The importance of the public sector workforce to the productivity of the public sector: The case of Hong Kong SAR

Paul Krugman once said, “Productivity isn’t everything, but in the long run it is almost everything”. It appears to be no different in the public sector. One of the key themes that have been emphasized under the New... [ view full abstract ]

Paul Krugman once said, “Productivity isn’t everything, but in the long run it is almost everything”. It appears to be no different in the public sector. One of the key themes that have been emphasized under the New Public Management reforms across the globe is productivity improvement. This is largely due to the fact that the public sector is typically viewed to be less productive than the private sector. So strong is this belief that it appears to have adopted a near-mythic status. We are more likely to hear complaints and discussions of low productivity than high productivity in the public sector. It is thus timely to test this claim on the public sector in Hong Kong SAR.

This paper has two objectives. The first is to estimate the productivity of the Hong Kong public sector in relation to the private sector. The second is to compare whether the growth in the productivity of the Hong Kong public sector depends more on the contributions of its workforce (e.g., their motivations) than the contributions of capital investments (e.g., infrastructure). Using government statistics, this paper finds that the total factor productivity of the Hong Kong public sector is higher than that of the private sector. It also finds that the Hong Kong public sector workforce contributes more to the productivity growth in the public sector than capital investments. The findings point to the importance of paying close attention to motivating and supporting the public sector workforce for improved public sector productivity.