**Future reform efforts should begin with an in-depth study of previous reform efforts and the reasons for their lack of success** . To identify the obstacles to reform, it is important to first recognize the stakeholders in the reform process, namely political parties, labor unions, donors, and public employees. The objectives of these actors must then be examined along with the way in which the reform proposals affect them. The final step involves an analysis of the decisionmaking process, including consensual negotiations, unilateral decision making, and dominant players. It would also be useful to reflect upon the intended role for the public sector in the country, whether it be as employer of last resort, social safety net, instrument of patronage and political cooptation, or service provider.

**Reforms to reduce the wage bill should disentangle the complex web of base salary, bonuses and allowances, and revise recruitment and promotion policies** . Workforce reduction can be carried out via layoffs, early retirement, or reduced recruitment. These initiatives may be accompanied by other measures aiming at rationalizing spending, including the modernization of processes and the pooling of certain functions. Clearly, these measures may have a negative impact on the morale and performance of public employees. Moreover, they could also be circumvented through complementary reforms. For example, mass promotions or increased allowances may make salary cuts ineffective in reducing the total wage bill. Similarly, an early retirement program will not reduce the wage bill if direct recruitment and automatic promotions continue. To determine the impact of any intervention, the interactions between the various aspects of performance management should be taken into account.<sup>21</sup>

**To prevent budget austerity measures from being overturned, these must be complemented with strategic management of staffing, budgets and competencies** . Strategic management is based on a sound understanding of skills requirements for different tasks and of current and desired supervision ratios in different ministries. Strategic management would allocate available resources to achieving the public sector’s objectives in terms of service provision. As it requires setting objectives and targets, strategic management would also facilitate the performance evaluation of individual employees and teams, and strengthen the link between performance on the one hand and compensation and promotion on the other.

**In countries with low-level administrative capacities, centralizing personnel and budgetary control is often a significant element of public management reform** . A centralized system for collecting information, evaluating performance, and setting compensation policies can facilitate the identification of fictitious jobs and the application of fiscal compliance in compensation. For Tunisia, strengthening centralized management means extending the INSAF system and accelerating the inclusion of all contract, temporary, regional, and SOE employees in the database.

**However, an examination of the advantages and disadvantages of centralizing performance management is recommended** . Some OECD countries have started replacing central controls by a more decentralized system that delegates certain recruitment, promotion, and compensation

> 21 To simplify the compensation system, the CGFP is currently designing a project to replace in-kind benefits by allowances that are then integrated in the base salary. In particular, the project would replace fuel vouchers by a bonus indexed to the fuel price. The project would also create a support fund to allow civil servants to buy their own car rather than request a service car.

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