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Reforming the Civil Service in Ukraine: Are salaries the core issue?

Many reforms in Ukraine have been long-overdue or unsuccessful. Attempts to improve the public administration in the country have been a bit of both.
Enhancing the Civil Service will depend on structural reforms, as much as on better paychecks.

May 17, 2018 - Serhii Soroka - Articles and Commentary

Since its independence nearly all the governments of Ukraine have been reforming their ministries and other authorities. The result of such “reforms” has mostly been a mixture of returning to the starting point or worse. These “reforms” lacked either systemicity, consistency, or professionalism. As a consequence, at the beginning of 2014, Ukraine had a virtually destroyed and looted state apparatus that was incapable of ensuring the well-being of its citizens or protect itself.

Unfortunately, the issue of reforming public administration has never really become a priority for current and past governments. It has not been included in the list of government priorities in the medium-term plan of action.

The results of an evaluation of the reforms carried out at the end of 2017 made by the Democratic Initiatives Foundation are indicative of a frustrating lack of change. The process of improving bureaucracy and raising competence of officials was among the top five areas considered as being behind schedule. Experts assessed the reform of the civil service as a failed one.

Reforms, evaluation and wages

The public administration reform was launched on the first of May 2016, after the new law of Ukraine concerning the Civil Service entered into force. Along with the work on the new law on the Civil Service and the by-laws surrounding it, the Government worked on a wider Strategy of Public Administration Reform. Indeed, the reform of the civil service is an integral part of a more general revision of the public administration, along with a reform of the executive and a reform of administrative services including the system of public finances.

Finally, the Government’s Reform Strategy for 2016-2020 was approved by the Government on June 24, 2016. From the very beginning of the reform, civil servants have stressed that their ineffective work is due to low motivation and instability.

The problem of instability is partly solved by the new law on the Civil Service, laying out the principle of exclusively competitive selection for all civil service positions, political impartiality and protection of civil servants from non-motivated dismissals.

Concerning the problem of “low material motivation” of the civil servants, the Government consistently and in accordance with the requirements of the new law itself raises official salaries. Moreover, the relative number of Ukrainian civil servants and their labor costs relative to the GDP of the country and are already in line with average European indicators.

On the 25th of January 2018, the Government approved Resolution No. 24 “On the Structure of Salaries for Employees of State Authorities, Courts and Institutions of the Judicial System in 2018”. The resolution provides the coefficients for increasing salaries of certain groups and certain categories of civil servants. For example, the official salary of a specialist of a state body on the level of a district will be increased by 32 per cent from January 1, 2018. The head of a state body will have a salary increase of 38 per cent. Thus, from January 1, 2018, the base salary (without bonuses and incentive payments) of the head of a structural subdivision of a ministry would be some 25 thousand UAH (1000 US dollars per month).

Are these wages competitive with the overall labour market? According to the research done by the Center of Economic Strategies (CES), they are indeed for the employees at the lower level, but not really for the management and up. The situation is similar in most European countries. The civil service at the public level remains prestigious and more economically attractive than for top executives. 

The issue of accumulating bonuses by civil servants still remains unresolved. Typically, employee bonuses, both in the private and public sector, should be paid exclusively for effective, efficient and qualitative work.

The qualitative planning of their work should be a prerequisite for the remuneration of motivated and hard working civil servants. Recent changes by the Government have pointed to the implementation of this approach. A model procedure for conducting an assessment of the results of civil servants’ activities has been introduced. According to this procedure, all civil servants should be assigned between three and five tasks for all of 2018. An evaluation of their work is to be carried out during the year, and at the end of the year a general assessment of the achievements of every civil servant will take place. On its basis a decision is made regarding their bonus (excellent evaluation) or dismissal (negative assessment).

In Ukraine, fixed salaries received by employees amount to only 30 per cent with the rest being comprised of bonuses. This makes the worker too dependent on the goodwill of their boss. On the other hand, in most places of the country, civil servants’ bonuses amount to no more than 10-15 per cent of their entire salary.

Higher salaries equals higher efficiency?

Regarding the efficiency of civil servants, there are still many unresolved issues. The competitiveness of the state of Ukraine directly depends on the efficiency of state institutions.

According to the indicators of the Global Competitiveness Index from the years 2016-2017, Ukraine ranks 85th out of 138 countries. The low position of Ukraine in world competitiveness rankings is explained by the dire situation at the top of the state apparatus leading to insufficiently effective management of human resources in the civil service.

Meanwhile, among civil servants and politicians there is a false belief that the efficiency and quality of the work of employees directly depends on the level of their wages. “Give us a high salary and we will work efficiently” – this motivational formula simplifies the problem of reforming the civil service according to many officials. But high wages should be paid not for positions or competences, but for specific results.

The Berlin Institute for Advanced Studies recently conducted a study on employer and employee preferences. The results were similar to previous ones. For the entrepreneurs income was in first place, followed by working conditions in second, which one would expect should have great importance to employees. It turned out that the employees are of quite a different mind. In the first place, they prefer well-executed work. In second place – accurate knowledge of the objectives of the company or institution, and products or services that it provides. In third – attitude towards personal worries of employees. In fourth – a stable workplace. It is only on fifth place, we find good salary. Interestingly, good working conditions are only in ninth place.

How come the public service isn’t attractive enough for? Why did involving competent staff in the positions of reform specialists (PRS) turn out to be far from simple business? After all, at competitions for PRS positions there are 30 or more candidates for one place. Too often it has been the case that the professionalism and competence of candidates has not been taken into account. Valuable potential civil servants from outside the system are still wary of going to the state service because they understand that bureaucracy is still dominant.

Could it be argued that factors such as: Recognition of well-executed work, the precise knowledge of the goals and objectives of the institution, the focus on the personal well being of employees and upholding a stable workplace are the golden standard for public institutions and organizations in Ukraine?

Can we say that the civil service has overcome the domination of the bureaucracy or “foolish work processes”?

Can we argue that ministries and other central bodies have established and optimised work processes for: Analysing state policy and strategic planning, financial and economic analysis, assessing the impact of government initiatives on government policy documents?

Will government decisions be made solely on the basis of a well-conducted analysis and forecast their influence?

Now that the responsibility for fulfilling tasks and setting up key indicators lies with ministers, heads of state bodies and managers of units in ministries – will their own wages be directly linked to the successful implementation of said key indicators?

Are the reformists themselves, who are engaged in introducing changes into public administration, immune to bureaucracy and procrastination?

Unfortunately, the answers are mostly negative

At the moment, Ukraine is still the poorest, most corrupt and second least competitive country in Europe. These questions are not rhetorical. The answers depend on how quickly Ukraine will overcome its crisis and find a path for economic and social development. Without reforming the state administration and the civil service of the country will be successful.

The article was first published in Ukrainian – http://rpr.org.ua/civil-servic/

Serhii Soroka is the Manager of the RPR expert group “Public Administration Reform”. A member of the Coordination Council of the Cabinet of Ministers of Ukraine on public administration reform

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