International monetary fund commonly known as IMF and World Bank has in the recent past been pushing its clients or countries to privatize some of the public administration, an issue which has led to heated debates on the effect that such a move would have on the countries’ economies as well as the global economy. Privatization is seen as a means of improving public services. People proposing for privatization claim that such a move would increase employees’ productivity, save tax and reduce government’s expenditure.
While some countries have already undertaken initiatives towards privatization of public administration, others feel that such a move would be detrimental to their economies as well as their citizens (Howe, n. d). Privatization refers to the handing over of public sector of administration to the private sector by the government. Privatization may be complete where a government sells off a public agency or partial through contracting with the private sector. Different reasons have been put forward explaining the reasons as to why privatization should or should not be encouraged.
One of the advantages of privatization is that it reduces monopolization thus encouraging fair competition. It may also lead to efficiency by firms and hence higher economic growth. However, privatization of some public programs such as social and health amenities may lead to exploitation of citizens, loss of control by government over essential public administration and may even reduce the quality of services offered to the public. While deciding on whether to undertake privatization of the public administration, a government should first consider the advantages and disadvantages such a move would have.
A program should only be privatized if it is advantageous to do so. The negative impact should be minimal both in the short run and the long run (Vanalandingham, 1999). Advantages and disadvantages of privatizing public administration Pros There are various advantages which may accrue as a result of privatization of some public services. One of the advantages of privatization is that it may lead to cost savings for the government. The private sector is believed to perform some services more cost effectively than the government due to various reasons.
The private sector is able to operate at lower costs because it incurs low labor costs as compared to the public sector. Unlike the government, private sector has few employee benefits despite the fact that salaries may be higher than in public administration. Another reason why private sector has lower costs of operation is because there are few regulation requirements. Government has accountability concerns that are highly regulated thus government agencies have to spend a lot of money for accomplishment of a project.
Such regulations are not present in the private sector making it possible for the private sector to streamline most of its operations. Also, personnel in private sector are more flexible making it easier to motivate employees through rewards and or termination of non-performing employees. Government agencies are inflexible making such moves difficult. Due to the flexibility of the private sector, it is able to adopt new and better technologies than public administration. This makes it easier for the private sector to react fast to changing business conditions and to meet new demands of the consumers.
Bureaucracies found in public sector render it inflexible thus increasing operation costs (Nicholson-Crotty, 2004). Staffing flexibility is also another advantage that privatization has. The private sector is able to obtain at ease specialized expertise unlike public sector. As mentioned above, the public administration is characterized by bureaucracies thus making it difficult to take advantage of opportunities as they arise. The private sector is able to hire professional services when they are required more quickly. This may ensure continuous productivity and improved services for the consumers.