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Innovation and the imf recommendations

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  • 1. Innovation, nonconsumption and the Portuguese education systemThe recently published IMF report on Portuguese public sector reform (“Portugal: Rethinkingthe State—Selected Expenditure Reform Options”) lists several reform options and advice basedon country data and comparisons to international standards. The comparison is drawn mainlywith EU15 countries, which is a sub-group of countries in the EU comparable to Portugal.While innovation is not directly mentioned in the report, some of the measures suggested arereally about process innovation. In the private sector, process innovation is constantly used togain a competitive advantage in the marketplace and to create wealth. In the public sector,process innovation should be used as a tool for creating efficiencies in governmentorganisations, which lead to better services for the public.In his article “Why Innovation Matters In Politics And The Public Sector”, Faisal Hoqueapproaches innovation in the public sector with business and financial concerns that are basicand widespread in the private sector. Return on investment, risk management, technologicalinnovations and efficiency are essential for the success of any company and should also be aconcern of Government officials and managers when investing public funds in critical sectorssuch as health and education.In the education sector, the IMF identifies a serious inefficiency in the management of schools.The IMF’s analysis reveals that there is over staffing and that career progress for teachers isbased solely on seniority. Schools have very limited management leeway and in fact cannotchoose whom to hire. Can you imagine a company being managed without the ability to chooseits own staff? This is what happens in this case: every year, a number of teacher positionsbecome vacant nationwide. Teachers apply and the choice is made based on seniority.Taking a step back, a useful concept to describe the failures of the Portuguese education systemis nonconsumption, which describes an area which appears unattractive to the companies orinstitutions that offer a service and where at the same time, some people would like to dosomething but are unable to get access to the available offering. At first sight, there are noobvious areas of nonconsumption in education: everyone is required to attend school up to acertain age. However, if you look deeper, you will probably find that a large proportion ofPortuguese students simply do not manage to reach higher education, although they would liketo, because they failed to grasp the more basic concepts between ages 12-18. This is the crucialproblem that needs to be addressed. The first step towards solving this problem is to placemotivated and capable teachers in front of those students that aspire to attend university but donot have the means or the background to do so. This is simply not achievable if the schoolscannot differentiate between teachers based on their competences.These problems have plagued the education system and seem to have flown under the radarscreen of previous (and numerous) reforms of the education system in the past. The IMFsuggests a better appointment system for teachers (not only based on seniority but oncompetence) and a framework whereby money would “follow the student”, which would allowbetter teacher hiring practices and a more efficient provision of education services.
  • 2. While some other measures proposed by the IMF in the report are painful, involving loss of jobsor the reduction of income for civil servants, this type of reform is really about theimplementation of important and sometimes long overdue structural reforms.