Public Sector Financial and Personnel Management during Cutbacks: Looking back at the Literature of the 1970s and 1980s

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Ringa Raudla Tiina Randma-Liiv Riin Savi


Given that the current era of austerity in the public sector is likely to bring about changes in the management practices of the public sector, it is worth taking a look back at the literature of the previous era of major cutbacks. This article examines what kind of changes to public sector financial and personnel management were proposed and adopted during the era of retrenchment in the 1970s and 1980s. The review of the literature shows that the previous cutback era triggered a search for increased flexibility and rationality both in financial management and personnel management to enable optimal cutback decisions and their implementation. It also indicates that the management of the finances and human resources during scarcity requires very difficult trade-offs.

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