Global Financial Crisis, Environmental Turbulence, and Public Service Institutions

Defined as a sudden and unpredictable change in the economic, political, social, legal, technological and physical environment, environmental turbulence or volatility adversely affects organizational structures and the performance of public service institutions (Boyne and Meier: 2009, 799) . Turbulence has its roots in the rapidity of change as well as the degree of interdependence among organizations (White, Crino and Kedia: 1984, 98). Turbulent environments are dynamic and prone to unforeseen changes (Emergy and Trist: 1965, 26-31) . Some of the factors that cause turbulence are sudden changes in economic, social and demographic conditions, actors, government policies, and technology (Perrott: 2009, 45) . Turbulence is significant for understanding organizational change in that it affects the goals and structures of organizations, their financial resources, target populations as well as internal and external relationships (Mulroy and Tamburo: 2004, 113) . The purpose of this report is to assess the impact of the global financial crisis in 2007-8 on public service institutions in Canada, Australia, the United Kingdom (UK), Singapore, South Africa, Trinidad and Tobago, and India. It is a survey of actual and planned changes in public service institutions between 2008 and 2011, although some changes will take place beyond 2011. It is argued that the sudden and unexpected global financial crisis, coupled with softening economic growth, created a credit crunch and liquidity trap by forcing financial institutions to hold on to their cash instead of lending to each other as well as to individual and business borrowers. National governments have resorted to Keynesian reflationary fiscal policy measures to ensure that the twin difficulties of the liquidity trap and economic growth are overcome in the short term. They have mainly been concerned with the fact that turmoil in the financial sector could spill over into the industrial sector and might result in an economic depression, akin to what happened in 1929 However, reflationary fiscal measures are planned to be temporary. Governments expect that tax revenues, coupled with spending cuts in public service institutions, will be enough to balance their budgets by phasing out spending gradually after 2011. In that sense, this u-turn in fiscal policy is seen as rather a short-term aberration within a broader neoliberal economic policy context in general. Such a perception has serious adverse implications for public service institutions, since economic growth after recovery will not be as high as before the crisis in most cases and balanced budgets will require more cuts in public spending. While the first part briefly defines key concepts and introduces the method and sources used in the study, the second section deals with the broader impact of the global financial crisis on national economies and fiscal policies in the concerned cases. The third part summarizes measures taken by respective governments to deal with the crisis. The fourth part assesses findings before stating conclusions in the fifth and final section.download