How is a smaller government "therefore" more efficient? It's only "more efficient" if you can demonstrate that the people leaving were redundant.
ETA:
To my point, if I yank out the GPU from my desktop computer, it's not magically "more efficient" just because it has less hardware in there. You need to demonstrate that I can get comparable results without the GPU for that statement to make any sense. It's possible that it will be more efficient, but it's also possible that forcing all the graphics to be rendered on the CPU in addition to its normal tasks makes stuff less efficient, since the CPU isn't as optimized.
Obviously humans are not computers, it's an analogy and I'm not claiming it's a perfect one, but what bothers me about this entire thing is it's going to selection-bias towards workers who can't get jobs elsewhere. The people who can easily get higher-paying jobs in private industry are likely to take the seven months of free pay and then go get a cushy corporate job that pays better.
As such I think it's going to leave behind the people who can't get easily get another job, meaning that we will have fewer people and these people might not be the most efficient at doing it.