Productivity in the central government sector of Finland –

the case of the Ministry of Transport and Communications 2000–2005

5.10.2006 2Jani Heikkinen and Mira Lehmuskoski

Content

Aim of data collection Contents of the survey Data features Output and outcome Results of case study Future work

5.10.2006 3Jani Heikkinen and Mira Lehmuskoski

Aim of Data Collection

Produce output volume indicators for:Statistics on central government productivityCentral government units themselvesNational Accounts (if needed)

One indicator in measuring public sector performance in Finland

Produce information annually from every government unit

5.10.2006 4Jani Heikkinen and Mira Lehmuskoski

Contents of the Annual Survey

Measurement units, quantities and shares of final output. DEFINED AND RECORDED MAINLY BY UNIT ITSELF EVALUATED BY STATISTICS FINLAND

Defining share of output (cost, income,working time or some other … which) MOSTLY COST SHARE

Quantity of labour input. MOSTLY WORKING YEARS Expenditure of activity. FROM CENTRAL GOVERNMET

BOOK-KEEPING SYSTEM Data collected always from two sequential years Explanations of changes and facts which could have affected

the production of the service.

5.10.2006 5Jani Heikkinen and Mira Lehmuskoski

Data features in general (I/III)

The central government services are very heterogeneous and most of them are collective services,

each observation is handled as a single unit in productivity measurement

final output and output indicators have to be separately specified by each unit (monopoly producers).

The used indicators cover the total output or at least the most important and essential

final products which make up most of the total output represent as homogeneous final products as possible (classification

of final products is vitally important).

5.10.2006 6Jani Heikkinen and Mira Lehmuskoski

Data features in general (II/III)

Productivity statistics for central government services proceeds from the micro level to the macro level, meaning that input, output and productivity indices are first compiled for each unit

After compiling these indices for each unit, the aggregation of the results is made by weighting the unit growth rate

output index by units share of the total costs of all the units

labour input by units share of the total labour costs of all the units

total input index by units share of the total costs of all the units

5.10.2006 7Jani Heikkinen and Mira Lehmuskoski

Data features in general (III/III)

Labour productivity for each unit is measured as the ratio of output change index to the labour input index

Total productivity is approximated by cost efficiency in real terms and it is measured as the ratio of output change to the changes in labour and other activity expenditure at constant prices.

5.10.2006 8Jani Heikkinen and Mira Lehmuskoski

Output and Outcome

There are no outcome based quality corrections on output volume measures

Output changes of different services are summed up by cost weights not by utility derived outcome weights

output volume of single service should be same regardless of service provider

utility can’t be measured sufficiently utility can be higher OR lower than actual costs costs, as an representatives of market price weights, give proxy measure

of utility (input markets of monopoly producer!) NA is trying to measure actions between balance sheets, outcome

movements drift from year to next

5.10.2006 9Jani Heikkinen and Mira Lehmuskoski

Results of Case Study (I/III)

Ministry of Transportation and Communication (MINTC)special project was carried out where every single agency

of the administrative sector of MINTC was studied individually

time series where created to check how well they would describe real events

Resultsresults of individual agencies can be read from paper general result at the level of administrative sector vs

central government results

5.10.2006 10Jani Heikkinen and Mira Lehmuskoski

Results of Case Study (II/III)

Quality changes of high-,rail-, and fairways is approached through capacity measuring

Output quality correction in research is estimated coefficient of amount cost/value based on type, length and scientific relevance of publication

Institutionalised services (license, fees) are not corrected because “service” to users remains mainly same, new licenses and fees are recorded as a different types of service

Very detailed division of output is used as means of quality corrections

5.10.2006 11Jani Heikkinen and Mira Lehmuskoski

Results of Case Study (III/III)

2001 2002 2003 2004 2005Administrative sector of Ministry of Communication and Transport

Output 2,7 0,8 0,9 3 0,6Labour input -46,1 0,7 0,3 -25,6 0,1Total input -1,4 -6,7 1,6 -1,1 -1,6Labour productivity 90,6 0,1 0,6 38,4 0,5Total productivity 4,2 8,1 -0,6 4,2 2,2

Central Government, totalOutput 1,5 0,8 0,5 1,1 1Labour input 1,2 1 0,3 1,2 -0,2Total input -1,3 2,3 2,7 1,2 0Labour productivity 0,3 -0,2 0,2 -0,1 1,1Total productivity 2,8 -1,4 -2,1 0 1

Change from previous year

5.10.2006 12Jani Heikkinen and Mira Lehmuskoski

Future Work

In 2005 Statistics Finland started a project to develop productivity measuring with the ministries. The goal is to measure productivity comprehensively in the authorities and institutions under the ministry.

Project started with, Ministries of Education, Agriculture and Forestry, Finance and Justice.

Aim is to publish at spring 2009 productivity statistics at the level of all administrative sectors (13).