Latvia should continue efforts to establish a small and effective state administration. Work should be continued towards measures aimed at preventing the creation of unnecessary posts for the realization of political projects and strive to make the use of the state budget and human resources more effective, believes Finance Ministry.
On Tuesday, 1 March, officials of Finance Ministry discussed the report regarding the single remuneration system in state administration and proposals for making the system more effective.
After analysing the growth of salaries in the private and government sector it was concluded that the government sector has experienced a more rapid growth of salaries than the private sector in recent years. In Q3 2015, average gross wages in the private sector had grown by 8.3% in comparison with the same period of the previous year (+6.7 in the government sector). Average wages in the private sector are almost a quarter higher than they were before the crisis. Growth rise in the government sector, on the other hand, is 4.9%. The increase was also affected by the raising of minimum wages.
A look at Latvia’s place among EU countries and Baltic States context based on the number of people employed in state administration shows that the proportion of people employed in the government sector in Latvia is 2.9% of the population, 3.4% in Estonia and 2.8% in Lithuania. In countries like France and Spain, on the other hand, is 8.5% and 6.4% respectively. The number of people employed in state administration, including defence and social protection, has decreased to 6.6%, which is below the total proportion of employed people across the EU.
The proportion of people employed in state administration has been experiencing a dramatic decline since 2008. In total, there were 58,000 people employed in state budget institutions in 2015.
A reduction in the number of employed people was noted during the economic crisis. Authorities also closely follow the employment amplitude in order to prevent an increase. Measures, including new regulations, political planning documents and sharing of duties, are taken by politicians to reduce the need for more employees. Under influence of the economic crisis, the number of people employed in the government sector has declined by 32%.
In regards to future measures, the ministry believes it is necessary to continue efforts to establish a small and effective state administration and primarily focus on effective use of budget and human resources. At the same time, the ministry points to the need to continue measures launched in 2015 and aimed at preventing the creation of unnecessary posts in state administration in order to conserve budget and human resources.
Considering that wages of high-rank officials and experts working in the government sector have lost competitiveness in comparison with wages in the private sector, the matter regarding the possible increase of wages of high-rank officials should be viewed in the near future.
In relation to vacant spots in state administration, the government should assess tendencies developing in related areas of employment.