Making the tough decisions -- We can't afford not to

Making the tough decisions -- We can't afford not to

James Kallman
PT Grant Thornton Indonesia
Management Consultancy
Jakarta

A recent piece in The Jakarta Post reminded me of how far we
are from making the tough decisions that must be made if this
nation is to get back on track.

It's bad enough that the State Minister of Administrative
Reforms Feisal Tamin should be forced to admit that only 40
percent of the nation's four million civil servants are
professional and perform their jobs well. What is worse however
is accepting this as a burden the government must bear, citing
the extra expense to the state in providing severance pay if the
unprofessional civil servants were to be dismissed.

This is just the old-fashioned thinking that continues to hold
the country back. It's all right to say, "for the time being we
can only encourage them to work harder and improve their job
performance," but this only compounds the problem. For by next
year there'll be another year's service to add to their severance
pay. And as has been found in countries the world over, the
security of working for the government -- be it in state-owned
companies or the civil service -- has never been the greatest
spur to productivity and self-fulfillment.

No, the simple truth is that we cannot afford not to dismiss
those who are incapable of performing their job in a professional
manner. That is what happens in the private sector and there can
be no exceptions for the governmental sector. Facing the
challenges of globalization, and 2020 is already beginning to
loom large, it is a case of either shaping up or shipping out.

Simple logic also tells us that if 60 percent are not
performing properly, then the other 40 percent must be
shouldering the load. Thus in reality, Indonesia does not need
one civil servant for every 50 or so of its citizens. The point
is not lost either that if we had fewer civil servants then we
could afford to pay them better. This would both reduce their
need to bolster their current paltry incomes by nefarious actions
and attract a higher quality of future intake.

Some might argue that with some 40 percent of the nation's 100
million workforce currently either unemployed or underemployed,
now is not the time to take such action. This is the call too
from employees of state-owned industries who decry privatization
out of the fear of losing their jobs. But in the age of
globalization everyone must pull their weight and it is a
government's duty to ensure that its civil service is both
efficient and cost effective.

This is not to suggest that we should cut the unprofessional
workers adrift. Far from it, for a portion of their severance
payments could be earmarked to help them establish small micro-
businesses, which in reality form the backbone of the local
economy.

Thus instead of adding to the unemployment figures there would
in fact be job creation, as each business would need an extra
pair of hands or two. Plus this would be productive work that
adds to the circulation of money within the economy. For despite
their essential nature, civil servants do not contribute a single
rupiah to the nation's GNP.

Restructuring is a word bandied about in upper echelons, but
unless the political will exists to put it into practice there
will be no international belief in Indonesia's seriousness in
tackling its economic problems. And at the present time,
international credibility is of vital importance in attracting
foreign investment, which has been on a steady decline since the
late 1990s. Indonesia remains the only country in the region with
capital flight.

That restructuring builds investor confidence can be seen in
the movements on international stock markets. Companies that
carry out radical rather than piecemeal restructuring are
rewarded by more robust share prices.Investors are prepared to
shrug off the one off costs of the restructuring process,
realizing that the company has recognized its past complacency
and tackled its problems in a positive manner.

What holds true for individual companies also holds true for
nations. Indonesia is by no means alone in countries that have
undergone economic and political crises in recent times, for in
many ways Indonesia's problems are mirrored in the current woes
of Argentina, or in the not so distant past, Mexico.

Yet there are examples closer to home, economically afflicted
at the same time as Indonesia. Thailand and South Korea however
have shown far more resilience in bouncing back, particularly the
latter that has enforced restructuring despite opposition from
its workers.

Government is not about winning popularity contests, but about
taking the actions necessary to produce future benefit for the
populace as a whole. At times these actions may not be popular,
but if the government is open and honest in explaining the
necessity for its policies then the majority of the electorate
will tighten its belt and look forward to the benefits that will
in time accrue.

Failure to formulate and implement such actions constitutes a
betrayal of the people's trust, which in a true democracy usually
results in a change of leadership at the next elections. This is
why we can't afford not to make those tough decisions necessary
to put Indonesia back on the right track; and not tomorrow or
next year, but now.