Minister of Finance seeks shake up of public sector pay rises

Minister of Finance Andrej Babiš appears to be well on the way to opening up a new front in his attempt to make the state machine operate more on the lines of one of his companies.

Photo: Filip Jandourek

This time, the minister has taken umbrage at the standard government formula for making standard pay raises to civil servants related to the number of years served. That is the model which, according to the business daily Hospodářske Noviny, is largely being defended buy Minister of Labour and Social Affairs, Michaela Marksová. Marksová’s ministry and the Ministry of Finance are currently trying to agree a new formula for working out which civil servants deserve pay rises and which will be deemed to be getting enough as it is. The new formula should be in place for 2017.

Babiš clearly has an idea from his own ministry that the state machine is not functioning as it should. He complains that when it comes to recruiting quality graduates for financial offices or customs and excise services in Prague the offer of a stating wage of 17,000-18,000 crowns a month is simply not enough when the opening offers in the private sector are around 30,000 crowns.

The result is that the likelihood in Prague of a tax audit from the finance office showing up serious fraud is minimal when compared with other parts of the country. Babiš adds that there is a clear impact on the state budget from the gaps in qualified staff at other outposts of his ministry.

But other ministries could clearly made special cases for their staff as well. Minister Marksová pointed out that there were specialists in her ministry on welfare payments and pensions who might not be sought after in the private sector but were virtually irreplaceable in their current positions.

Babiš’ ideas on finding a new pay structure for public workers have not developed far. He says a study should outline the options and highlight who should get more or stay put in comparison with what happens in the private sector. But he admits that fully following his own example in the private sector, where he hired and fired five bosses of one of his food companies before eventually finding the right person for the job, is not an option.

Calls for reform of the public sector have come and gone in the past. The idea of a leaner but better paid and more efficient public sector was one of the main battle cries of the Civic Democrats around a decade ago. The final result was largely illusory.

Former Civic Democrat prime minister Petr Necas though did, probably unintentionally, contribute one reform. The bonus payments to some staff, including the former head of his private office and current wife, were so exorbitant that the current coalition has agreed to put a ceiling on such payments. Such bonus payments are now not allowed to exceed a quarter of the annual wage.