Three years ago, the then head of the State Chancellery, Janis Citkovskis, came to the Saeima, literally shedding fiery tears: salaries in public administration are miserable, the reward system is unclear, and turnover is high... In general, this cannot continue — a radical reform is needed.
Namely: instead of various tricks like cash prizes, bonuses, and awards, a system of adequate salaries should be introduced — so that everything is clear and transparent. And most importantly — competitive. Citkovskis even stated the maximum goal: to achieve that the remuneration in public service amounts to 80% of the remuneration for a similar position in the private sector.
And Life in Chocolate!
Ministers, and then members of the Saeima, received the proposed reform "with enthusiasm," especially considering that the highest officials themselves ended up, to put it mildly, in a favorable position as a result of the reform. After all, the reform provided not only for a sharp increase in the basic salaries of ministers, parliamentary secretaries, Saeima deputies, and heads of independent public administration structures but also for annual indexing — depending on the growth of the average salary in the country.
And the reform was given the green light. In fact, for three years now, a new, "reformed" system of remuneration has been in place in public administration. And what are the results of this reform? The State Control audit was supposed to answer this question, with its findings presented to the public last week.
But Bonuses and Prizes Have Not Disappeared
It should be noted that even without the audit, it was known that the reform, contrary to the assurances of the now former head of the State Chancellery Citkovskis, did not "eliminate" cash prizes, bonuses, or awards in public administration. At the same time, basic salaries have indeed risen sharply and not only "caught up" with salaries in the private sector but, in many cases, "surpassed" salaries in the private sector.
It is even difficult to find a position in public administration where the salary is lower than for a similar position in the private sector. Moreover, public administration employees also have other bonuses — health insurance, opportunities for training (upgrading) qualifications. And we are not even talking about the management level of state and municipal capital companies (that is, state and municipal enterprises) — these managers earn monthly amounts that most top managers in the private sector can only dream of!
In 2022 alone, 626 thousand euros were spent on bonuses and cash prizes in ministries and the State Chancellery, a year later — already 2.5 million, and for 10 months of the past year — 1.6 million euros. And this is despite the fact that the state is in debt, with this year's budget having a deficit of 2 billion euros.
But let's return to the results of the State Control audit. What did the audit reveal?
The Goals of the Reform Have Not Been Achieved!
"The State Control audit shows that the legal framework for the reform has been established, including the procedure for determining monthly salaries. However, the goals of the reform have not been achieved in practice. Despite the fact that overall compensation expenses have significantly increased, salary inequality between departments and institutions persists. Employee salaries are still determined by historically established basic funding, rather than the value of the position and the content of the work," it is stated in the preface to the published audit.
The reform of the public administration reward system, initiated in 2022, has not achieved its stated goal — to ensure equal and competitive remuneration.
The increase in expenses has not reduced the inequality of compensation funds between institutions. For 2023-2025, 55.4 million euros have been allocated for the implementation of the reform, but public administration still has "rich" and "poor" departments and institutions.
For the same or equivalent positions, monthly salaries in different institutions can still vary significantly. Historically established basic funding prevails over the value of the position.
The variable part of the remuneration (bonuses and cash awards) is used regularly and systematically in a number of institutions, rather than as an exceptional motivational tool, effectively replacing an increase in monthly salary.
The Problem Is in the Distribution of Money
"The results of the audit show that the problem is not in the amount of available money for public administration as a whole, but in its distribution. As long as salaries are determined by historically established basic funding, equal pay for equal work in public administration is impossible. Moreover, the audit report is not only about numbers but also about values — fairness and respectful treatment of everyone," states Gatis Litvins, a member of the State Control Council.
For the same or very similar positions with comparable content and responsibility, pay can differ between institutions by up to 30%.
Since it is necessary to find funds for the defense of the state, the Cabinet of Ministers has decided to significantly limit the compensation fund in the 2025 budget, establishing that the increase should not exceed 2.6%. A number of exceptions have been established, primarily in the area of defense and internal security of the country.
Review the Compensation Fund
"The solution is to review the compensation fund based on zero-based budgeting principles — recalculating the basic funding in institutions according to the structure of positions and the number of job positions, and linking it to the target salary level. This would help identify excess funding in 'rich' institutions and direct it to institutions with structural deficits, ensuring a more equal and fair salary for equivalent work," advises Gatis Litvins.
If most employees receive bonuses for their contributions to achieving strategic goals or cash awards, then in fact, it compensates for insufficient monthly salaries rather than rewarding outstanding work results.
Bonuses of up to 75% of the monthly salary are awarded based on annual evaluations. The amount of the bonus is determined by the institution according to the evaluation of the employee and the available funding in the institution. The audit analyzed the results of work performance evaluations. It was found that in many institutions, the highest rating of "exceeds requirements" was assigned to more than half of the employees.
The audit concluded that such a practice undermines the credibility of the performance evaluation system and its connection to actual work results. In institutions, an average of 72% of employees receive bonuses annually. 41% of bonus recipients receive them at the maximum amount, and 47% receive them at 65-74% of their monthly salary.
Is It Time to Cut?
Thus, the auditors' conclusions are unequivocal: the reform was not effective, was not fair, and consequently — did not achieve the stated goals.
Let us add from ourselves what the auditors "omitted" since it did not align with the goals of the audit. Namely: in public administration, there is still duplication of functions, and there has long been a need to make the bureaucracy more compact and at the same time — more efficient.
It is clear that the growth of salaries in public administration should be stopped: at least for a year or two — until real economic growth begins and until the "tradition" of continuing to increase debts is halted.
