When the head of government entrusted Dr. Enrico Bondi the office of extraordinary commissioner for the rationalization of public spending for the purchase of goods and services, it was immediately understood that this was the right time to proceed with an incisive intervention on the inefficiencies and waste of the Italian Company.
The Government also relied on the professional and managerial experience of the "axe man", as the extraordinary commissioner was called in Montedison, to implement the analysis of the expenses and costs of the Public Administration and start a consequent and robust cost reduction plan.
The measures of the government spending review can therefore be declined according to the following "basics" of a classic cost reduction plan:
Purchase effectiveness: the centralization of the purchases of goods and services in a single body increases the so-called "firepower" of the buyer in negotiations with suppliers to obtain lower prices, being able to count on higher purchase volumes.
This is the path followed both by large industrial groups which have set up, even in joint ventures, companies dedicated to the purchase of goods and services (from raw materials to semi-finished products, from utilities to information technology) and by small and medium-sized companies with special consortia o network contracts for joint purchases.
In this logic, Consip, the company of the Ministry of Economy that manages the rationalization of public administration purchases, will necessarily become the single "purchase center" of the Italian Company, eliminating the spread found between the lower cost of purchases made with the Consip procedures and those carried out by the administrations autonomously.
Organic efficiency: all organizations (corporate, bureaucratic or of opinion) tend to increase their structures beyond the physiological levels of functioning, with a push from the bottom up to encourage the growth of people from within. The method of organizational analysis of the zero base budget demonstrates that, in these cases, an intervention on the workforce with a decrease of up to 20% of managerial personnel and 10% of order personnel has no impact on the functional processes of the structures (so-called tall grass mowing in company parlance).
The application of the zero base budget also entails the blocking of hiring turnover until the implementation of the staff reduction plan and a subsequent hiring of new staff gradually and to a lesser extent than exits, delaying the trend as much as possible over time natural of the structures to create needs in order to be able to grow again.
The planned "staff cut" in the Public Administration of 20% of managerial personnel and 10% of non-managerial personnel, to be carried out with the pre-Fornero reform retirement requirements already matured or to be matured in the two-year mobility period, would respond to the zero methodology budget basis if they were carried out on actual service personnel, with the consequent cost savings, and not on mere organic plants.
Cost of labor: another area of intervention concerns the containment of labor costs in unitary terms by cooling or freezing wage dynamics on remuneration items such as: contractual increases, overtime, travel allowances, meal tickets, etc.
Among the measures of the spending review on this chapter, it should be emphasized that of the compulsory use of holidays and the prohibition of monetizing those not taken: in this way the double cost of paying wages on days worked, while they should have been holidays, is avoided, and to pay off unused vacation days because you work.
Overheads: among the items of expenditure on which to intervene, in addition to the classic ones such as consultancy, travel, paper consumption, mobile and landline telephony, hardware infrastructures, there are particolare noteworthy, for their emblematic value, are the reductions in paid seats on the boards of directors of public companies, the prohibition of paid sinecures in the form of consultancy positions for retired public employees, the 15% reduction in rents paid by the State (sometimes disproportionate, as noted by numerous journalistic investigations), the cost halved by 50% for the fleet of blue cars (with a desirable orientation for national car manufacturers and not for German manufacturers, like the previous government).
Running costs : between the interventions on operating costs include the outsourcing of cleaning services in schools with savings, after a make or buy analysis, of at least 25% and the homogenization of payroll systems in public administrations, with a cost reduction of the pay slip not less than 15%. But also part of the rationalization of operating expenses is the suppression of public companies which, for the vast majority of their business volumes, provide services to the Public Administration, to manage off-balance-sheet internal activities of the PA itself.
Organizational efficiencies: the unification of homogeneous organizational units to take advantage of possible synergies (the so-called "castling"), the concentration of activities of several entities into a single one (insourcing), the cancellation of expense centers are also part of the analytical methodology of a cost reduction plan considered non-essential or the closure of entities whose activities are not part of the core business (cutting of dry branches).
From this point of view, the measures adopted by the spending review are numerous and of different types: from the suppression of various companies and entities, including Isvap and Covip, merged into Ivarp, the only institute for the supervision of insurance and pension savings, to unification of the provinces or the establishment of metropolitan cities, the squeezing out of the small courts and peripheral prosecutors.
Just as in a company, to achieve the ambitious objectives of a plan, there must be a command team with a strong commitment and an operating structure equipped with the necessary leadership, also in the Italian company the government team and its leader must be given a clear and unequivocal mandate to proceed from Parliament and to guarantee effective collaboration, not only by the Public Administration, but also by the Regions and Local Authorities (everyone must row on the same boat and in the same direction).
If it was taken for granted that the cuts in position annuities envisaged by the spending review had the contrast of the defenders of now anachronistic privileged positions, found not only in the trade union and party caste, but also in the aggressive oligopolistic lobbies or in the very powerful professional corporations, they have aroused a some amazement, and alarm in some circles, the statements made by the President of Confindustria, hand in hand with the General Secretary of the CGIL, on the feared risk that these government measures cause a "social butchery".
Prof. Monti's words on Sunday 8 July at the economic conference in Aix en Provence are valid for all: taxes, and that it was time to affect public spending and state structures. But obviously I had misunderstood”.
Within a few weeks it will then be the turn of the provision on the financing of trade unions prepared by Prof. Amato and that of Prof. Giavazzi on the rationalization of public resources and loans granted to businesses. Congratulations!
