Public sector reform in Germany: Is the turtle still plodding along?

Reforms to Germany’s public management system, such as implementing popular managerial and market-based approaches, have typically been incremental, and changes have been slow if not absent. Federalism, a strong, legally entrenched bureaucracy, and a fragmented system of political decision-making are seen as the main reasons for this.  Nevertheless, Germany has also shown a capacity for rapid response and an accelerated pace of change – for example, in its recent COVID-19 response. In a new paper published in May in Public Management Review, Hertie School Professor of Public Administration and Public Policy Kai Wegrich examines what conditions lead to an accelerated pace of reform or substantive changes in the system.

In “Is the turtle still plodding along? Public Management reform in Germany”, Wegrich notes three “puzzling” aspects of public sector reform in Germany. First, he says, focusing solely on the effects of incrementalism on public sector reform would ignore changes that are actually taking place at the local or sectoral levels. Second, the slow pace and stable approach to reforms at the federal level have not avoided mistakes and failures, for example in digitalisation. Third, he says, recent reforms may not be as slow as perceived, especially when considering the recent, large-scale efforts to digitalise public services or the country’s response to the coronavirus crisis.

“While it is too early to evaluate the effects or success of these initiatives, they call for a re-assessment of the prevailing image of public sector reform in the German federal government,” Wegrich writes. He notes that the speed and political support for certain reforms has accelerated – for example, under pressure from the EU to digitalise public services. Germany had to make changes to its constitution and adopt new laws to implement reforms, such as creating an online portal of the federal and local governments for the provision of public services. In addition, a number of federal ministries have set up ‘innovation labs’ to introduce ‘design thinking’ and ‘agility’ into government. The labs aim to develop digitalisation strategies, foster innovation and experimentation and have led to a series of managerial changes across administrations.

At the same time, the 2020 COVID-19 crisis increased the pressure to digitalise public services. The immediate need for remote working, digital processing of files and online services highlighted the German public sector’s weaknesses, Wegrich writes, especially in the area of general services, healthcare and education. This required quick and improvised solutions after years of resistance and slow progress. In addition, he notes, Germany quickly responded to the crisis with an unprecedented fiscal rescue package to buoy the economy and harnessed the expertise of scientists at it federal agency for biomedicine and others.

“Constitutional division of responsibilities required a consensus-based coordination approach across levels of government, and the state (Land) prime ministers displayed a high consensus orientation after an initially slow response to the crisis,” he says. But the emergence of some dissention in the public and between the federal and state levels may alter this course in the coming months, and “the consensus-based system of Germany will be tried and tested if, during the summer or fall 2020, rising infection numbers might demand renewed restrictions."

While it may be too early to assess the new reform dynamic in the federal government, “the developments of the last five years are substantial and surprising enough to renew the declining interest of public management research in reforms,” Wegrich says.

He expects new research and debates about what is driving public management reforms, especially in the German federal government. One area of interest are the pros and cons of incrementalism in reforming the system. Criticism of this approach has recently been countered by arguments that incremental change allows for correcting failures early on and avoids an adversarial environment. “Ironically, the step-wise expansion and learning can allow for a more fundamental transformation over time,” Wegrich notes. However, he says, these positive traits do not always materialise.

Looking ahead, Wegrich writes, “…it remains an open question if the new dynamic in public sector reform will subside into a new phase of political complacency in light of the many implementation problems associated with digitalisation reforms in a large country with dispersed political authority and fragmented administrative structures. The COVID-19 crisis of 2020 could work in both directions, i.e. reinforce the need to push through reforms or confirm that the system, as it is, does perform rather well compared to reform hares such as the UK.”

Find the full paper here.