flexibility
        and capability needed to respond to emerging challenges. It is most important that
        reforms in this area are consistent with the efforts being made to introduce performance
        management and competency-based management and with the renewed emphasis on
        training and development.
            The Ministry of Planning should take the lead in developing a view of what needs to
        be done in terms of a well-integrated set of reforms. This is by no means simply a matter
        of developing a technical design for a new system. Making such changes requires careful
        management as many interests are involved, including those of trade unions and
        professional organisations. Existing arrangements will inevitably influence strategic
        options about reforms, and the Brazilian government will face some difficult choices in
        terms of dealing with the interests of different job categories and ministries.
            Two particular aspects of the existing arrangements are likely to create obstacles to
        change. One is the existence of different pay scales or bonuses for similar types of work
        in different ministries or agencies. This is likely to result in resistance on the part of those
        on higher pay scales to any attempt to merge job groups. Second, payments to pensioners
        are linked to their former career group and pensioners are a strong pressure group with
        both politicians and unions.
            An essential step will be to make a strong political case for what will be a challenging
        reform by setting out the changes needed in order to equip the public service to deliver
        the government’s policies effectively and to reduce the inefficiencies associated with the
        current system. The advantages for employees need to be well defined and well
        communicated in order to win support for change. Major advantages of a more integrated
        system would include improved career structures and the creation of a fairer, more
        transparent pay and grading system.

        Reduce the number of job categories and create more fluidity in the system
            Rationalising job categories should be a priority. The number of different job
        categories and different situations in individual ministries and agencies should be
        reduced. In the interests of greater fluidity, as many job categories as possible should be
        inter-ministerial. Jobs could be grouped into a smaller number of categories by merging
        similar jobs in different ministries into one inter-ministerial category, as has already been
        done for some functions. It would be advisable to reduce the number of special job
        categories attached to individual institutions with a view to eliminating such
        arrangements over time.




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            An issue that will need to be addressed to reduce fragmentation is the “ownership” of
        job categories by specific ministries. An important step would be to create centralised
        ownership of job categories, as already exists for the inter-ministerial job categories
        which are managed by the Ministry of Planning, or at least shared custody. A very
        interesting development lies in the creation of four careers: infra-structure,8 social
        analysts,9 executive analysts,10 and information technology analysts.11 These careers will
        be handled provisionally by the Ministry of Planning, Budget and Management.
            In deciding how to approach rationalisation, it may be helpful for the Brazilian
        government to look at the experience of Canada, France and Spain. In France there has
        been an ongoing process of reducing the number of separate corps in the public service
        by abolishing corps or merging them with similar functions across different ministries.
        Between 2005 and 2010, the number of corps will have been almost halved. Over 80% of
        the mergers have concerned Category C corps – operational jobs. The French system
        prior to these reforms has some parallels with the Brazilian situation in that many of the
        corps were highly specific categories.
            A new occupational group structure introduced in the Canadian public service in 1999
        greatly reduced the number of groups by integrating those that perform similar or related
        functions. Here again there are some parallels with the Brazilian situation as the pre-1999
        structure contained a large number of narrowly defined groups and the union structure
        was also fragmented. The reform has streamlined the collective bargaining process and
        provided employees with more opportunities for career mobility and professional
        development. The central HRM agency, the Office of the Chief Human Resources Officer
        in the Treasury Board Secretariat, has led the initiative and continues to play a key role in
        supporting public service organisations in working with the new structure (see Box 2.8).
           Merging job categories and creating more inter-ministerial categories should facilitate
        mobility within a job category as employees could move to another post in a different
        ministry or agency while remaining in the same job category. However, to manage the
        workforce in a more integrated way, with greater possibility to reassign people within and
        between organisations, the Brazilian government should consider developing tools that
        would make it possible to move away from the current very rigid approach to defining the
        properties of a job category.

        Develop a standard way to identify and describe positions
            The Brazilian administration does not currently appear to have a standard way to
        identify and describe positions. An important step would be to develop an integrated
        inventory of positions so as to identify equivalent positions in different ministries. A
        framework of standard job definitions, against which all the positions in the public
        service could be identified and matched, would be of considerable help. There should be
        as few reference jobs as possible to avoid a proliferation of job definitions. Job definitions
        could be used for a range of purposes, including matching jobs in ministries to reference
        profiles in order to grade them, competency mapping and recruitment. This approach
        would be compatible with the efforts being made to move to competency-based HRM in
        the Brazilian administration, as the competencies could be attached to standard job
        definitions. Job profiles could also be developed on this basis, as outlined in Section 2.1.




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           Box 2.8. Canada: Occupational group structure in the core public administration

             In the core public administration classification system, the organisation of work and
         employees is based on an occupational group structure. In 1999, the government approved an
         occupational group structure with updated definitions. The new structure contains a smaller
         number of groups (29 instead of 78 under the old structure) some of which serve to consolidate
         older occupational groups that share certain common traits.
              As an example, one new group, called Programme and Administrative Services, was created
         out of 11 previous groups, including administrative services, communications, data processing,
         office equipment, secretarial, programme administration and a number of other functions. As part
         of the reform, the job classification system was reviewed and updated.
             The Office of the Chief Human Resources Officer in the Treasury Board Secretariat is
         leading the modernisation by:
              •    defining the occupational group structure;
              •   reviewing job classification standards and qualification standards for all occupational
                  groups;
              •   working with public service organisations on classification monitoring to give Deputy
                  Heads the information they need to exercise their delegated classification authority;
              •    implementing a renewed suite of classification policies and guidelines;
              •   creating a competency profile, learning curriculum and recognition programme for
                  organisation and classification advisers.
         Source: Treasury Board of Canada Secretariat, Office of the Chief Human Resources Officer, www.tbs-
                 sct.gc.ca/chro-dprh/cla-eng.asp, accessed August 2009.



            In this context, it is worth looking at the experience of Spain, which, in addition to
        merging a number of corps, also moved from a corps system to a mixed system based on
        positions and corps in 1984. The main goal of the reform was to render the system more
        open and flexible by reducing the power of corps. This was done by making the position
        a key element of personnel management. This open system coexists with the previous
        career system organised by corps, especially because recruitment, by competitive
        examinations, is still organised for corps, as previously. The 1984 system allows for
        external recruitment based in corps and internal promotion open to the different corps
        (with some limitations and exceptions). The Basic Statute of the Public Employee
        (EBEP), enacted in 2007, does not introduce radical changes in the structuring of the civil
        service, but it allows public administrations to recruit alternatively for positions and not
        necessarily for corps. An important element of the system is the requirement for
        developing inventories of positions in order to provide a common framework for internal
        recruitment and mobility (see Box 2.9).




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                 Box 2.9. Spain: Main elements of the reform of the corps system in 1984

             In general, posts are no longer assigned to a particular corps. In principle, members of any
         corps can apply for any job if they possess the required educational level (and in some cases the
         specific degree needed to exercise a profession, such as a doctor or an architect).
             The corps is no longer the basis for payment, which is mainly related to the position. Base
         salary is the same for corps of the same entry educational level.
              Corps influences entry into the public administration, but no single corps can self-manage
         the recruitment examinations, as it previously could.
              Corps that performed similar functions have been merged; for instance, several corps of tax
         comptrollers have become one corps. Some have disappeared, although the more than 200 corps
         in the central administration are still too numerous. Corps are considered either “general” inter-
         ministerial corps, assigned to the Ministry of Public Administration or “special”, when related to
         a specific profession and assigned to the relevant ministry.
             The administrative career is now based on positions. Civil servants can apply internally for
         higher positions. After two years in the same position, the level of the position becomes the
         grade. A civil servant cannot be assigned to a position lower by two levels than his/her
         consolidated grade. When occupying a position of lower level than his/her grade, he/she will be
         paid the salary supplement corresponding to the consolidated grade.

         Real power and real career of corps
              Although legislation has attempted to restrict the power of corps, they still have some
         influence over the career and salaries of their members. There are three major aspects:
             •    Corps are still able to obtain favourable (high-level) initial posts for their members.
                  Members of corps which need a university degree normally enter at level 20, but in
                  influential corps, such as civil administrators, diplomats and finance comptrollers, entry
                  at level 26 or 28 is common.
             •    Corps may try to restrict the entrance of members of other corps into “their” positions,
                  especially by reserving positions for certain corps through the approved Relación de
                  Puestos de Trabajo (inventory of positions).
             •    Strong corps lobby effectively to create posts for their members with the highest
                  possible position supplement. Although posting allowance is linked to special features
                  of a particular post, in practical terms more influential corps have the highest position
                  supplements.
             In some ways, the search for positions with better levels and position supplements
         constitutes the real career of civil servants, reflecting a hierarchical perspective.

         Position-based organisations
              The Basic Statute for the Public Employee (EBEP) (2007) requires the public administration
         to structure its organisation through Relaciones de Puestos de Trabajo (inventories of positions)
         or other similar instruments. These inventories should include for each position:
             •    name of the position;
             •    group or groups of civil servants who can apply for the position (groups defined by the
                  educational level needed to access the civil service);



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           Box 2.9. Spain: Main elements of the reform of the corps system in 1984 (cont’d)

              •    in specific cases, the corps which can apply for the position;
              •    system of internal selection (competition or free designation);
              •    level of the position (in the 30-level scale); accordingly a level supplement is to be
                   added to salary;
              •    position supplement to be added to salary.
              Through positions, organisations try to avoid rigidities by suing a legal provision which
         allows public administrations to assign civil servants functions, tasks and responsibilities
         different from those corresponding to their positions.

         Double process to enter civil service and to fill a position
              1.    External recruitment, by corps (for entry-level positions): External access to the civil
                    service takes place through competitive examinations which are different for each
                    corps. Civil servants can compete to join a different corps in a closed process with
                    some posts reserved for career civil servants (a process called internal promotion).
              2.    Position filling (internal recruitment among civil servants after entry level): Positions to
                    be filled are internally advertised and a competition based on merit is held to choose
                    among the candidates. For top civil service positions (level 30) and for other very
                    specific positions it is possible to choose freely among civil servants. The selection
                    criteria and the system to be used are set out in the Relación de Puestos de Trabajo
                    (inventory of positions).
         Source: Information provided by Xavier SISTERNAS, peer reviewer from Spain.



            The national French public service offers another useful example for Brazil.12 In
        France, in parallel with the rationalisation of the corps, the notion of métier or occupation
        has been introduced as the basis for managing the principal elements of the career so as to
        provide for more fluidity within the system. Key aspects of HRM such as assignment,
        performance evaluation, promotion and remuneration are to be less linked to the statute of
        the corps and more to the métier. Although it is too early to assess the results of the
        reform, professionals agree it is a crucial step in the modernisation of government (see
        Box 2.10).
            The French and Spanish examples show how existing systems which did not provide
        much scope for active management of human resources can evolve to include new
        elements which improve mobility and open up career structures. They also illustrate a
        pragmatic approach to reform in a sphere which is technically and politically very
        complex to change. The approach in both countries has been to modify and add new
        elements to the existing systems in order to gain flexibility, rather than attempting to
        introduce a completely different system.




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                Box 2.10. France: Répertoire interministériel des métiers de l’État (RIME)

            The RIME was launched in 2006. This is an inter-ministerial index of state occupations. All
        jobs are indexed, including those occupied by contractual staff. This is a way of bringing together
        function and occupation and setting up a common nomenclature. It identifies 23 common
        functions divided into strategic, operational and support. Attached to these functions are
        236 reference jobs which are described in the RIME. Individual ministries can use the reference
        job descriptions to identify and classify the jobs within their own structures. The reference jobs
        also help to prepare job profiles and job descriptions which can be used as a basis for
        performance assessment.
             The RIME has been well received and ministries are implementing it. It has permitted a shift
        from personnel administration to HRM based on analysis of needs and required competencies.
        The RIME reinforces staffing based on competency needs analysis and increases cross-
        departmental mobility of staff by making it possible to identify potential recruitment pools. There
        is better targeting of recruitment and matching of jobs and people based on ministries’ operational
        needs. Training can also be organised around the competencies needed for the reference jobs.
            Two examples of how the RIME has been applied are outlined below.

        Professionalisation of the job category: field of finance
             A cross-ministry working group on the management of HRM wanted to professionalise such
        job categories by using initial and continuous training, recruitment, career paths and mobility. For
        this purpose, it has identified competency needs and updated financial job categories in the
        Répertoire interministériel des métiers de l’État (RIME). In June 2008, the Budget Directorate
        launched work aimed at:
            •    identifying all the jobs and mapping the profiles of the financial functions;
            •    clarifying the needs of such jobs in terms of changes of the scope of activities;
            •    creating an index of about 20 financial jobs in concert with all ministries to be included
                 in the RIME as of 2009;
            •    designing and implementing a short-term and medium-term action plan to improve
                 recruitment and training and diversify career paths within government.
            This work is piloted by a committee including directors of financial affairs, a budget
        controller and accountant, and representatives of the Directorate for Public Finances, the
        Directorate for Personnel and Adaptation to the Professional Environment, and the Directorate for
        Administration and the Public Service.

        Job categories in the Ministry for Agriculture and Fishery: the role of the Observatory
        for Missions and Job Categories
           To develop its work on job categories, the ministry relies on work led by the Observatory for
        Missions and Job Categories (Observatoire des missions et métiers — OMM) created in 2000.
            The OMM is responsible for following developments in government missions in the fields of
        the ministry and their impact on job categories. For example, the OMM produces prospective
        studies on large job categories with the involvement of a study steering committee composed of
        relevant personnel. The OMM also produces horizontal studies on changes in job categories and
        competences or studies on mobility and career paths. All studies conclude with recommendations
        aimed at accompanying changes in missions or organisations with changes in HRM.



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           Box 2.10. France: Répertoire interministériel des métiers de l’État (RIME) (cont’d)

             The work of the OMM is used by the ministry to better assess future needs in terms of
         workforce numbers and competencies and in its strategies to improve HRM especially in the
         areas of recruitment, initial and continuous training, and career paths.
             First, the descriptions of present and future jobs helps make jobs better known outside of the
         ministry. They are also used as a reference grid for hiring interviews and annual performance
         appraisal meetings.
            Second, the work of the OMM is used for lifelong training purposes by training institutes
         under the responsibility of the ministry and for designing overall lifelong training policies.
             Third, this work is used for mobility purposes and for job profiling purposes especially for
         jobs open to internal mobility.
             More generally, the Secretary General of the ministry has ensured that there is some follow-
         up to the OMM recommendations through the establishment of working groups in charge of
         concrete action plans, most importantly in the fields of recruitment, lifelong training and career
         paths.
         Source: Ministère du budget, des comptes publics et de la fonction publique (2008a), Rapport annuel sur
                 l’état de la fonction publique, Politiques et pratiques 2007-2008, Vol. 2, pp. 65-68, Paris.



   Develop a job classification system
            The Brazilian public service also needs a standard means of evaluating positions for
        pay and grading purposes so as to introduce more transparency into the remuneration
        system and move towards more efficient management of relative pay levels. A key
        organising principle should be to fit all or most jobs into a common classification system
        for grading and pay purposes and a common competency framework for purposes of
        recruitment, selection and staff development. The basic principle of job classification is
        that similar positions with equivalent responsibilities, challenges and working conditions
        should have equivalent pay (a constitutional requirement – Article 39 §1). A job
        classification system would help to shift the focus away from individual jobs and break
        down demarcations. While specialised technical, professional and scientific jobs will
        naturally be specific to certain ministries or agencies, they should still be classified within
        the common structure.
            OECD member countries offer numerous examples of job classification methods and
        standards used in the public service. For example, Sweden uses a job classification
        scheme to enable pay comparisons across a wide range of state agencies that set pay
        independently. Each job is classified for content with a three-digit code (family, class,
        type) and a one-digit code for functional level.
            Job classification is always a sensitive matter. The establishment of an inter-
        ministerial commission to supervise the process, with independent external technical
        assistance, is strongly advised. Central custody of the system is needed to maintain its
        integrity. This function is usually carried out by the central HRM agency. For example, in
        the United States, the federal Office of Personnel Management is responsible for
        classification standards and guidance to federal government agencies on the application
        of the classification methodology.

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           The job classifications should be integrated into a common remuneration table, which
        should be as simple and short as possible. Table 2.1 gives an example from the Spanish
        public service.

          Table 2.1. Integrated view of corps, positions and salaries in the Spanish civil service after
           the 1984 reform (simplified). Example with corps and positions belonging to group A1

                                   External recruitment                           Internal career
        Corps and         Group according       Corps                Range of levels1       Typical positions    Position
        positions         to educational                                                    available            requirements
                          level required                                                                         (stated in RPT)
                                                - Lawyers                                   30th: Deputy         Open to all civil
                                                                                            general director,    servants from
                                                - Diplomats                                 Senior Adviser,...   group A1
                                                - Civil                                     29th:...             Open to diplomats
                          A12                   administrators       20th-30th                                   and civil
                                                                                            27th:...             administrators,
                                                - Tax inspectors
                                                                                            21st:...             with law degree
                                                - ...
                                                                                                                 Open to...

        Salary of the     Base salary A1,       From EUR 5 537       From EUR 9 000 to
        positions         same for all corps    (level 20) to        41 000 a year,
                          of group A1:          EUR 12 200           approximately
                          EUR 13 893            (level 30) a year
                          Base salaries,        Level                Position supplement:
                          related to group,     supplements: the     decided by each
                          are the same in all   same in all public   public
                          public                administrations      administration; in
                          administrations                            central
                                                                     administration,
                                                                     authorised by a
                                                                     commission
                                                                     presided by Ministry
                                                                     of Finance3

        Note: Annual salaries 2009, without two annual extra payments, and without seniority (trienios) and variable
              pay (productividad).
        1. Theoretically, each new civil servant should be assigned to a position at the initial level of their group,
           i.e. civil servants from group A1 should start at level 20. In practice, the situation is quite different.
        2. There are five groups, according to the educational degree needed to enter: A1, A2, B, C1, C2.
        3. Comision Interministerial de Retribuciones (Interministerial Commission on Salaries).
        Source: Provided by Xavier Sisternas, peer reviewer from Spain.

    Open up opportunities for career progression
            The changes already suggested should go a considerable way towards opening up
        opportunities for mobility and career progression in the Brazilian public service. In
        addition, professional career opportunities should be improved. Real career possibilities
        should be created, as far as possible, along with a system of internal competitive selection
        for promotion. This would improve incentive structures and provide mechanisms to
        encourage performance.
            Two key principles to be adopted in this context are a career pyramid – not everyone
        can move up – and correspondingly less emphasis on seniority as the basis for moving up
        the career ladder as better career structures are introduced.
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            As noted earlier, various arrangements for career progression exist in OECD member
        countries. Many, in particular career-based systems, differentiate seniority increases in
        pay (corresponding to different pay levels for the same position or “grade”) and changes
        in positions, i.e. changes in the level of responsibility. This principle should guide
        reforms in Brazil today.
            More strongly career-based systems, as in Ireland and Japan, have a series of
        promotion grades, with entry to the public service mainly at base grade and promotion
        based on competitive internal selection (although the transparency of the competitive
        internal selection process can sometimes be improved). Unlike the current system of pay
        grades in Brazil’s job categories, promotion grades imply increasing levels of
        responsibility and a pyramidal structure, with fewer positions available the further up the
        hierarchy. Such systems provide a clear career perspective and are compatible with
        performance management and competency management provided that promotion is
        linked to these.
            However, such systems can reduce the flexibility to recruit from outside the public
        service at higher levels. To overcome this potential downside Ireland has opened
        recruitment to external candidates at certain key senior levels in the career structure. The
        Brazilian administration already has considerable flexibility to bring people into senior
        management positions from outside the public service. This possibility should be retained
        within an improved career system and with more transparent recruitment procedures.
            A different option for strengthening the career dimension is to emphasise positions as
        the basis of managing employment and careers, as in Australia, the Netherlands and the
        Nordic countries. Instead of promotion grades or ladders, people progress by competing
        for a suitable position at a higher level. They can also advance their careers by applying
        for a different position at the same level in order to expand their competencies. Position-
        based systems can have structures that facilitate career progression. For example, most
        occupational groups in the Canadian public service have a number of levels, requiring
        different degrees of experience and knowledge. Career progression in Canada primarily
        takes place laterally through deployment, or upwards through either an advertised or non-
        advertised appointment (see Box 2.11).
            Whatever approach is taken, the Brazilian administration should introduce an internal
        appointments process that allows public servants to compete for certain jobs without
        having to undergo a public examination testing basic academic skills. The example of
        Spain (see Box 2.9) illustrates a possible combination of external competitions for certain
        positions and internal competitions for others. Such processes, which exist in many
        OECD member countries, are merit-based, with transparent and objective selection
        procedures. They are usually overseen by a public service appointments commission of
        some sort and there is usually an avenue of appeal in case of dissatisfaction with the
        process. The career system in the Canadian public service shows how a combination of
        external and internal merit-based appointments is managed by an independent agency in
        order to safeguard merit and non-partisanship (see Box 2.11). Before moving in this
        direction, it is necessary that all control processes for full transparency be in place.




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                         Box 2.11. Career System in the Canadian public service

             All appointments to (external) or within (internal) the public service are made by the Public
        Service Commission (PSC), an independent agency whose mandate is to safeguard merit and
        non-partisanship in the public service. Authority to make appointments has been widely delegated
        by the PSC to deputy ministers. An external appointment process is open to all persons,
        irrespective of whether or not they are employed in the public service. An internal appointment
        process is open only to persons employed in the public service. In making an appointment, the
        PSC or a deputy minister may use an advertised or non-advertised appointment process. An
        advertised appointment process, where more than one person is considered, is the standard
        practice in the Canadian public service. Non-advertised appointments may be used only when
        appropriate, and should be supported by a rigorous demonstration of how the choice of a non-
        advertised process respects the staffing values of fairness, transparency, access and
        representativeness. Some of the situations that may lead to a non-advertised appointment include
        short-term acting appointments, appointment of an incumbent to his/her reclassified position,
        organisational professional development programmes, specialisation of a person to be appointed,
        appointment to a professional group where there is a shortage, and appointment of a person who
        is a member of an under-represented employment equity group. The choice of an appointment
        process must also be consistent with the organisation’s human resources plan.
            Appointment to or within the public service is made to a particular position, within a
        specified occupational group at a certain level. Most occupational groups in the Canadian public
        service have a number of levels, requiring different degrees of experience and knowledge. Every
        level has a salary range. The pay increment period may vary by occupation; the most common
        one is 12 months. Career progression primarily takes place laterally through deployment, or
        upwards through either an advertised or non-advertised appointment.
            Deputy heads must respect PSC appointment policies in exercising their delegated
        appointment authorities, and they are held accountable to the PSC for the appointment decisions
        they make, through mechanisms such as monitoring, reporting, studies, audits, investigations and
        corrective actions. For example, the PSC may limit or remove delegated authority from a deputy
        head. In turn, the PSC is accountable to Parliament for the health and integrity of the appointment
        system in the public service.
        Source: Public Service Commission of Canada (n.d.), “Careers in the Federal Public Service”, http://jobs-
                emplois.gc.ca/centres/experience-eng.htm, accessed in December 2009.



            Some changes should be made to the DAS system in order to improve career
        opportunities, as recommended in Chapter 4. Reintegrating the administrative and
        technical levels in the DAS system into the normal job category structure would make it
        possible to develop the type of career structure outlined above. Also, opportunities for
        civil servants to be promoted to senior management levels should be improved by
        introducing a more transparent selection system that is not dependent on political
        approval and setting up a special job category for senior managers.
            Finally, the present rationale for the existence of about 50 000 Commissioned
        functions to which appointments are discretionary is not really acceptable from a good
        governance point of view. It is possible that some categories of functions may have
        requested increases in salaries, but these should be done within the job category system
        and appointment to these positions should be implemented through regular processes. It is
        thus necessary that Commissioned functions be reintegrated into the renewed job


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        category system. For political reasons, this may have to be implemented through a non-
        renewal of departures to retirement.

2.3.    Acquiring human capacity and talent

        The experience of OECD member countries
            Working for the government differs in one important aspect from other employment.
        The primary loyalty of the public employee is to democracy and to legality. The public
        employee serves the state and the citizens, as represented by the duly elected government,
        but is obliged to serve any duly elected government equally well, and to implement any
        legally adopted policy and statute equally loyally. This specificity is reflected in the
        special employment arrangements for public servants existing in all OECD member
        countries, including recruitment arrangements that tend to be relatively more protective of
        merit and transparency.
            To this protection of transparency and merit, however, the growing diversity of public
        activities and the increased performance requirements have put new pressures on the
        recruitment system, to which countries have adjusted differently. Moreover, even if the
        recruitment arrangements in OECD member countries share a number of underlying
        values and central goals, they vary substantially depending on a country’s specific
        historical, political and social context, and especially how centralised or decentralised
        public human resource management is. These arrangements are considered as being
        adequate and appropriate by the country that has adopted it.

        Merit-based recruitment and promotion
            All democratic countries have rules – normally in their constitutional documents –
        which are intended to ensure that public employees are selected on fair and objective
        grounds, and to prevent all forms of patronage; personal as well as political. The
        processes used for achieving these goals have changed substantially over time. Formal
        examinations have been complemented with tests of skills and aptitudes, and the focus
        has shifted from formal diplomas to actual competences.
            Sweden can be used as an example. In 1634, it was one of the first countries to adopt
        the principle of merit-based appointments and promotions in an attempt to prevent royal
        patronage. The merit principle used to be formulated as “skills and merits”, and this
        principle became deeply internalised both in the core values of public service and in the
        understanding of the Swedish public.
            The system became very formalised over time. “Skills” came to be identified with
        formal education diplomas, and “merits” with years in the national government’s service.
        In 1974, a constitutional amendment changed the wording to “objective grounds, such as
        skills and merits”. This made it possible to take previous performance and non-public
        experiences into account, and to use professionally recognised testing methods.
        Furthermore, it was explicitly stated in the preparatory texts that seniority should only be
        taken into account if two candidates were considered equally skilled.

        Recruiting for public employment
           The arrangements and procedures for recruiting for public employment are normally
        more formal and bureaucratic than in the private sector.13 The main reasons are, as in


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        Brazil, a desire to prevent personal and political patronage and to guarantee that the
        selection for recruitment is based on fair and objective grounds.
            Public administrations in OECD member countries have moved or are moving away
        from simply looking at formal merits and towards using written tests of knowledge skills
        and competencies. The main reasons are the stronger focus on better performance and
        quality services and thus the need to become better at finding people with the right skills
        and competences for the jobs to be done. Today, they face the same need as private
        enterprises to find and recruit the best possible persons for different positions, and have
        the same need to re-orient their recruitment when the need for capacities and
        competencies change.

        Organising the recruitment process
            Even if the recruitment policies in OECD member countries share a number of central
        goals and values, their recruitment arrangements vary widely. One important area is the
        degree of decentralisation of recruitment, which ranges from strictly centralised to
        extensively decentralised. However, most countries with tenured civil servants tend to
        have a centralised or relatively centralised system.
            In Belgium, all administrations are obliged to use the federal selection office (Bureau
        de séléction de l’administration fédérale, SELOR) as their recruitment agency when
        recruiting tenured civil servants. Most use SELOR as a recruitment agency for other
        employees as well. Ireland also has a career-based system but a more decentralised
        recruitment system. Recruitment of tenured civil servants in the government
        administration is managed by the Public Appointment Service (PAS). PAS also carries
        out competitive examinations for senior levels in the local government sector, the health
        sector (including specialist doctors, managers, nurses and clerks), police and other
        agencies of the state. It also carries out more executive searches, with tailored
        recruitment.
            Ireland differs from Belgium in having a framework for decentralisation. Departments
        and government bodies can handle their own recruitment, provided that PAS finds them
        sufficiently competent, and provided that they observe the government’s Code of Practice
        for recruitment. This is expected to be a learning process and lead to handling a growing
        share of recruitment at a decentralised level. The advantage of this system is that it
        separates the standard-setting function from actual service provision. This makes it
        possible to combine the safeguarding of an appropriate recruitment process with a
        competitive environment for recruitment services.
            A recurring criticism in countries with centralised recruitment functions such as
        Belgium and Ireland is the length of the recruitment process. The time needed seems, to
        judge by OECD reviews of the Belgian and Irish public administrations (OECD, 2007a;
        OECD, 2008a), to depend on three factors. First, the internal process in the recruiting
        organisation takes time (authorising recruitment, specifying competency profiles).
        Second, assessing a relatively large group of candidates through a process based on fair
        and equal treatment requires a substantial amount of time. Third, the scale of the
        examinations means that they cannot be held too often, and recruiters may have to rely on
        recruitment reserves (that is the ranking from the last examination). Many of these
        candidates may, however, have taken up another employment in the meantime.
           The time needed for preparation can be shortened by improved workforce planning
        and by systematic competency management. Pre-screening before the most resource-

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        demanding part of the process can shorten the time needed for processing the applicants,
        as is the case for recruitment for the foreign service in Sweden. The first screening is
        based on the application and its statement of educational achievements and experiences.
        Only 10% of the applicants move to the next stage in the selection process. Examinations
        more clearly targeted on specific competency profiles can also reduce the scale of the
        examinations.
            A recurring criticism of decentralised recruitment functions is that they may entail
        higher transaction costs. They are also more opaque, since it is more difficult for
        interested persons to find out which bodies are recruiting and when. Norway has dealt
        with this problem through a website on which all public bodies must publish recruitment
        announcements with recruitment criteria.

        Using employees other than tenured civil servants
             Most OECD member countries have comprehensive statutes that regulate the content
        of civil servants’ employment contracts. The statutes may prescribe tenure
        (i.e. employment for life with dismissal only in cases of misbehaviour) or employment for
        an unspecified duration. These statutes were originally designed to suit core government
        functions and the exercise of public authority. The growth of service production and the
        increased focus on performance during the last half-century have challenged these
        arrangements, and different OECD member countries have chosen to meet the challenge
        in different ways.
            Some have found it expedient to have a secondary form of employment that is more
        similar to private employment. For example, in Germany the public workforce consists of
        tenured civil servants (Beamte), with a statutory regulation of employment conditions,
        and of public employees (Angestellte), with normal labour contracts. There is no clear
        demarcation between these two groups, and they can to a certain degree be used for the
        same tasks. The core government functions and all forms of exercise of public authority
        are, however, reserved for civil servants. One-third of the German public workforce is
        civil servants, while the others are public employees.
            Other OECD member countries have instead tried to make their public service
        statutes more flexible or to limit their scope. These reforms have been extensive in New
        Zealand and the Nordic countries, where employment conditions for almost the entire
        public workforce are regulated by individual contracts and/or collective agreements.
            All OECD member countries allow temporary employment for different needs, such
        as a temporarily increased workload, a specific project or a replacement for a public
        servant on leave. The exact rules surrounding temporary employment vary. It is not
        possible to discern any trends towards increased or decreased amounts of temporary
        employment.
            The recruitment of temporary labour is normally less formalised and more
        decentralised than recruitment for life or for unspecified lengths of time. There is thus a
        clear risk that it may become a way to bypass competitive examinations for public
        service, and many OECD member countries are trying to improve the recruitment
        arrangements and management of this part of the public workforce.
            The Belgian public administration provides a set of examples. There is no statutory
        regulation of the procedure for selecting temporary staff. The federal administration uses
        the same recruitment organisation (SELOR) as for tenured public servants. The Flemish
        administration has established its own recruitment agency which works much in the same
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        way as SELOR. The Brussels Region advertises all temporary positions and has an open
        recruitment procedure. The French Community also has an open recruitment procedure
        with juries that propose selections. In all Belgian administrations recruitment criteria for
        casual staff have evolved significantly towards the increased use of competency criteria.

        Using external service providers
            Recruitment of new staff is not the only way in which a public administration can
        acquire new capacities and competences. For large parts of its activities it can choose
        between recruiting its own staff and contracting an external service provider. The main
        drivers are the need to get access to specialised management and specialised skills and
        competencies and to benefit from the scale advantages that a specialised service provider
        can offer, especially with regard to human resource management. In fact, no organisations
        are today able to undertake all production functions themselves, and have to rely to some
        extent on external services, and public administrations are no exceptions (Chapter 1 also
        develops this aspect).
            OECD member countries’ experience indicates that all public administrations can
        gain from co-operating with non-profit organisations and private enterprises. Outsourcing
        (not in terms of leased labour but firms contracted out for the provision of goods and
        services, see Chapter 1) can contribute to a more efficient public administration and to
        more flexible and higher-quality public services. All OECD member countries thus use
        outsourcing of input services, although to varying degrees, and many also rely on non-
        public organisations for the provision of public services to the public.
            Using external service providers entails a different type of relation from employment
        and creates the risk of cost-increasing dependencies. Managing the choice between
        organising an internal service and relying on an external service provider requires an
        appropriate sourcing policy, and managing relations with external service providers
        requires new management competencies. Outsourcing should therefore not be seen as a
        general remedy to efficiency and quality problems.
            OECD member countries’ experience also reveals a number of elements that may
        complicate or limit outsourcing. The administrations need to retain sufficient internal
        competence to be able to procure services efficiently. Outsourcing should never become
        so extensive that it encroaches on administrations’ adherence to due procedures and
        legality in their exercise of public authority and use of public resources. Differences in
        employment arrangements and conditions between public administrations and private
        enterprises, and different unions for public and private employees, may generate
        resistance to using external service providers instead of hiring more employees.

        The situation in Brazil
            In Brazil the recruitment arrangements organise the federal workforce according to
        different job or employee categories. These categories are very diverse. Most are linked
        to a specific organisation, while others are transversal and give access to jobs in a range
        of organisations. Some are fairly broad and provide opportunities for functional careers,
        while others are intended for specific functions and only provide for salary progression.
        The present set of job categories is described more thoroughly in Section 2.2.




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        Merit-based selection for public employment
            Brazil started implementing merit-based recruitment to the federal administration as
        early as the 1930s, but for a limited number of positions until it became widespread in the
        1990s. The principle seems to have been internalised by Brazilians. There are also clear
        indications that Brazil needs to maintain this concept in order to prevent the spread of
        personal and/or political patronage. The present interpretation favoured by the courts of
        the concerned constitutional clause with narrowly defined testing of academic knowledge
        seems, however, unnecessary restrictive.

        Recruiting for public employment
            Selection for public employment in Brazil is normally made through formal
        competitions open to all persons who fulfil the basic requirements for employment in the
        category in question. There is a specific competition for entry into each category. A
        public employee who has passed the competition for a specific category has to enter a
        new competition if he/she wants to move to position in another category.
            The competitions seem to be relatively unsophisticated in most cases owing to the
        restrictive interpretation of the relevant constitutional clause. Each category has a specific
        knowledge base required of those who have the corresponding jobs. Whenever a public
        entity is allowed to fill a position, it has to refer to the knowledge profile required for that
        specific category. The assessment of whether a candidate has the required skills and
        aptitudes has as far as possible to be done through a written test, that is in many cases
        restricted to multiple choice questions assessing academic knowledge.
            These tests normally mean that candidates have to prove that their knowledge
        satisfies the profile for the specific category they have applied for. Competitions for more
        qualified categories may, however, also involve testing for competences. In the case of
        competitions for the category “Public Policy and Management Specialists” for example,
        candidates are required to make a written analysis of a case study or write an essay.
        However, Brazil seems to use modern methods for testing for skills and aptitudes less
        frequently than OECD member countries or the private sector. Previous experience is not
        taken into account, unless it is part of the basic requirements for entry into a specific
        category.
            A full assessment of the adequacy and appropriateness of this system of competitions
        for entry into public employment has to address Brazil’s very complex set of job
        categories. It is evident that the present system meets the primary requirement of
        preventing patronage and ensuring an objective and transparent process for access to
        public employment. It is at the same time reasonable to conclude that the system is less
        adequate for ensuring that the federal administration gets access to the best possible staff
        for fulfilling its public duties and functions.
            The approximately 22 000 DAS positions, of which more than 4 000 are considered
        management and senior management positions (see Chapter 4), are an important
        exception to the transparency of the federal government recruitment process.
        Appointment to a DAS position and apparently to other senior management categories is
        at the government’s pleasure, although in some parts of government efforts have been
        made to professionalise recruitment in the DAS positions. It is mostly made among
        existing government employees but also outside of government (see Chapter 3). The
        management of senior managers is discussed more extensively in Chapter 4.


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            DAS positions allow some flexibility in a rather rigid system of job categories and
        career paths, by allowing talent to move up quickly and by opening up positions to lateral
        entry in the public service for staff outside of the public service for a certain percentage
        of positions. This flexibility, however, should not come at the expense of transparent
        recruitment procedures. Staff in DAS positions should be recruited following transparent
        and competitive recruitment processes. These processes should be different from those
        allowing entry in the public service and be mostly competency-based. In order to
        maintain flexibility in the system, the recruiting body could provide a list of candidates
        with acceptable aptitudes on which the government could draw.

        The organisation of competitions and rankings
            There are no fixed schedules for the organisation of competitions for entry into the
        various job categories. Instead, the organisation responsible for the management of a
        category has to request permission to organise a competition when it considers that it
        needs to hire more staff.
            While a safe control mechanism, centralised establishment control entails the risk of
        delays in meeting labour shortages and of temporary labour hoarding. The state of
        strategic manpower planning in Brazil’s federal administration is discussed further in
        Chapter 1.
            The organisation calling a competition will normally use an external service provider
        to organise and carry out the competition. These providers are chosen through a public
        procurement process. There is no central mechanism for vetting and certifying providers
        of competition services, and each contracting organisation can make its own selection.
        Most organisations providing competition services are public universities or semi-public
        foundations. The quality and adequacy of Brazil’s public procurement processes are not
        covered by this review.

        Probationary employment
             All employment in Brazil’s federal administration is subject to a three-year
        probationary period before the employee gains tenure (i.e. the right to employment for
        life). Termination of employment before the end of this probationary period or non-
        confirmation of employees at the end of the probationary period is possible, but not easy.
        The employer’s decision can be challenged in court as unconstitutional, and the employer
        can therefore be assumed to need to have documented objective grounds for the decision.
        Some organisations also use an initial probationary period of a few months (which
        conforms more closely to what is normally meant by probationary employment). It is,
        however, probably equally difficult to terminate employment during or at the end of this
        period, since an easily used termination right might be construed as a way to bypass the
        strict selection rules.

        Using external service providers
            It was noted earlier in this chapter that procuring input services from external
        organisations (i.e. outsourcing – not in terms of leased labour but as firms contracted out
        to deliver goods and services) gave better access to specialised competences and
        increased the flexibility of the public service. During the Cardoso presidency (1995-
        2002), outsourcing of public production functions was a major element of the reform
        agenda. There are no data to enable an assessment of the quality and appropriateness of
        those policies, but it seems reasonable, given the timeframes, to assume that they were
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        relatively rapidly introduced in organisations with limited experience of and competency
        for service procurements. Considering the relatively high level of outsourcing in the
        government today (see Chapter 1), it is likely that recent waves of outsourcing have
        concerned services other than the low-skilled input services that are easier to monitor than
        more complex tasks. Some mention contracting out is used to circumvent public
        employment legislations and authorisations to hire, and eventually put pressure on the
        Ministry of Interior to authorise recruitment to replace staff hired on a provisional basis
        by regular staff. Similar actions in OECD member countries have resulted in less than
        favourable outcomes.
            Although some report continued increase in outsourcing (see Chapter 1), there has
        been a recent shift towards more restrictive policies and recuperation of previously
        outsourced functions during the Lula da Silva presidency (see Chapter 1). This more
        restrictive attitude must also be seen in the light of Brazil’s emphasis on formal
        competitions as the only method of selecting candidates for public employment. Using
        labour provided by non-public service providers can easily be interpreted as a way of
        bypassing the strict selection rules, especially if the procurement processes are less formal
        than the recruitment processes.

        Suggestions for future reforms
           The main weaknesses in Brazil’s present arrangements for the federal
        administration’s acquisition of capacity and talent are:
             •    the lack of a coherent competency framework and of competence in and
                  experience with competency profiling (see Section 2.1);
             •    the fragmented structure of job categories leading to overlapping and to a
                  weakening of the coherence of the employment arrangements (see Section 2.2);
             •    the unnecessarily restrictive interpretation of the constitutional requirement for
                  merit-based recruitment and for using external service providers.
            Competencies and the concept of strategic competency management are discussed in
        Section 2.1. When these management arrangements are fully developed, they link an
        organisation’s recruitment policies, its selections for employment, and its policies and
        programmes for staff training and enhancement to a strategic assessment of the
        organisation’s competency needs over time. Brazil’s federal administration will not be
        able to implement this type of advanced human resource management without also
        adopting more sophisticated methods for selection for entry into public employment.
            The present structure of job categories has evolved over time as a result of
        consecutive partial reforms. It is complex and un-systematic. The present structure is
        analysed in Section 2.2, which also contains a proposal to reorganise the job categories so
        that they reflect the competency and skills structure of Brazil’s federal administration.

        Merit-based selection for public employment
            Merit-based recruitment is, as noted earlier, a necessary cornerstone of a modern
        public administration in a democratic country. The important element is the prevention of
        personal and political patronage in relation to entry into the public administration. All
        Brazilian citizens must therefore be able to compete for public employment on even terms
        and on their objective merits. Future reforms of the process for entry into public
        employment in Brazil should build on and safeguard this principle.

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            Although quite recent, the implementation of the merit principle in Brazil’s federal
        administration seems robust, with a great deal of scrutiny and oversight and recourse
        mechanisms. There also seems to be strong public sensitivity to the slightest suggestion
        that merit principles have not been respected. The issue is more about the quality and
        sophistication of its implementation than transparency or the principle itself.
            There is, as demonstrated by practices in OECD member countries presented above in
        this section, scope for a more sophisticated interpretation and application of the concept
        of merit without the need to amend the Constitution. Recruitment and promotion should
        continue to be based on objective and documented grounds, but there is scope for a
        broader interpretation and a stronger focus on skills and competencies.


                           Box 2.12. Recruitment in the Belgian government

             Belgium offers an example of a country with relatively sophisticated recruitment
         arrangements. The employment system is career-based, and public employees are either
         tenured civil servants or contract employees. Recruitment for tenured employment shall,
         according to the Constitution, be merit-based.
             The basic form of recruitment of tenured civil servants in Belgium is open and competitive
         examinations. These are based on job descriptions and competency requirements drawn up by
         the recruiting organisations. Over time, the recruitment process has moved away from large
         generalist examinations towards recruitment based on specific competency profiles. Presently,
         selection is based on generic competency profiles in only 10% of cases and on specific
         competency profiles in 90%.
             Possession of a diploma may be a pre-requisite for participation in an examination. The
         breadth and quality of the educational background affects the assessment of a candidate.
         Applicants who meet the formal requirements take part in different tests of skills, competences
         and aptitudes. The content of these tests depends on the type of post and recruitment criteria
         and may include a psychological test.
             In 90% of cases, recruitments are based on ranked selections. Most administrations follow
         the rankings, but the combined Flemish and Dutch administrations makes the final selection
         themselves. The administrations are allowed to draw up a reserve list of candidates for possible
         future recruitment.
        Source: OECD (2007a), OECD Reviews of Human Resource Management in Government: Belgium, OECD
                Publishing, Paris.



            A number of proposals are brought forward in this and in preceding sections for more
        systematic competency management, including competency profiling and competency
        assessments. It is reasonable to assume, however, that implementing these proposals and
        ensuring that the federal administration gets access to the best possible staff would be
        difficult under the present recruitment arrangements.

        Recruiting for public employment
            There are two compelling reasons why Brazil should enhance its selection methods
        instead of merely testing for knowledge.
           The first is that merely testing for knowledge does not take the full range of
        candidates’ merits into account. Candidates with superior experience, skills and aptitudes
        may be bypassed by candidates with nothing but an aptitude for good results in written

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        tests under controlled conditions. One might even question whether this is compatible
        with a fair and equitable assessment of candidates’ merits.
            The second is that Brazil's federal administration needs to target and compare skills,
        aptitudes and experience in order to develop strategic competency management and to
        enhance the quality of the administration’s manpower. The present unsophisticated
        methods create an unnecessarily high risk of recruitment errors, and it is likely that each
        organisation has some employees who are not suited for the tasks for which they were
        recruited.
            The key issue in comparing the relative merits of different candidates is that all
        comparisons should be based on objective grounds, that is, on aspects that are generally
        acknowledged as being relevant for the positions or careers in question. Furthermore, all
        aspects taken into account need to be adequately documented in order to enable ex post
        audits of the selection process. These two requirements can be met with the use of
        established methods for testing candidates’ skills and aptitudes provided that the methods
        used are based on sound science and generally accepted by the relevant professional
        community. OECD member countries’ experience shows that they can also be met
        through the use of selection boards, provided that these are composed of disinterested
        persons with acknowledged integrity and an appropriate professional background.
            It is therefore recommended that the Brazilian government review the present
        arrangements for competitions for entry into the federal administration and take action to
        amend these as needed to enable recruiting organisations to test for skills and aptitudes in
        addition to knowledge and to allow relevant experiences of candidates to affect rankings
        in the hiring process.
            In addition, transparent and modern recruitment procedures should be put in place for
        DAS positions, with competitive selection based on an assessment of experience and
        competencies. This does not necessarily mean written tests, but at least open procedures
        with recruitment panels and ranked candidates for lower level DAS positions and a list of
        candidates judged qualified for the job.

        Recruitment quality
            The goals of federal recruitment activities are to ensure that the administration has the
        employees it needs, and that they are recruited appropriately. It is equally important to
        ensure that the persons recruited have the competencies, skills and aptitudes required by
        the different parts of the federal administration, and that recruitment is carried out in a
        timely manner so that the employees are available when needed.
            Adequate outcomes of recruitment activities also depend on the appropriateness of the
        organisation of the workforce in job categories. The fragmentation of this structure is one
        of the main weaknesses of the Brazilian system. A reorganisation of job categories,
        replacing organisation-oriented categories with competency-oriented categories, would
        improve the outcome of recruitment activities. These questions are discussed in
        Section 2.2, which also contains conclusions and recommendations concerning job
        categories.
           Competency-oriented job categories and examinations that place more weight on
        competencies, skills and aptitudes will make new demands on the recruiting
        organisations. Substantial work will be needed on a competency framework that can be
        used across the administration and on identifying the competency needs of each
        organisation. More transversal job categories will entail more inter-organisational co-
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        operation in determining recruitment needs and developing adequate competency
        profiles. The use of rankings for the outcomes of examinations for public employment
        makes it possible to complement selections with reserve lists of persons who may be
        offered employment later. A reserve list is not an ideal solution, since those on the list
        may not remain available. It may still facilitate timely recruitment and it should therefore
        be possible to use them more generally. The reserve lists should, however, only be
        available during a limited period and should never be more than a reasonable percentage
        of the number of persons directly selected.

        The organisation of competitions and rankings
           The fragmented structure of job categories affects the organisation of competitions
        and rankings of candidates. The recruitment parameters are often regulated in
        organisation-specific statutes, and there seems to be no comprehensive legislation (aside
        from the Constitution).
            The previously recommended broader and more sophisticated interpretation of the
        concept of “merit” would enable recruiting organisations to take skills, aptitudes and
        previous experience into account. This will require new competences and capacity
        building in the recruiting organisations. Organisation-specific categories should also be
        replaced by competency-oriented categories to permit more transversal categories. More
        inter-organisational co-operation will be needed to develop a shared competency
        framework and competency profiles for transversal categories.
            If Brazil accepts and implements these recommendations, it also needs to strengthen
        the central human resource management node. It is therefore also recommended that the
        Brazilian government create a central body charged with developing guidelines for more
        sophisticated selection processes and with monitoring and supporting their
        implementation by Brazil’s federal administration. It should also be responsible for the
        shared competency framework and able to support the other organisations’ work on
        competency profiles.
            The Public Appointments Board in Ireland and the federal selection office in Belgium
        might serve as models for such a body, as these countries have relatively centralised
        career-based systems (see Box 2.13) An equivalent body in Brazil could be formally
        mandated to manage all recruitment for the federal administration. At the same time, it
        should be able to delegate responsibility for recruitment of staff to non-transversal job
        categories if and when it finds that an organisation has the necessary competency and
        capacity to handle its own recruitment. It should monitor and assess the quality and
        appropriateness of delegated recruitment and be able to rescind a delegation if and when
        necessary. It should work together with the School of Public Administration (Escola
        Nacional de Administração Publica, ENAP) to support stronger competency orientation.
            The present practice of using external service providers for the organisation and
        implementation of competitions can be continued. The transition to more sophisticated
        selection methods makes it essential to ensure that such service providers are sufficiently
        competent and reliable. It is therefore recommended that the central body mentioned
        above also be mandated to authorise the service providers allowed to compete for public
        selection contracts. An upgrade of those recruiting services will be necessary.




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                 Box 2.13. Recruiting organisation and processes in Belgium and Ireland

              In Belgium, recruitment criteria are agreed between SELOR (the federal selection office) and
         the recruiting organisation, and specify the skills and types of employees the organisation wants
         to recruit. SELOR advertises the selection, receives applications, vets the applicants for formal
         requirements, conducts the different tests and examinations, and draws up a ranked list of
         applicants who have passed the selection process and are eligible for tenured public service.
             SELOR’s main advantages are its professionalism and its independence from the recruiting
         organisations. It is a modern recruitment agency using state-of-the art methods. It has developed
         competence in competency and methodology certification. It has invested in modern facilities and
         equipment, is actively developing its use of the Internet, and seems to be leading in developing
         and using e-supported recruitment processes. It is funded by the federal budget and has been able
         to expand its activities without increased funding.
              Ireland has a career-based system with a more decentralised recruitment system. Recruitment
         of tenured civil servants in the government administration is managed by the Public Appointment
         Service (PAS). The process is similar to Belgium’s. Testing has shifted from abstract tests to
         more job-simulation tests, strategic exercises, competency tests, and to a lesser extent, the
         examination of achievements. The process generates a ranked list of approved candidates. These
         are then offered employment as vacancies become available. Employers have limited possibilities
         to choose whom to pick, or applicants to choose where to go.
             PAS also carries out competitive examinations for senior levels in the local government
         sector, the health sector (including specialist doctors, managers, nurses and clerks), police and
         other agencies of the state. It also carries out executive searches, with tailored recruitment.
              Ireland differs from Belgium in having a framework for decentralisation. Departments and
         government bodies can handle their own recruitment, provided that PAS has found them
         sufficiently competent, and provided that they observe the government’s Code of Practice for
         recruitment. This is expected to be a learning process, leading to a growing amount of recruitment
         handled at a decentralised level.
         Source: OECD (2007a), OECD Reviews of Human Resource Management in Government: Belgium, OECD
                 Publishing, Paris; and OECD (2008a), Ireland: Towards an Integrated Public Service. OECD
                 Public Management Review, OECD Publishing, Paris.



            Reliance on authorisations from the Ministry of Planning to organise competitions for
        recruitment has serious drawbacks. It makes it more difficult for federal organisations to
        handle their manpower planning and to ensure that they are adequately staffed. It is
        therefore recommended that the Brazilian government split the processes of central
        establishment control from that of planning of competitions, so that competitions can be
        organised on a different schedule from that of authorisations for opening positions. It is
        also recommended that the government consider means of making recruitment a more
        continuous process, for example through more transversal categories and improved cross-
        organisational co-operation.




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        Probationary employment
            Combining formal merit-based selection methods with probationary employment
        requires strict and reliable processes for terminating employment during or at the end of
        the probationary period. These processes have to be sufficiently manageable to make
        termination a realistic option. Furthermore, all decisions to terminate probationary
        employment should be based on objective grounds and documented.
            The Constitution presently requires that “as a condition for tenure, the evaluation of
        performance be conducted by a Commission created for this purpose” (art. 41, § 4). This
        is awaiting regulation, but would be worth considering. The Brazilian government may
        otherwise consider establishing a special board charged with trying appeals against the
        termination of a probationary employment. Each federal organisation should thus
        continue to be able to terminate a probationary employment, provided that there is
        sufficient and relevant cause for termination.

        Using external service providers
            The policy of Brazil’s federal administration concerning outsourcing is at present
        relatively restrictive, and it is likely to be one of the reasons why it is being bypassed with
        “irregular outsourced activities” (see Chapter 1). In the present situation, Brazil is
        combining a highly centralised HRM system with a decentralised outsourcing policy.
            As noted in Chapter 1, Brazil’s federal administration would gain from a less
        restrictive policy regarding the use of external service providers, but with transparent
        planning of activities to be outsourced and a clear rationale exposed. It is therefore
        recommended that the Brazilian government amend current rules and policies concerning
        the use of external service providers to allow federal organisations to make rational
        choices between in-house and outsourced provision of a broader range of input services.
        The issue for the federal government is to make a clear distinction between the use of
        “leased labour” for short-term purposes only through manpower companies if needed (but
        this should be very limited), and the contracting out of private sector companies for the
        provision of goods and services because it is thought to be more cost efficient for some
        projects and services. Good tracking of outsourced activities should continue in order to
        avoid the unwanted increase in the cost of producing government activities that would
        arise from an increase in contracted-out services without a corresponding decrease in
        government employment and a similar quantity and quality of services produced (see
        Chapter 1).
            Outsourcing should not, however, be seen as a policy goal in itself and there should
        be no targets in this respect. Instead, federal organisations should be encouraged and
        helped to develop organisation-specific policies for greater use of external service
        providers. One way to do this would be to set up a peer network for outsourcing issues
        within the federal administration. Through such a peer network, the different federal
        organisations could exchange experiences and provide mutual support.
            There are groups of staff working for external service providers that are called
        “irregular outsourced workers”. It seems reasonable to assume that for some posts, the
        main driver has not been cost advantages or patronage, but the need for access to
        specialised competences that cannot be acquired through the present system of job
        categories and competitions. In that case, more sophisticated solutions need to be
        established to have access to those skills as simply forbidding such contracting out will
        deprive administrations of needed skills.
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            Previously it was noted that using external service providers might be seen as a way
        of bypassing the constitutional requirements for merit-based recruitment for public
        service. It was also noted that the essence of merit-based recruitment is selection for
        public employment based on objective grounds. A pre-requisite for expanding the use of
        external service providers should therefore be statutes governing public procurement
        which ensure that procurement selections are also based on objective grounds. The
        policies, statutes and arrangements for managing public procurement are, however, not
        covered by this review.

        Change management
            A change from organisation-specific to transversal job categories will increase the
        potential for internal mobility between ministries and organisations. This can benefit the
        administration as a whole by contributing to a shared identity and to better allocation of
        scarce skills. It will be welcomed by employees who see opportunities in mobility, but
        may be resented by others who see it merely as increased competition for promotion.
        Some public employers may also resent increased opportunities for mobility that entail
        greater competition for skills and competencies between different public organisations.
        Increased mobility will also sharpen the need for a coherent remuneration structure across
        the different public organisations.
            One challenge for public administrations concerns the introduction of external
        recruitment at intermediary or top levels in a job category that was previously a closed
        career. This increases competition for higher positions and is likely to be resented by
        insiders who aspire to promotion to these levels. In Brazil’s federal administration,
        however, the situation has been the opposite. The main top management category, the
        DAS, has been open to external recruitment and only recently have quotas been reserved
        for internal appointments at the four lower DAS levels.14
            A challenge also arises when trying to move from a fragmented or decentralised
        system, in which each ministry or organisation handles its own recruitment, to a more
        centralised system. This involves realignment of mandates and influences, and is
        normally resented or opposed by those who perceive that their mandate is thus restricted,
        even if the change is intended to support and facilitate their recruitment activities. How
        serious the opposition is depends on perceptions of the earlier arrangements. The change
        is easier to handle if previous arrangements are generally perceived as inefficient and
        problematic than if it is seen as driven by the ambitions of other actors.
            This issue is likely to arise if Brazil follows the recommendation to replace
        organisation-specific with transversal categories based on competency profiles. Ministries
        and organisations will go from managing proprietary categories to participating in a
        collaborative effort. Resentment can be reduced by ensuring a co-operative culture and by
        providing increased support for organisations’ competency profiling.

2.4. From training to learning

        The experience of OECD member countries15
           In recent years, the training and development of staff have received renewed impetus
        and focus in the public services of OECD member countries. Entry-level training allows
        competency profiles to be adapted; continuous training enables acquisition of new
        qualifications and allows the functional competencies of the workforce to be adapted to
        changes in the strategic missions of government organisations.
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            One major reason for the increased emphasis on training and ongoing learning is that
        they are a crucial management tool in a knowledge economy. Another key driver has
        been the need to better integrate training and development policies into performance
        management systems.
            There has been a shift in emphasis from a top-down approach to training delivered
        through formal courses to developing employees’ capabilities through continuous
        learning and development, much of which takes place in the workplace. This is not to say
        that formal training should be eliminated completely. The increasing knowledge content
        of work makes ongoing skill development indispensable. However, as adaptability,
        problem solving and innovation become increasingly important for organisations, training
        in the skills needed for a particular job is being complemented by other forms of learning
        to develop a range of technical and behavioural competencies. The notion of “training” is
        being replaced by the broader perspective of “learning and development”.
            In line with this evolution, the development of employees is viewed as a strategic
        issue for organisations. Training and learning are approached as part of the development
        of the organisation’s human capital and are designed as an integral element of the
        business plan. Governments are making a significant investment in skills and human
        capital and are emphasising the need for lifelong learning. More self-directed learning
        and development by employees are being encouraged, supported by competency
        frameworks and the inclusion of development in performance management and career
        progression. Taught courses are being complemented by a variety of other methods of
        learning, such as developmental assignments, coaching, mentoring, knowledge sharing
        and team-based learning. Advances in e-learning have also facilitated this approach.
            While training policy is generally determined by the central HRM body, the tendency
        is to set the strategy and broad framework rather than to involve central government
        agencies in delivery of training. Increasingly, staff development is being left to line
        departments or even individual units. In this approach it is crucial for accountability for
        development to remain with line managers and the employees themselves and be
        reflected in performance management requirements, competency frameworks and
        arrangements for recording learning. Also essential is a supportive set of HR tools such as
        coaching, mentoring, self-assessment and access to formal and informal development
        opportunities.
            An exception to the pattern of decentralisation is the training and development of
        senior civil servants. Particularly in countries with a senior executive service, training and
        development are key elements and tend to be organised centrally in order to ensure
        consistency. Even in countries that lack a separate senior cadre, senior public servants are
        given more specialised training.
            Trends in OECD member countries are summarised in Box 2.14.




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              Box 2.14. Training and learning in governments of selected OECD member
                                               countries

              Traditionally, in career-based systems, training affects civil servants’ career paths indirectly:
         it aims to broaden competencies with a view to functional promotion and/or preparation for
         competitive examinations required for promotion to higher grades or levels. In position-based
         systems with more individualised HRM practices, training is used more to strengthen the public
         service culture among public servants and as an opportunity to increase technical skills as new
         public service issues arise.
              Training programmes have been re-engineered in many OECD member countries, especially
         to introduce lifelong learning programmes. In countries such as Australia, lifelong learning has
         been developed within the staff performance management system; in others (as in Sweden or the
         United Kingdom) it is part of the establishment of business plans and views on required
         competencies and skills.
             Training policy is designed at the level of central HRM bodies in a large majority of OECD
         member countries. Implementation is left to line departments or even lower management levels
         in many countries. For instance in Norway, the United Kingdom and the United States there is
         no co-ordinated framework for initial training.

         Initial training
              Most OECD member countries have established initial training at entry into the civil service.
         However, countries such as Norway or the United States do not have a framework for such
         training; it is left to the discretion of the local units. Most countries differentiate initial training
         by seniority level or by category/type of public servants.
              The length of initial training at entry in the civil service varies considerably across countries
         and also within countries. For some categories of public servants it can last for one year or more
         (the Czech Republic, France, Luxembourg, Portugal, the United States). In some cases, it is also
         considered as a probationary period prior to becoming a civil servant. Initial training can take
         less than three months in countries such as Hungary, Japan, and Norway. Initial training is
         provided at least partly by government-specific training organisations in almost all countries
         with such programmes, with the notable exception of Australia. However, some countries also
         use private-sector firms for the initial training of some employees (Australia, Italy, the
         Netherlands and the United States).

         Continuous and lifelong training
              Many OECD member countries invest considerably in continuous/lifelong training. For
         instance in Austria, Japan, Korea, Norway and Portugal, the average length of continuous
         training is between ten and 15 days a year per employee, while in Australia, Luxembourg,
         Mexico, the Netherlands and Spain employees benefit from between five and ten days on
         average for continuous training. Countries investing the least in continued training (three to five
         days a year per employee) are Finland, Germany, Hungary, Italy and Switzerland.




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                Box 2.14. Training and learning in governments of selected OECD member
                                            countries (cont’d)

         Management development
              Development of senior managers is receiving increasing attention in many OECD member
         countries. A survey carried out on behalf of the Office for the Senior Public Service in the
         Netherlands in a selection of OECD member countries found that recurring themes are
         “leadership” – reflecting an expectation that senior officials will manage change, not just cope
         with it – and “networking” – especially to encourage sharing of experience and ideas (EIPA/
         Berenschot, 1998). In line with this, there is less emphasis on traditional classroom-based
         training for senior managers and more use of active learning methods such as workshops
         interactive learning events and exchanges.
         Source: OECD (2007a), OECD Reviews of Human Resource Management in Government: Belgium, OECD
                 Publishing, Paris; and OECD (2009f), “Sustainability of Civil Service Reforms in Central and
                 Eastern Europe Five Years after EU Accession”, SIGMA Paper No. 44, OECD, Paris.



        Knowledge management
            Knowledge management (KM) refers to a broad collection of organisational practices
        related to generating, capturing and disseminating know-how and promoting knowledge
        sharing within an organisation and with the outside world, including:
            •     organisational arrangements (e.g. decentralisation of authority, breaking down
                  bureaucratic divisions, use of information and communication technologies);
            •     personnel development (e.g. mentoring, training, mobility) and management of
                  skills;
            •     transfer of competencies (e.g. teamwork, guides to good work practices);
            •     managerial changes and incentives for staff to share knowledge (e.g. knowledge
                  sharing as an element of performance assessment and promotion selections,
                  evolution of the role of managers).
            KM in government has ranked high on the management agenda for some years in
        many OECD member countries for several reasons. Knowledge is a critical determinant
        of competitiveness of OECD economies, and is created and destroyed faster and faster.
        Perhaps more than anything, KM is being driven by efforts to make the public service
        more efficient, productive and innovative. In addition, the need for better integration of
        government activities to address complex cross-sectoral problems makes it necessary for
        people in different organisations to share information and know-how and work together.
        Ageing public service workforces in many OECD member countries also make it
        imperative to transmit knowledge to ensure organisational continuity.
            Central government organisations are making efforts to improve their KM practices
        using:
            •     traditional knowledge-sharing methods (training for internal knowledge sharing
                  and meetings for external knowledge sharing);
            •     tools such as networking and communities of practice;


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             •    establishment of central KM units and development of ICT tools;
             •    collaboration with organisations outside government in problem solving and
                  developing policies; more interchange with academic, community and private-
                  sector organisations; and more exchange of knowledge through international
                  organisations and international contacts.
            However, the experience has been that the improvement of KM practices goes well
        beyond the need for new tools and processes or formal strategies. A key finding of OECD
        research is that good KM practices may be best enhanced by long-term efforts to change
        behaviours by building trust, team spirit and co-operation in the workplace. It also
        appears that organisations whose missions are more outwardly focused tend to have more
        demanding KM requirements and therefore better KM practices.
            There are also potential pitfalls: unless they are well designed, KM policies can lead
        to added costs in terms of information overload and a dilution of accountability.

        The situation in Brazil
            The Brazilian government launched a new policy on continuous qualification of
        public servants in 2006. Ministries are supposed to develop qualification plans for their
        employees based on competencies and efforts are being made to modernise methods of
        learning and development. A national network of government schools has been
        established and partnerships with other providers are being developed.
            There are significant challenges to be faced (Amaral, 2006). While the level of
        education of those recruited into the public service has risen over time, there is a good
        deal of variation in skill and qualification levels in different areas. While areas such as
        diplomacy, universities, hospital-schools and finance make substantial investments in
        training, some ministries suffer from a shortage of well-qualified or appropriately
        qualified staff. Moreover, the ageing of the public workforce means that in the next
        11 years, roughly 70% of the current federal civil servants will be entitled to retire,
        engendering both problems and opportunities with regard to building capabilities.
            A general provision in the Law 8112 was introduced only in 2008 to allow civil
        servants to take some paid leave in order to obtain a Masters or PhD degree, but
        beforehand, there was no framework for those demands which were considered on a
        discretionary basis by the individual ministries and government organisations.
           According to ENAP the main concerns expressed by the Brazilian government’s
        management development institutes include:
             •    the strategic importance of training and development is not appreciated and as a
                  result it receives insufficient attention from senior management;
             •    information about training and development is patchy so it is difficult to get a full
                  picture of how much training is done and to what standard;
             •    the capacity of many ministries to develop training plans is still insufficient.
             At the same time, ENAP understands that training and development initiatives cannot
        work in isolation. The creation of the National Policy for Civil Servant Development
        seeks to establish the necessary linkages with competency management, selection and
        performance management. However, this initiative is still in its infancy and faces
        considerable challenges: the national system of management development institutes is
        still being developed and capacity varies considerably. Most do not have adequate staff or
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        structures and have not yet developed the necessary relationships with their client
        ministries. ENAP itself is experiencing capacity issues for building leadership and
        management training. The cultural, economic and social diversity and the geography of
        Brazil, as well as the highly dispersed delivery of public services also create challenges in
        terms of scale, access and design.
            The steering committee set up to oversee the implementation of the national policy
        has decided to focus initially on training those responsible for implementation. This
        appears to be a good first step. Courses and workshops are being organised for those
        involved in human resources, training, and planning and budgeting in ministries.
        Additionally, ministries are being offered training in competency-based management to
        strengthen their capacity to develop their training plans. A national training syllabus is
        being established by the network of government schools.
            It is difficult to get a picture of how much training and development is being done in
        terms of expenditure and numbers trained as there is no central database. ENAP is
        surveying training offers and expected to have an overview by the end of 2009. There are
        currently no measures of the cost-effectiveness or quality of training.
            While extremely competitive entrance exams mean that new entrants to the public
        service are well educated, the academic focus of the exams means that they do not
        necessarily possess the competencies required for their new roles. Most new recruits go
        through a training period of variable length and have a probationary period of three years.
        In some cases the initial training is part of the selection process.
            ENAP is responsible for leadership and management training. It trains entrants to the
        new public service management careers and also provides training for DAS civil servants,
        although the DAS does not require training. The numbers participating in management
        development courses rose from 7 800 in 2003 to 29 600 in 2008. The greatest increase
        was in participants in distance learning, which has become an important method of
        delivering training. Public servants increasingly realise that they need to show a high
        level of qualifications to be selected for DAS positions and increasingly use training for
        that purpose. Similar trends exist for holders of DAS positions in order for them to be
        maintained in their posts, reappointed or promoted within the DAS system.
            Efforts are being made to modernise the methods of training and development
        through distance education, in-service training, seminars and sharing of best practice.
        However, much of the training is still classroom-based and uses traditional
        methodologies.

        Knowledge management
            KM in the Brazilian public service is at an early stage. There are a number of isolated
        instances of successful implementations of KM initiatives in major state-owned
        enterprises, such as Petrobras and the Banco do Brasil, but KM practice is not generally
        well developed in federal ministries and agencies. A draft decree establishing a public
        policy on KM has been prepared and is under consideration.
            As regards HRM, the federal government needs to improve KM to prepare for the
        large number of retirements that will start to occur in ten years. New legislation will
        allow civil servants to be tutors in government training schools and thus share their
        knowledge. This is leading to the emergence of communities of practice among course
        participants. Roundtables of specialists in particular issues have also been held. Internal
        networks are being encouraged to offer the opportunity for better communication. The
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        establishment of the national network of government schools is intended, among other
        things, to promote the sharing of knowledge.
             There are organisational features of the public service that can favour knowledge
        sharing as well as features that impede it. DAS mobility within the public service and as a
        result of DAS appointments from outside the public service can be viewed as a way of
        disseminating knowledge. Reforms of the DAS system should take account of this.
        Another feature that favours KM is the new public management careers established in
        recent years, such as the EPPGG. These public managers are potentially a valuable vector
        for KM. Features that impede KM include ministerial “silos” (there seems to be relatively
        little communication or collaboration among ministries) and inflexible careers which
        inhibit mobility.

        Suggestions for future reforms
            Brazil’s approach of using competencies to drive training and development is going
        in the right direction. The recommendations below are aimed at supporting
        implementation, promoting closer integration of training and development with other
        HRM processes, and increasing the cost effectiveness of training and development
        activities.

        Roles and responsibilities
            At present the approach to training and development is relatively centralised, with the
        Human Resources Secretariat (SRH) in the Ministry of Planning, Budget and
        Management and ENAP responsible for evaluating annual training plans and reports of
        ministries and agencies and giving direction on the allocation of training resources. The
        actual training is done primarily through the network of government schools. This
        involves the central bodies in a lot of detailed oversight activity.
            It is recommended that the SRH refocus its activities on creating frameworks and
        support for ministries and agencies as they implement the national policy for civil servant
        development and approach training and development more strategically. For example, a
        framework might set broad parameters for how much ministries and agencies should
        invest in training and development, leaving some flexibility as to how they carry it out. It
        should also set out key linkages between training and development and other areas of
        HRM, such as performance management and career progression.
            Support provided by the SRH might include guidelines and templates to assist
        ministries and agencies to develop their own strategies, as well as standards, best practice
        and information on training and development resources. Support should include helping
        ministries to develop workplace-based methods of staff development. Oversight should
        focus on assessing progress with implementation and dealing with problems rather than
        detailed evaluations of ministries’ training plans. Special support might be given to
        ministries that experience problems with implementation. This approach would be
        consistent with the SRH’s responsibility for formulating HRM policies and guidelines.
            ENAP should maintain its responsibility for executive and management development
        and should continue to provide expert advice on the implementation of the national policy
        for civil servant development.
            Heads of ministries and agencies and line managers should have well-defined
        responsibilities in relation to training and development of their staff and these
        responsibilities should form part of managers’ performance objectives. Staff should be
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        responsible for their own ongoing learning and development. A framework should
        support them in this: competencies, guidance, resources and support from their managers.

        Integration with other areas of HRM
            Building a culture of learning and development will require changes in other areas of
        HRM that affect incentives for managers and staff to invest effort and resources. In
        particular, links need to be created with promotion, career opportunities and performance
        management. As regards promotion, building up the capacity of the public service will
        mean giving more weight to the development staff have undertaken, as opposed to
        seniority, not mechanistically but as part of assessing how well prepared they are to
        undertake a higher-level role. As regards career opportunities, there is great disparity in
        the extent to which public servants have access to promotion and therefore in their
        incentives to engage in ongoing development. Overhauling the career structure to create
        more pathways for professional growth and career progression is a necessary part of a
        skills strategy for government.
            The developmental aspect of performance management should be strengthened using
        the competencies approach. Managers should be trained in how to assess and address the
        developmental needs of their staff in order to improve on-the-job performance. At the
        same time, a careful balance is needed between the development focus and the results
        focus of performance management.

        Methods and delivery
            The need to bring training and development methods up to date is appreciated. Given
        that much of the recruitment in the Brazilian public service is at base grade and early in
        the career, investment in initial training is essential. At present the amount of training in
        different ministries and agencies appears very uneven. It is recommended that this be
        reviewed and that requirements be set for minimum initial training appropriate to
        different types of job categories in consultation with the hiring organisations, although a
        level of flexibility should be maintained to adjust the training to the needs of
        organisations..
            Classroom-based training should be based on the most modern adult-learning
        methodologies. Other forms of development – workplace-based activities such as on-the-
        job training and developmental assignments and secondments – should also be supported.
        Distance learning should continue to be developed as a means of expanding access to
        ongoing training. A modular approach to training should be developed, linked to a
        competency framework.
            Given the geographical dispersion of the public service, it is understandable that
        Brazil has invested in developing a network of government training schools. In addition,
        ministries and agencies often use private providers. There is probably scope for
        rationalisation to avoid duplication of effort and concentrate investment on priorities.
        Quality assurance methods should be applied to both government schools and private
        training consultants. Universities should be encouraged to set up courses in public
        management and to develop partnerships with ministries and agencies to provide
        specialised ongoing development for particular professional groups.




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        Developing leaders and managers
             ENAP and the network of government training schools should continue to focus on
        developing leaders and managers, building on appropriate international best practice.
        Initial and ongoing development should be linked to core competencies to ensure a
        common framework for development. A framework for ongoing development should
        incorporate not only formal training but also a range of other activities, such as
        networking and executive coaching. The executive development frameworks in a number
        of OECD member countries, outlined in Box 2.15, provide examples of how this could be
        approached.

            Box 2.15. Development of senior civil servants: examples from OECD member
                                              countries

             In Australia the Australian Public Service Commission supports leadership learning and
         development. The Senior Executive Leadership Capability Framework defines the capabilities
         required of senior executives in the public service. A suite of development programmes, events
         and services provided by the Commission has been specifically designed to reflect this
         framework. The Commission works closely with leading institutions and training providers,
         across industry, to develop and deliver programmes which have been specifically designed to
         meet the changing needs of public service employees.
             In Canada, the Canadian Office of the Chief Human Resource Officer offers programmes and
         information to senior staff that foster professional growth. For the most senior level, Assistant
         Deputy Minister (ADM), the agency provides individual ADMs with advice on assignments,
         promotions and learning opportunities, as well as personal and career development strategies.
              In Germany the Bundesakademie für öffentlich Verwaltung organises development and
         further training of federal civil servants. However, the federal public service offices and those of
         the federal states are responsible for deciding who may participate in the courses offered by the
         Bundesakademie. The programmes are not compulsory.
              In Sweden the leadership task of senior civil servants is emphasised by the “government’s
         leadership policy”, which provides guidelines and basic principles. Specific training and courses
         aim to develop the leadership skills of senior civil servants. The Ministry of Finance decides
         which subjects are important for training. However, the organisation of training is decentralised
         to individual agencies.
         Source: Survey carried out on behalf of the Office for the Senior Public Service in the Netherlands,
                 EIPA/Berenschot (1998), and in some cases from government websites.



            A consistent approach to developing leaders and managers would be facilitated by
        changes to the way the DAS operates, as recommended in Chapter 4. It is recommended
        to establish specific requirements regarding training and development of civil servants
        nominated to DAS positions. This should include induction as well as development based
        on core competencies. In addition, all persons nominated to DAS positions, including
        those coming from outside the civil service, should be required to undergo an induction
        programme dealing with public service values, ethics and code of conduct.




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        Evaluating the cost effectiveness of training
            Evaluation should focus on the extent to which training and development are meeting
        the needs of the organisation: for example, the percentage of staff deemed to be at
        acceptable competency levels and whether the skills and qualification profile of the
        organisation is satisfactory.
            Measures of cost effectiveness should be developed for ministries, agencies and
        government training schools to use to evaluate their training activities: for example,
        management feedback data on how employees apply what they learn and improve their
        performance; feedback from clients of public services; and cost-benefit data for specific
        training interventions.

        Knowledge management
            KM in the Brazilian administration is at a very early stage. It will progress when
        competency management becomes well established and when the system of job
        categories has been reformed to provide more fluidity of movement within the public
        service.
            As regards how HRM policies can contribute to KM, OECD experience highlights the
        importance of leadership, staff involvement and incentives to build organisational
        cultures that are conducive to KM. The development of competency frameworks in the
        Brazilian public service provides an opportunity to integrate KM into HRM. KM should
        be considered a core competency for all managers and should be an element of their
        performance appraisal. It should also be integrated into training for both managers and
        staff.
            A survey of KM practices in ministries, departments and central government agencies
        in OECD member countries points to a number of important factors that the Brazilian
        government should take in to account in its efforts to establish KM (see Box 2.16).

                     Box 2.16. OECD survey of central government KM practices

             The following factors were found particularly important for the success of KM in a cross-
        section of OECD member countries:
            •     high priority given to the KM initiative at the very top of the hierarchy;
            •     well-developed and co-ordinated communication plans for the initiative;
            •     strong involvement of staff;
            •     establishment of incentives to share knowledge;
            •     allocation of sufficient financial resources.
        Source: OECD (2003a), “Conclusions from the Results of the Survey of Knowledge Management Practices
                for Ministries/Departments/Agencies of Central Government in OECD Member Countries”,
                GOV/PUMA/HRM(2003)2, OECD, Paris.




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        General conclusions
            In recent years, the federal government of Brazil has made considerable progress in
        strengthening its human resource capacity by increasing the level of qualification for
        entry into the public service and ensuring merit-based selection processes at entry. These
        are the first important steps in the construction of a capable public service.
            Staff capacity, however, remains undermanaged, with very limited management of
        competencies, narrowly defined merit selection systems, and rigid and narrow job
        categories which prevent the optimal use of human resources and limit opportunities for
        staff to develop their careers through lateral mobility or vertical progression. The
        government needs to take a number of measures to develop its civil service into a fully
        modern civil service similar to those of most advanced economies.
            Further efforts in the area of management capacity and competencies and in
        reforming the job category systems are priorities and should go hand in hand so that they
        reinforce each other. This involves designing a competency framework for the civil
        service, developing the capacity within ministries and other government organisations to
        manage competencies, and ensuring that key HRM tools and processes are related to
        competencies. Competencies and the development of senior managers should be a
        priority area of emphasis. The central HRM body has a special responsibility for
        managing transversal categories and maintaining coherence across the system of
        competency management in government organisations.
            The management of competencies includes of course its application to the recruitment
        system, which is based on a narrowly defined notion of “merit” and does not at present
        guarantee the selection of the most competent person for the job. Recruitment exams can
        be modernised to go beyond tests for knowledge and skills acquired in universities.
        Modernisation of the recruitment system will probably entail the establishment of some
        sort of independent appointments board to give guidance on recruitment, set standards,
        possibly act an appeal body, and mandate recruitment providers.
            Commissioned functions and DAS positions are an important exception to the
        principle of transparent competitive selection of staff in the federal government. DAS
        positions should probably be a priority for systematising a transparent but modern
        recruitment process, based on experience and competencies, and some organisations seem
        to be doing so already. This would fill in a gap in terms of transparent recruitment
        process, professionalise the recruitment of senior management, help build group cohesion
        across managers, constitute a trial process for selection that is not based on knowledge,
        and thus help build confidence in more modern ways of measuring “merit” in
        recruitment.
            As for the Commissioned functions, it is important that they be reintegrated into the
        job category system and that appointment to those positions follow regular procedures
        rather than discretionary appointments. This can be implemented over the years as staff
        go on retirement.
            The management of competencies will not achieve most of its potential without an in-
        depth restructuring of civil servants’ job categories and career opportunities. The rigid
        and fragmented way in which job categories are managed today hinders the optimal
        allocation of staff, creates high transaction costs and pressures for increased
        compensation costs. In addition, the DAS system, especially for non-managerial
        positions, has been a relatively unhealthy way to provide flexibility in the rigid
        management of job categories.
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            Reforms in job categories are technically and politically very complex to implement
        but have been conducted successfully in a number of OECD member countries with
        similar difficulties. This can inspire Brazil’s efforts. The federal government should
        certainly consider reducing the number of job categories, increasing transversal job
        categories, developing job profiles that underpin the career structure and favour mobility,
        and designing a job classification system. The procedures for mobility and promotion
        across careers, however, need to be transparent and based on competitive processes with
        transparent and publicly available listing of openings.
            Many countries are moving towards opening up some positions to lateral entry into
        the public service. Brazil has already moved in this direction through the DAS system.
        This system, however, is an imperfect solution designed as much to give some freedom to
        those in the job category system as to increase competition and allow the entry of people
        with different competencies into the system. For middle and senior management
        positions, the DAS system could remain, with more transparent appointment processes
        based on competencies for lower management positions and more discretionary
        appointments at higher management levels (Chapter 3). For other positions, however,
        when the job category system has been reformed, it is advisable that they be reintegrated
        into the job category system, still allowing, however, for lateral entry into the system of
        staff from outside the public service.




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                                                              Notes


        1.        The European Group of Public Administration (EGPA) has undertaken a
                  comprehensive study of competency management in the public sector in Europe: see
                  Horton, Hondeghem, and Farnham (2002).
        2.        The jurisprudence of the Supreme Court does not allow mid-level recruitments within
                  the regular job category system, but they exist for some positions such as university
                  teachers, researchers in research institutes, and infrastructure senior specialists.
        3.        The DAS system comprises about 22 000 positions, outside of the job category
                  system. Most senior positions are included in the DAS system, but the majority are
                  relatively junior positions. Appointments to the DAS system are discretionary,
                  although a large percentage are legally reserved for civil servants. The full description
                  of the DAS system is in Section 3.2.
        4.        The competency-based methodologies are described on the Belgian federal
                  government’s personnel website www.fedweb.belgium.be/fr.
        5.        This paragraph is drawn from Farnham and Horton (2002).
        6.        This analytical framework was proposed by Osterman in 1987 and discussed in
                  Boxall and Purcell (2003: 117-118).
        7.        Some careers in regulatory agencies have a “qualification reward” (Gratificação de
                  qualificação) that aims to differentiate among new entrants according to
                  competencies and experience. But these rewards have never been used since 2004
                  because of a lack of regulation.
        8.        The career was created by the Provisional Measure 389/2007, later transformed in the
                  Law 11.539/2007, later reformulated by the Law 11.661/2008, derived from the
                  Provisional Measure 407/2007. Eight hundred eighty-four positions (84 seniores and
                  800 analysts) of infra-structure analysts have been created since then. They are
                  distributed mainly in line ministries such as Transports, Energy and Mines, National
                  Integration, Cities and Communications.
        9.        The career was created by the Law 3.952/2008. There are 2 400 positions to be
                  fulfilled by the line ministries (Education, Health, Social Development, Agrarian
                  Development, Human Rigths, Women, Racial Integration, Employment, etc.).
                  Appointment process to those positions will start at the beginning of 2010.
        10.       The creation of this career – Project Law 3952/2008, 2 190 positions – is destined to
                  populate the critical areas of human resources, procurement, financial services,
                  administrative routines. It has not yet been approved by the Congress.
        11.       The career was created by the Provisional Measure 441/2008, transformed in the Law
                  11.907/2009. Three hundred fifty positions have been created and a public selection
                  to fill 230 positions has just been realised.



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        12.     It should be kept in mind that the number of central government civil servants in
                France is much larger than in the federal government of Brazil and, when comparing
                with the federal government of Brazil, the number of job categories and groupings
                should be adjusted accordingly.
        13.     There are however exceptions, most notably in the Nordic countries, where the
                decentralisation of human resource management to independently led executive
                agencies has led to an almost total harmonisation with the arrangements and practices
                in the private sector. The protection against patronage is in these countries based on
                deeply internalised public service values, an extensive and legally guaranteed
                transparency, and access to appeals.
        14.     Quotas existed in the past for the lower grades but were not properly enforced.
        15.     This section draws partly on information included in the OECD (2007a: 81-82), and
                from OECD (2006), Survey on Strategic Human Resources Management, OECD,
                Paris.




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                                                                                ANNEX 2A.1. JOB PROFILE TEMPLATE – 187




                                                      Annex 2A.1
                                                    Job profile template




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                      JOB TITLE
                      POSITION DESCRIPTION & COMPETENCIES
                      OVERALL PURPOSE OF THE POSITION:
                      KEY RELATIONSHIPS:


                      Internal
                      External



            ACCOUNTABILITIES AND TASKS


                      Key result areas                            Accountabilities/tasks




         REQUIRED ATTRIBUTES:
         TECHNICAL KNOWLEDGE
         MANAGEMENT AND LEADERSHIP
         COMMUNICATION
         PERSONAL ATTRIBUTES AND ABILITIES



         JOB COMPETENCIES AND INDICATORS


                                                             Key behaviours/indicators
                   Job competency
                                                                (demonstrated by)




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                                       Chapter 3
                  Enhancing performance orientation and building leadership



            A constant challenge for governments is the efficient delivery of services and
        operation of programmes. This chapter analyses the strategies implemented by the
        Brazilian federal government to enhance performance and build leadership in the federal
        public administration. Taking into consideration the experience of OECD countries, the
        chapter analyses a number of elements and activities which form the set of drivers of
        performance in the Brazilian federal government: budget management, staff performance
        management, the remuneration system, and individual performance assessment. The
        management of senior managers is seen as a critical element for reinforcing the
        performance orientation of public governance and public management, and for
        enhancing the delegation of responsibilities for human resource management.




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3.0. Introduction

            It is easy to support the idea that government should deliver efficient services and
        operate efficient programmes. This has in fact been a key goal of all countries that have
        moved beyond archaic governance systems. Public resources are always limited, and
        getting the most out of them has always occupied the minds of modernisers, whatever the
        national context.
             It is of course easier said than done. Public activities differ from private ones on two
        critical points. First, the way output is achieved is at least as important as its economic
        value. Second, the output or results of public activities are normally not assigned a market
        price that integrates quality, quantity and customer satisfaction. “Performance” in public
        administrations and services is a broad concept that includes not only costs, output and
        effects on outcomes, but also such things as appropriateness, due process and
        trustworthiness. A public servant’s performance involves not only working and delivering
        but also respect for the laws of the country, for the democratic system and for the elected
        government during its term of office.
             Nor does good performance just happen, at least not consistently. It requires
        appropriate actions by political leaders, legislators, public managers and public servants.
        It is about culture and attitudes as much as about organisations, mandates, competences
        and incentives.
            Much has been written about strategies and arrangements for enhancing performance,
        almost all of it on how to manage the workforce and how to make public employees
        perform better. The last decades have generated a wealth of management literature that
        offers different models and recommendations, although most are only concerned with
        market enterprises.
             Discussions about public servants’ performance long focused on how they behaved
        and worked. Goals were expressed in terms of correct behaviour, impartiality, legality
        and appropriate procedures. Accountability arrangements emphasised controlling inputs,
        compliance with rules and regulations, and hierarchical structures. Incentive structures
        focused on compliance, and as such, discouraged initiative and innovation. Although
        these were critical for the trustworthiness of the public administration, they were said to
        inhibit innovation and hamper efforts to enhance efficiency and performance. They have
        been questioned in all OECD member countries, in different ways and at different paces.
        The general trend has been to delegate managerial authority and increase accountability
        for results and performance. This is by no means an easy task, and countries are still
        striving to achieve a better balance between controls and efficiency. Given its relatively
        strong emphasis on control, this is clearly a direction that the federal government of
        Brazil should follow, using caution so as not to undermine ethical standards in the public
        service.




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3.1. Enhancing performance orientation

        The experience of OECD member countries

        The drivers of organisational performance
           While there is no “best case” country or model, it is possible to outline a number of
        elements and activities which form the set of drivers of organisational performance in any
        public administration.
             •    First, the government has to make clear statements about the outputs and
                  outcomes it wants to achieve and its expectations of performance in the different
                  parts of its administration and from its employees. This strategic management of
                  public activities involves setting and regularly updating a set of organisational
                  goals, which have to be specific enough to enable assessments of organisational
                  performance. It also includes setting the standards and promoting the values that
                  should guide its employees in their work.
             •    Second, the government has to provide the necessary financial resources for the
                  different parts of its administration, so that they have a reasonable possibility of
                  reaching their goals. The goals of the government’s budget management should
                  not only be to control the amount of expenditure and the allocation of expenditure
                  across organisations and activities, but also to do it in such a way as to provide
                  adequate and optimal conditions for public organisations’ pursuit of enhanced
                  performance.
             •    Third, the government has to ensure that its administration has a workforce
                  possessing the skills and competences necessary for the activities it is expected to
                  perform and able to maintain them over time. This requires an adequate level of
                  workforce planning, competency management that builds on a competency
                  framework, competency profiles to guide recruitment and training activities, and
                  being an attractive employer able to meet the growing competition for scarce
                  skills and essential labour.
             •    Fourth, the government has to ensure that it has competent and loyal managers at
                  all levels, able to lead the different parts of the administration towards their
                  respective goals, and to encourage and stimulate employees to improve their
                  performance. This requires managers who are empowered and have sufficient
                  managerial discretion, especially concerning performance rewards for their
                  employees.
             •    Finally, the management of public employees has to change. Good performance
                  must be rewarded and unsatisfactory performance must be attended to. Incentives
                  must be provided for both personal and organisational development and
                  innovation must be encouraged. Employees need to be encouraged to provide
                  good service and to enhance their own capacities and competences. This will be
                  very difficult if management by rules and regulations is not replaced by spheres of
                  managerial discretion and responsibility for results and performance.
            These five sets of elements and arrangements are interdependent and mutually
        reinforcing. It is difficult to enhance overall effectiveness, efficiency and quality without
        satisfactory standards in all five areas. Some of the measures involved can be introduced
        even in a bureaucratic environment. These include performance management and

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        budgeting, performance measurement, improving financial management and tracking of
        public expenditure. Other measures entail more innovative approaches, such as a
        relaxation of financial and managerial input controls, an increase in managerial flexibility
        in areas of spending and staff, and use of internal market-type mechanisms. This implies
        that managers are increasingly trusted to improve performance and have the freedom to
        manage, but are also more effectively being held accountable for how they manage, how
        wisely resources are used, and what results have been achieved.
            This relaxation has to be combined with new governance and management
        arrangements to ensure that the basic values of public service are still respected and
        complied with. The most important of these involve collecting information on
        performance and results; new means of assessing the performance of managers,
        organisations and employees; and improved internal audits.
            In practice, OECD member countries have taken different approaches to the
        relaxation of input controls and to the provision of formal performance information.
        Europe’s Nordic countries have a long history of independently managed executive
        agencies and started relaxing input controls during the 1970s. In other countries, many of
        the mechanisms needed to support increased flexibility, such as delegated financial and
        performance management and systems to develop and gather performance information
        have only recently been put in place.

        Aligning human resource management to enhance performance orientation
            In addition to general enablers of good performance, appropriate human resource
        management (HRM) practices are essential in the quest for enhanced performance. In
        1960 Douglas McGregor published his seminal book on modern human resource
        management. He challenged the Taylorist approach and argued that employees performed
        better if empowered, motivated and stimulated than if merely commanded. Previously,
        performance incentives had been quantitative measures intended to make a labourer work
        harder and faster. McGregor’s article became the starting point for experimentation with
        new forms of more sophisticated performance incentives, linking rewards and other forms
        of incentives to the strategic goals and results of the organisation. By now it is generally
        accepted that enhanced performance cannot be achieved simply through set rules and
        preordained procedures, although standards, rules and appropriate procedures will
        continue to set the scene for active human resource management.

        Assessing performance
            It is possible to discuss and assess performance at several levels: the organisation, the
        group or team, and the individual. The ability to measure or assess performance at any of
        these levels depends on the ability to describe the desired results of the organisation's
        activities in a sufficiently operational way. Systems for rewarding organisational
        performance are always based on such descriptions, and expectations of team or
        individual performance should always reflect the organisation’s goals.
            The concept of performance acquires new dimensions when one moves from the
        organisation to the team and the individual. It is no longer merely a question of doing the
        right things and doing things the right way. It also involves how an individual behaves in
        a workplace context and how he/she contributes to a well-functioning workplace and to a
        well-functioning organisation.



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            Previous OECD surveys and studies show that existing systems for assessing
        individual employee performance vary across organisations from very simple to complex,
        and that they are also very context-dependent. A simple system may consist only of
        subjective supervisor assessments or of a few easily observed quantitative variables.
        More evolved systems structure assessments according to different aspects and/or
        competencies or include more variables. Among the more complex systems used in some
        organisations are the so-called 360-degree assessments in which not only supervisors but
        also colleagues, subordinates (if any) and customers/clients assess an employee’s
        performance. Advanced systems can contain elements intended to standardise the
        assessment of different supervisors and to reduce the risk of subjective and discriminating
        treatment. Such elements include assessment guides and assessment training for
        supervisors. Employees may also have a right to appeal a negative assessment.
            Figure 3.1 provides an indication of which criteria are used for assessing the
        performance of government employees in different OECD member countries.

          Figure 3.1. Criteria used for assessing performance of employees in central governments of
                                       selected OECD member countries




         Source: OECD (2005c), Performance-related Pay Policies for Government Employees, OECD Publishing,
                 Paris.


            Early in performance management, a number of countries established rather
        sophisticated measures to assess outputs and outcomes, using models aimed at achieving
        a certain level of “scientific” assessment. These models have proven very cumbersome
        from a bureaucratic point of view, and have focused employees’ attention not on their
        general behaviour and overall delivery of services but on a few outputs and measures.
        These systems have since evolved and adopted more diverse criteria for assessing
        performance.
            The criterion “improvement in competencies” has become increasingly important,
        partly because it is a way to encourage the development of the key skills required of staff.
        It may also be easier to agree on what constitutes technical competencies than to assess
        what outputs have been achieved. This route has enabled countries to avoid the
        divisiveness often associated with performance-related pay based on appraised


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        performance outputs. In 2009, for example, Japan introduced performance assessments
        with criteria for both outputs and outcomes and improvement of competencies.
            In most cases, standard criteria are developed to assess the individual’s performance.
        Overall, the most important criteria highlighted in country reports are: outputs achieved,
        which include the objectives specified above; competencies and technical skills;
        interpersonal skills and teamwork; leadership and management skills; and inputs. Other
        criteria mentioned by individual countries include ethics (Canada) and innovation
        (Denmark).
            Interpersonal skills have taken on more importance with the spread of more flexible,
        team-based working practices and the need to be more responsive to individual citizens’
        requirements. Associated with these are leadership and management skills. They are
        especially relevant for managerial staff, but measures to devolve more decision making
        and responsibility to front-line staff make these skills relevant for staff lower in the
        organisation as well.
            Performance-related pay schemes based on achieved outputs have encountered
        assessment and attribution problems. The other criteria described above are also not
        immune from similar problems. It may be hard for instance to measure competencies in
        the absence of formal certification, as they may be difficult to define in a way that is
        acceptable to both staff and managers. Relying simply on a manager’s subjective
        judgement as to whether an employee has acquired a particular competency can be as
        difficult as deciding whether an employee has achieved a certain level of output.
            Performance rating, like performance assessment, tends to be less standardised, less
        formalised and less detailed than a decade ago. Performance appraisals rely more on
        dialogue with line managers than on strictly quantifiable indicators; more diverse criteria
        are now more flexibly applied. In most cases, managers and their staff have two meetings
        a year, one to set objectives and the other to assess the results obtained.
            Systems for rating performance which impose quotas on the number of public
        servants to be rewarded are widespread in OECD member countries. Some are formal,
        and some are informal. Practitioners generally agree that it is relatively easy to identify
        the 10% best or poorest performers. The difficulty lies in assessing the other 80%. For
        these, the value of the performance appraisal system lies more in the discussion of
        objectives and achievements than in the actual rating.

        Rewarding good performance
            A number of studies have conclusively shown that rewards for good performance do
        not have to be monetary. Attention, praise in front of colleagues, being singled out for
        attractive tasks and for career enhancement are at least as effective as remuneration in
        promoting better performance. The role that past performance plays for selection for
        functional promotions, whether within a job category or in competition for entry into
        another job category, is also a very important incentive for enhanced performance.
            Targeting unsatisfactory performance is as important as rewarding good performance.
        Supervisors are, however, typically more comfortable with rewarding good performance
        than with tackling unsatisfactory performance. This may therefore have to be given
        special attention in supervisors’ training. When a number of unsatisfactory performance
        assessments can lead to termination of employment, special care has to be taken that the
        assessments are correct and defensible.


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        Performance-related pay
            Forty years ago, nearly all public servants in the central governments of OECD
        member countries were paid according to salary scales based on length of service. Today,
        significant numbers of public servants in most OECD member countries are covered by
        performance-related pay (PRP) schemes of one kind or another. These are most
        frequently used for senior managers, but increasingly also for non-managerial employees.
        The reasons for introducing them vary across administrations and are typically complex,
        but they generally focus on improving individual motivation and accountability of public
        servants as a way of improving organisational performance.
            This does not necessarily mean that the pay of public servants differs on the basis of
        performance in most OECD member countries. It does mean that the notion of
        performance has been introduced and allows for singling out excellent or poor performers
        in terms of their pay. In fact, however, very few OECD member countries have extensive
        formalised PRP schemes, and PRP is sometimes more rhetoric than reality, with
        performance rewards distributed to all.
            There is a spectrum of arrangements in OECD member countries for linking
        remuneration to performance assessment. Some countries have introduced the possibility
        of performance bonuses (rather than performance increments). In many OECD member
        countries, the salaries of public servants now consist of three components: a base pay, a
        supplement related to the nature or duties of the position, and one or more PRP elements.
        The two types of variable pay components should not be confused. The first relies on an
        ex ante evaluation of the responsibilities and requirements associated with the position,
        while the other relies on an ex post evaluation of individual performance. Other countries
        have made salary progression on fixed salary scales dependent on favourable
        performance assessments. A few have introduced individualised salaries, with
        performance just one of several factors influencing salary revisions.
            Aside from a few exceptions, the size of performance payments is generally a fairly
        modest percentage of the base salary, in general less than 10%, especially among non-
        managerial staff. At management level, performance payments are generally around 20%
        of the base salary.
           Recently, a few countries have started to establish collective or group performance
        schemes, at the team/unit or organisational level. This is an interesting development,
        especially for career-based systems in which individual performance management has
        proven more difficult (see Box 3.1).
            A number of studies have failed to demonstrate any significant correlation between
        individual PRP schemes and the performance of the concerned organisations, although
        PRP seems to be easier to implement for simple piecework production than for complex
        tasks. This does not mean that such correlations do not exist, but that performance-related
        pay alone is not enough. Instead, PRP has to be part of broader performance management
        systems, with appropriate career opportunities and other forms of recognition. PRP
        systems also have to be operated by competent managers and based on appropriate and
        reliable performance indicators or assessments. Performance-related pay is not a stand-
        alone feature.




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                Box 3.1. Conclusions of a study on collective performance-related pay

            Collective performance pay is a recent phenomenon and aims to respond to criticisms of
        individual performance pay as having a negative impact on cohesiveness and team spirit in the
        public service. It is not yet widespread and only a few countries, such as Denmark and Finland,
        have started to go in this direction. The definition of the scope of the group to which collective
        bonuses should apply seems to be very important. This is one of the reasons invoked by the
        United Kingdom for the failure of the introduction of collective performance bonuses in
        employment agencies. In Finland, collective bonuses are mostly applied in agencies rather than in
        central services.
             In Finland, which has a very sound system of cascading objectives, collective bonuses are
        based on the achievement of performance objectives. These are divided into two parts: one is
        related to multi-annual objectives, and another is related to annual objectives. Bonuses are only
        allocated past a certain threshold, and represent between 1.5% and 4.5% of annual gross salary.
        Sometimes collective bonuses are the same for all who are rewarded; more often they are
        proportional to one’s salary.
             Finnish government bodies using collective bonuses have to fund them themselves. They
        consider this a useful tool for taking note of achievements and recognising excellent work. There
        are a number of conditions attached to collective performance pay:
            •    the existence and credibility of the multi-annual strategy;
            •    precise and measurable objectives;
            •    understanding of the cumbersome processes attached to allocation of those rewards and
                 efforts to incite a dialogue;
            •    investment in making performance part of the organisational culture.
            In conclusion, the Inspection général des Finances in France advises the following:
            •    allow collective performance pay through a general framework but decentralise its
                 management to the organisation’s management levels;
            •    treat collective performance pay as a contractual device;
            •    make it a condition that strategic documents exist and are credible;
            •    do not link collective performance rewards to efficiency measures regarding personnel
                 costs;
            •    start small;
            •    formalise collective performance pay into explicit contracts;
            •    favour simplicity and equity through an equal distribution of collective rewards in the
                 teams;
            •    associate team members in the definition of objectives;
            •    incite managers to get training in management and in discussing objectives and
                 achievements.
        Source: Inspection Générale des Finances (2009), Rapport sur l’intéressement collectif (comparaisons
                internationales), April. France.




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            A final word of caution is necessary. Differences in remuneration and other rewards
        for employees with equal tasks and competencies need to be generally recognised as
        motivated and legitimate, in order to not affect the workplace climate and morale
        negatively. The performance of any group of employees tends to vary according to the
        Gaussian normal distribution (also called a bell curve), with the majority clustering
        around the median and with a smaller number of outliers substantially above and below
        the median. Introducing evidence-based pay differentials in the large groups clustered
        around the median typically entails high transaction costs, but there is seldom sufficient
        added value to outweigh these costs. The use of individualised and differentiated pay
        should thus not be overdone. There are inherent values in standardised pay, and the
        ability to differentiate should only be used if and when managers have the required
        competence and evidence base for differentiation, and when there is a sufficient business
        case.

        Decentralising pay setting for performance pay
            The transaction costs involved in trying to combine centralised wage setting with
        elements of individual performance-related pay are substantial. Objective output
        indicators have long been used for piecework by blue-collar labour but tend to be less
        suitable for assessing the performances of white-collar employees, especially public
        servants. The performance of a public servant can normally only be observed and
        assessed by the immediate supervisor. The introduction of elements of performance-
        related pay therefore always entails further decentralisation of human resource
        management. However, decentralising pay setting does not necessarily mean
        individualising pay, as managers can be delegated the authority to manage pay for groups
        rather than individuals.
            Decentralised pay setting creates a number of challenges for public administrations,
        even if it only concerns a small part of total remuneration. Supervisors need to have the
        necessary competencies and to be comfortable with grading their subordinates. Steps
        have to be taken to ensure the consistency of pay structures across the administration, so
        that two employees with similar tasks and qualifications and performing equally well are
        paid approximately the same. Appropriate financial management arrangements are also
        essential to ensure that aggregate pay developments do not get out of line.
            The chances of a positive outcome of decentralised pay setting will improve if the
        central agency provides adequate and appropriate support for those who manage the
        decentralised pay setting. This can include guidelines, handbooks, training, peer
        consultation networks and statistical tools that enable pay-setting entities to benchmark
        their pay system and pay structure to that of other pay-setting entities in the public
        administration and to the evolution of market pay for comparable skills and tasks.
            Introducing PRP can be a very slow process. It seems to require a minimum of eight
        to ten years to attain full coverage. In Denmark, implementation started in 1997 and was
        completed in 2005. In 2002, only about 35% to 50% of the civil service in Finland had
        successfully implemented the new pay system launched in 1992. The rest of the civil
        service was to implement it at the beginning of 2005 at the latest.




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            Gradual implementation allows a new system to be piloted on a limited number of
        employees, and to improve it by drawing on lessons learned from such experiments. It
        also contributes to a smoother implementation process with unions and greater acceptance
        by employees. Partial or gradual change processes are more akin to learning and
        adaptation – crucial for PRP – than to reform.

        The situation in Brazil
            The quest for better performance is evidently on the agenda in almost all parts of
        Brazil’s federal administration. Most organisations seem to have undertaken measures
        intended to improve the results of their activities or have been discussing such measures.
        At the same time, concerted action covering all parts of the federal administration is still
        limited and the previously mentioned five sets of elements and activities that constitute
        the main drivers of organisational performance.

        Strategic management and budget management
            The scope for enhancing performance through improved human resource
        management depends on the adequacy of strategic and budget management. Although
        these are beyond the mandate of this OECD review, there are reliable indications of the
        need for reform in these areas.
            As mentioned in Chapter 1, progress has been made in budget and financial
        management in the past ten years. Efforts have been made to make the budget process
        more programmatic and more forward-looking and performance-based to some extent,
        although improvements in the capacity to implement those are still needed to get some
        returns out of these changes.
           Although a performance culture seems to be taking root in the federal government,
        organisational strategic management is still hampered by difficulties in programming and
        managerial rigidities.
            Attention to performance seems primarily to be promoted through ad hoc and/or
        informal political signals to the organisations concerned. As would be expected, this
        seems to work best for organisations that are not dependent on budget allocations and that
        have clearly defined variables in terms of economic results (i.e. state-owned enterprises).
            Efforts in the past ten years aimed at improving the programmatic aspect of budgetary
        management and the strategic management of organisations should continue and be
        reinforced to enhance a performance culture in HRM.
             The government is drafting a proposal for a law to implement Constitutional
        Amendment in force since 1998 (EC19) that changed two articles of the Constitution
        (art. 37 and art. 39) to allow: i) that any agency or ministry that establishes a management
        or performance agreement can get more autonomy and reward its managers and
        employees or civil servants according to targets and results achieved; ii) the payment of
        bonuses to civil servants following economy in current expenses. The draft law was the
        object of public consultation for 30 days in January 2009, but is still in the process of
        internal consultation.




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        The broad human resource management framework and its influence on
        performance orientation
            HRM is a core driver of enhanced organisational performance. If public employees
        are not enabled, empowered and helped to work towards this goal, it is doubtful whether
        other drivers can achieve anything. Brazil has recently begun to introduce competency
        management as part of a strategy to strengthen the capacity of the public service. A
        government decree in 2006 introduced the concept of a competency-based administration
        (Gestão por competências) and a national policy for civil servant development has been
        established. However, competency management is initially being approached merely as a
        way of reorienting and strengthening training opportunities and individual development.
        In the longer term, it will be necessary to broaden competency management so that it can
        serve as one of the pillars of strategic human resource management. These issues are
        developed in Section 2.1.
            How jobs in the federal administration are defined, classified and grouped sets the
        scene and context for the design and operation of all other aspects of human resource
        management. The HRM arrangements in Brazil’s federal administration are both complex
        and fragmented. Successive attempts at reform and solutions intended to address the
        changing needs of individual institutions have led to a variety of overlapping
        arrangements. This patchwork is, as discussed in Section 2.2, dysfunctional and in need
        of simplification and reorientation towards competencies and a stronger focus on the
        needs of the entire federal administration.
            The federal administration’s arrangements for acquiring new human capacity and
        talent are weakened by the fragmented system of grouping jobs described above. This
        means that it cannot benefit from the advantages of either centralised or decentralised
        recruitment arrangements. The arrangements are also unsophisticated and not yet linked
        to the emerging work on competency profiles and competency management. These issues
        are examined in Section 2.3.
            Brazil’s system for selecting and managing senior management is flexible and allows
        the government to select the right person for each post, regardless of background. The
        management categories are dominated by the DAS (Grupo-Direção e Assessoramento
        Superiores) system, but also include persons in certain other job categories. The DAS
        system is opaque overall, despite efforts by some organisations to professionalise the
        appointment to DAS positions and make them more transparent. DAS positions are
        temporary assignments. Appointments to DAS positions are at the will of the government
        and can easily be terminated. There is no concerted management of the managerial
        cadres, no general competency profiles, no systematic training and no concerted effort to
        promote cohesive values and attitudes among the public managers. These issues are
        discussed in Section 3.2.

        Staff performance management policy and practice1
            It is evident that the federal government has taken many initiatives to establish
        specific tools for increasing attention to performance in staff management. Attempts to
        establish performance management as the basis of management of federal government
        employees started in 1960 with linkages between promotion and compliance criteria. This
        was followed by the adoption of a performance evaluation system in 1977 with a ranked
        distribution (after three years the emphasis returned to seniority). Then, in 1994, a curve
        mechanism was introduced in the performance evaluation system in order to justify the
        payment of performance-based compensation for a group of job categories in the
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        Treasury, the Budget Secretary, for Specialists in Public Policy and Public Management
        (EPPGG) and IPEA (Institute of Applied Economic Research) employees and in 1998 the
        possibility of dismissal for poor performance was introduced in the Constitution
        (however, no system of performance evaluation that could lead to a dismissal was ever
        designed). After 1995, bonuses based on performance have been established and have
        become generalised but have limited real value in terms of managing performance,
        although in some parts of some ministries performance-related pay seems to be
        functioning.
            Presently, the relevant regulations are:
            •   The federal Constitution refers to the performance evaluation of civil servants. It
                makes their promotion subject to participation in training courses, and creates the
                possibility of dismissal for insufficient performance.
            •   Legally, civil servants are to go through performance evaluation during their
                probation period.
            •   A decree of 1980 established rules for performance evaluation although it really
                re-established functional progression.
            •   Specific laws establish criteria for evaluation that are specific to the different
                careers. A recent regulation (Law nº 11.784 of 2008) makes an unprecedented
                effort at standardising performance evaluation throughout the administration.
            It is difficult, however, to form a clear picture of the actual management of staff
        performance in different parts of the federal administration, and it can be reasonably
        assumed that there are large differences. There are evidently islands of excellence, but
        equally evidently parts of the administration in which the focus is on narrow payroll
        issues rather than competencies and performance. The detailed central regulations also
        mean that opportunities for operational managers to promote and reward good
        performance are limited.
            All parts of the federal administration are expected to carry out performance
        assessments for their statutory employees. The level of implementation varies. In some
        organisations, assessments rely on the personal opinion of the closest supervisor. So far,
        more formalised assessments have typically focused on outputs and on competencies.
            Most federal organisations do not seem to have acquired the necessary experience and
        competencies to use performance evaluation and performance rewards adequately at
        individual or team level. Nor does there seem to be a concerted national effort to develop
        this experience and these competencies. Opportunities for promotion are often curtailed
        by the system of job categories or based more on seniority than on performances.
        Performance pay is not functioning properly.

        The remuneration system and the opportunity for pay increases and bonuses
            As discussed in Chapter 1, basic salaries for federal employees are regulated by salary
        scales in the statutes governing each job category. The revision of salary scales is
        prepared on an ad hoc basis by the Ministry of Planning in collaboration with the ministry
        responsible for the category in question but has to be approved by Congress in every case.




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            The Brazilian public administration used to have – like many OECD
        administrations – a relatively large number of supplements, allowances and bonuses.
        There is a trend (Law 11.784 [9.22.2008]) and Law 11.907 [2.2.2009]) towards
        simplifying the remuneration system by reducing these, which might make the
        remuneration system and its linkages with performance clearer. A constitutional
        amendment has for example eliminated these for certain categories, including the
        judiciary, legal careers, attorneys, and certain police officers. Today Brazil has two
        alternative remuneration systems:
             •    A variable compensation system consisting of a base salary, a possible
                  performance-based award and in some cases a supplement for an academic
                  degree. There is an individual bonus related to individual performance and a
                  bonus related to institutional performance. There can also be an additional amount
                  based on the role in a certain ministry. The variable compensation system is used
                  for most categories, and the total possible variable amount varies across
                  categories. Compared to OECD member countries, the so-called “performance-
                  related pay” is a much more important part of overall pay, as it commonly
                  represents 50% to 100% of the baseline pay. There are even records of bonuses
                  corresponding to 100% to 800% of baseline pay (Pires, 2007: 11).
             •    A total remuneration system without variable components but with three or four
                  different pay levels (up to 13 for certain job categories). This system is often
                  referred to as a “subsidy” system. It is used for management categories, legal
                  careers, attorneys, police officers, diplomats and auditors.
             Performance-related pay does not have the credibility that should be proportional to
        its importance in overall remuneration. Bonuses are too often attributed largely across the
        board and are now in reality part of base pay, although some parts of the administration
        have made efforts to link some part of performance-related pay to performance
        assessments. An example of the inconsistency between the attribution of performance-
        related pay and its links with performance assessments is the fact that in some of those
        cases the courts have ruled that retired staff and pensioners had the right to get the
        maximum value of performance-related pay or at least the average paid for the active
        civil servants in the same career.
            It seems possible, however, to delay or even withhold progression in careers for
        public servants whose performance is judged insufficient. There is also a trend towards
        reducing or eliminating seniority awards for new employees, although employees already
        in place will continue to get awards based on time served.
            Individual differences in base salary are also normally very limited for staff belonging
        to the same category. For example, the Management Group (Grupo de Gestão) has
        (among others) four job categories with a common salary scale. Two of these (Analista de
        Finanças e Controle, Analista de Comércio Exterior) are restricted to a specific ministry
        while the third (Analista de Planejamento e Orçamento) and fourth (Especialista em
        Políticas Públicas e Gestão Governamental, EPPGG) exist in several ministries (but
        under the management of the Ministry of Planning). The common salary scale has four
        classes (A, B, C and Especial). The first three classes have three steps, and the fourth has
        four.




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            A move from the lowest to the highest step in a class would generate a salary increase
        of about 5% in the three lowest classes and about 6% in the highest class. The maximum
        possible salary spread for the four categories is thus not more than 33% in some cases,
        about 40% in other cases and even 56% in 2011 for the Social Security Career Plan when
        the new law is fully implemented.
             Entry into a category is always at the lowest step in the lowest class. The employee
        progresses to the next step for his/her class after 12-18 months. Promotion to a higher
        class is possible after the same period in the highest step, and is dependent on favourable
        performance assessments (in some cases, for example the EPPGG career, promotion also
        depends on the participation in regular courses in the National School of Public
        Administration; diplomats can be promoted also only if they take some courses in the
        Instituto Rio Branco). Almost all employees thus reach the highest possible salary level
        for the category after 13-20 years. No information is provided on the share of staff who
        fail to reach this level before retirement.
             SIDEC, the “System of Careeer Development”, was introduced by law in 2008 as a
        new general rule for a set of core government job categories such as attorneys, tax
        auditors, internal accountants, planning and budget analysts, Central Bank specialists,
        public managers, and so on. It aims to permit the development in the careers from the
        bottom to the top following some merit principles and rewarding qualification (academic
        or not), experience, etc. But this new system (that will also forbid promotions based on
        seniority only) faces resistance, and more than 14 months after its introduction in the law,
        it is still not in force as requires an Executive Order to be implemented.
            To conclude, salary progression is not used as a management device for signalling
        good performance. It is mostly seniority-based, and performance-related pay is attributed
        in many parts of the administration across the board by job category although it is less
        automatic in some areas of government compared to others. Considering how difficult
        and risky the individualisation of pay is for public administrations, even for those with the
        most sophisticated management systems, this is likely to be a wise choice for the
        moment. For good governance purposes, the government should probably acknowledge
        the true nature of the system and the fact that performance-related pay is in reality part of
        base pay, although the system could be kept and improved in the areas of government
        where the most progress has already been achieved.

        Opportunities for functional promotions
            Some job categories for more qualified tasks are sufficiently broad to allow for
        functional promotion within the category. The rules are the same as for salary
        progression, which means that seniority plays a larger role than performance assessments.
        The main opportunity for a functional promotion and a more significant salary increase is
        an appointment to a DAS position (see Section 3.2. for a discussion of this system).
            Except in the DAS system, functional promotions within careers are not performance-
        related (legally they are, but in reality they are only midly performance-related, apart
        from some exceptions), and careers in ministries are rigidly determined. Staff rarely
        change careers, and this would in any case require taking an entry level competitive
        examination (see Section 2.1).




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        Individual performance assessments
            Individual performance assessment seems rudimentary in most parts of the federal
        administration. A law of 2008 (Law 11.784 edited on 22 September 2008) has defined
        how performance assessment should be conducted across government organisations but it
        is too early to assess how it has been implemented and its effects on the quality of
        performance assessments throughout public administration.
            The lack of central support places the brunt of assessment on supervisors, who can
        consequently be expected to act carefully and with caution. Weak and even non-existent
        pay differentiation for individual performance in large parts of the federal administration
        is appropriate, given the lack of adequate and reliable individual performance information
        and of competence for and experience in differentiated pay setting.

        Suggestions for further reforms
            Brazil is at an important point in the evolution of its federal administration. It
        introduced a bureaucratic management paradigm in the 1930s, a relatively early date in
        international comparisons but much more recent than in most OECD member countries.
        As a result, the core values and principles of this paradigm may not yet be sufficiently
        internalised in the values and expectations of politicians, public employees and the
        general public. Yet globalisation and the need for a competitive economy mean that
        Brazil has to complement its bureaucratic paradigm with a strengthened performance
        orientation that might seem to challenge its bureaucratic values. This is a challenge
        shared with many other countries, including some OECD member countries, but one
        which Brazil seems able to handle.

        The drivers of organisational performance
            Brazil evidently has a federal administration that is interested in reform and willing to
        and capable of change in order to improve results and enhance performance. At the same
        time, it is evident that such efforts are needlessly hampered by inadequate and
        inappropriate structures.
             First, strategic management of the federal administration and budget management
        (which are not covered by this review) need reinforcing. This report deals with human
        resource management and thus refrains from providing recommendations in those areas.
        It is nonetheless necessary to underline the need for adequate and appropriate strategic
        management in order to provide the necessary focus and direction for efforts to improve
        results and performance. Addressing performance through human resource management
        actions has to be embedded in a hierarchy of strategic plans, business plans, and
        organisational goals and targets.
            Second, Brazil’s human resource management is, as noted above, fragmented and less
        efficient than it might be. There is a substantial capacity gap that the Brazilian
        government should close through a co-ordinated effort across the different areas of
        human resource management, such as competencies, job categories, recruitment, training,
        staff assessments, remuneration and performance management. Specific conclusions and
        recommendations regarding these areas can be found in the other sections of this report.
        Three issues are however so important as drivers of organisational performance that they
        need to be highlighted here:
             •    The culture of dialogue and horizontal agreement that seems to exist in Brazil’s
                  federal administration should be maintained. In order to achieve results in this
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                way there must be clearly stated government-wide goals and expectations.
                Assisting in and contributing to the necessary reforms should also be a key
                performance variable for senior managers.
            •   Employees need to be empowered to provide good service and to enhance their
                own capacity and competencies. This can be facilitated by reducing rules and
                regulations to the essentials and by replacing excessive judiciary involvement by
                credible internal systems for monitoring, auditing and appeal. The spheres of
                managerial discretion need to be broadened and combined with effective
                responsibility for results and with measures to ensure that public managers have
                the competencies necessary to manage with a view to enhanced performance.
            •   In terms of human resources it is likely that the two most important points of
                entry for increasing performance orientation in government are changes to the
                management of the senior civil servants (see Section 3.2) and the design of a
                competency management system that supports recruitment, job definitions,
                training and promotion (see Chapter 2).

        Staff performance management and practice
            The importance accorded to performance in Brazil’s federal administration varies
        widely, and much remains to be done to link human resource management practices to
        enhancing organisational performance. Human resource management arrangements
        require a number of reforms if the country’s potential is to be fully exploited. In this,
        Brazil is not different from most OECD member countries.
            All human resource management components of Brazil’s federal administration
        should be designed to facilitate and promote enhanced performance. They should be part
        of an integrated system, mutually supportive, and thus able to generate synergy effects.
        This will require co-ordinated changes in certain human resource management
        arrangements. The recommendations in this section should therefore be viewed together
        with conclusions and recommendations in the sections on workforce planning,
        competencies, job categories, recruitment, training and senior management.
            The structure of job categories is a fundamental issue, since it is the basis of all
        human resource management activities and promotion. The way job categories have been
        designed over time have resulted in a fragmented system that is unnecessarily complex
        and a poor basis for performance-oriented human resource management. The analyses,
        conclusions and recommendations concerning job categories are found in Section 2.2.
        The recommendations call for extensive restructuring, strengthening of central co-
        ordination, a widening of job categories and as far as possible replacing ministry-specific
        categories with transversal categories that can be used by several or all ministries. They
        also call for introducing or strengthening a career dimension in job categories where this
        is possible. Every effort should be made to give good performers interesting career
        opportunities based on an assessment of their performance.
           Introducing and strengthening systematic competency management is another
        important issue and is discussed in Section 2.1. By basing different human resource
        management activities, such as recruitment, training, skills assessment and promotion, on
        a common competency framework, it becomes easier to ensure that the federal
        administration has access to a workforce with the skills and competencies necessary for
        good performance.


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            The management of senior management is discussed in Section 3.2. The key
        recommendation is to make the DAS system more transparent and differentiate the
        management of top officials from the rest of officials in DAS and non-DAS positions. For
        DAS positions other than senior managers, these positions should remain open to outside
        applicants to increase competition in the system, but performance assessment should be
        an essential criterion and the recruitment process should be transparent and based on
        qualified applicants’ performance. In addition, the career dimension in selected job
        categories for qualified employees should be reinforced.
            Salary structures should be modified in line with recommended changes in the job
        category structure and the reinforced career dimension of selected job categories. Thus, in
        many cases, the relatively narrow bands between the first step in the first class and the
        final step in the final class in a job category should be widened through the insertion of
        more classes and/or steps and a higher final salary step.
            Seniority (i.e. time in a class and/or step) can continue to be used as a main qualifying
        factor for salary progression and promotion to a higher class, but only in job categories
        without a career dimension, and in the early stages. It is, however, recommended that in
        job categories with a clear career dimension, seniority should gradually be de-emphasised
        as employees progress up through the system. Promotion to the top class or classes in a
        category with a clear career dimension should be seen as a functional promotion which in
        suitable categories would qualify for posting to managerial positions. It should therefore
        be selective and entirely based on transparent assessments of skills, competencies and
        performances.
            It seems clear that the existing system of individual performance bonuses is not
        working well in many parts of the administration. This may be due to a lack of
        competency, experience and/or reliable information on performance. It is therefore
        recommended to reduce the emphasis on this system in order to enable a new start,
        although the system can be retained in organisations which have made the most progress
        in this area. This means reducing (or eliminating) the share of total remuneration
        allocated to performance bonuses in favour of base pay (or recurring benefit). The
        bonuses could later be increased (or reinstated) when supervisors have gained more
        competence and experience and more confidence in their ability to make reasonably
        sound performance assessments. A system of performance-related pay could nonetheless
        be retained for senior managers and may help improve organisations’ performance
        management. This should only be implemented when DAS positions have gained in
        transparency and performance orientation (see Section 3.2).
            The recommended reforms require improved employee assessment. As assessments
        become more decisive for salary progression, functional promotions and postings, it
        becomes increasingly important for all employees to be assessed according to a common
        model and measured against a common standard. A first step was taken after the new law
        of 2008 that establishes general rules for how performance assessments should be
        conducted (Law 11.784 edited on 22 September 2008). However, legal changes are
        certainly not sufficient. It is therefore recommended that the Brazilian government
        continue to strengthen its common framework for employee assessment and establish a
        central mechanism for promoting this framework and monitoring its application. The
        government should also invest in training supervisors in skills and performance
        assessment, and support them in their roles as assessors by providing guidelines,
        handbooks and other forms of support.


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            The Brazilian government should not attempt or expect to get quick results. It will
        take time for the different stakeholders (managers, supervisors, employees, union
        representatives) to gain the necessary skills and experience with performance assessment
        in order to differentiate rewards for competence and performance. Instead of attempting a
        wholesale reform, the government should start small, invest in improved capacity and
        competency, and gradually expand the role of skills and performance in salaries and
        promotion.

        Change management

        Changing the values
            Changing to a performance culture entails altering the attitudes, focus and incentives
        of managers and employees and aligning administrative systems, organisations and
        resources towards multi-dimensional performance targets. This is a complex process, as it
        involves altering formal structures and arrangements, but also the informal incentives and
        ingrained habits that underpin the system. Moreover, it is not a simple or straightforward
        task. Many OECD member countries have introduced performance-oriented reforms
        which have changed formal structures and processes, but have found that they did not
        result in the intended changes in behaviour. Lessons learnt point to the following:
            •   Need for a coherent framework. Performance accountability should be matched
                with managerial room for manoeuvre in the management of staff and financial
                resources. The different elements of increased performance orientation interact,
                and the synergy drives cultural change. Simultaneous and matching actions in
                several areas are therefore required.
            •   Political support. Governments, as well as individual organisations, have their
                own cultures, beliefs, values and norms, which determine acceptable behaviour.
                To advance a performance culture calls for a whole-of-government approach
                openly supported at the highest political level. It is not a coincidence that the three
                cases presented in Section 3.2 all meet that criterion.
            •   Incremental reforms. Although sweeping reforms offer ways to exploit windows
                of opportunity, they risk failing if preparation, capacity and competencies are
                insufficient. The advantage of incremental reforms is that the first steps require
                little previous experience, but each step generates the experience and competency
                to move ahead. The challenge then is to sustain the momentum for reform so that
                the lessons learnt in one step quickly feed into the design of the next.
            •   Build ownership. A problem observed in several OECD member countries is the
                general reluctance of influential groups at the centre of government to relax their
                control and to allow managerial discretion to expand. Trade unions representing
                public employees are also typically organised for central action and tend to react
                similarly. The lack of enthusiasm for greater flexibility in these groups can be
                understood as a natural concern about the capacity of operational managers to
                handle greater responsibility for financial and human resource management. In
                these cases incremental reforms may offer a viable path forward.
           Finally, any system of control raises issues relating to the balance between
        accountability and flexibility. The need for compliance with regulations has to be
        weighed against the freedom managers need to do their jobs well. There are obvious
        dangers in relaxing control in the absence of adequate financial and managerial systems.

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        However, there are also dangers in failing to relax these controls sufficiently. Too many
        restrictions create conditions which do not give managers enough freedom to improve
        performance. Achieving an appropriate balance is an unending struggle, and the approach
        taken may have to vary from sector to sector within the same administration.

        Introducing elements of staff performance management
            Reorienting human resource management towards enhancing performance requires
        parallel and synchronised efforts in several fields, including managerial competencies and
        mandates, performance assessments and performance incentives. It often also necessitates
        increased decentralisation of pay setting and other elements of human resource
        management. These changes have to form part of a coherent performance management
        strategy. Achieving this coherence across policy areas can be a substantial political
        challenge.
            Introducing and extending performance assessment, performance-related pay
        elements and decentralised pay setting are challenging tasks. They require managerial and
        supervisory competences that public managers – often recruited for and schooled in a
        bureaucratic management mode – do not normally possess. In addition, there is the risk of
        faulty performance assessments and subjective pay differentiation which would affect
        work morale and performance negatively.
            It is all too easy to spot instances of failed reforms in OECD member countries,
        although these have seldom been sufficiently analysed. The reasons for failure when
        introducing performance-related pay often seem to be inadequate preparation and too
        hasty introduction. Fortunately in such cases, most managers, instead of trying to allocate
        performance bonuses on the basis of faulty or inadequate performance information, have
        chosen to share bonuses more equally if they have had the opportunity.
           In some cases a combination of decentralisation and inadequate financial
        management arrangements has led over time to substantial inconsistencies in the public
        administration pay structure, in terms of remuneration levels in different organisations.
        These inconsistencies obviously constitute inequities, but they also have negative
        economic effects. Recruitment and retention problems tend to push up sub-standard
        wages, but no correcting forces push down too generous wages; this drives total costs up
        and reduces cost efficiency. Such inconsistencies also affect the allocation of skills and
        competencies negatively. Once they have grown too large, it becomes difficult (and
        expensive) to eliminate them.
            As mentioned, it should not be a priority for the federal government to introduce
        wider pay differentiation and pay individualisation. The more important drivers for
        enhanced performance orientation today relate to the management of job categories and
        of senior management.
            Nonetheless, when the government is ready to move towards increased
        individualisation of pay, it should establish frameworks for pay increases that prevent
        excessive pay differentiation across organisations and should strengthen reporting
        requirements on employee compensation in order to ensure close monitoring of costs.




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3.2.    Managing senior management

        The situation in OECD member countries
            As performance and efficiency issues have become more urgent in public governance
        and management, more attention has also been paid in OECD member countries to the
        role, tasks and capabilities of management in the public administration.
            OECD member countries have witnessed an influx of new ideas and initiatives in the
        field of public governance and management. Many recent public management reforms
        involve reinforcing the performance orientation of public governance and public
        management and, consequently, delegation of responsibility for human resource
        management. Senior management plays a key role in implementing these new policies
        and its quality and capacity have thus become a key public governance issue. Countries
        vary widely in how they manage their senior managers.
            Senior public managers also find themselves at the sometimes tense interface between
        the political executive and the public administration. They are responsible for the
        appropriate implementation of legal instruments and of political strategies and measures
        and for the consistency, efficiency and appropriateness of government activities. Senior
        managers are expected to be committed to the interests of the state as such and to the
        legal government, and not to the interest of a particular government or political party.
        They are also expected to be responsive to the elected government.
            A key issue in any review of senior managers in public administration is thus their
        relation to the political level and the degree of political involvement in appointments,
        remuneration and management of senior managers. In a classic bureaucracy, civil
        servants handle these issues. However, that political influence in staffing matters may
        work well, provided that there are other checks and balances in the system.
            There is as of now no “best practice” regarding the selection and management of
        senior managers in the public administration. It is not even possible to see a general trend
        in the basic arrangements chosen by different OECD member countries, since these are
        the product of their public administration system and their specific historic, political and
        social context.
            Recent OECD studies of senior public managers indicate a number of common
        elements in the reforms debated or enacted (see Box 3.2). Foremost among these is an
        increasing focus on the quality of the senior management in reforms intended to improve
        performance. The selection of senior managers has been the object of multiple reforms
        and has become more transparent in many countries. The competencies required of senior
        civil servants have become more varied and are used as a basis for recruiting and training
        public servants. Many countries have also taken measures to increase competition for
        senior management positions. Even countries with closed career systems for other public
        servants have opened up senior levels to external recruitment. Performance assessments
        and rewards have been introduced to increase senior management’s responsiveness
        without infringing on their professionalism. Some countries have introduced fixed-term
        mandates in order to support greater performance orientation.




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           Box 3.2. General trends in the management of senior management in OECD and
                                      European Union countries

             In general, a “career-based” civil service system recruits top civil servants from a wide-
         ranging group. Recruitment takes place after university or early in the career and often relies on
         competitive examinations. Thereafter progression is managed by the organisation. This system
         invests a lot of resources in the development and careers of those selected in order to prepare
         them for top executive positions.
             In a “position-based” civil service system, candidates for particular top executive positions
         are recruited from the wider civil service and the private sector. This creates a large pool of
         possible candidates. A sub-category of the “position-based” system is the “department-based”
         system which has no well-developed whole-of-government structure. Appointments tend to be
         made on the basis of seniority and merit within the department.
             This typology implies different degrees of centralisation in recruitment and appointment
         processes. Although very few countries follow any one of the above systems exclusively, it is
         possible to know which system applies best to any given country. This is of practical value when
         comparing management reforms in different countries’ senior civil service. The significance of
         reforms often depends on the type of system at the outset, as the two systems create very different
         incentives for individuals and therefore tend to foster different cultural characteristics.
             There is a general tendency in many countries to focus on developing management
         capacities. While performance management is already a focus of reforms in all countries, it is
         increasingly supplemented by a focus on leadership and change management as well as human
         resources management. To a varying degree, most countries have decentralised management
         responsibilities and established mechanisms to ensure individual accountability of senior
         executives.
             “Career-based” systems with a tradition of centralised recruitment, promotion and training
         are introducing external competition for open positions, ministerial management by objectives
         and lifelong training programmes. In Belgium, Hungary, Ireland, Italy, Portugal, Spain, Malta
         and Romania, special recruitment procedures have been established for senior managers, with
         fixed-term mandates in Belgium and Malta, and the recruitment of external candidates for some
         senior positions (Austria, Belgium, Ireland, Italy, Korea, Portugal, Spain, Romania). In Hungary,
         recruitment for senior management positions has been separated from recruitment into the civil
         service.
              “Position-based” systems with extensive decentralised management of appointments,
         promotion and training increasingly introduce central guidance of appointments, talent pools and
         inter-ministerial databases of present and potential senior civil servants. The Dutch government
         has established a programme of young academic talent to start their careers in the civil service
         with the aim of becoming public managers after several years. Poland uses a state staffing pool
         system from which the best candidates are chosen when a position becomes available.
              In order to ensure the independence of the recruitment process, countries have relied on
         panels or selection committees, supervising bodies, a central organisational body or involvement
         of outsiders. Most European Union members have a body or committee for recruiting or advising
         on the best candidates for senior civil service positions so as to ensure political neutrality and
         independence in the recruitment of senior civil servants. The term of appointment of senior civil
         servants varies; most have a permanent appointment as civil servants but a fixed-term
         appointment for a specific position or within the group of senior civil service positions. In some
         career-based systems, private contracts are sometimes introduced for individuals in senior
         management positions who are not civil servants. These individuals never become civil servants
         in this way (France, Spain).


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          Box 3.2. General trends in the management of senior management in OECD and
                                European Union countries (cont’d)

            The management of senior managers’ competencies has also received increasing attention.
        Half of EU member states have central competency profiles for senior civil servants. These
        profiles are used for recruitment and for training.
        Source: OECD (2003b), “Managing Senior Management: Senior Civil Service Reform in OECD Member
                Countries”, OECD, Paris; and Ministère du budget, des comptes publics et de la function publique,
                (2008c), “Top Public Managers in Europe: Management and Working Conditions of the Senior
                Civil Servants in European Union Member States”, Études et perspectives, EIPA, Maastricht.



            In general, countries have found it increasingly important to manage senior managers
        as a separate group. The management of senior managers often includes special rules for
        recruitment (more centralised, more open to outsiders, very focused on competencies and
        past performance, early identification for fast-stream programmes), more emphasis on the
        management of their performance, often a level of performance-related pay, and special
        training and socialisation programmes.

        Political cabinets
            Political cabinets consist of politically appointed advisers and other close associates
        of ministers and other members of the political executive. They are appointed at will, can
        normally also be dismissed at will, and leave office when their government or even their
        political principal leaves office. Some practitioners question the existence of such
        cabinets, while others argue that they are essential to avoid politicisation of top
        management. The role played by political cabinets is important for understanding the full
        picture of senior management arrangements.
            In Denmark, top managers are expected to be able to provide political advice to their
        ministers. Both Belgium and Sweden have political cabinets. In Sweden they are
        relatively small (five to ten advisers per minister) and cannot give orders to civil servants.
        In Belgium they are much larger and have assumed top managerial functions. The United
        States has politically appointed senior managers; this limits the need for political cabinets.
        The Senate decides which positions are open for political appointment.

        The situation in Brazil
            The senior management structure in Brazil’s federal administration, while providing
        breathing space for the political sphere and top managers within an otherwise rigid and
        fragmented management system of staff, is also unfortunately far from transparent. The
        DAS system seems to be generally regarded as the core management cadre, although
        most DAS staff do not hold managerial positions. There are also 30 categories with over
        57 000 persons listed under the heading “categories and functions of confidence and
        gratifications” (Cargos e funções de Confiança e Gratificações), some of whom are said
        to be senior managers. An example is the Cargos de Natureza Especial, NES, which has
        52 persons who seem to have top management positions. Political appointments to senior
        management positions in regulatory agencies, state-owned enterprises and in pension
        funds are also outside the DAS system.



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        The DAS system
            The DAS system has six levels, and the top levels can be considered as senior
        management. In March 2009, there were 20 664 persons in the DAS system compared to
        16 000-17 000 ten years earlier. Of these, 4 229 were in the three top levels which are
        considered to be management positions, of whom 208 in the top level, and 978 in the
        second highest level. The number of persons in these two senior levels has increased by
        over 40% during the last ten years.
            A narrow definition of senior management would thus include about 200 persons and
        a broader definition somewhat over 1 100 within the DAS system. To this should be
        added an unknown number of persons in specialised senior management positions outside
        the DAS system.
            The DAS system covers the ministries and organisations directly subordinated to a
        ministry (the so-called direct administration), as well as a large number of autarchies and
        foundations (regulatory agencies and universities are notable exceptions). The number of
        positions open to DAS appointments is regulated in the statute of each organisation. DAS
        appointees may either be seconded from another public organisation (mainly from the
        federal administration but also from a state or municipal administration) or recruited
        externally. Secondment is only possible for DAS positions; it can thus be primarily
        understood as a secondment system used for senior management positions, rather than as
        a senior management system as such.
            Tenured civil servants seconded through appointment to a DAS position continue to
        receive their basic salaries from the organisation that seconded them, and an additional
        wage bonus from the organisation in which they serve in a DAS position.
            The DAS system provides the very complex and relatively static system of job
        categories a necessary element of flexibility. Its main advantages are to enable adequate
        staffing of the core government functions and to provide career opportunities for skilled
        and gifted public servants, regardless of their job category. It also allows the government
        to bring in external competencies. Its main limitation, as discussed below, is its lack of
        coherence and transparency.

        Appointments of senior managers
             The DAS system is an exception2 to the rule that entry into the Brazilian public
        administration is through open competition (and formal exams). Appointment to a DAS
        position is at the government’s discretion but does not in itself entail a right to tenure.
        Such appointments can be terminated as easily as they are made; appointees who are
        tenured civil servants then go back to the organisations and categories from which they
        were recruited unless they are invited to another DAS position. A number of ministries
        and organisations have established processes for appointment to DAS positions in order
        to favour professionalism but the extent of the use of those processes is difficult to assess.
        It shows, however, a growing awareness that there is a necessity for transparent processes
        and professionalisation of DAS positions.
            Each organisation usually has its own rules for the appointment process and
        responsibilities. In general, the higher the DAS level, the higher the hierarchical position
        of the authority that decides on the appointment. Appointments at lower levels are
        normally delegated to senior management. There does not seem to be any formal internal
        vetting or co-ordination of DAS appointments, although appointments for senior DAS
        levels (levels 4, 5 and 6) have to be approved by the Casa Civil. This procedure, however,
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        seems to be mainly political (including the need to control appointments based on
        personal preferences only) and there is no indication of a formal process for examining
        the appropriateness of senior management appointments (but the process includes some
        investigation about private activities and the judicial situation of the appointee in order to
        comply with integrity rules).
            At the higher DAS levels, 40% of those at the level 6 and 31% at level 5 were
        recruited from outside the public administration. The share is around 22-24% for the
        lower and primarily administrative and technical levels. In 2005, legislation
        (Decree 5.497) set a ceiling of 25% of external recruitment for the three lowest levels and
        50% for level 4. No ceiling was set or foreseen for the two highest levels. This makes the
        DAS system much more position-based than the rest of the civil service. This is also not
        uncommon in OECD member countries. There are other examples of countries which
        mix quotas for civil servants and for non-civil servants for their mid-level to high-level
        managerial positions (Ireland, Korea).
            The management of the DAS system lacks transparency. There are no publicly
        available descriptions of competency requirements for positions to be filled or of the
        merits of the persons selected. The DAS system is never audited by the Supreme Audit
        Institution or the Court of Accounts (Tribunal de Contas da União). There seems to be no
        documentation of the reasons for specific DAS appointments, and no data are therefore
        available on why it was felt necessary or appropriate to select an external candidate for a
        specific DAS appointment.
            There is thus no identity between political appointments and external recruitment, or
        between objective grounds and internal recruitment. The selection of a tenured civil
        servant for a DAS position can be based on political considerations, while an external
        recruitment can be based on objective grounds. One may assume that the main reason for
        an external recruitment is the position’s need for specific skills and competencies. The
        DAS system, seen in this perspective, enables the political leadership and senior
        managers to bypass the deficiencies of the normal selection process in order to obtain the
        necessary talent and experience. One may, however, also assume that some DAS
        appointments are made on a more political basis. The reason needs not be patronage or
        partisanship but may be the need to ensure a sufficient affinity and compatibility between
        the political executive and the core management units in ministries and public
        organisations. One cannot, however, disregard the possibility of an implicit “spoils
        system” and the risk of political and/or personal patronage inherent in appointments at the
        will of the political executive. It seems nonetheless reasonable to assume that reasons of
        competency and affinity are more prevalent at the top DAS levels than at the lower
        administrative and technical levels. The risk of patronage may therefore be higher at the
        lower DAS levels.
            No data could be provided on turnover in DAS positions and the exact rate is
        unknown. It was, however, confirmed that persons in DAS positions are often replaced in
        connection with changes of government or of the relevant minister. Changes are very rare
        at the four lowest levels and more frequent at the top two levels. It was also noted that
        this may have a negative impact on management continuity, but that continuity can still
        be maintained if there is a strategic plan and formal policies.
            The quotas for positions reserved for internal candidates aim at limiting the risk of
        patronage. However, as mentioned, recruiting staff who are already civil servants does
        not necessarily decrease this risk, and, at the same time, limits the possibility to look for
        skills outside of government staff. It does, however, help civil servants have a better and
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        more stable picture of possible career opportunities. While the level of quotas seems
        reasonable today, this should not be considered a solution to the deficiencies of the DAS
        system, which requires more transparency in terms of appointments and reinforced
        management of competencies.

        The political-administrative interface
            The political cabinets (political advisors) seem small. There are not any indications
        that members of these cabinets assume managerial roles, contrary to some OECD
        member countries. Instead, the system seems similar to that of the United States, in which
        the political executive governs through politically appointed senior managers, but it lacks
        the transparency of the US system.
            The political-administrative interface in Brazil’s federal administration is thus a factor
        that affects the top levels in the DAS system but is not visible to an outside observer,
        since it is not known why a person was selected for a senior management position.
        Consequently, it is difficult for the Brazilian public to know where political activities end
        and where professional administration begins. The same can be said for the other
        specialised categories that include senior managers.
            All civil servants aspiring to a senior managerial position have to hope for an
        appointment to a DAS position or to a similar position in another category. Because these
        appointments are not systematically transparent and at the will of the political executive,
        potential candidates for senior managerial positions may try to avoid displeasing the
        concerned minister or ministers, although there is no doubt that it is also known that high
        potential is an implicit criterion of appointment in a good number of cases. The system
        thus entails a risk of politicisation that can affect lower functional levels within the
        federal administration.

        Managing the senior management groups
            Despite some easier and more natural routes to DAS positions for staff in some job
        categories, senior managers are less managed as a group3 than in many OECD member
        countries (see Figure 3.2). ENAP, the Brazilian National School of Public Administration
        (Escola Nacional de Administração Pública) provides training for senior managers, but
        this training is not compulsory, although the number of requests for training has increased
        tremendously over the past years. No effort seems to have been made to strengthen cross-
        institutional consistency of senior managers or to foster whole-of-government
        perspectives.
            Tenured civil servants appointed to a DAS position are, as mentioned above,
        seconded from the organisation in which they served before, and keep the basic salaries
        they would have had in their previous jobs. In addition they receive a standardised pay
        supplement that depends only on the DAS level (Ministério do Planejamento, Orçamento
        e Gestão, 2009b). There does not seem to be any specific or standardised system for
        performance bonuses or any other form of performance-related remuneration for senior
        management.




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          Figure 3.2. Degree to which senior civil servants are managed by separate HRM policies in
                                              central government
                                                                                                                                                                       2005

                1.0
                0.9
                0.8
                0.7
                0.6
                0.5
                0.4
                0.3
                0.2
                0.1
                0.0




                                                                                                                                                                                             O E C D 26
                                    United K ingdom




                                                                                                                                      P ortugal




                                                                                                                                                                                                                                  T urkey




                                                                                                                                                                                                                                                                         G ermany
                                                                                                                            Belgium




                                                                                                                                                                                                                                            J apan




                                                                                                                                                                                                                                                                                    Ic eland


                                                                                                                                                                                                                                                                                                       Ireland
                                                                                                       P oland
                                                                                  F inland




                                                                                                                                                  C z ec h R epublic




                                                                                                                                                                                                                                                     S lovak R epublic
                                                                       F ranc e




                                                                                                                                                                                                                                                                                                                 Braz il
                                                                                             C anada




                                                                                                                                                                                                                   L ux embourg
                                                                                                                 Hungary




                                                                                                                                                                                                                                                                                               Italy
                      Netherlands


                                                      United S tates




                                                                                                                                                                       K orea
                                                                                                                                                                                Aus tralia


                                                                                                                                                                                                          Norway




        Note: This index is a composite indicator of results on variables about the definition of the senior civil
              service, the identification of potential future leaders early in their careers, the average age upon
              entering the senior management group, and the difference between the employment framework of
              senior management and regular staff.
        Source: OECD (2009c), OECD Government at a Glance 2009; OECD (2008b), The State of the Public
                Service; OECD Survey on Strategic Human Resource Management filled in by the Brazilian
                Ministry of Planning, Budgeting and Public Management.


            The fact that DAS appointments are revocable does mean, however, that it is possible
        to sanction insufficient performance or inacceptable behaviour. It also means that senior
        managers have incentives to improve their performance and behaviour. However, the lack
        of transparency surrounding terminations of appointments also entails the risk of an
        excessive tendency to avoid political displeasure.

        Suggestions for future reforms
           Compared to OECD member countries, arrangements for the management of senior
        managers suffer from the following deficiencies:
            •    The interface between the political and the administrative level is invisible,
                 perhaps non-existent. This hampers the growth of a cadre of non-political senior
                 managers specialised in public administration and loyal to the credo of public
                 servants.
            •    The system for selecting senior managers lacks transparency, despite some
                 changes in some parts of the administration to improve the recruitment system of
                 DAS positions. This makes it impossible to enforce any reasonable accountability
                 for selections, decreases the chances of systematically choosing the most qualified
                 and competent managers, and entails a risk of improper actions. It also provides a

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                  fertile soil for suspicions and accusations that can undermine trust in the
                  professionalism and objectivity of the public administration.
             •    The group of senior managers is not well defined and the management of senior
                  managers is neither systematic nor comprehensive. The dominant system of
                  senior managers – the DAS – contains non-managerial positions and a number of
                  senior management positions are handled outside this system. This undermines
                  managers’ accountability and does not provide a good basis for the management
                  of the competencies of senior managers that the federal government needs today,
                  including a cohesive group of senior managers able to overcome the
                  fragmentation of the public management system.
             •    The recent creation of the job categories of infrastructure analysts and social
                  analysts with possible outside recruitment at relatively experienced levels is an
                  interesting development aimed at providing a professional bureaucracy with no
                  necessary linkages with the DAS system. It shows the fact that there is
                  recognition of the need to make the system evolve in this area. The initiatives
                  remain bound within narrow occupational categories, and cannot really be
                  considered as a building block of a strong senior management level that needs to
                  show strong cohesion across ministries and organisations.

        The senior management system
            It is possible to identify – in the light of the spectrum of different arrangements
        existing in OECD member countries – alternative ways of correcting these weaknesses.
        Before looking at these alternatives, some other conclusions need to be highlighted.
             •    The growing complexity and heterogeneity of public services makes it necessary
                  to be able to bring new competencies and experience into the group of senior
                  managers. The possibility of appointing persons other than tenured civil servants
                  to senior management positions is valuable and should be maintained, not only at
                  the political but also at the administrative level.
             •    The system for selecting senior management should entail credible opportunities
                  for tenured civil servants to be promoted to this level, opportunities that are not
                  dependent on political approval.
             •    The administrative and technical levels in the DAS system and in similar systems
                  should be reintegrated into a reformed job category structure but remain open to
                  applicants from outside the public service in order to bring in new skills and to
                  increase competition within the public service. This would not necessarily prevent
                  a system with secondments from other public organisations to core managerial
                  units or the existence of pay supplements for seconded staff.
             •    Given the political-administrative interface in the federal government today, the
                  very small size of the ministerial cabinets should be safeguarded. Ministerial
                  advisers should continue to be just that and should not be involved in operative
                  functions. This result is one that a number of OECD member countries would like
                  to achieve, but have not been able to, and is thus an asset for Brazil.




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            It is not possible, given the very diverse arrangements in OECD member countries, to
        say how the management of senior public managers in Brazil should evolve. Three
        options that might serve as inspiration for a continued discussion in Brazil are sketched
        out below. They can be modified in various ways. They all preserve the government’s
        influence over the selection of senior managers while creating greater transparency and a
        clearly visible interface between the political and the administrative levels.
            The first alternative is inspired by the system in the United States. A limited number
        of senior managerial positions would be identified as reserved for political appointments.
        These positions should also have clear job descriptions. Their holders would be freely
        appointed but also freely discharged and expected to resign when the government
        changes. Below this there would be a corps of tenured senior managers, recruited by open
        competitions focused on the management skills, experience and potential required for
        specific positions (see Box 3.3).

                              Box 3.3. Senior managers in the United States

             The United States is quite highly institutionalised but also has a more open political
        involvement. Its arrangements are characterised by presidential control over the executive
        functions combined with active monitoring by the Senate. The number of political appointees is
        relatively large, but special features help to maintain a proper balance between political
        responsiveness and neutral competence.
            After each presidential election, the Congress publishes a list of positions in the legislative
        and executive branches of the federal government which may be subject to non-competitive
        appointment. The present list contains 7 996 positions throughout the country, of which 1 141
        require the Senate’s agreement to the President’s appointment. The merits of such candidates are
        therefore normally scrutinised very carefully, even if there is no formal competition.
             Among the positions requiring the Senate’s consent are the secretaries of the 15 Cabinet
        agencies, deputy secretaries, under-secretaries and assistant secretaries, and general counsels of
        those agencies; certain jobs in the independent, non-regulatory executive branch agencies and in
        the regulatory agencies.
            The Senior Executive Service (SES) is a personnel system covering top-level policy,
        supervisory and managerial positions in most federal agencies. The SES includes most civil
        service positions above a certain grade. Currently, 8 328 SES positions are authorised by the
        Office of Personnel Management (OPM). About half of SES positions are reserved for public
        servants. The main reason is that the need to ensure impartiality is felt to require career
        employees. The remaining SES positions may be filled either by career or non-career appointees.
            Career appointments are made through a competitive process, including published
        announcements, rating and ranking of eligible candidates, approval by the agency of the
        professional qualifications of the selected candidate, and a further review and approval of the
        executive/managerial qualifications of the proposed appointee by the SES Qualifications Review
        Board. A career appointee serves a one-year probationary period. Upon completion, the appointee
        acquires tenure rights and may be removed from the SES only for cause or for poor performance.
            Special rules protect career appointees from improper patronage. A performance appraisal for
        a career appointee may not be made within 120 days after the beginning of a new administration.
        A career appointee may not be involuntarily reassigned within 120 days after the appointment of
        a new agency head and may not be involuntarily transferred to another agency.




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            The second option is similar to the ABD system in the Netherlands. The basis would
        be a corps of tenured senior managers recruited by open competition for general service,
        and in principle able to serve in any senior management position. Appointment to a
        specific position would be at the will of the government and for a predetermined period.
        At the end of the period the person would either be reappointed for a new period or
        appointed to another senior management position, unless he/she is eligible for retirement.

                                   Box 3.4. Senior managers in the Netherlands

             The Netherlands have recently introduced a more systematic management of its senior
         managers. Its Algemene Bestuursdienst, ABD, is composed of the five top levels of the Dutch
         national government administration (secretary-general, director-general, director, department
         heads and policy makers). The top three levels are called the Top Management Group (TMP). In
         June 2008 there were 780 persons in the ABD, of which 65 in the TMP.
              The system is managed by a central office, the Bureau Algemene Bestuursdienst, BABD, in
         the Ministry of the Interior. It plays a major role in recruitment, career development, training and
         promoting mobility for the ABD group. All ABD positions are open to both internal and external
         candidates. Recruitment is centralised, and all appointments are to a position. ABD vacancies are
         published on the BABD website. Candidates are assessed on their formal education, previous
         experience and performance, and interest and motivation. The BABD is responsible for the
         preliminary selection and presents a shortlist of three to five candidates to the appointing
         authority.
             About 60% of those appointed already hold an ABD position, and about 10% come from
         outside the civil service. Appointments to ABD position are for five years, and can be prolonged
         in exceptional cases. The maximum for TMP-positions is seven years. Statistics show that ABD
         members remain an average four years in their positions.
             An ABD member can be seconded to another department for up till two years. There is a
         special programme set up by the BABD to develop leadership in the higher grades in the national
         government.

            Chile has also recently instituted an interesting reform for the management of senior
        civil servants (see Box 3.5) which could be an inspiration to Brazil. It relies on
        parliamentary scrutiny and both its design and its change management process have made
        the reform a success.

        Managing the senior managers
            The Brazilian government should, regardless of the basic institutional arrangements
        chosen, develop and implement a consistent approach to managing senior managers. The
        exact details of this approach will depend on the evolution of Brazil’s system for senior
        management. The first challenge should be to determine what the group of senior
        managers should be. Selecting sectoral groups should be avoided in order to favour cross
        ministerial cohesion at senior management levels. This is very important especially in
        Brazil where fragmentation of the public service is a major issue. Definition of the senior
        management group should thus be cross ministerial and defined by the level of
        managerial responsibility. The group should be managed as a group irrespective of the
        belonging to one’s job category. The top levels of the DAS system is thus the system on
        which to build the senior management group.




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                               Box 3.5. Managing senior managers in Chile

             Chile has a group of staff known as senior public managers. In 2003, the Chilean
        government, with the agreement of all political actors (opposition political parties, non-
        governmental organisations, civil society), created the Sistema de Alta Dirección Pública (ADP),
        a central senior civil service system, in order to modernise public management and make it more
        transparent and to deal with allegations of corruption at senior levels. The aim of the ADP was to
        establish a professional senior management with hiring based on public competition. The ADP
        contracts out most of the selection process to specialised enterprises. Just over half of the 200
        services in the national public administration participate in ADP. They have 102 posts at the first
        hierarchical level (heads of service, director generals) and 735 at the second hierarchical level
        (regional directors, heads of division). The system has been implemented gradually as adherence
        to the ADP system does not immediately result in a public competition; this takes place when the
        post falls vacant. As of 2008, 61% of the posts covered by the ADP have been filled by open
        competition.
            The National Civil Service Directorate (DNSC) is responsible for management of the ADP.
        However, the Senior Public Management Council (Consejo de Alta Dirección Pública) is in
        charge of guaranteeing the transparency, confidentiality and absence of discrimination of the
        selection process. It is chaired by the director of the DNSC and four members proposed by the
        President of Chile and approved by the Senate. The selection process, which takes around four
        months, begins with the publication of the vacancy in the media. A specialised enterprise
        commissioned by the Council analyses the curricula vitae of the different candidates and prepares
        a shortlist for the Council or a selection committee (under the Council’s supervision).
        Professional competence, integrity and probity are some of the criteria used in the selection
        process. Subsequently, the Council or the committee selects the best candidates for interview and
        prepares a final shortlist for the competent authority for the final appointment. Senior managers
        selected through the ADP system are appointed for a three-year term, and the appointment can be
        renewed for two subsequent equivalent terms. Although the managers are selected by the ADP,
        they can be removed by the President for poor performance or loss of confidence.
            The ADP system was based on international experience. In particular, the experience of
        OECD member countries such as Australia and New Zealand strongly influenced the Chilean
        model. The system is considered one of the main achievements of the modernisation of Chile’s
        public management. One effect has been the decline in the number of political appointees in the
        central government; they currently represent only 0.5% of the total public workforce. It is also
        argued that the presence of women in senior positions has increased under the system; they
        occupy 32% of positions compared to 15% in the Chilean private sector.
             However, the ADP system faces at least three main challenges. First, it has to extend its
        coverage to more services. There are still almost 100 public services whose senior positions are
        not part of the ADP system. In the central government as a whole, there are 3 114 senior positions
        at the first and second hierarchical levels, of which only 837 are part of the system. Second, the
        system has to find ways to speed up the process for the final appointment by political authorities.
        One proposal has been to leave the final decision to the Council and not to the political
        authorities. Finally, in some cases the ADP has not been able to fill vacancies owing to the lack of
        candidates; for technically complex and politically problematic positions with low salaries and
        lack of political support, potential candidates do not find working conditions appealing.
        Source: Costa, R. and M. Waissbluth (2007), “Tres Años del Sistema de Alta Dirección Pública en Chile:
                Balance y Perspectivas” (Three Years of the Senior Management System in Chile: Assessments and
                Perspectives), paper presented for discussion at the Libertad y Desarrollo Consortium.




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            The government should review the arrangements for handling the remuneration of
        tenured civil servants appointed to senior management positions. There should be a
        special salary schedule for senior managers, which takes into account the complexity and
        level of responsibility of the different management positions. Brazil’s senior management
        system should also have induction programmes for new senior managers and activities
        aimed at reinforcing the management skills of those who serve as senior managers. ENAP
        and ESAF (School of Public Finance) have started such programmes that should be
        reinforced and systematised.
            Competency management should guide their recruitment and training (see
        Section 2.1) and there should be a centralised control of those processes (although
        detailed implementation can be left to the recruiting ministry/organisation). Senior
        managers should be managed as a group and be given more systematic opportunities to
        meet on a regular basis as a group in training, seminars and various collective gatherings
        in order to build cohesion. Their involvement in the group should be one of the values
        guiding their recruitment, renewal in position, and promotion. Efforts to strengthen
        performance management should be made first and foremost for this group, and special
        tools for recognising good management could be adopted. Finally, Brazil could develop
        “fast stream” careers for potential senior managers; to avoid favouritism and nepotism, a
        transparent process is essential.
           This is not an easy process and that could first be developed within careers with some
        oversight and definition of the rules of the game by the Ministry of Planning. Canada has
        such a programme, which is considered quite successful and could be used as an inspiring
        example (see Box 3.6).

   Change management
            Two main groups of stakeholders are involved in the management of senior
        managers. One is existing and potential senior managers among the career employees.
        The other is existing and potential political executives, since the change will affect their
        interface with the public administration. The potential problems differ between these two
        groups.


                    Box 3.6. The Canadian Career Assignment Program and follow ups

             The Career Assignment Program of the Government of Canada (CAP) aimed to accelerate
         leadership development and advancement by recruiting public servants with demonstrated
         executive potential. During a three-year placement, CAP participants took part in a combination
         of hands-on work experience and training sessions to prepare them for more senior positions.
         CAP was one in a suite of leadership development programmes designed to develop managerial
         and leadership know-how in the public service. The programme was committed to employment
         equity.

         Who qualified?
             CAP was for employees with experience at up to three levels below the Executive Group (IS-
         05 or AS-06, for example), or as an EX equivalent. Applicants must have:
              •    a university degree or an acceptable equivalent in education and experience;




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             Box 3.6. The Canadian Career Assignment Program and follow ups (cont’d)

            •    management experience, which may include project management or team supervisory
                 experience;
            •    a consistently high level of work performance and proven track record;
            •    a CBC/CBC language profile or a demonstrated aptitude and willingness to obtain the
                 required profile;
            •    a willingness to be assigned, change jobs or relocate;
            •    a demonstrated capacity to function at the EX-01 level within the three-year time period
                 of the programme;
            •    a minimum security authorisation of “enhanced reliability”.
             CAP participants were chosen through a competitive process at the organisational level, using
        the agency’s assessment tools and the key leadership competencies profile.
            The Career Assignment Program was a cost-sharing arrangement involving the Office of the
        Chief Human Resources Officer at the Treasury Board Secretariat, the home organisation and the
        host organisation.
             Before undertaking the CAP recruitment process, interested organisations had to answer the
        following questions:
            •      To what extent does CAP respond to our human resources planning needs?
            •      Can we offer participants a position at the end of the programme?
            •      What support framework do we have for participants?
            •      How many participants do we plan to support?
             How will we use the programme to help meet our employment equity objectives? As part of
        the strategic review of central HR organisations in Canada which was completed in 2008, the
        existing suite of leadership development programmes, including Career Assignment Program,
        that had been managed by the Canada Public Service Agency/Office of the Chief Human
        Resources Officer is being eliminated. There is currently a much greater onus on the departments
        to create their own leadership development programmes, which can work similar to CAP. In other
        words, departments can decide to replicate programmes like CAP at the departmental level. This
        is a development to be expected in a country when there is enough ownership for such
        programmes in departments and enough shared values.
        Source: Treasury Board of Canada Secretariat (n.d.), “Career Assignment Program”, www.tbs-
               sct.gc.ca/prg/cap-eng.asp accessed in August 2009; and information provided by Tatyana Teplova,
               the peer reviewer from Canada.



            Senior tenured employees interested in continuing as or becoming senior managers
        will ask themselves how their future career opportunities will be affected by a change.
        The non-systemic and non-transparent character of the present system limits the risk of
        negative reactions. The creation of a centralised career management function such as the
        Dutch BABD or an introduction of stronger controls or restrictions on existing external
        recruitment will on the other hand probably generally be received favourably by most
        employees, but may be opposed by the highest senior managers.


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            All members of the political executive may not be enthusiastic about a change that
        limits their sphere of appointments at will or that introduces more formal and transparent
        processes for the selection of the senior management, even when this change is proposed
        by their own government. The opposition in Parliament would typically be more
        favourable, as long as they are in opposition. However, they might also take a short-term
        perspective and oppose changes intended to improve the performance orientation of the
        governance of the administration.
            Several OECD member countries have recently reformed or are in the process of
        reforming how they manage senior managers. The content of the reforms vary depending
        on the starting point. Little has been written about their experience of the change
        processes. There are however a few tentative conclusions.
            Sensitive reforms require clear political ownership and support at the highest level.
        They need at the same time to be designed in an open process in which the interests of
        different stakeholders are taken into account as far as possible, without deadlocking the
        reforms.
            Career employees who already have acquired rights should not be deprived of these
        without carefully weighing reasons. They will have to accept, however, that promotions
        to managerial positions will become more selective and based on managerial capacity.
            A centralised career and recruitment function for senior management will facilitate
        reforms, regardless of the character of the reforms. It should be situated within the core
        ministerial structure but preferably be seen as a resource by all ministries.

        General conclusions
           To respond to the more pressing demands for performance and efficiency, Brazil
        needs to develop a more sophisticated system of staff performance management and
        develop leadership among government employees.
            Many efforts have been made in the past to develop performance orientation in the
        management of staff, but these have been hampered by a lack of perseverance,
        inconsistencies in the overall management framework, and a lack of capacity to
        implement changes.
            Further reforms in the management of staff performance should include stronger
        strategic and budget management in organisations and increased flexibilities for
        managers. Regarding human resource management in general, reforming the job category
        system to provide more career opportunities for employees, and improving the
        management of senior managers are necessary entry points into the reforms aimed at
        improving the performance orientation of the HR system.
            Performance pay should not be the main tool for attempting to enhance performance
        orientation and should be downplayed in the system of incentives. Efforts should focus
        instead on providing opportunities for functional promotions that should be at least
        partially performance-based (in a reformed job category system), once the system of
        performance assessment has been strengthened and is better monitored by the Ministry of
        Planning.
            It is necessary to reform the management of senior managers not only to enhance the
        performance orientation of the human resource system, but also to further professionalise
        senior civil servants and ensure transparency in the management of the top executives.
        The DAS system provides senior managers with a welcome possibility to bring in skills
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        from the outside and increase the level of competition for posts, but the delineation
        between the level of posts whose appointment can remain discretionary and the level of
        appointments that should be based on more transparent criteria of appointment should be
        made clearer. This does not mean that appointments should follow the usual criteria and
        processes for entry in the public service, and every effort should be made to base the
        process on competency requirements and past records of performance.
            In general, senior managers should be managed as a group, with clear competencies
        defined, opportunities to develop group cohesion, and induction and training
        opportunities.
            Positions in non-managerial positions in the DAS system can remain open to
        individuals who are not civil servants, but there is no reason not to develop recruitment
        criteria and processes that are transparent for their recruitment. Their management should
        also be reintegrated into a reformed job category structure.
            Like for many HRM reforms, efforts should be made to limit the need for changes to
        the law when implementing reforms. There is no clear reason why most of the changes
        implemented on performance management should require legal changes and should
        instead be considered as management changes driven by the Ministry of Planning.




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                                                              Notes


        1.        This section is based on Pires (2007).
        2.        This exception is allowed in the Constitution.
        3.        The EPPGG job category was created to fill the positions of senior management and
                  reduce the dependence on the DAS system, and although this result has not been
                  achieved, a large number of EPPGG or former EPPGG members act as senior
                  managers filling in DAS positions.




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                                         Chapter 4
                    Strengthening human resource management reform in the
                                 Brazilian federal government



            In order to design and implement human resource management reforms successfully,
        governments must analyse a number of structural conditions. Considering the experience
        of OECD countries, this chapter discusses three elements that will have an impact on the
        success of the Brazilian civil service reforms: ensuring consistency between traditional
        values and the values embedded in the legislation and human resource management
        (HRM) tools; adapting the capacity of the central HRM department to empower it to
        conduct strategic human resource management and have a clear division of
        responsibilities between the central HRM department and the HRM units in ministries
        and agencies; and making HRM reforms consistent with other government reforms like
        budgeting and strategic organisational management.




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           In order to design and implement human resource management (HRM) reforms
        successfully, governments have to consider a number of structural conditions.
            First, reforms will succeed if the values embedded in new legislation and new HRM
        tools are clear, consistent with traditional values, and accepted by all. Core values are a
        reference point for staff, and they help to give meaning to reforms and to build and
        strengthen a sense of community in government. In addition, well-established core values
        help maintain trust in government. Although HRM policy helps establish and maintain
        core values, it also has to be consistent with the overall values and help promote them.
            Second, to be successful, reform implementation strategies need to be planned
        carefully. HRM reforms have to be consistent with other government reforms, especially
        in the fields of budgeting and strategic organisational management. Building people’s
        ownership of reform, sequencing the different phases, providing effective leadership and
        ensuring mechanisms to sustain the reform are all crucial aspects of implementation
        strategies.
            Third, the implementation of HRM reforms requires adapting the capacity of the
        central HRM department which needs to be fully empowered to conduct reforms and to
        adjust to the requirements of strategic human resource management. Reforms often affect
        the division of responsibilities between the central HRM department and HRM units in
        ministries and agencies. It is therefore necessary to plan for these changes.

4.1. Core values

        The experience of OECD member countries
            The values embedded in the public service culture, which guide the behaviour of
        public servants, are an important part of governance. Public service values such as respect
        for legality, integrity and political neutrality are among the defining features of a
        democratic society. As such, they tend to be enshrined in the legislation that applies to the
        public service or in constitutions, supported by codes of conduct, and protected by
        administrative procedures and sanctions. Well-defined values that lead to consistent
        government practices are essential to maintaining trust in government. They reflect what
        the public service is trying to achieve, help design collective and individual objectives,
        and maintain the collective public service culture.
            In OECD member countries these core values include traditional values such as
        integrity, impartiality, legality, probity and merit and newer values such as efficiency,
        transparency, diversity and user orientation. Traditional core values usually revolve
        around three main principles: ensuring ethics and integrity in the public service; securing
        the continuity of the public service; and guaranteeing the legality of decisions. It is these
        values that have justified an employment framework for public servants different from
        that of employees under general labour laws in most OECD member countries.
            Broadening the definition of the public service’s core values has become a key
        strategic objective in many OECD member countries as a way to increase citizens’ trust
        in government. Also, with the introduction of more managerial flexibility in public
        management and less control on inputs and processes, countries have sought to
        incorporate these values in management processes. Values-based management is viewed
        as a more efficient way of maintaining core values in the public service than controls that
        hinder the move towards more performance-based management.


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            In many OECD member countries core values have been slowly evolving to include
        user orientation, increased individual responsibility, and focus on outputs and outcomes.
        In addition to these goals related to public policy outcomes, diversity has become a core
        value in HR policies.

                                Figure 4.1. Frequently stated core public service values
                                                          2000 & 2009


                 Impartiality

                     Legality

               Transparency

           Integrity/Honesty

                   Efficiency

             Professionalism


                                0%           20%              40%               60%      80%             100%
                       Percentage of the 29 countries that responded to both the 2000 and 2009 surveys


                                                  2000                           2009

         Source: OECD (2009c), Government at a Glance 2009, OECD, Paris.


            The fact that values are reviewed from time to time does not mean that they are
        unstable. While public service reforms have added new values, they have also reaffirmed
        existing core values. Indeed, successive cycles of public service reform have brought
        discussion of values to the fore and heightened awareness of how changes in HRM and
        other areas of public sector management may affect values and culture (Matheson and
        Kwon, 2003). For example, increased managerial flexibility has been a feature of public
        management reform in many OECD member countries and has led to greater emphasis on
        the explicit definition of public service values and the reinforcement of integrity
        frameworks.
            Some OECD member countries have organised discussions of core values as part of
        deliberations on public service reforms in order to highlight their centrality. For example,
        in France a public opinion survey on public service values was organised in 2008 and
        debates and roundtables, involving both public servants and others, were held (Silicani,
        2008). In Australia, a review of core values was a key part of revising public service
        legislation, and the new Public Service Act of 1999 explicitly sets out these core values.




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        Core values and human resource management
            Human resource management arrangements in the public service in OECD member
        countries play an essential part in institutionalising values. For example, methods of
        recruiting public servants through open, merit-based competition or other sorts of
        competitive selection procedures are a guarantee of freedom from patronage. Tenure
        arrangements and protection against dismissal have traditionally been seen as protecting
        the independence and neutrality of public servants and ensuring continuity. Discipline
        provisions are meant to uphold probity and legality. Professional socialisation through
        training, career management processes, and the senior executive services that exist in
        some public services are also important for instilling values. Competency management
        and performance management can be used to signal values to individuals through the
        establishment of performance and competence criteria. They are also more directly used
        to help strengthen performance orientation and professionalism.
            It is also well recognised that the informal norms and behaviours that are part of an
        organisation’s culture strongly influence values (Silicani, 2008). If there is a gap between
        formal rules and procedures or stated values and the way things are actually done, an
        informal set of values will take root and shape the culture in ways that can be extremely
        difficult to change.
            One of the challenges of public service reform is to bring HRM into line with
        priorities such as results orientation, improved service delivery and capacity for
        innovation without undermining existing core values. For example, in introducing
        competency or performance management mechanisms, it is essential to be clear about the
        values that are being promoted and to ensure that they are consistent with and do not
        undermine other values such as integrity and continuity.

    Core values and codes of conduct
            Codes of conduct that are fully implemented and adhered to are an essential part of
        values-based management in the public service (OECD, 2009e: 43-46). Most OECD
        member countries have introduced instruments such as integrity codes which state the
        core principles, values and standards of conduct expected from civil servants. The most
        recent are the codes of conduct in New Zealand in 2007 and in Austria in 2008. A large
        majority of OECD member countries rely on handbooks, websites and other forms of
        internal communication to ensure that public servants are aware of values and codes of
        conduct. Box 4.1 contains the OECD Principles on Ethical Conduct in the Public Service
        (OECD, 2008).
           Disclosing wrongdoing in the public service is a key concern in OECD member
        countries. Measures obliging public servants to report misconduct and/or provide
        procedures to facilitate reporting have been introduced in most OECD member countries.




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                     Box 4.1. OECD Principles on Ethical Conduct in the Public Service

              1.   Ethical standards for public service should be clear (civil servants and political officials
                   should know where the boundaries of acceptable behaviour lie). Codes of conduct serve
                   this purpose.
              2.   Ethical standards should be reflected in the legal framework (laws and regulations
                   provide the framework for guidance, investigation, disciplinary action and prosecution).
              3.   Ethical guidance should be available (socialisation facilitates ethics awareness, but
                   ongoing guidance and internal consultation mechanisms should be made available to help
                   civil servants (and politicians) apply ethical standards).
              4.   Public servants should know their rights and obligations.
              5.   Political commitment should reinforce ethical conduct of public servants.
              6.   The decision-making process should be transparent and open to scrutiny (this also points
                   to the role of the legislature and the press).
              7.   There should be clear guidance for interaction between the public and the private sectors.
              8.   Managers should demonstrate and promote ethical conduct (by providing appropriate
                   incentives, adequate working conditions and effective performance assessments).
              9.   Management policies, procedures and practices should promote ethical conduct.
              10. Public service conditions and management of human resources should promote ethical
                  conduct (this relates amongst others to recruitment processes, promotion and adequate
                  remuneration).
              11. Adequate accountability mechanisms should be in place within the public service
                  (internal as well as outward accountability to the public).
              12. Appropriate procedures and sanctions should exist to deal with misconduct.

            OECD member countries have given special attention to measures to prevent conflicts
        of interest in the public sector. A large majority have enacted measures that target
        officials in positions particularly susceptible to corruption in order to help prevent
        conflicts of interest and combat illicit enrichment. These include professions that are
        exposed to sectors in which economic interests are at stake and at the intersection of the
        public and private sectors, such as budget execution (Australia and Japan) or health
        personnel (Norway) (OECD, 2000). In Australia, Greece, Ireland, Italy, Korea and the
        Netherlands, certain categories of public officials are require