Exclusive: Israel’s cronyism drags on economy, study suggests

The survey, the first IDI survey to examine economic perceptions, found that the public holds largely negative views on the country’s civil service.

May 22, 2016 19:13
3 minute read.
THE TEL AVIV skyline; the area around the city is home to many Israeli start-ups

THE TEL AVIV skyline. (photo credit: REUTERS)


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Israelis see a high degree of cronyism and corruption in the public sector, according to a recent survey conducted by the Israel Democracy Institute.

That finding was just one of several factors contributing to ineffective performance in that area, and could be linked to lackluster economic growth more broadly.

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The survey, the first by IDI to examine economic perceptions, found that the public holds largely negative views of the country’s civil service. Most participants gave low marks to the civil services for overall performance (85.1% ranked them very poor to average), with similar views on efficiency (88.5%), transparency (88.5%) and professionalism (79.1%).

Strikingly, just 9.2% of respondents rated the civil services above average when asked about the degree of cronyism and favoritism, while some 11.9% ranked above average the government’s ability to attract the best talent. The contrasting percentages indicate that the vast majority of those surveyed perceive public sector job candidates needing personal ties, not good skills, to gain entry and advance in government bureaus.

The survey, which was prepared ahead of this week’s Eli Hurvitz Conference on Economy & Society, was conducted between March 29 and April 3. Conducted in Hebrew, Arabic and Russian, it recorded the views of 600 interviewees over the age of 18. It was weighted to produce a nationally representative sample, and had a maximum sampling error of plus or minus 4.1%.

Those results may have implications beyond mere frustration with bureaucracy.

According to IDI President Yohanan Plesner, international studies show a link between government effectiveness and GDP per capita (though it is not clear what the causal connection is; a higher GDP could lead to a better public sector, or a better public sector to a higher GDP, or some other attribute could lead to both).

Israel, he says, ranks 21st among 34 advanced countries on the scale of effective public services.

A related problem, he adds, is that the government system is very unstable, with short periods between elections and regular ministerial shakeups that hinder long-term planning.

According to World Bank parameters of stability and effective political systems, Israel ranks only ahead of Turkey, with government here seen as less stable than those of Mexico, Greece and Spain, he adds.

The study’s timing, amid the Defense Ministry shuffle, is coincidental, but illustrative, Plesner says.

In this unstable political context, the IDI has some recommendations on how to make government work better, though they focus mostly on ways to attract better talent to government jobs, and do not include other structural issues such as inter-ministerial communication.

The study found a negative correlation between the level of effectiveness and the degree of political appointments in government.

In other words, the more power a minister has to appoint his or her professional staff, the less likely that staff will be a professional one.

“The more you rely on political appointments, the less effective the public service is, and that is extremely telling because it’s a very strong correlation,” Plesner said.

Relying on a professional, fair hiring process for most positions would result in more qualified workers, more stability, and less cronyism.

Countries that focus on talent, merit and results – as opposed to tenure – in hiring and promoting bureaucrats, also do better, he added. Making the process more open to less-connected, but talented candidates, as well as enhancing cross-ministry promotion, would also help.

The study also revealed the more budgetary demands a bureau has, the less effective it is. This means instead of placing the onus on the Finance Ministry to specify in minute detail how a budget should be spent, the ministry should allow offices flexibility to allocate resources as they see fit.

Governments who outsource services to contractors are also more effective.

“There’s also a whole cluster of issues that needs to be further investigated which this [survey] did not address,” Plesner said. “The quality of the regulatory apparatus, the authority between ministries, who gets to decide what, general accountants, the legal advisers, and so forth.”

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