Dividing_Line_Between_Public_and_Private_Sector

INTRODUCTION The divide between the public and private sectors are slowly becoming blurred according to the theory of contemporary management. The aim of this paper is to critically discuss the diving line between the two sectors. During the 1950’s, the public sector started to expand and undertake everyday jobs that would have normally been private. As a result government also began to take responsibility for activities that would have remained private. New Public management (NPM) is based on the philosophy of generic management. During the apartheid era, the South African Public Service was isolated and remained unaware of the new international developments with regards to public sector reforms. It is often argued that the study of Public Administration is based on the presumption that there is a major variation between the public and private management. However according to Stoker: Governance refers to the development of governing styles in which boundaries between and within the public and private sectors have become blurred… Governance is more than a new set of managerial tools; it is also about more than achieving greater efficiency in the production of public services (Stoker, 1998). BLURRING THE PUBLIC AND PRIVATE DIVIDE Governance describes the management of a network of public and private providers as public services. Traditional distinction between the public and private sectors has become blurred due to governance thinking about developing synergy between the multitude sectors (Wettenhall & Thynne, 2004). The blending of the public sector and the private sector resources brings about a new formal partnership between both the public and private sectors. Many private organizations retain the services of public workers. On the other hand, the goals of both sectors remain traditionally distinctive. Private companies have more defined goals that entail the need to make a profit while public organizations are driven by ethical values. There are many state owned enterprises that are run like regular private companies such as ESKOM and TELKOM, which provide services for the public but, are regarded as parastatals because they are business organizations with the aim of making a profit for the state. NPM reforms shift the emphasis from the Traditional Public Administration to a New Public Administration driven by a combination of economic, social, political and technological factors. It is thus essential to realize the importance of good governance and to recognize the interconnected role played by both the public sector and the private sector in society. Governance refers to the governing styles in which the boundaries between the public and private sectors have become blurred. Governance is ultimately concerned with creating the condition for ordered rule and collective action (Stoker, 1998) TRADITIONAL PUBLIC MANAGEMENT It is stated that Traditional Public Management was the administrative tradition of Germany. The Traditional Public Administration model of Max Weber and Woodrow Wilson relied on comprehensive and hierarchical organizations governed by strong leaders. Industrial revolution and breakthroughs of modern economies was made possible through the development of modern bureaucracies. It was regarded as critical to the development of large scale public and private enterprises throughout the world. The public service was governed by precise rules and accountable to higher officials. Weber stressed control from top to bottom in the monocratic hierarchy. Although the public and private sectors were assumed to be separated in the traditional model, there was a slow movement towards each other. The objectives pursued by the public and private sector were becoming closely correlated such as the Service deliveries that may have been conceptualize as being public services were in fact being delivered via private companies. Many private organizations such as NGO’s are using government financing or public funding are being used for private enterprises. The Traditional Public Management was challenged which resulted in the modernization of public sector management in counties such as England, Australia and New Zealand. A new model for public sector management emerged called New Public Management or Contemporary Public management. The traditional model falls short of being able to coherently address an increasing number of issues that reflect today such as the need for flexibility, the interactions between politics and policies and new forms of accountability (Bourgon, 2007). CONTEMPORARY PUBLIC MANAGEMENT It was during the 1980’s and 1990’s, that a New Public Management (NPM) evolved to modernize the public sector. NPM is inspired by the values and concepts used by the private sectors. NPM is based on a set of thoughts; the first being the use of private sector management and secondly, the use of market mechanisms such as privatization. Hood (1991) sees NPM as a marriage of opposites. He believed there were 2 different streams of ideas. The first stream was the “new institutional economics” helped to generate a set of administrative reform doctrines based on the ideas of contestability and a close concentration of incentive structures. The other partner was the latest of a set of successive waves of business type “managerialism” in the public sector, helped generate a set of administrative reform doctrines based on the professional management. The collaboration between the public and private sectors is seen as a technique of creating a more effective and efficient public services than what could have been achieved through a traditional hierarchy management. Privatisation substitutes public ownership with private ownership and introduces private sector management ideas into the public sector. One of the features of New Public Management is a stress on private sector styles of management practice. New Public Management had a greater emphasis on private sector style of management. Part of this blurring of this divide between the public and private sectors entailed the move away from the closed Weberian model towards the contract system according to (Hood, 1991). The objectives of both the private sectors and public sectors were becoming interconnected. However the degree to which New Public Management reforms have replaced the traditional Public Administration in practice has been questioned. The recent FIFA World Cup which took place in South Africa combined the services of both government and private companies. The main aim of both the sectors was to enhance worldwide credibility for South Africa and the opportunity to celebrate Africa as a continent rich in culture and diversity. Yet the motivation driven by both sectors are distinctly different. Government was concerned with delivering the necessary infrastructure and services for managing the event and creating employment for citizens. While private companies were more interested in profit-making, increasing market value of their shares and creating a global recognition for their companies. NPM changes centralized planning procedures to decentralization and privatization. It aims to achieve accountability through the measurement. This meant giving line managers greater managerial authority and responsibility. Hood (1991) describes this perspective as hands-on professional management. Another common feature of NPM is corporatisation which entails converting departments into free standing enterprises or departments. There is a shift towards disaggregated units in the public sector entails the breaking up of large entities into corporatized units around products funded separately and engaging with each other on an arm’s length basis (Hood, 1991). However, the main criticism of privatisation is the lack of state control in the production of public services. ANC Youth League president Julius Malema has called for the South African government to nationalize all mines. He believes that the state should control 60% of new mines. However the nationalization of mines could prove disastrous of South Africa. In the 1970’s, Zambia nationalized its copper mines. The Zambian government found it difficult to manage the mines and collaborated with the private company to help manage the mines. The government begun to bore losses while the private companies continued to receive a profit. The NPM movement has thus come under increasing criticism because of its use of a market paradigm and the business model to governance introduces privatised individual vales in place of community values. CONCLUSION One of the key components of NPM has been the decentralization of authority and responsibility to managers. While a framework for decentralization has been put in place, in practice, there has not been as much as is normally presumed. The ideologically driven NPM framework has been the major reason for the creation of public entities. Although the divide between the public and private sectors are slowly being eroded with the introduction of privatization, it is important to realize that both the public and private sectors have distantly different objectives and motivation. The public sectors will aim to improve the quality of life for its citizens while the sole purpose of private sector is to generate a profit. REFERENCES Bourgon, J. 2007. Responsive, responsible and respected government towards a New Public Administration Theory. International Review of Administrative Science. 73 (1): 5 - 56. Cameron, R. 2009. New Public Management Reforms in the South African Public Service: 1999-2008. UCT Hood, C. 1991. A Public Administration for All Seasons. Public Administration. 69 (1): 3- 19 Stoker, G. 1998. Governance as a Theory. International Social Science Journal, Vol. 50, No.1. 19 - 28. Van der Waldt, G & Du Toit, DFP. 2007. Managing For Excellence in the Public Sector. Cape Town: Juta and Co, LTD.