Three conditions to truly reform the public administration

“CompoLab” is a blog on competitiveness and growth coordinated by Carlo Altomonte

Ten years ago, a study on Italy published by the International Monetary Fund demonstrated the correlation between administrative efficiency and productivity: according to the estimates, if the efficiency of the public administration (PA) matched that of the most advanced provinces, output per euro of labor cost would grow by up to +22% in the sectors most dependent on the PA (such as construction, but also transport, energy, telecommunications); value added per euro of labor cost could increase between +2% and +10%; for the average firm, output would rise by about +3%.

The study measured PA efficiency using an index (already employed in earlier research) based on ISTAT data on the output of civil justice (number of civil cases resolved and average processing times), healthcare (beds, hospitalizations, discharges), education (schooling rates and secondary school outcomes), and general administration (registry services, permits, licenses, administrative activities managed by local offices), all standardized by number of employees (public servants). According to this index, the most efficient territories were not those that “spent less,” but those that, with the same number of public employees, produced better public services, or, with the same level of services, employed fewer people.

The study’s data predated the large-scale hiring freeze in the PA and the erosion that subsequently affected the entire administrative system, weakening its ability to respond and deliver services. This did reduce public spending, but also its effectiveness.

The reform agenda for the PA stimulated by the National Recovery and Resilience Plan (PNRR, Piano Nazione di Ripresa e Resilienza, the Italian implementation of Next Generation EU) has finally changed course along two major lines of action.

The first concerns input: people. For the first time, PA staff are at the center of an investment program that covers not only the hiring of new personnel, but also the maintenance and renewal of skills among those already working in the administration. The recent “PA Decree” 2025 (DL 25/2025, converted into law on May 8, 2025) is only the latest in a series of measures introduced in recent years to restore functionality to the PA. The new rules introduce a comprehensive reform of the functioning of public administration, with measures on recruitment, organization, and structural strengthening, focusing on digitalization, reducing temporary contracts, and enhancing skills. During the law’s conversion, special attention was given to local authorities, with numerous provisions to reinforce the efficiency and operational capacity of territorial entities.

The second line of action is the simplification and streamlining of bureaucracy provided for by the PNRR: the first milestone was reached in December 2024 with the simplification of the first 200 procedures, while by June 2026 a further 400 are to be streamlined, identified through consultations with major trade associations in key sectors and through a traveling initiative, “Let’s make Italy simple,” aimed at gathering local input on the issue.

Will this program be enough to bring the entire Italian PA to the frontier of efficiency?

Yes, if three fundamental conditions are met.

• Regulatory consistency and stability: for reforms to produce lasting effects, a stable and coherent regulatory framework is essential. The reforms on recruitment procedures and the public procurement code are positive, given the flexibility they introduce, but caution is needed. The more unstable the regulatory framework, the slower operators move, disoriented by shifting rules. For this reason, reforms must be followed by a period of regulatory continuity.

• “Situated” programs, i.e. aligned with the different policy areas (healthcare, education, justice, municipal services): the Public Administration as such is an abstraction. What exists is a complex and diverse system of public institutions, each with its own problems and priorities: what works in healthcare may not work in justice or schools. While reforms must inevitably be systemic and erga omnes, change programs must instead be “situated,” adapted to specific contexts with tools suited to each sector. In healthcare, for example, the great challenge is technology, which can revolutionize the efficiency and effectiveness of care. In education, by contrast, priorities lie in managing the teaching workforce and redesigning the student service experience to make schools more inclusive and effective. In welfare, governance must connect the silos of health, municipal, and social security services. A one-size-fits-all approach risks failure: what is needed are tailored and differentiated policies, built through dialogue with operators and stakeholders in each sector.

• Managerial skills: even with adequate resources and regulations, the real difference comes from the people leading the administrations. The recent emphasis on leadership skills among senior civil servants is welcome, but management must not be forgotten. Public managers need solid skills to translate policy objectives into concrete actions, manage organizational change, and assess results in order to adjust course. Managerial training in the PA cannot be occasional: it must become systematic, to build a leadership class capable of steering the public machine in service of the country’s competitiveness.

In conclusion, investing in an effective system of services and efficient administrative infrastructures is more than a basic condition for national competitiveness: it is a genuine driver of development, a vehicle of social cohesion, and an indispensable ingredient to sustain the green and technological transitions. The PNRR has provided an unprecedented window to invest massively in this complex program. And after that?

Once the extraordinary resources have been spent and with renewed pressure to control public debt, the risk that this season of investment in administrative reform will fade away is real. It is therefore essential to work soon on a plan to capitalize on this rich and complex experience, ensuring it does not remain an isolated phase but becomes a new, sustainable, and lasting way of doing public administration, serving the country’s economic and social development.