A welcome shake-up for the civil service

One year ago, a new collective wage agreement was signed with public-sector doctors. I can’t remember a signed agreement ever generating as much opposition from union members as this one did. But according to data published by the Israel Medical Association last week, the deal has been a whopping success – if your yardstick is the welfare of the health system as a whole rather than that of a few senior doctors.

The agreement was controversial for several reasons. What made it unique, however, was that instead of giving all union members the same raise in percentage terms, it awarded differential raises: Doctors working in either specialties or geographic regions that were suffering a shortage received the highest increments. And it turns out that medicine is no exception to the laws of economics; doctors respond to financial incentives just like anyone else.

In just one year, outlying areas of the country recruited 184 new doctors, the IMA reported. For some hospitals, the increase was dramatic: The number of residents at Safed’s Rebecca Sieff Hospital rose 39 percent; Poriya Hospital in Tiberias saw a 61 percent jump.

The differential raises also attracted 430 new doctors to specialties with shortages. There’s still a shortage of anesthesiologists, the IMA warned. But Beersheba’s Soroka Medical Center was able to reopen an internal medicine ward it had closed for lack of internists, and several hospitals filled vacant neonatology slots.

All this was possible thanks to a rare willingness on the part of three people to sacrifice short-term personal interests for the long-term greater good. Finance Minister Yuval Steinitz and Prime Minister Benjamin Netanyahu had to endure being lambasted by the media and the public throughout a five-month doctors’ strike, the longest in Israel’s history. And IMA President Dr. Leonid Eidelman had to endure opposition and vilification from both senior doctors at hospitals in the center of the country and young residents at those same hospitals, all outraged that, having secured jobs in the choicest locations, they wouldn’t also be getting the highest raises.
 
One year later, many of these doctors are still griping. But the country as a whole has clearly benefited.

Nor is medicine the only entrenched bureaucracy to get a shake-up lately. Though Ariel University Center hasn’t yet become a full university, it has already forced some new thinking into the higher education bureaucracy.

Ariel’s salutary impact was largely thanks to an accident of geography: Because it is located in the West Bank, it isn’t subject to the Council for Higher Education like all other Israeli colleges are. Instead, it’s subject to a parallel body known as the Council for Higher Education in Judea and Samaria.

Five years ago, when the college first applied for university status, the CHE was vehemently opposed: It is dominated by the existing universities, who always oppose new competition. But because the CHE-JS is independent, it didn’t have to accept that answer. Instead, it created a completely new category – the university center, which is more than a college but less than a university – and conferred that status on Ariel for five years, along with a promise that if the college met certain benchmarks, it would then be upgraded to a full university.

At the time, the academic establishment was openly contemptuous: Who ever heard of a “university center”? But within a few years, the CHE had become so enamored of the idea that it commissioned an outside consultant, New York University’s Institute for Higher Education Policy, to help it create a new funding model that would enable the establishment of many university centers. It now aims to inaugurate the new model in 2013.

The CHE concluded that under the old, two-tier model, applied research was falling through the cracks, since colleges focused on teaching and universities on theoretical research. But industry, government and the defense establishment all need applied research. And that despised new creature, the “university center,” could fill the gap nicely, it decided.

Once again, it turns out that government bureaucracies are no exception to the laws of economics: The moment you create competition, you allow new ideas to enter the system – which is precisely why Ariel ought to be granted the upgraded status a blue-ribbon academic advisory panel has decided it deserves.
 
These two principles – competition and differential pay – desperately need to be introduced in the rest of the civil service as well. School principals, for instance, should be given much more autonomy, enabling them to try out innovative educational strategies that, if successful, could be adopted by other schools. This necessarily includes authority to hire and fire teachers, since no innovation is possible if the staff balks. And teachers themselves should be offered higher pay for teaching in distressed neighborhoods or towns, to encourage some of the best and the brightest to tackle this challenge.

The ports, where an initiative to create competition by allowing privately-owned wharfs alongside state-owned ones has long been stalled, are another prime example. The first private port, Israel Shipyards, was finally granted a license in 2007, and four years later, its market share had jumped to 20 percent, putting it ahead of its state-owned rival, Haifa Port. It achieved this result by offering flexible hours and lower prices – the kind of benefits that enable importers and exporters to lower prices to the consumer (assuming they aren’t themselves cartels). But proposals to introduce competition at Ashdod Port, the country’s largest, have so far gone nowhere.

Turning competition and differential pay into public-sector norms won’t be easy; the Histadrut labor federation has been fighting such reforms with all its might. But the long-term benefits to the country are worth the short-term price of massive strikes. All that’s needed is a government with the courage the wage the fight.

The writer is a journalist and commentator.