Cherie's Place

Myth 5 The public sector has a worse productivity record than the private sector

REALITY Public services create public value

The CBI uses government statistics to show that public sector productivity has declined by an average of 0.3% over the period 1997-2007 and that over the same period, labour productivity in the private sector increased by an annual average of 2.8%. The CBI states that these diverging trends are “undesirable and unsustainable.”⁸

Productivity measures in the public sector are notoriously problematic and we need to be very careful in interpreting data on productivity. It can be seen, for instance, that increasing class sizes in schools may lead to perceived greater productivity by individual teachers, ie the ratio of teachers to schoolchildren. But it is doubtful that increasing class size would have a positive impact on the quality of education. Standard definitions of public sector productivity are a poor measure of public value and it is more important to look at efficiency, performance and outcome.

Productivity can be assessed in the private sector by looking at the balance sheet. By definition, this is not possible in the public sector. Rather, public sector productivity is centred around the notion of public value, with services that respond to the needs of citizens, that are sustainable, provide long-term value for money and are trusted by citizens. We know that financial pressures will require a sharper focus on value for money, but cost should never be the prime driver for public services.  Public services are not a drag on the UK economy; but a vital part of it, delivering health and social care, crime prevention, education, fire safety and many other important services.

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8 CBI, doing more with less, 2009

Tags: PCS, Privatision, Public Sector, Public Services, Trade Union