Liz Fisher

Focusing on specific elements of the public sector delivery chain will allow finance professionals to make a difference.

Productivity, or more specifically, finding a way to halt the decline in productivity growth seen in recent years, is a national and international preoccupation.

Global productivity growth between 2015 and 2019 was only a third of the level achieved between 2000 and 2004.

This means lower economic growth and tax revenues have significant consequences for governments and the public sector.

As the economist Paul Krugman said, "Productivity isn’t everything, but, in the long run, it is almost everything."

A new report from ACCA argues the solution lies in productivity in the public sector because effective public services are essential to support the growth of the wider economy.

Public finances are under pressure – public debt globally reached 93 per cent of GDP in 2023, and in low-income countries, on average, a quarter of tax revenues are spent on debt interest payments.

The report, A Productive Approach: Finance Professionals Improving Productivity in the Public Sector, says improving productivity in the public sector is vital if governments worldwide aim to successfully address public budgets and services.

The biggest difference will come from delivering higher quality outputs without increasing inputs.

To deliver this, however, the way the public sector operates and how public services are delivered needs urgent change.

Wider lens

The report advocates "a transformational shift" for finance, moving away from a narrow focus on cost-cutting and cost control.

"Finance staff and leaders must work strategically at the heart of governments and the broader public sector to fully understand how productivity ambitions can be realised," it says.

Understanding and measuring productivity – or the efficiency with which an organisation converts its inputs into outputs – is even more complex in the public sector.

In the private sector, the prices of goods and services are readily available, allowing output to be measured. But in the public sector, there are often no prices and many outputs are provided free of charge at the point of delivery. The public sector is designed to achieve policy objectives as well as outputs, whose market value cannot be readily identified.

The report explores in detail how productivity in the public sector can be better assessed and measured. The report argues that the entire delivery chain needs to be examined to understand where and how finance teams can drive interventions. Useful case studies from public sector organisations around the world are used to demonstrate leading-edge thinking.

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It also looks at the three main elements of the public service delivery chain: budget efficiency, organisational productivity and the effectiveness of outputs and outcomes.

Accountancy and finance professionals, it says, are critically important to improving productivi