UNITED NATIONS, Oct. 26 (UPI) -- Governments should hire based on merit, but shouldn't necessarily pay based on performance, says a U.N. report on the public sector released Wednesday.
"Merit appointments seem to be the single most important determinant of the quality of public service," Jose Antonio Ocampo, undersecretary general of Economic and Social Affairs, told reporters at the news conference where the report was released.
Merit-based promotions are positively correlated with the quality of government services, according to statistical analysis by the U.N. Department of Economic and Social Affairs, which produced the report.
But the report, which is critical of some free-market reforms, said governments should proceed with caution when implementing salary regimes that tie pay to performance rather than seniority.
Pay-for-performance -- which ties salaries to the achievement of specific, stated objectives -- sometimes rewards short-term accomplishments while ignoring the long term, the report said.
"Pay-for-performance is a very widespread reform and there's really very little evidence that it functions as it should in the public sector," said Patricia Ingraham, a public administration professor at the University of Syracuse, who was cited in the U.N. report.
She said managers must be willing and able to implement extensive goal-setting and evaluation programs, which isn't always the case in governments undergoing reform. "If the structure isn't reformed, pay-for-performance doesn't work either," Ingraham said.
The report called outsourcing a "double-edged sword," saying it often saves money only by lowering pay.
Ingraham said governments sometimes privatize services in non-competitive industries. A few companies, such as Haliburton, come to dominate those sectors, and the government turns to them again and again.
"Does it make it more efficient? The evidence is that contracting out doesn't always make it more efficient, and in fact it might cost more," she said.
