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Public sector downsizing in the Cook Islands: some experience and lessons

Sharma, Kanhaiya L. (2008) Public sector downsizing in the Cook Islands: some experience and lessons. South Pacific Studies, 28 (2). pp. 69-85. ISSN 0916-0752

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An Economic Reform Program (ERP) was undertaken in the Cook Islands in mid-1996 when the economy was in a serious financial crisis due to an unsustainable fiscal expansion as a result of growing wage bill, an expanding welfare system, and surging capital expenditure largely funded by external borrowing. An attempt is made in this paper to understand the process adopted in the public sector downsizing which was a major component of ERP. The extent of the reduction in employment and the wage bill is found while analyzing the growth of the private sector. The process of downsizing involved a forced mass reduction in the size of the public service by 57.2 percent within a year without adequate development of the private sector. As a result large numbers of those laid off have emigrated to New Zealand and Australia for employment opportunities since 1996. A great loss of skills has resulted in deterioration in the quality of services especially in the health and education sectors. The process did, however, achieve the desired result of cutting expenditure on public servants by 58 percent in 1994/95 to 39 percent in 1997/98 of total budget expenditure. Downsizing should be carefully designed and carried out in phases over a period of time in the context of a particular institutional setting.

Item Type: Journal Article
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Business and Economics (FBE) > School of Economics
Depositing User: Ms Neha Harakh
Date Deposited: 19 Oct 2008 21:35
Last Modified: 18 Jul 2012 03:09

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