BB.lv: Latvian public sector employees can’t fit at the trough: what to do?

With enviable regularity, discussions flare up on social networks and elsewhere regarding how we have too many officials and, in general, everyone who feeds from the state budget – and this really slows down the development of the country, and most importantly – because of such a number of “dependents” there is not enough money for the country’s much more important needs.

Is this really true and is the number of civil servants only growing?

The reality is that Latvia ranks 8th in the EU in terms of the proportion of public sector employees. Since there are 27 countries in the EU, this is a fairly large percentage of those who live off the budget. In terms of the proportion of those working in public administration, Latvia is in 4th or 5th place.

It is important to emphasize that when we talk regarding those working in the public sector, we mean not only officials, not only employees of state and municipal institutions, but also other public sector employees – teachers, doctors, police officers, firefighters.

Budget employees should also include employees of state and municipal enterprises, although not all of them live off the state budget – on the contrary, many earn their own money and even transfer large amounts of money to the state treasury (for example, Latvenergo).

Although the comments of those who believe that it is time to reduce the number and salaries of members of the boards and councils of such enterprises are fair.

Meanwhile, the number of public administration employees has decreased by 22 percent from 2008 to 2019. This sounds impressive, but it should be borne in mind that the overall number of employed Latvians has also significantly decreased in recent decades.

Thus, in 2002 there were 955 thousand hired workers, but now there are only 884.2 thousand people left, and the authorities dream of at least increasing the number of workers to 900 thousand by 2027.

It is clear that the decrease in the total number of working Latvians once morest the background of significant emigration led to a reduction in the number of state administration workers. However, in reality the number of clerks did not decrease by 22 percent, but rather by 10–12 percent — some officials moved to work in other budget structures (in the same state and municipal enterprises).

One way or another, it is obvious that since the population continues to decline and, most importantly, the dynamics of revenues to the treasury is decreasing, it will be necessary to reduce administrative expenses as well. In order to stabilize the budget in the long term, the state apparatus must be reduced by at least another 15-20 percent.

Many entrepreneurs complain that every third worker is still employed in the public sector. Yes, but on the other hand, this is also explained by the general standard of living in Latvia – the state and local governments have to, for example, maintain boarding houses, since only a small proportion of Latvians are able to use the services of private boarding houses.

Meanwhile, both in public administration and in budget organizations in general, salaries have begun to rise sharply over the past four years — the growth rate is much higher than in private business. If this continues, the share of those working in the public sector will increase even more. Will two or even one and a half people working in the private sector be able to feed one budget employee? The question seems to be rhetorical…

By the way, let us recall that starting next year, the salaries of senior officials, and along with them other public administration employees, will increase once more – this time by six percent. And this despite the current very low inflation rate.