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Why Romania fails to join OECD: criteria that it does not meet and what to do

de Victor Bratu 20.2.2017

Romania’s accession to the OECD is a major goal of the Romanian foreign policy since 2004.

After 7 governments at Victoria Palace and 13 years since establishing this objective, during which the OECD has received new members 2 times (2004 and 2012), Romania is still waiting for a favourable decision.

According to an OECD report issued in December 2016, the wait seems to be lasting and does not dependent primarily on the consensus of the organization members, but Romania itself, which has significant shortcomings in meeting the accession criteria.

Monitored areas: what does not work

Once a country announces its intention to join the organization, OECD initiates a monitoring process of the candidate to decide whether comply with a set of common rules.

The latest OECD report, issued in December 2016, indicates that the organisation monitors the following five areas:

  • centre of government;
  • strategic human resources management;
  • budgetary governance;
  • open government;
  • digital government.

Below, the problems identified by the OECD on each of the five fields:

1 – Centre of government – reforms must be undertaken and rooted in reality

According to the OECD definition, the Centre of government (CoG) is the body that provides direct support and advice to the Romanian prime minister and the Government overall. From a traditional administrative position, the CoG plays in many OECD member countries an active role in the development and coordination of the public policy, including strategic planning and supervision, cross-departmental coordination.

In Romania, CoG is based on two institutional pillars:

  • General Secretariat of the Government, which primarily focuses on support activities, including human resources, legal and economic reviews of policies and laws, government meeting coordinating
  • Prime Minister’s Chancellery primarily focuses on ministerial co-ordination, policy co-ordination, strategic foresight, and monitoring law implementation.

Below, a comparison in terms of organization, duties, and resources of CoG between Romania and OECD countries:

Clarifying the CoG’s mandate and strengthening its capacity in areas such as strategic planning and these efforts are often conceived or funded by external partners, not Romania, shows the OECD report.

In detail, it states:

  • Whereas substantial efforts are made to clarify institutional mandates, some inconsistencies or potential inefficiencies continue to exist in terms of responsibilities for strategic planning and foresight and the vision on long-term institutional or organisational development is lacking
  • The shift toward sustainable changes only if line ministries are capacitated in a similar way and if horizontal and vertical institutions embrace a common reform agenda.
  • At the global level, CoG responsibilities include elements such as vision, development of sophisticated mechanisms for public policy monitoring and evaluation. Romania’s CoG is not yet embracing all these principles but might be pressured to do so in the future.

OECD recommendations for Romania’s CoG are:

  • To further push for a coherent and complementary mandate across different subcomponents of the CoG
  • To ensure that a “shared language” is developed between the horizontal CoG structure and the vertical line ministries
  • To ensure appropriate institutional anchorage and ownership of punctual reforms within the CoG, to guarantee sustainability

2 – Governance Budget – Fiscal Responsibility Law must be respected

The budget is a central policy document of government, showing how it will prioritise and resource the achievement of its annual and multi-annual objectives. Budgetary governance refers to the processes, laws, structures and institutions in place for ensuring that the budgeting system meets its objectives in an effective, sustainable and enduring manner.

According to the OECD, the governments must ensure that budget data and documents are open, transparent and accessible. The graph below shows which data are available in the OECD countries and Romania.

According to the OECD, despite substantial efforts, specific challenges limit the budgetary governance in Romania. These challenges include:

  • Practical adherence to the Fiscal Responsibility Law. The Law and associated fiscal framework are sound, though not always applied effectively in practice.
  • Ownership in relation to ongoing reforms. Leadership and buy-in to ongoing reforms are reported to be limited and government employees are grappling with the fundamental reforms.
  • Meaningful parliamentary engagement in the budget process. Parliament does not have sufficient time, information or technical capacity to undertake effective budget oversight.
  • Participative debate on budgetary choices. There is limited meaningful public participation through the budget process.
  • Accessible and comprehensive budget documentation. Budget documents are not always accessible and reporting in relation to fiscal risks and long-term fiscal sustainability is limited.
  • Flexibility in resources and fiscal space. There is limited information on the scope for flexibility in the expenditure baseline and a need for greater fiscal space.

The OECD recommendations are:

  • Improve adherence to fiscal framework
  • Better understand flexibility within the expenditure baseline; supplement with a spending review to enhance fiscal space
  • Develop a stronger medium-term dimension in the budgeting process;
  • Improve timeliness and accessibility of budget documentation;
  • Ensure there is strong leadership and capacity building within government in relation to reforms;
  • Review parliamentary engagement in the budget process;
  • Expand fiscal reporting in areas such as fiscal risks and long-term fiscal sustainability

3 – Strategic Human Resources Management – National Agency of Civil Servants should not be subordinated to the Ministry of Development

Strategic Human Resources Management (HRM) looks at the processes and tools used to ensure that the capacities of the government workforce are aligned to the mission and core strategic objectives of the government. This means ensuring that the right people are working in the right places to effectively and efficiently achieve goals and objectives.

According to the OECD data, the central government in Romania employs 125,446 people (68,033 civil servants, 50,083 contract staff, and 7,330 public dignity positions). Civil servants have a high job security, are on different pay scales and undergo a rigorous recruitment process.

The National Agency of Civil Service (NACS) acts as central HR authority. In Romania, the hiring responsibility is split between NACS and ministries to an extent exceeding the average of the OECD member states, which generates suspicions about the clarity of the NACS’s role in the hiring process.

In Romania, the OECD notes, standardised and centralised administrative data for central public workforce are lacking. Romania collects much less data than almost all OECD countries, as the chart below shows

The management of recruitment of senior civil servants is a growing priority among most OECD countries and Romania’s human resources practices for this category is weaker than the OECD average, as the chart below shows.

OECD lists the following challenges that block the implementation of a proper human resources strategy:

  • Capacity. The National Agency of Civil Servants has recently adopted an ambitious reform strategy that would bring Romania in line with the common standards, but has limited capacity, authority and influence to implement such ambitious and broad reforms, especially given its current position under the Ministry of Regional Development and Public Administration
  • Data availability. Data on workforce management is very limited, which inhibits the ability to plan reforms and monitor progress
  • Pay discrepancy. The discrepancy in pay between ministries continues to be a top concern. Although laws have been passed to address this, ministries do not appear to be able to implement them

For an irreversible process of strategic human resource reform, OECD invites the Government to consider the following:

  • The correct institutional approach of development and implementation of new strategies regarding the civil servant
  • Capacity building for the NACS and the human resources offices in each ministry should be considered a priority
  • Exploring effective ways on how to address pay disparities over the medium- to long-term that are consistent with the budgetary frameworks and limitations
  • The focus on competency management is very good, but it must be assumed and applied as such in ministries and agencies

4 – Open government – Abuse of emergency ordinances, too many disconnected strategies

The open Government refers to a culture of governance that fosters democracy and inclusive growth, based on innovative and sustainable policies and practices inspired by the principles of transparency, accountability, and participation.

Below is a table of tools used in the open government.

According to the OECD report, Romania has to face the following challenges in this area:

  • Capacity. As in many OECD countries, capacity to design and implement open government policies would benefit from further strengthening. In addition, the capacity to evaluate the policy in this area is needed to demonstrate the value-added
  • Effective implementation. The frequent use of emergency ordinances for different policy areas affects the open government principles
  • Political will. The frequent changes in the government structures pose a challenge to the sustainability of open government reforms

Additionally, the OECD noted the multitude of national strategies which are not connected and, in some cases, are contradictory.

Consequently, the OECD advises the Romanian Government to place open government on its top priority list and recommends:

  • Ensuring administrative capacity to deliver transparency, accountability and commitment
  • Demonstrating the impact and relevance of open government policies
  • Defining the vision and uniting ongoing open government reform efforts, via a national open government strategy
  • Pursuing efforts to bring open government reforms to the Parliament, the justice system and the decentralized institutions

5 – Digital government – humanize digital relationship between state and citizens

Digital government refers to the use of digital technologies as an integrated part of governance. It relies on the government actors, non-governmental organisations, business environment, citizens to support the creation of – and access to – data, services and digital content.

Below, a graph illustrating Romania’s position on the map of digital governance.

Romania is currently trying to modernize its administration by implementing the National Strategy on Digital Agenda. The challenges of this approach, according to the OECD:

  • Governance and coordination. The newly created tool for coordinating at the government level the process described by the Digital Agenda is a right step, but the real challenges start now – involving all stakeholders, putting in place the right framework to ensure coordination and monitoring the implementation should be among the priorities
  • System thinking and culture of shared efforts. To overcome the fragmented efforts in place in several sectors of the Romanian public administration, a global vision, shared efforts and interoperability are needed
  • Citizen-centred approach. Important room for improvement exists in the area of digital service delivery. Romania needs to develop integrated platforms, humanize and upgrade the citizens’ experience when digitally interacting with the public administration

Brief history of Romania’s efforts to join OECD

The idea of joining the Organisation for Economic Co-operation and Development appeared during the Nastase government. The initiative becomes in 2004 a strategic objective of the Romanian foreign policy, but the Ministry of Foreign Affairs takes no significant steps in this regard.

The objective is maintained during Tariceanu, Boc and Ungureanu governments and later, during Ponta government, is even included in the PSD government program for 2013-2016.

After missing the target in 2012, when the OECD accepted new members, Romania reiterated its intention to join the organization by the letter of the Romanian Prime Minister Victor-Viorel Ponta to the OECD Secretary-General, Angel Gurria.

In June 2016, Prime Minister Ciolos goes to the OECD headquarters, where agrees with the Secretary-General on a co-operation program for receiving an invitation to join on the occasion of the next round of enlargement.

On 1 September 2016, the Government established the Inter-ministerial committee on development of cooperation with the OECD.

OECD: institution and benefits of membership

The OECD is an intergovernmental forum with the mission to identify, disseminate and evaluate the implementation of appropriate public policies to ensure sustainable economic growth and social stability.

OECD focuses its activities on four main directions:

  • (Re) establish confidence in markets by streamlining and levelling the mechanisms that make it function
  • Improve and strengthen national fiscal policies
  • Promote innovation in the economy and
  • Harness human capital by empowering the workforce. The OECD notably promotes the structural reforms, a social agenda focused on fighting inequalities and sustainable development.

The 35 members of the OECD (most of them Europeans – 23) are developed countries, representing over 70% of global production and trade and 90% of the global FDI.

Main benefits of Romania’s accession to OECD

  • Romania’s benefit of being member of the small club of the developed economies and the implicit recognition at global level of its status of functioning market economy and established democracy, with the impact on the country rating and attracting foreign investment;
  • Benefit of example. Romania’s favourable image to both the largest economies in the world (US, China, Japan, etc.) and the countries from our region having European aspirations (Republic of Moldova, Macedonia, Albania, Serbia, etc.);
  • The benefit of expertise. Needed information shared in the priority areas for Romania (government framework, legislative reform, anti-corruption, fiscal policy, transportation infrastructure, agriculture, education, etc.);
  • Benefit of Romania’s access to the economic decision-making tools and centres of the OECD and the opportunity to contribute to the global economic governance;
  • Benefit of assistance in the public policy area from the OECD members by periodic assessments of Romania’s policies in specific areas (peer review) and recommendations for their improvement.
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