Economic growth provided the opportunity to fund the welfare state and the
adoption of Keynesian demand management techniques viewed public expend-
iture as a tool to maintain economic stability. However, as economic and political
circumstances shifted from the mid- 1970 s onwards, the size and scope of the public
sector and the management of the workforce was increasingly questioned.
The emergence of the new public management (NPM) has become associated
with a radical shift in the management of the public sector workforce.
23.4 New Public Management and the
Employment Relationship
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New Public Management has been associated with a number of pressures that have
been a catalyst for public sector reform. First,Wscal and social pressures on public
services have arisen from the ageing of the population and advances in medical
technology in OECD countries. Not only has demand for welfare services increased
but there has been increased criticism of the quality of public service provision and
the failure to meet citizens’ expectations. Governments were confronted with the
diYcult challenge of ‘squaring the circle’ of higher demand in a context ofWscal
constraint (Foster and Plowden 1996 ).
Second, in some countries during the 1980 s, notably the UK, public service
reform was underpinned by a ideological commitment to ‘roll back the frontiers’ of
the state. Such an approach drew heavily on the assumptions underpinning public
choice theory with its view of employees as ‘knaves’ working in ineYcient state
bureaucracies. Other pioneers of the NPM, especially New Zealand and Australia,
with Labour governments ostensibly opposed to the New Right agenda, also
vigorously implemented the NPM (Foster and Plowden 1996 : 43 ). President
Clinton was also an enthusiastic advocate of some aspects of the NPM.
This combination of pressures gave rise to a set of policy prescriptions labeled
the New Public Management. Hood ( 1991 ) suggests that the term comprises the
following practices:
. Hands-on professional management in the public sector
. Private sector styles of management
. Disaggregation of units
. Greater competition in service provision
. Tighter and more eYcient use of resources
. Explicit standards and measures of performance
. Emphasis on output controls.
hrm and the new public management 475