Reduce salaries to reduce administration

Goran Adamovski

Basically all of the former Yugoslavian countries are facing the problem of over-employed and inefficient public administration. Of course, this is not only a Balkan phenomenon, but many other non-transition states don’t know what to do with their public administration, so they create reforms that don’t really have a particular effect.
But in our region, a job in public administration is something that every child, even more so of his or her parents wish for, so the question is why is that so?
Economists are unanimous: because things in the whole society are upside down. In capitalism it is normal for private sector salaries to be higher than those for the public sector on average. It motivates the most skilled professionals to go into the private sector where economic and social progress has been made. The more thriving the private sector is – the stronger the economy. The stronger the economy, the better the standard of living of the citizens, the higher the pensions, the greater the competitiveness of the economy globally.
But as soon as the best staff in the country goes into the public sector, which means that those who are not the best and most competitive remain in the private economy, the economy begins to weaken due to poor quality of labor, the state is forced to address the chronic budget deficit problem with new ones borrowing and raising taxes on the already weak economic activity.
On the other hand, the increased number of public sector employees means that they are becoming a dominant social factor due to their numerous and relative financial security. Thus, public administration becomes an important political factor on which the decision-making of economic policy depends. Naturally, the political nomenclature is giving way to the public administration, giving it privileges because it thus wins the elections and no one cares that it is long-term unsustainable and leads to a state of collapse with unpredictable consequences.
Dejan Vukovic’s excellent analysis raises the question of whether it is at all possible to have quality and inexpensive administration. Not to mention the Estonian example, where the small Baltic state of 1.4 million has only 140 public administration employees, thanks to the introduction of e-government. Even in elections, voting in Estonia is done electronically.
If we agree that such a model is from and for some other time for our country, all we could do is turn to other measures. Unpopular and harsh measures.
This, above all, means demotivating the work of the public administration. If the average salary is legally restricted, for example up to 60-70 percent of that in the private sector for the same job and the same training, it might get quality staff to gather around creative economic sectors rather than the public sector where there is little or nothing at all to do.
Until things are said in the right name, we will go round in circles. Then we will find a variety of solutions that will neither seem logical nor solve things. The last such attempt is to transfer the lazy administration staff to the private sector.
Something has to change, everyone knows that, because if we go on like this we will soon end up with 200,000 executives in a country that currently has about 1.5 million citizens.
But who will work on finding a real solution to the problem? The government? Now, before elections? Or the opposition, if it comes to power? Well, in its ranks there are factions working day and night for their party to head the country precisely so that they can be employed in state institutions.
Solution? We will keep things as they are. When the whole system collapses, we will think of something. Or we’ll wait for Brussels to do that, as well.