Harry Geels: Resolute approach needed for plan of 22% fewer civil servants

May 21, 2024

^{This column was originally written in Dutch. This is an English machine translation.}

By Harry Geels

Without wanting to discuss all the pros and cons of the new response agreement, there is one plan in particular that stands out positively: 22% fewer civil servants. But it will come down to the implementation. My suggestion: 'cold turkey'.

The coalition agreement is finally on paper in outline. For an economist with an eclectic view of politics, the plan initially contains good and less good points. Because details are still lacking, it is difficult to make a good judgment now, although people with a clear political signature naturally see this differently. Two things are particularly striking: a strict asylum policy and the plan to reduce the civil service by 22%.

When it comes to asylum policy, it is clear that things have to change. On the one hand, a solution must be found for reception (we cannot physically accommodate such large numbers of asylum seekers properly). On the other hand, there is a demographic problem (too few children are born and so we need labor migration). It appears that this last problem is not being addressed.

The biggest eye-catcher, however, is the desire to make major cuts in the number of civil servants. There are five good reasons for this.

1) Stop the spiral of ever-larger government

As mentioned earlier, the influence of the government in the economy has increased sharply since the beginning of the last century, with some fluctuations, from 15% of GDP to, in some Western countries, more than 50%. In the Netherlands, the number of civil servants has also increased considerably in recent years, especially in the government, with an increase of 29.4% since 2010, as Figure 1 shows. Alexis de Tocqueville observed in 1835 that democratic governments tend to centralize and expand their power, often at the expense of individual freedoms.

In his book The Road to Serfdom (1944), Friedrich Hayek argued that government intervention in the economy leads to more centralized control and an inevitable expansion of government authority. Robert Higgs, known for his book Crisis and Leviathan (1987), argued that governments tend to grow significantly in times of crisis and that the expansion of power and scope rarely fully returns to previous levels when the crisis is over. With a decisive downsizing policy, we could now break this spiral.

Figure 1: Growth in number of civil servants, in %

2) Simplifying society

One of the problems is the growth in the number of civil servants in 'policy and support', according to Roel Bekker, the Secretary General for Civil Service Renewal, who had to reduce the number of civil servants between 2007 and 2010 during Rutte II. Too much policy has been made and new policy must be introduced for policies that do not work well. Arno Visser, Director of the Court of Audit, said a year and a half ago that we have made society too complicated and that this is partly due to proliferating bureaucracy.

3) Provide relief to the overstressed labor market

By reducing the number of civil servants, the labor market is breathing new life again. The business community is eager for new workers. As mentioned earlier, the expansion of the government – through more rules – is a threat to efficient markets and labor productivity. It also creates a less favorable 'level-playing field' for large and small companies: the smaller ones quickly become 'too small to comply'. If more workers enter the market, the energy transition can even be achieved faster.

4) Good for public finances

Fewer civil servants is obviously also good for government finances. The coalition agreement seems rather weak in terms of hard cuts, although there is a target to keep the budget deficit below 2.8% of GDP. But whether this will work remains to be seen, given the many tax cuts that are also included in the agreement. And the proposed cuts, for example the lower contribution to the EU (of € 1.6 billion) and lower development aid (€ 2.4 billion), still have to be realized.

5) Fairer pay for the remaining civil servants

Last but not least, an abuse can immediately be cleared up, namely the hiring of external staff. They are often more expensive for the government and can avoid the more difficult work (for example, many self-employed people in healthcare are not available for night shifts for which permanent staff have to pay, or self-employed people in education contribute less to all other matters that need to be arranged in addition to teaching). The Roemer standard – less than 10% external staff – is not achieved in almost any ministry, as shown in Figure 2.

Figure 2: Share of external hiring at the ministries, in %

Resolute policy needed: 'cold turkey'

It is difficult to reduce the number of civil servants, although the past shows that it is possible. I propose a 'cold turkey' policy. As soon as possible, Mileinian: stop hiring external staff and a temporary stop on hiring managers, policy and support officials. That will undoubtedly cause problems here and there. But let that happen. After all, a smaller government also offers major advantages. And there will probably be some 'creative destruction' going on.

This article contains a personal opinion from Harry Geels

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