Results indicate that sizeable job reductions can be made with little recourse to compulsory redundancies. 'Manpower substitution' offset retrenchment in places. Social impacts were less harmful than feared unless redundancy payments were poor and back-up welfare provision lacking.

The study was mainly based on meetings held with relevant public officials. In Ghana, meetings were mainly with staff of the Office of the Prime Minister. Staff in the Ministry of Finance and trade union officials were also consulted. In the UK, staff in the Cabinet Office and officials of government agencies, the Health Service and local authorities participated.

In Uganda, talks were mainly with staff of the Ministry of Public Service, but also with staff in the Ministry of Finance and a trade union.

Reduction in all three countries has been substantial. For example, in Uganda the payroll fell from 320,000 to 180,000, and in the UK from over 700,000 to under 500,000 jobs. Contrary to popular belief, large reductions have been achieved with few compulsory redundancies - only 14,000 (about 10 percent) of the overall figure in Uganda, not more than 1,000 in any single year in the UK. Reductions were achieved by various means. These included eliminating 'ghost workers' and enforcing retirement ages. Also used was the purely cosmetic expedient of transferring civil servants to another agency - such as an 'enclave' revenue authority - where they no longer counted as civil servants, though still paid out of the public purse.

The UK experience showed that it is possible to reduce numbers and yet increase overall spending on staffing. This usually arises when departments resort to 'manpower substitution', replacing the staff who leave regular employment, with consultants, or burying staffing expenditure in non-staffing budgets. Partly for this reason, but more directly because of the cost of financing severance packages for retrenchees, job reduction programmes, which governments embark on to reduce expenditure, are typically costly in the short term. Only in Year Five did Ghana begin to 'show a profit' on its programme.

All three countries worried about the social impact of retrenchment. This was generally less than expected, since, as noted above, there were relatively few compulsory redundancies. The experience of those who left either voluntarily or compulsorily has been mixed, even within particular countries. The first wave of retrenchees in both Ghana and Uganda fared relatively badly, partly because of the low redundancy payments which they received, and partly because of their lack of understanding of what was happening to them.

The authorities in South Africa commissioned the study in hand because they wanted pointers to how they should embark on job reductions. Conclusions drawn from our research included:

• Substantial job reductions can be made while making few compulsory redundancies, mainly through efficient management of the payroll
• Analysis of the costs of job reduction in terms of severance payments and the like and benefits in terms of reducing payroll, should be carried out in advance
• Governments should recognise the likelihood of 'manpower substitution' occurring, and consider managing staffing through budgets rather than headcounts
• Governments should anticipate the impact of job reduction on retrenchees, and make provision for retraining, counselling, loans and other suitable safety-nets.

Willy McCourt
Institute for Development Policy and Management
University of Manchester
Precinct Centre
Oxford Road
Manchester M13 9GH
UK

T: +44 (0)161 275 2800
F: +44 (0)161 273 8829