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After more than three decades of reform, China has finally decided to reshape public institutions to improve social services.
In March, the Chinese Government implemented a program to reform public institutions nationwide by type. On June 2, a detailed timetable was announced at a conference in Beijing, inaugurating one of the country’s toughest reforms in history.
Official statistics show China has 1.26 million public institutions with more than 40 million staff members and retirees. Among all the public institutions, there are 952,000 practicing independent accounting. More than 70 percent of the country’s scientific research personnel and 95 percent of teachers and medical workers are working in public institutions. Expenditures on these institutions account for more than 30 percent of government revenues.
Premier Wen Jiabao said in his government work report to this year’s session of the National People’s Congress, China’s top legislature, the reform of public institutions aims at stopping them from performing government and business functions, as well as separating supervision from day-to-day operations and for-profit institutions from nonprofit ones.
According to the announced timetable, the government will categorize public institutions in accordance with their functions through 2015. By 2020, a new system for the management and operation of public institutions will be established.
Obscure functions
With the country’s policy of reform and opening up going deeper, problems of the decades-old system for managing public institutions have become increasingly evident.
Many public institutions are blamed for overstaffing, inefficiency and slack management. “They felt it difficult to adapt to the needs of the market economy and some of them have become obstacles to coordinated economic and social development,” said Wang Yukai, a professor at the Chinese Academy of Governance.
According to Wang, China’s public institutions fall into three categories. Those in the first category perform some administrative functions or serve government departments, mainly engaged in supervision, quality inspection, authorization or logistic services. The second category consists of institutions serving the market and enterprises through consultation and coordination services. Institutions in the third category, which represent the majority, are engaged in social services.
“The value of public institutions lies in providing sound services,” Wang said.
But some public institutions have acted like government departments or for-profit businesses, instead of performing their duties to effectively provide services. For example, some institutions with administrative powers impose unnecessary fines.
Besides, outdated organizational and management systems in some institutions have resulted in low efficiency and a waste of
public resources.
“There is a widening gap between the performance of public institutions and the demand of the general public,” Wang said.“Reforming public institutions holds the key to improving the quality and efficiency of public services.”
Incremental reforms
Since 1985, China has been attempting to reform its public institutions, but the progress was slow and there was regression in some areas.
For example, Shanxi, Zhejiang and Guangdong provinces and Shanghai and Chongqing municipalities were chosen to pilot the pension reform for public institution employees in 2008. But so far none of the five provinces and municipalities has really started the reform.
In 2009 Guangdong planned to carry out an ambitious reform of higher learning institutions. But even before implementation began, the reform program met strong opposition from the university teaching staff and was set aside.
“Except lacking the motivation to reform, many public institutions and their staff resist changes due to entrenched interests,” said Huang Hengxue, a professor at the School of Government of Peking University.
This time, the Central Government has determined to totally change the situation.
According to the reform program, China is planning to transform public institutions that perform administrative functions into
government agencies under strict supervision, while those conducting for-profit, commercial activities will become fullfledged enterprises. Those with inadequate or ambiguous functions will be eliminated or merged into other organizations.
“Meanwhile, public institutions engaging in social services should strengthen their functions,” said Song Shiming, another professor at the Chinese Academy of Governance. “These government-sponsored institutions will be prohibited from performing commercial activities.”
The reform would facilitate China’s efforts to forge a service-oriented government and improve the overall quality and quantity of public service programs, Song said.
After the reform, he said, public institutions would be defined as those that provide essential social services.
“The move seeks to address various problems in the current work of public institutions. It reflects the government’s resolution to address public complaints over inadequate access to public services, such as education and healthcare,” said Wu Jiang, Director of the Chinese Academy of Personnel Science, a think-tank under the Ministry of Human Resources and Social Security.
The general goal of the reform is to establish a system by the end of 2020, under which non-profit institutions will effectively operate to provide public services that people have equal access to.
For a long time, individuals recruited by public institutions are known for having an‘iron rice bowl,’ namely a regular salary and tenure until retirement, regardless of performance.
“After the reform, the staff members of public institutions will have no iron rice bowl in the future, and their salaries will be determined according to their work results,” Wu told Xinhua News Agency.
Besides financing public institutions, the government would also widen the doors for social investment to run non-profit institutions, like nurseries, primary schools, clinics and hospitals, Wu said.
“Public service institutions, like schools and hospitals, were almost all governmentrun in the past. In the future, they will be run by the whole society under government regulations,” he said.
Private schools, universities and hospitals have been increasing in China, but are still far from being popular options for people. Most private institutions lack enough policy and financial support and cannot afford to obtain advanced equipment and talented people.
Wu said the reform of public institutions would provide a great chance for China to evolve a completely new public service system. He expects the country to largely increase its support for privately-run, non-profit institutions.
Meanwhile, Wang said more emphasis should be put on fairness in the process of the reform of public institutions.
“Fairness is the most important point in the reform, which will require the government to clarify its top responsibility, adjust the key areas of public investment, and establish a payment transfer system and a rational supervision framework,” he said.
“Along with the reform, a great number of employees will be squeezed out through a proper competitive procedure. Thus, an improved social security system will be vital for smoothing the process,” he said.
“To avoid detours during the reform process, simultaneous reforms should be undertaken among administrative organs,”Wang said.
According to him, the reform itself implies a parallel transformation of the government and the administrative system. The slow progress of the reform of public institutions in recent years is a reflection of the inadequate transformation of government functions.
“The two processes interact and weaken each other. In order to push the reform of public institutions, we need to start with government restructuring and administrative reform,” said Wang.
“It involves many aspects such as personnel management, income distribution, social security and taxation policy. If even one of the above fails to function properly, others will be affected and the overall effectiveness of the reform will suffer,” Wang said. “Therefore, public institution reform must be coordinated with other reforms, and combined with supporting measures.”
Wang warned that the reform of public institutions, as an enormous systematic project, demanded further efforts beyond solving the problems of redundant labor and heavy fiscal burdens. “Importance should be attached to restructuring the remaining majority that provides public services,” he said.
He said the government should adopt a clear strategy to build a fair and effective public service system, which will benefit most people, including those in rural areas and on the lowest rungs of the social ladder.
Public service providers should also follow the market rules of free entry and fair play, he said.
In March, the Chinese Government implemented a program to reform public institutions nationwide by type. On June 2, a detailed timetable was announced at a conference in Beijing, inaugurating one of the country’s toughest reforms in history.
Official statistics show China has 1.26 million public institutions with more than 40 million staff members and retirees. Among all the public institutions, there are 952,000 practicing independent accounting. More than 70 percent of the country’s scientific research personnel and 95 percent of teachers and medical workers are working in public institutions. Expenditures on these institutions account for more than 30 percent of government revenues.
Premier Wen Jiabao said in his government work report to this year’s session of the National People’s Congress, China’s top legislature, the reform of public institutions aims at stopping them from performing government and business functions, as well as separating supervision from day-to-day operations and for-profit institutions from nonprofit ones.
According to the announced timetable, the government will categorize public institutions in accordance with their functions through 2015. By 2020, a new system for the management and operation of public institutions will be established.
Obscure functions
With the country’s policy of reform and opening up going deeper, problems of the decades-old system for managing public institutions have become increasingly evident.
Many public institutions are blamed for overstaffing, inefficiency and slack management. “They felt it difficult to adapt to the needs of the market economy and some of them have become obstacles to coordinated economic and social development,” said Wang Yukai, a professor at the Chinese Academy of Governance.
According to Wang, China’s public institutions fall into three categories. Those in the first category perform some administrative functions or serve government departments, mainly engaged in supervision, quality inspection, authorization or logistic services. The second category consists of institutions serving the market and enterprises through consultation and coordination services. Institutions in the third category, which represent the majority, are engaged in social services.
“The value of public institutions lies in providing sound services,” Wang said.
But some public institutions have acted like government departments or for-profit businesses, instead of performing their duties to effectively provide services. For example, some institutions with administrative powers impose unnecessary fines.
Besides, outdated organizational and management systems in some institutions have resulted in low efficiency and a waste of
public resources.
“There is a widening gap between the performance of public institutions and the demand of the general public,” Wang said.“Reforming public institutions holds the key to improving the quality and efficiency of public services.”
Incremental reforms
Since 1985, China has been attempting to reform its public institutions, but the progress was slow and there was regression in some areas.
For example, Shanxi, Zhejiang and Guangdong provinces and Shanghai and Chongqing municipalities were chosen to pilot the pension reform for public institution employees in 2008. But so far none of the five provinces and municipalities has really started the reform.
In 2009 Guangdong planned to carry out an ambitious reform of higher learning institutions. But even before implementation began, the reform program met strong opposition from the university teaching staff and was set aside.
“Except lacking the motivation to reform, many public institutions and their staff resist changes due to entrenched interests,” said Huang Hengxue, a professor at the School of Government of Peking University.
This time, the Central Government has determined to totally change the situation.
According to the reform program, China is planning to transform public institutions that perform administrative functions into
government agencies under strict supervision, while those conducting for-profit, commercial activities will become fullfledged enterprises. Those with inadequate or ambiguous functions will be eliminated or merged into other organizations.
“Meanwhile, public institutions engaging in social services should strengthen their functions,” said Song Shiming, another professor at the Chinese Academy of Governance. “These government-sponsored institutions will be prohibited from performing commercial activities.”
The reform would facilitate China’s efforts to forge a service-oriented government and improve the overall quality and quantity of public service programs, Song said.
After the reform, he said, public institutions would be defined as those that provide essential social services.
“The move seeks to address various problems in the current work of public institutions. It reflects the government’s resolution to address public complaints over inadequate access to public services, such as education and healthcare,” said Wu Jiang, Director of the Chinese Academy of Personnel Science, a think-tank under the Ministry of Human Resources and Social Security.
The general goal of the reform is to establish a system by the end of 2020, under which non-profit institutions will effectively operate to provide public services that people have equal access to.
For a long time, individuals recruited by public institutions are known for having an‘iron rice bowl,’ namely a regular salary and tenure until retirement, regardless of performance.
“After the reform, the staff members of public institutions will have no iron rice bowl in the future, and their salaries will be determined according to their work results,” Wu told Xinhua News Agency.
Besides financing public institutions, the government would also widen the doors for social investment to run non-profit institutions, like nurseries, primary schools, clinics and hospitals, Wu said.
“Public service institutions, like schools and hospitals, were almost all governmentrun in the past. In the future, they will be run by the whole society under government regulations,” he said.
Private schools, universities and hospitals have been increasing in China, but are still far from being popular options for people. Most private institutions lack enough policy and financial support and cannot afford to obtain advanced equipment and talented people.
Wu said the reform of public institutions would provide a great chance for China to evolve a completely new public service system. He expects the country to largely increase its support for privately-run, non-profit institutions.
Meanwhile, Wang said more emphasis should be put on fairness in the process of the reform of public institutions.
“Fairness is the most important point in the reform, which will require the government to clarify its top responsibility, adjust the key areas of public investment, and establish a payment transfer system and a rational supervision framework,” he said.
“Along with the reform, a great number of employees will be squeezed out through a proper competitive procedure. Thus, an improved social security system will be vital for smoothing the process,” he said.
“To avoid detours during the reform process, simultaneous reforms should be undertaken among administrative organs,”Wang said.
According to him, the reform itself implies a parallel transformation of the government and the administrative system. The slow progress of the reform of public institutions in recent years is a reflection of the inadequate transformation of government functions.
“The two processes interact and weaken each other. In order to push the reform of public institutions, we need to start with government restructuring and administrative reform,” said Wang.
“It involves many aspects such as personnel management, income distribution, social security and taxation policy. If even one of the above fails to function properly, others will be affected and the overall effectiveness of the reform will suffer,” Wang said. “Therefore, public institution reform must be coordinated with other reforms, and combined with supporting measures.”
Wang warned that the reform of public institutions, as an enormous systematic project, demanded further efforts beyond solving the problems of redundant labor and heavy fiscal burdens. “Importance should be attached to restructuring the remaining majority that provides public services,” he said.
He said the government should adopt a clear strategy to build a fair and effective public service system, which will benefit most people, including those in rural areas and on the lowest rungs of the social ladder.
Public service providers should also follow the market rules of free entry and fair play, he said.