Government-managed public services today face both short-term and long-term challenges. Inefficiency and corruption of stretch their services along with limited resources in short term. The changing society's increasing demand for services is the long term challenge, since both fund and innovative services are not available from government departments. Government employees are unable to cope with the technological change. They are trying to render obsolete and traditional forms of service delivery. This is a major challenge for the government. The government service sectors like water, sanitation, energy, medical service etc are managed under financial and technological assistance from donors. The donors are not focusing on non-government organisation (NGO) and diverting their technology and funds due to corruption, inefficiency and orthodox mentality of bureaucracy and policy makers.
Unfortunately, the government is often not keen to provide many things, even some basic needs of life, guaranteed by the Constitution. The government has created Dhanmondi, Gulshan, Baridhara residential areas by evicting poor people and acquiring their land by paying them a very low price. It developed the land and sold it to the privileged class at a throwaway price. The government sells land for Tk 10 million, while the actual price is Tk 100 million per decimal. On the other hand, the donors, NGOs and service clubs are building shelters for poor people in remote areas in the country with funds raised from the donation of members and overseas donors. These organisations also have partnership with governments in different countries for such activities.
The governments of developing countries are now forced to explore and consider the role of independent providers, including the community sector, and social and private enterprises, in public service delivery as potential areas for reform.
There is a long history of social services from the dawn of civilisation. Many people are remembered for their philanthropy. Many services are hard to get from the government and are beyond the means of individuals. Philanthropists, ready to sacrifice personal wealth and time and comfort for the welfare of humanity, provide these services. Kind people take the seriously-ill people to hospital, help poor people construct their shattered homes after natural calamities or campaign for creating awareness to avoid disaster, or provide free-education to under-privileged people. The service to promote education, health care, environment awareness and other facilities to improve the life of the common people are supposed to be part of government services. The role of philanthropists complements basic state services and provide cutting-edge innovation in service development. One of the remarkable examples of philanthropy is Nowab of Dhaka in funding the water and sanitary system of Dhaka city.
Bangladesh Secretariat lies at the centre of the country's administrative activities. — FE Photo
There are many trusts, Wakf estates and foundations regulated under different laws of the countries for bridging the gap between availability of services from the governments and the demand of the citizens. The donors in the developed countries prefer non-government organisations and service clubs to deliver services to the needy because of allegations of corruption against a section in the governments and bureaucracies of developing countries.
The NGOs in Bangladesh are engaged in diverse activities-the same NGO may be involved in multiple areas of operation including education, health, family planning, environment, human rights, women and children welfare.
There is another alternative effort to provide services by the government, citizens, NGOs and private companies in an organised manner. It is public service mutualisation.
The rising social and economic need is there in an increasingly unequal society experiencing gradual withdrawal of the state from public service delivery and replacement of it by the private sector and other forms of association or mutuals.
Free market has tactics to achieve targets or the application of market mechanisms but the emerging big corporations also at one stage dominate the sector and hardly consider the need of the citizens. As a result, mutuals - with their inherent capacity, through democratic legitimation and voice to address the problems of accountability and power - are understood to be fruitful mechanisms in rendering public services in new ways.
This may also be termed social enterprise partly, because the concept is generally used to depict a wide range of very different organisations - including charities, service recipients, and private firms that are seeking to deliver social services. Generally, social enterprises refer to businesses that have a social purpose, rather than relating to any particular corporate form or style of ownership. The widely-discussed social business also refers to some kind of public service mutualisation.
This hybrid model - of being owned by 'members' who represent all 'stakeholder interests' - is the corporate form adopted for example by Gono Shastha Kendro or Grameen Bank in Bangladesh. These are owned by service recipients, salaried staffs, government etc. The model may be a particular mutual model in which employees have a stake along with one or more partner organisations. This can combine the improved productivity associated with stakeholders' ownership with additional expertise and capital investment.
The mutual enterprises give communities more power to decide on the policy, encouraging people to play an active role in their communities. It can successfully transfer power from central to the local government and support the mutuals to become more engaged in the delivery of public service.
The employees may oppose the idea due to fear of losing authority over the service. Indeed, staffs are extremely concerned it would not only lead to worse terms and conditions for themselves but also may be a stepping stone towards the eventual privatisation of a publicly-owned and publicly-governed essential emergency service. The system may be promoted with the ownership of government employees. Any employee-owned mutual will enable public sector employees to own and run the services they provide. These departments operating for health, local government and civil service staff, involved in plans for employee-led mutuals, may become independent operating units delivering public services gradually involving the other stakeholders like citizens, NGOs and private companies.
The development of mutuals will also empower the local community and help foster civic engagement and community volunteering. The service might also be cheaper as they will be free of expensive overhead costs of bureaucracy and reduce cost with improved efficiency due to involvement of service recepients and reduce corruption.
Mutuals take over services usually provided by the public sector and may allow public organisations to protect the delivery of key services in the context of significantly-reduced funding. It may inspire ownership, efficiency, effectiveness. The efficiency, effectiveness and equity ensure delivery of excellent services to meet the needs of the community. Public services are to be delivered against a complex social and political background of collaboration, partnership and accountability.
Funding can be focused on priority areas, with the community and voluntary sector providing other services. Mutuals might produce more tailored and effective services as service users/the community/employees might have a greater appreciation of need.
Mutuals are very successful in some countries. One study in 2010 reveals -there are mutuals at work - small and large - throughout the UK's social fabric. There are 4,800 independent cooperatives in the UK owned by more than 11 million members. Within the North East Region there are successful mutuals and social enterprises operating across a range of different sectors - including some which have been recognised with national social enterprise awards. Some of the better known examples nationally include the a consumer cooperative embracing banking, insurance, farming, retail, pharmacies, travel and funeral care.
The UK government has some remarkable mutual organisations with success to provide due services to the citizens. They are : (1) The London Partnership - a 'reducing multiple disadvantage' Community Interest Company (CIC) from a group comprising Department of Health, local authority, Primary Care Trust and NHS staff, (2) The Department of Health's London and SE Learning Disability Team forming a regional CIC, (3) Hammersmith and Fulham Children's Services, (4) a social enterprise for delivery of housing support services to vulnerable people in Mansfield, (5) The Lambeth Resource Centre supporting people with physical and sensory impairment, (6) NHS employees forming a social enterprise to provide services for homeless people in Leicester , (7) Teaching and administrative staff to set up a Trust to run Newton Rigg Agricultural College, Cumbria, (9) Borough of Kensington and Chelsea to examine different models of employee-led youth support services, (10) Integration of Community Health and Adult Social Services in Swindon into a cooperative, etc.
Some UK service providers have been converted to company, for example, Newcastle-based Eaga is one of the UK's leading providers of energy efficiency solutions, and the leading deliverer of UK government's fuel poverty programmes. It had a turnover of £3/4 billion in recent time. Established as an employee-owned social enterprise it has more recently floated on the stock exchange. However, 50 per cent of its share capital is still owned by its 4,500 employees, together with a stake in the company held by the Eaga Partnership Trust which is Eaga's largest single shareholder.
Mutual is not a theoretical concept only but also has global recognition. The International Cooperative Alliance, the apex organisation for cooperatives worldwide recognises the following seven governance principles for mutuals: i. Voluntary and Open Membership, ii. Democratic Member Control, iii. Member Economic Participation, iv. Autonomy and Independence, v. Education, Training and Information, vi. Cooperation among Cooperatives, vii. Concern for Community.
Mutuals can be governed and legally constituted in different ways. The majority of mutuals exist as companies limited by guarantee. Ownership of a mutual can be direct or indirect. Direct ownership means employees/service users/ the community purchase or given shares. Indirect ownership means the relevant equity is placed in trust or other type of mutual society, which acts on behalf of the employees/service users/ the community.
The social business is widely discussed due to involvement of Dr Yunus . Social enterprises operate strictly as mutuals or cooperatives. The trustees or directors of the company will normally be elected by members, but they will be publicly accountable for the pursuit of the company's objectives. Mutuals having values, principles and practices are particularly fruitful enablers of voice and participation, bringing stakeholders into the heart of accountable and open public service delivery.
It may be difficult to persuade public sector employees to form mutuals, if they offer no extra guarantee of stability or job security. Mutuals are subject to the same market pressures as normal businesses and may fail. While normal shareholders have the option of selling their shares, if they sense the business is failing, employees do not have this option.
Successful mutualisation of services requires energised, enthusiastic and capable staff to identify services that may be suitable for mutualisation themselves. It is important that the employee or a group of employees demonstrate entrepreneurial and business management skills and that they have given due consideration to the range of risks that exist in such a venture.
There are at least two potentially conflicting motivations behind the current proposals for this new approach to public service delivery. The first is to enhance employee commitment to their organisation and to its future, and hence to their work and to the quality of the goods and services they are providing. The other motivation is to cut costs so as to reduce public spending.
Private sector organisations should be speaking to their public sector clients to understand which areas they are considering to provide a mutual service and then being innovative.
Bangladesh is in a transition period handing over the responsibilities of production and distribution of services to the private sector. NGOs are also taking over some of the responsibilities in their own fashion with the help of foreign donors. These transfers are mostly donor-driven. The developed world is not only depending upon the private sector but also involving all stakeholders in the services sector. At this stage, Bangladesh needs legislative, policy and regulatory changes to pave the way for public service mutualisation taking the experience of developed world into consideration.
The writer is a Legal Economist and pursuing PhD in Open University, Malaysia.
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