20100930 HRM Survey Report FINAL

8/3/2019 20100930 HRM Survey Report FINAL

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Challenges for Public Sector Human Resources Management in the recent Economic Downturn - 1 -

COMPARATIVE RESEARCH

CHALLENGES FOR PUBLIC SECTORHUMAN RESOURCES MANAGEMENT

IN THE RECENT ECONOMIC DOWNTURN


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Challenges for Public Sector Human Resources Management in the recent Economic Downturn

This publication was produced by the Regional Centre for Public Administration Reform of UNDPBratislava Regional Centre,www.rcpar.org

September 2010

Author: Katri Vintisa, MPA

Advisor and coordinator: Nenad Rava, Network Facilitator, RCPAR

Contributors: Vuqar Askerov (Azerbaijan), Sanja Jelic (Bosnia and Herzegovina), Margus Sarapuu andLiina Simm (Estonia), Hortenzia Hosszu and Richrd Adorjn (Hungary), Baiba Medvecka and Valrijs

Stris (Latvia), Laima Tuleikien and Jurgita Siugzdiniene (Lithuania), Tamara Gheorghita (Moldova),Bojana Jankovi and Desanka Duran (Serbia), Aleksandar Golev (the former Yugoslav Republic ofMacedonia), Maksym Subota (Ukraine).

Editor: Anne Caroline Tveoy, Policy Specialist, RCPAR

For more information, please contact Panos Liverakos, Team Leader, RCPAR,[email protected]

The United Nations Development Programme (UNDP) is the UNs global development network,advocating change and connecting countries to knowledge, experience and resources to help

people build a better life.

The views expressed in this publication are those of the author and do not necessarily representthose of the United Nations, including UNDP, or their Member States.
http://www.rcpar.org/http://www.rcpar.org/http://www.rcpar.org/mailto:[email protected]:[email protected]:[email protected]:[email protected]://www.rcpar.org/


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UNDP Regional Centre for Public Administration Reform (RCPAR)

The Regional Centre for Public Administration Reform is a five-year regional project launched bythe United Nations Development Programme, Bratislava Regional Centre and primarily financedby the Hellenic Government. Through multi-country initiatives generated by network members,the Project aims at facilitating professional networking and cooperation between the countries inthe region of Central and Eastern Europe and the Commonwealth of Independent States.Thematically, the Regional Centre focuses on strengthening capacities for policy-making andcoordination; improving public finance management; enhancing organization and staffing in thepublic sector; and promoting public service delivery.

The network of focal points, consisting of government entities, academic institutions and non-

governmental organisations from the countries in the region, is one of the cornerstones of theRegional Centre for Public Administration Reform. A systematic effort to expand the network is anongoing process. In each country, the aim is to engage a government institution responsible forcoordination of the national public administration reform efforts, as well as a set of Focal Points ineach of the thematic areas. Although there is an emphasis on government entities, and middleand high level civil servants, who constitute around 80% of the current contact persons in thenetwork, non-governmental organizations and academic institutions are also included.

Through its philosophy, design and operational mechanisms, the Project offers significantopportunities for countries in the region to engage in the formulation and implementation of multi-country activities (MCA) funded by the Centre. Network members are actively encouraged to

propose ideas and develop proposals, involving a minimum of three countries from the region,within one of the thematic areas. The funding available for each initiative is around US$100,000and the Project aims at generating at least six initiatives per year. Application guidelines andtemplates have been distributed widely in the network; they are also publicly available atwww.rcpar.org.

Set up under the central UNDP online collaborative work platform, the Project operates aworkspace which was launched in June 2009. Its purpose is to provide a virtual meeting place formembers of the Network of Focal Points. By enabling members to launch or participate in onlinediscussions, and use a variety of tools to share experiences and documents, the aim is tofacilitate the generation of multi-country proposals and produce a large base of documentationand knowledge.
http://www.rcpar.org/http://www.rcpar.org/http://www.rcpar.org/


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ABREVIATIONS AND ACRONYMS

CV Curriculum Vitae

EIPA European Institute of Public Administration

EU European Union

EUR Euro

GDP Gross domestic product

HR Human resources

HRM Human resources management

IMF International Monetary Fund

IQ Intelligence quotient

NGO Non-governmental organisation

MCA Multi-country activities

MoF Ministry of Finance

OECD Organisation for Economic Co-operation and Development

RCPAR Regional Centre for Public Administration Reform

SIGMA Support for Improvement in Governance and Management

UNDP United Nations Development Programme

WB World Bank


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CONTENTS

UNDP Regional Centre for Public Administration Reform (RCPAR) .......................................... - 3 -ABREVIATIONS AND ACRONYMS .......................................................................................... - 4 -CONTENTS ........... - 5 -I ACKNOWLEDGEMENTS ................................................................................................ - 6 -II EXECUTIVE SUMMARY ................................................................................................. - 7 -III INTRODUCTION ............................................................................................................. - 9 -

III.1 Purpose ................................................................................................................. - 9 -

III.2 Scope .................................................................................................................... - 9 -

III.3 Research tools .................................................................................................... - 10 -

III.4 Core topics .......................................................................................................... - 10 -

IV FINDINGS ........... - 12 -IV.1 Public sector cost cutting and downsizing measures........................................... - 12 -

IV.2 Transformation of the civil service ....................................................................... - 14 -

IV.3 Human resources management measures .......................................................... - 17 -

IV.4 Changes in HRM policy planning and implementation practice ........................... - 22 -

IV.5 Communication policies....................................................................................... - 26 -

IV.6 Impact of crisis on the motivation of civil servants and development of public service

in the longer term ................................................................................................ - 27 -

V COMPARATIVE ANALYSIS .......................................................................................... - 29 -V.1 Approach to public sector cost cutting and downsizing ....................................... - 29 -

V.2 Trends of civil service transformation .................................................................. - 29 -

VI Strategic human resources management development ................................................. - 31 -VI.1 Changes in HRM policy planning and implementation ........................................ - 31 -

VI.2 Communication during crisis ............................................................................... - 33 -VI.3 Motivation, innovation and the possible impact of the crisis in the longer term ... - 33 -

VII CONCLUSIONS AND LESSONS LEARNED ................................................................ - 34 -VIII REFERENCES .............................................................................................................. - 36 -IX APPENDIX: SURVEY QUESTIONNAIRE ..................................................................... - 37 -


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I ACKNOWLEDGEMENTSThe preparation of this paper benefited from the input of many people. In particular, I would like tothank representatives of the individuals and institutions participating in the study: public sectorHRM professionals Vuqar Askerov (Azerbaijan), Sanja Jelic (Bosnia and Herzegovina), MargusSarapuu and Liina Simm (Estonia), Hortenzia Hosszu and Richrd Adorjn (Hungary), BaibaMedvecka and Valrijs Stris (Latvia), Laima Tuleikien and Jurgita Siugzdiniene (Lithuania),Tamara Gheorghita (Moldova), Bojana Jankovi and Desanka Duran (Serbia), Aleksandar Golev(The former Yugoslav Republic of Macedonia), and Maksym Subota (Ukraine).

Special thanks goes to the distinguished contributors to the seminar on impact and challenges ofthe economic crisis on human resources management in the public sector in Tallinn, 4 and 5

February 2010: keynote speakers Professor Tiina Randma-Liiv (Tallinn Technical University,Estonia), Dr. Niamh Hardiman (University College Dublin, Ireland), Margret Bjornsdottir(University of Reykjavik, Iceland), moderator of the seminar Annika Uudelepp (Estonia) andindependent consultant Damir Ahmetovic (Bosnia and Herzegovina).

The report was prepared under the general guidance and advice of UNDP/RCPAR and the twopartners in the activity, the Ministry of Finance of Estonia and the State Chancellery of Latvia. Iam grateful for valuable suggestions and constant support from Nenad Rava and Anne CarolineTvey (RCPAR), Karin and Reelika Vljaru (Ministry of Finance of Estonia), and Inese Vaivare(State Chancellery of Latvia).

Katri Vintia

March 2010


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II EXECUTIVE SUMMARYThis paper presents a comparative analysis of the current challenges facing public sector humanresources management (hereinafter referred to as HRM) in selected countries of the region, inthe context of the global economic downturn. This crisis has affected the countries in Central andEastern Europe unevenly. The report compares challenges and responses in Azerbaijan, Bosniaand Herzegovina, Estonia, Hungary, Latvia, Lithuania, Moldova, Serbia, the former YugoslavRepublic of Macedonia, and Ukraine, which were all represented at the seminar on the impactand challenges of the economic crisis on human resources management in the public sector inTallinn, 4 and 5 February 2010.

The main purpose of the research has been to consolidate experiences and lessons learned,

focusing on current challenges posed by the crisis and the possible impact on HRM, now and inthe future. The research puts emphasis on changes in HRM practices which may have beenprompted by, and directly or indirectly affected by the crisis. The report consists of three mainchapters: [1] factual findings, based on input provided by the representatives of countriesparticipating in the survey; [2] a comparative analysis of country cases; and [3] conclusions andlessons learned.The research is based mainly on the opinions, observations and experience ofHRM professionals from institutions in the countries involved. No independent research has beenundertaken to verify the accuracy of the information submitted.

The research shows that the governments responses to the economic crisis have varied , whichmay be explained by the following factors:

different starting points: the existing public administration system, culture andprinciples, as well as the general state of affairs in the civil service HRM at the timethe crisis manifested itself;

degree of impact of the crisis, measured in actual level of state income reductionand fall of GDP;

existing legal framework and institutional arrangements governing labour relations inthe public sector, including prospects for redeployment and lay offs;

political backdrop: stability versus changes in the government and/or politicalleadership

impact of external actors like the European Union (EU), International Monetary Fund(IMF), World Bank (WB);

culture and traditions of each country and its inhabitants.However, several similarities were also identified:

the level of politicization of the civil service has not changed significantly and it isperceived as being at medium in most of the countries studied;

no major changes have been identified in centralization versus decentralization ofdecision-making and policy planning in the field of HRM;


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the social partners, defined as representatives of public sector employees and tradeunions, have in many cases been more active during the crisis, but their impact is

perceived as low; ex ante policy analysis and research have not been an integral feature of HRM policy

planning during the crisis; the culture and practice of communication is underdeveloped, both internally in the

public sector, between management and staff, and externally, towards the public; no significant signs of innovation in HRM have been identified.

One of the main outputs of this research is the collection of experiences and examples of goodpractices in 10 different countries in the region of Central and Eastern Europe.

involvement of relevant stakeholders in HRM policy planning and implementation inAzerbaijan;

the choice to cut costs in areas which do not adversely affect the functioning of the publicsector in Bosnia and Herzegovina;

centralization and streamlining of HRM support services in Estonia; establishment of a civil servants e-job bank, enabling job seekers access to all vacancies

within the public sector through a single portal, as well as the development of anadvanced training strategy for public sector managers in Hungary;

expansion of advanced remuneration systems, including job classification schemes, valuegrading and performance linked pay, and adjustment of salary levels between the publicand the private sector in Latvia;

use of international assistance to develop HRM practices in Lithuania and Moldova; anti-crisis measures taken by the Government in the former Yugoslav Republic of

Macedonia to prevent the dismissal of a large number of public employees, as well as theestablishment of a Human Resources Management Network among civil service HRMunits to promote and develop HRM functions and standards, and the sharing of bestpractices;

package of social measures aimed at softening the impact of the crisis, provided by theGovernment of Serbia;

extensive leadership training and the decision to prioritize training over other expendituresin the face of economic downturn in Ukraine.


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Challenges for Public Sector Human Resources Management in the recent Economic Downturn - 9 -

III INTRODUCTIONThe multi-country activity Government Action in Response to Economic Downturn was initiatedby the State Chancellery of Latvia and implemented in close cooperation with the Ministry ofFinance of Estonia and the Main Department of the Civil Service of Ukraine over a period of 12months, from June 2009 to June 2010. The central event of the activity was the 5 th InternationalPublic Management Summer Institute entitled Restructuring Government to Overcome Crisis,which took place from 17 to 21 August 2009 in Sigulda, Latvia. As a follow-up to the SummerInstitute, two workshops were organized: one on impact and challenges of the economic crisis onhuman resources management in February 2010, in Tallinn, Estonia, followed by a workshop onfunctional reviews in Kiev, Ukraine two weeks later. The two workshops involved a total of 55practitioners and academics from 15 countries, as well as 4 keynote speakers, primarily from

Western Europe.

Both workshops were linked to a comparative research, each covering 10 country experiences.The research methodology was developed by external consultants, whereas the collection of dataand preparation of country reports were done by the workshop participants. After the data hadbeen analyzed and presented in draft reports, the participants validated the findings and furtherensured ownership of the final outcome of the studies.

III.1 PurposeThe main purpose of the research has been to consolidate experiences and lessons learned,

focusing on current challenges posed by the crisis and their possible impact on HRM; to identifythe main trends and approaches to public sector HRM; and, finally, to produce recommendationsfor the future. The research puts emphasis on changes in HRM practices which may have beenprompted by, and directly or indirectly affected by the crisis, with an emphasis on recent initiativesor activities launched by the governments in the countries covered by the report. In other words,the research aimed at looking specifically at HRM policies in the overall government responses tothe crisis.

III.2 ScopeThe research encompasses the experience of the following countries: Azerbaijan, Bosnia and

Herzegovina, Estonia, Hungary, Latvia, Lithuania, Moldova, Serbia, the former Yugoslav Republicof Macedonia and Ukraine.

The research involves actions taken within and affecting the central government ministries,and institutions directly subordinate to these ministries.As mentioned above, the researchputs emphasis on changes in HRM practices which may have been prompted by, and directly orindirectly affected by the crisis. The period covered is January 2008 to March 2010.


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III.3 Research toolsThe research relied primarily on the administration of a questionnaire (see Annex), and

secondarily on discussions with participants during the Tallinn workshop. The questionnaireallowed for comments and qualitative answers. In cases where the responses were unclear,additional clarifications were sought via email. The research is based mainly on the opinions,observations and experience of HRM professionals from institutions in the countriesinvolved. No independent research has been undertaken to verify the accuracy of theinformation submitted.

III.4 Core topicsThe following core topics were covered in the research:

1. Public sector cost cutting and downsizing measures undertaken by governments as aresult of the economic downturn; the sequencing and timing of actions, and the approachto cost cutting and downsizing adopted by various governments and institutions in theregion;

2. Civil service transformation, in particular in relation to: institutional or legal status of civil servants; remuneration systems, including base pay, flexible pay, other subsidies and

benefits etc; additional (social) benefits, including specific monetary allocations, leave, etc; degree of politicization, i.e. the extent to which senior officials and/ormanagement are subject to political influence.

3. Typical HRM measures, such as: HR planning: planning ahead the number of personnel required to carry out

public administration functions; defining the competencies and skills necessaryfor public service provision;

recruitment and selection: attraction, selection and retaining the personnelnecessary to carry out public administration functions;

promotion, transfer, demotion and dismissal: the career progression of civilservants/public service employees: procedures for promotion, horizontal transferto another position, job rotation, transfer to a lower position/demotion, anddismissal;

performance management: the approach to planning, managing, and assessingthe performance of civil servants/public service employees and theirunits/departments. Performance is defined as what has been achieved (goals,tasks) and the manner how it has been achieved (skills, attitudes, behaviours);

training and development: mechanisms or schemes for developing theprofessional skills and competencies of civil servants/public service employees;

leadership development: mechanisms or schemes for developing themanagement skills and capacities of senior officials.


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4. HRM policy development and implementation practice: responsible institutions;

scope and content of tasks assigned to experts and policy planners; involvement of social partners, defined as representatives of public sector

employees (trade unions); centralisation/decentralisation tendencies; international donor involvement/support programmes; ex anteand similar policy analysis initiatives undertaken to assess the impact of

different alternatives/initiatives considered in response to the economic crisis.

5. Communication undertaken by governments in order to inform and involve civilservants/public sector employees, and the general public in the decision-making processand the implementations of new policies.

6. Impact of the crisis on the future of public sector development, in particular: impact of initiatives provoked by the crisis on the motivation of civil servants and

public sector employees; appearance, and evidence of innovative solutions in the public sector HRM

practices; degree of beneficial or harmful impact - gains and losses of measures

implemented in the field of HRM in the medium and longer-term.

The degree to which the above topics are covered in each country vary, partly because some

countries have taken more measures than others, and partly because of differences in theamount and level of detail of information provided by the respondents participating in the study.


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IV FINDINGSIV.1 Public sector cost cutting and downsizing measuresThe responses from the institutions participating in the study revealed that not all the countriescovered have experienced actual cost cutting and personnel downsizing in the public sector as aresult of the economic downturn.

In Azerbaijan, the expenditure levels in all state organizations were reduced. In addition, thesalary freeze planned for 2010 came into effect a year earlier, in 2009. However, there was noreduction in basic salaries and supplementary benefits for civil servants, as this is prohibited bythe Law on State Budget. The pension system for civil servants also remained unchanged.

In Bosnia and Herzegovina, measures taken by the Government affected mostly salaries andother benefits, with changes coming into effect at the end of 2008. In line with stipulations in theIMF lending agreement, signed in 2009, public sector salaries were cut by 10%. In addition, mealsupplements were reduced, and transportation subsidies for public servants living within a 3kmradius from their work place were abolished.

In Estonia, the personnel budget of the central government administration was cut by 8,6% in2009 and another 7% in 2010. The number of personnel was reduced by 3 % in 2008, by another3% in 2009, and a further reduction of 5% is planned for 2010. For the 2010 state budget, thegovernment has decided to reduce personnel costs by 9%. Public sector agencies have stoppedpaying performance based salary top-ups and other bonuses, and allowances have beenreduced or abolished. In 2009 and 2010, other reductions were also being implemented, forexample in trainings budgets, business travels, study leave, etc. Finally, in recent years, effortshave been made to streamline state structures aiming to making them more efficient, amongother by merging state agencies. There has been a considerable increase in such activities in theperiod 2008 2010.

Although Hungary was heavily hit by the economic crisis, the impact on the public sector wasless significant. As a part of the 2009 Bajnai-package1, salaries of civil servants were cut by 8%(corresponding to the abolishment of the so-called 13th-month wage). A hiring freeze was alsointroduced.

In Latvia, the 2009 Law On Remuneration of Officials and Employees of State and LocalGovernment Authorities in 2009 decreased the amount set aside in central and local budgets forremuneration of employees by 15%. The Law also envisaged the following cost cutting measures:bonuses, gratuities and annual leave allowances not disbursed in 2009; management contractsabolished; childcare allowance reduced; allowance in the case of the death of a family member ordependant reduced; salary supplements for taking on additional duties during the absence of acolleague limited to 20% of monthly salary; limitations on dismissal allowances. In July 2009,another reduction of 20% of monthly salaries was implemented, followed by a further reduction of

1

The Government of Hungary introduced the Bajnai-package, named after the new Prime Minister Gordon Bajnai.


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5% in January 2010. The average public sector salary was reduced by 28% in the period 2008 2010, from 832 EUR in 2008 to 689 EUR in 2009 and 600 EUR in January 2010. Simultaneously,

the number of employees in state institutions was reduced by 11% between 2009 and 2010.In Lithuania, the Seimas (Parliament) adopted decisions to reduce the remuneration of civilservants three times, in December 2008, April 2009 and July 2009, resulting in an average salarycut of 11% (from 974 Euro/month in 2008 to 867 euro/month in 2009). Moreover, the basic paywas reduced by 8%, from 490 Lt/month (690 euro/month) to 450 Lt/month (630 euro/month) inthe period December 2008 July 2009, and bonuses were reduced. The upper ceiling on staffingin central government organisations and agencies was reduced by 5,6% in 2009, but it did notresult in any real staff reduction. A hiring freeze was announced, and the possibility of takingunpaid leave for up to 10 days was abolished. The process to retool the machinery ofgovernment was initiated in 2008, including abolishment of administrative levels (in the police

force) and restructuring of ministries (new Ministry of Energy; staff mergers). A variety of otherreforms are underway in each sector of government.

In Moldova, the Government reduced the number of public sector employees by 3.200 in 2008and 4.000 in 2009. In December 2009, an Economic Stabilization and Recovery Program wasapproved, foreseeing further cost cutting and downsizing measures. The 2010 Budget Lawstipulates the reduction of personnel expenditures by 5%. Nevertheless, the actual number ofemployees in central government institutions has not been reduced; on the contrary, the totalnumber of employees increased by 1,7% in 2008 and by another 1% in 2009. In January 2010,the Government of Moldova signed a Memorandum with the IMF for the period of 2010-2012. TheMemorandum stipulates a series of cost cutting and downsizing measures in the public sector.

In Serbia, the Government adopted a Plan for Economic Stabilization in June 2009, whichprescribed public sector saving by 89 billion RSD (or about 840 million Euros). The personnelbudget of the General Secretariat of the Government will be cut by 23% in 2010. Salariesbetween 400 and 940 Euro/month will be cut by 10%, whereas salaries of 950 euro/month andhigher will be cut by 15%. The savings achieved by these measures will be paid into a specialfund set up to soften the impact of crisis. A further reduction in the number of public sectoremployees, by 10 % (8.000 employees) is planned by the end of 2010.

In the former Yugoslav Republic of Macedonia, the anti-crisis measures undertaken by theGovernment were primarily of the ex ante character, to prevent large-scale dismissal ofemployees. A planned 10% rise in public sector salaries was postponed, and bonuses wereabolished. A temporary hiring freeze was initiated, along with re-assignment of civil servants tonew functions, and reductions in travel budgets. The operational costs were cut by 16% amongother, by a procurement freeze (on furniture, equipment and vehicles); stricter control on officialtravel and use of mobile phones; reduction in expenditures for advertisements, entertainment andsponsorships; rigorous control with remuneration and other expenses for members of steeringand supervision committees, and a ban on paying allowances to members of commissionsestablished within the public sector institutions. The total budget for public sector remunerationwas reduced by 6,13 % in 2010 compared to 2009.


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In Ukraine, the first cost cutting measures were initiated in autumn 2008, after the crisis hadmanifested itself. Controls on budgetary expenses and outlays were strengthened, and a hiring

freeze was introduced in December 2008. The average monthly remuneration in the Departmentof the Ukrainian Civil Service was cut by 13% in 2009, and another 5% in 2010. There are alsoplans to reduce the overall number of public servants by 20% in 2010.

IV.2 Transformation of the civil serviceIn some countries, the economic downturn not only forced the implementation of cost cuttingmeasures, but also prompted a review of the civil service: its legal provisions, the status of civilservants, social benefits, remuneration and the level of politicization.

In Azerbaijan, the institutional status of civil servants is clearly defined. The Budget Law prohibitsreduction of salaries and of certain social benefits, including coverage of expenses related tomedicine and food.

The level of politicization is characterised as fairly high in Azerbaijan, in particular for higher levelpositions (Heads of apparatus and departments).

In Bosnia and Herzegovina, no changes in the institutional status of civil servants were made,but the salary system changed, with salary cuts and abolishment of certain benefits. TheParliament obliged the Council of Ministers to prepare a set of regulations, includingapproximately 50 new decisions, nearly 60% of which were related to HRM. The new regulationsenvisage savings in areas which do not adversely affect the functioning of the public sector, suchas representation and travel expenditures.

The level of politicization has not changed during the economic downturn and it is characterisedas not significant.

In Estonia, a new draft Civil Service Law has been finalised, but as it has been under elaborationfor several years, it cannot be said to have been prompted by the crisis. Nevertheless, thechanges introduced by the new law may contribute to mitigating the possible negative impacts ofthe crisis. Only public sector employees who execute functions of public authority will retain theircivil servants status. By reducing the number of civil servants and balancing the rights andobligations of employees, the Law aims to make the civil service system more efficient. The

salary system will be reformed by using the process of job evaluation to create new salary gradesin all public organisations, with the following characteristics: salary additions for language skillsand academic degrees will be abolished; more flexibility, as individual bonuses can represent asmuch as 30% of the total salary; more transparency, in the sense that information on theindividual agencies salary systems, as well as the actual salaries of civil servants , will be madepublic. Under the new Law, the civil service will be governed by common Labour Law. With theexception of longer annual leave, all other special benefits will be abolished. Administrative


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support services will be centralised, to ensure more transparency and availability of reliableinformation for state budget planning purposes2.

The level of politicization in Estonian civil service has not changed significantly in the wake of thecrisis, and it is characterised as medium.

In Hungary, the crisis did not prompt any changes in the civil service legal framework,remuneration, or social benefits.

In Latvia, the crisis and subsequent cost cuts revealed several shortcomings in the existing legalframework, leaving civil servants with less protection against unfair treatment compared toemployees under regular labour contracts. Consequently, three main alternatives for civil servicereform were formulated, and are currently being discussed among experts and politicians:

the definition of who is a civil servant will be revised and the concept of civilservice is introduced in the whole public sector, including the local level;

the definition of who is a civil servant will be revised and two groups ofemployees will be created (a) senior civil service, comprising heads ofinstitutions, and (b) all other public service employees;

as long as actual job functions are similar on the central and local levels, theconcept of civil service will also be introduced at the local level.

The Latvian Civil Service Law states that political neutrality is one of the main characteristics ofthe civil service. Ministers are involved in the appointment, promotion, remuneration, dismissal of

State Secretaries and Heads of subordinate bodies. The level of politicization has not changedsignificantly in the wake of the crisis and is characterised as medium.

Lithuania has not changed the provisions of the civil service legal framework in the period of2008-2010. A new concept for civil service reform is under discussion among different socialpartners, including trade unions, universities, and political parties.

The level of politicization, perceived as medium, has not significantly changed during the periodunder examination. The law prohibits political influence on the actions of senior civil servants;however, politicians may have exerted influence on the appointment of senior officials in specificsituations.

In Moldova, the new Civil Service Law came into force on 1 January 2009, as part of an ongoingreform process not prompted by the crisis. The Law clearly distinguishes between civil serviceand non-civil service jobs, and it may result in a reduction of expenditures. In 2010, the followingchanges will be implemented in the civil service remuneration system: improvement of theseverance pay provision mechanism in case of disbandment of a public authority, downsizing orchanges in payroll; salary increases planned for 1 October 2009 for civil servants were postponed

2 See http://www.fin.ee/index.php?id=101002 for information about the centralization project at the state level in

Estonia.
http://www.fin.ee/index.php?id=101002http://www.fin.ee/index.php?id=101002http://www.fin.ee/index.php?id=101002


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for 2010; and for military and staff of national defence, state security and public order bodies for2011 and 2012 respectively; provision of material aid reduced from two to one per year; reduction

in the size of incentive payments. A new remuneration system will be implemented in 2012.The level of politicization is characterised as medium in Moldova. Ministers, Vice-Ministers,Directors of agencies are all politically appointed, by the President and the Government. At thelevel of Heads of divisions and units, the level of politicization is low. On average, more than 80%of Heads of divisions and units remain in their position when the government changes.

In Serbia, the Civil Service Act was amended in December 2009 and a new Law on determiningthe maximum number of employees in Administration was passed. The amendments to the CivilService Act provide for gradual decentralisation of HRM procedures by granting individualMinistries the right to advertise vacancies in order to speed up the recruitment process. Internal

competition procedures are also no longer mandatory, which makes the civil service moreaccessible to outsiders, but this may also increase politicisation. The consequences of negativeperformance appraisal are more severe and provide managers with the opportunity to terminateemployment of civil servants who do not perform well only after 4 months (in comparison to 15months earlier on)3. To counteract social hardship following dismissals, the Government hasadopted a package of measures such as extended paid leaves, provision of dismissal wages andhealth insurance to civil servants who have been laid off, and special aid to the most vulnerablecategories.

The level of politicization is perceived as low, with no changes prompted by the crisis.

In the former Yugoslav Republic of Macedonia, changes in the Civil Servants Law were adoptedin September 2009, and came into force in March 2010. Additionally, for the first time, a Law onPublic Service is in the process of being adopted by the National Assembly. The legal status ofcivil servants, remuneration system, and social benefits remain unchanged.

The level of politicization is perceived as low and no changes have occurred during the economicdownturn.

In Ukraine, no changes were made in the legal status of civil servants, remuneration system, andsocial benefits, but due to a devaluation of the national currency, the purchasing power of civilservants was reduced. The crisis sparked more activity from the side of the trade unions, and

their role in securing benefits for civil servants is perceived as significant.

The level of politicization of the civil service is perceived as rather high, and it has not changedduring the economic downturn.

3 The publishers are indebted to Aleksandra Rabrenovic of the Institute of Comparative Law in Serbia for providing

information about the amendments to the Civil Service Act.


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IV.3 Human resources management measuresBesides cost cutting and downsizing measures, many countries are developing their approach to

HRM, among other by re-designing the existing system and introducing strategic HRM policies.However, it should be noted that the most important changes in this f ield have been planned longbefore the crisis emerged and would in all likelihood have been implemented irrespectively of thecrisis.

In Azerbaijan, significant developments in HRM practices have occurred, and a new Civil ServiceHRM Strategy will be adopted in 2010.

In the area of recruitment and selection, procedures for recruitment were improved, and newrules, related among other to required test scores for positions in the local administration (whichwere lowered to attract more personnel to the regions) and IQ tests, were adopted. The newmeasures relate to the design and conduct of job interviews, involving, among other, independentexperts, to increase objectivity, attract competent candidates and building public trust. As of 2008,promotion in civil service is supposed to be carried out based on results of interviews. Amechanism for internal job rotation within state bodies has been partially established, andimprovements to the mechanism, as well as improvements in the procedures for performanceappraisal and appeal in case of dismissal, will be made in 2010. As a result of the crisis, only keypromotions are allowed, limiting the prospects for career advancement. Combined with a non-competitive public sector salary level, it has resulted in a brain drain to the private sector.

In the area of performance planning and evaluation (performance management), a new Law

was enacted in 2008, envisaging yearly performance appraisals conducted by direct supervisors,and in 2009, rules for how to carry out the appraisals were issued. These rules will come intoforce in 2010, and the appraisal process will be linked to other aspects of HRM such as jobrotation, promotion, additional education, motivation incentives, etc.

In the area of training and capacity development, new legislation, dating from 2008 and 2009,define types, forms, terms, financial sources and other related issues related to training andeducation of civil servants. In 2010, a state order on the re-training and professional developmentof civil servants is planned, providing for the creation of a civil servant training centre;examination rules; rules governing the selection of civil servants for trainings abroad, etc. Inaddition, the strengthening of financial support for training and education is planned. However, as

a result of the crisis, current training initiatives focus only on key personnel and some activitieshave been cancelled. In the area of leadership development, special trainings on managementand leadership for senior officials have been conducted. Individual career planning for reservecadres for senior positions has been established.

Finally, in the area of remuneration, the system of civil servants remuneration was determinedby a unique standard legal act in 2008, defining a remuneration framework for eachfunction/position. The remuneration consists of official salary, additional payments (for length ofservice, professional rank), and bonuses. In 2010, the establishment of a performance- and skills-based, pay system, and a corresponding review of the bonus system is planned. However, as a

result of the crisis, the planned salary review for the civil servants has been postponed.


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In Bosnia and Herzegovina, various projects have been implemented to make the personnelselection process more efficient. Since 2009, public sector institutions have to submit annual

recruitment plans to the Civil Service Agency. As a result of the crisis, in the period 2009 2010,there have been more internal and external transfers than new recruitments.

In the area of training and capacity development, new training topics and a new space fortraining were made available in 2009, but the number of trainings was limited in 2010 due tobudgetary cuts. In the area of remuneration,salaries and salary supplements were increased in2008 and lowered in 2009. In 2010, there was a salary freeze and approximately 50 newdecisions, 60% of which relate to HRM issues such as travel and representation, were issued bythe Council of Ministers.

In Estonia, the government has not taken any specific steps in the field of HRM as a result of the

crisis. As mentioned earlier in the report, the changes planned in the context of the new CivilService Law were not prompted by the crisis. Estonia has a decentralised approach to HRM.Every Ministry decides how to manage its personnel resources. Accordingly, as ministries hadtheir budgets cut as a result of the crisis, the funds available for training and capacitydevelopment were reduced. As far as the remunerationis concerned, there has been an overalldecrease in (the size of) salary supplements such as performance-based bonuses and otherallowances.

In Hungary, no specific changes have been made in HRM as a result of the crisis. The period2002 2010 has been characterised by comprehensive and in-depth strategic HRM reforms, andthe crisis has not significantly slowed the pace of reforms.

In the area of HR planning, in accordance with the stipulations of the EU Convergence Program,the Government centralized the governmental HR services into one, common, integrated HRregistry system. In the future, the Government Centre aims at integrating other governmentalorgans in the central system, but as a result of the crisis, the process has slowed down.

In the area of recruitment and selection, the Government has put emphasis on competency-based selection of public sector managers at the central and local (regional) levels, making itmandatory to institute an open selection process for all managerial posts (7000 in total).Following an increase in the number of applicants, four local centres were opened in July 2009.From January 2011, the Government Centre will offer services related to recruitment and

selection to other actors in the private market. In order to develop, monitor and support thenetwork of HR units, the central administration introduced a civil service job bank, where jobseekers can access all public sector vacancies through a single website, introduced in 20084.

A new performance evaluation system was introduced in 2007, and it is based on self-selectionof core competencies (professional knowledge, communication, team-working, strategic thinking,managerial methods, responsibility, creativity and separateness), self-evaluation and discussionwith supervisor. In 2007, 4,500 civil servants were included in the new system, and by the end of2008, it comprised of 13,300 civil servants. In January 2011, it will be extended to staff at the

4 See the websitewww.kozigallas.gov.hu
http://www.kozigallas.gov.hu/http://www.kozigallas.gov.hu/http://www.kozigallas.gov.hu/http://www.kozigallas.gov.hu/


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local levels of the central administration, and the total number of civil servants included in theappraisal mechanism will be 40,000. The Government Centre offers a short course Performance

evaluation training for civil servants to help employees and supervisors understand theperformance evaluation process, and the curricula can be downloaded from the institutionswebsite in electronic format (27,000 downloads so far)5. The result of the performance evaluationdetermines the annual salary premium of the individual civil servant. However, due to the financialcrisis, the funds set aside for such premiums (previously 8% of ministerial budgets) werereduced.

In the area of training and development, several training programmes have been designed andsome are already being implemented.

Bib Istvn European Civil Service Fellowship Program, targets second-year university

students, by providing training during weekends and breaks to prepare them for futureemployment in the civil service. The program is scheduled to start in September 2010.

Young Civil Servant Fellowship Program (YCSP), initiated in 2007, providing opportunitiesfor recent university graduates to spend one year working in the public sector. From a pool of800 applicants, 185 were employed in 10 ministries in 2007/2008, and more than 70%continued working after the first year. In 2010, 144 graduates were employed under YCSP,which operates its own website for the target group6. After the first two years of operation,financing for the programme started coming from the ministries instead of from the centralgovernment.

Roma Fellowship Program, financed by the EU, to assist 200 Roma graduates to enterpublic service. Eventually, 130 individuals passed the required examination in December2009, and were eligible for employment in ministries. However, the future of the initiative isuncertain as the EU funding only covers the first year.

In the area of leadership development, a 600-hour Executive Master of Administration in PublicAdministration (EMPA) has been developed based on European standards. The successfulcompletion of the EMPA will be a requirement for all public sector directors from 2012 onwards.Management training programmes, such as a 360-degrees evaluation training and competencyworkshop on performance evaluation, have been introduced to promote a professional,supporting environment for future reform implementation.

In Latvia, the crisis halted the implementation of a number of initiatives in the field of HRM,initiated before the crisis. In 2005 - 2006, a new competency framework was developed for publicsector employees, in the framework of a comprehensive competency-based HRM project,financed by EU structural funds. Despite the fact that the project was initially approved by theGovernment, it was cancelled to cut costs.

In the area of HR planning, a functional tool to analyze and evaluate public administrationfunctions, corresponding costs and required numbers of employees will be developed in 2010.

5

See the websitewww.kszk.gov.hu6 See the websitewww.osztondijasok.hu
http://www.kszk.gov.hu/http://www.kszk.gov.hu/http://www.kszk.gov.hu/http://www.osztondijasok.hu/http://www.osztondijasok.hu/http://www.osztondijasok.hu/http://www.osztondijasok.hu/http://www.kszk.gov.hu/


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In the area of recruitment and selection, a unified selection procedure and criteria will bedefined for senior civil servants. With regards to career advancement provisions, a mobility

framework within public administration (including local governments) will be developed in 2010.In the area of performance planning and assessment (performance management), a newelectronic tool for public servant performance appraisal, based on the competency approach, willbe introduced. The introduction of additional competency assessment methods like 360evaluation and external (outsourced) competency assessment of senior public servants iscurrently being discussed.

In the area of training and capacity building, the crisis has brought about new approaches,such as voluntary training by colleagues from other ministries and workshops to discussproblems and share experiences. Concerning leadership development, more emphasis will be

put on leadership development: review of top managers competencies and provision of targetedtraining programmes.

The remuneration system was substantially changed, mostly as a result of the crisis. In July2010, a new remuneration system came into force at the central and local level (the latter waspreviously exempt), as well as in institutions such as courts, prosecutors office and state-financed universities. Thus, the basic principles of the remuneration system introduced in 2006 -

job classification and grading according to perceived value, compatibility of pay levels betweenthe public and private sector and the link between results of performance evaluation andindividual pay - will be expanded to the rest of the public sector.

In Lithuania, on 30 November 2009, the Prime Minister issued a decree to prepare a conceptpaper on the Lithuanian civil service development. The concept contains several reformmeasures, but it is too early to judge their actual content and potential impact. A project entitledAnalysis of required civil service competencies and job descriptions for the civil servantsdirectory was initiated in 2009.

In Moldova, many HRM reforms were accomplished during the period of 2008-2010, mostly asan integral part of the ongoing efforts to reform the public sector. In the area of HR planning, anestimate of the number of personnel required to carry out specific functions in a number of publicbodies was established. In 2010, the estimate was reduced downwards, as a part of an overalleffort to reduce the size of the public sector.

In the area of recruitment and selection, until 2008, most civil servants were hired internally, onthe basis of an appointment by the head of the body, without open competition or testing. In 2009,both internal and external recruitment may be used when filling a vacancy; internal recruitmentthrough promotion based on merit, or transfer, and external recruitment through opencompetition, involving review of application and screening of candidates; testing and interviewing.As of 2009, promotion and dismissal are linked to performance.

The performance management system has been significantly modernised. Until 2008, all civilservants received an attestation every three years, irrespective of performance and results. In2009, a new performance appraisal was conducted for the first time, assessing civil servants on

achieved results, skills and attitudes. More than a thousand middle managers (evaluators) from


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central and local authorities were trained in a total of 34 workshops. As of 2010, according to theLaw on Civil Service, performance appraisals will be conducted annually. A guide on performance

appraisals will be developed and over 1.000 middle managers will be trained.In the area of training and capacity development, in 2008 and 2009, a maximum of 2% of thesalary fund could be allocated for staff training and capacity development activities. As of 2010, aminimum of 2% of the salary fund should be allocated for such activities, but some public bodiescannot afford it because of budget limitations. Training activities included in the governmenttraining plan are still financed by the state budget, and additional training activities are financedfrom various grants, such as the Multi-Donor Trust Fund for the Central Public AdministrationReform. Finally, a specific set of trainings in the area of public finance management will beorganised by the Ministry of Finance. In the area of leadership development, workshops onorganisational management, intended to develop the managerial skills of senior officials were

organised in 2008 and 2009.

As for the remuneration system, in 2009, the Law on Pay System was applied with somemodifications such as postponement of planned salary increases. In 2010, a new remunerationsystem for civil servants is being developed and will be implemented in 2012.

In the former Yugoslav Republic of Macedonia, there have been no significant changes in HRplanning. With the exception of 5.000 unemployed individuals who will be engaged by theGovernment in public works for a period of 6 months, a temporary hiring freeze came into force in2009 and stricter control with temporary employment will be enforced.

In the area of performance planning and assessment (performance management), newguidelines were adopted in 2008, stating that seniority allowances may be paid only if the civilservant has been assessed as outstanding instead of satisfactory, as provided for in the Lawon Civil Servants. In 2009, the disbursement of salary bonuses to civil servant who wereevaluated as outstanding was postponed. In 2010, provisions allowing for promotion and salaryincrease after three consecutive evaluations outstanding and satisfactory were put into force. The budget for the generic annual training programme diminished in 2010.

In Ukraine, changes in the countrys political sphere have influenced the HRM processes, inparticular, the practices of recruitment, selection, and career advancement. In the area of HRplanning, a methodology will be developed in 2010 to determine the number of necessary

human resources for implementation of state programmes.

Most training activities in 2008 - 2009 were focused on leadership training. In 2009, thetrainings covered the impact of the crisis and budget reductions, whereas in 2010, emphasis wasput on exchange of experience in the area of budgetary restraint.

The remuneration system in Ukraine was not fundamentally affected, although certain cuts havebeen made and further salary decreases are expected in 2010.


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IV.4 Changes in HRM policy planning and implementation practiceA number of changes in the institutions responsible for HRM policy have been observed in the

period 2008-2010. In some countries, the crisis has triggered the activity of social partners,although their impact on policy planning is perceived as minor. Findings suggest that the crisishas had no obvious impact on centralisation/decentralisation tendencies, whereas it may havereinforced the tendency of not carrying out proper policy analyses when designing new HRMpolicies. In several countries, the development and implementation of HRM policies aresupported by international donors.

In Azerbaijan, HRM planning is the responsibility of the Civil Service Commission under thePresident of the Republic of Azerbaijan. In the period 2008-2009, its functions were widenedconsiderably and its capacity was reinforced. Within the scope and content of tasks of the

Commission are: defining training needs for civil servants (2008); training strategy for civilservants (2009); professional development system of civil servants; state order on re-training andprofessional development of civil servants (2010); rules for performance appraisal of civil servants(2009). The role of Unions in HRM policy planning and implementation has significantlyincreased. The Unions play a significant role in the process of dismissal and granting of socialbenefits to civil servants. Furthermore, NGOs participate in the annual performance evaluation ofstate bodies. On the other hand, recruitment, regulation, and control over the conduct of civilservants, as well determining mechanisms for performance appraisal, have become morecentralised.

In Bosnia and Herzegovina, the main institutions responsible for HRM policy planning are the

Council of Ministers and the Parliament. Public service institutions are responsible for draftingparticular regulations, each in their jurisdiction. The involvement of social partners in the decision-making process is perceived as minor. The decision-making process is relatively decentralized,as it was earlier. Concerning the use of policy analysis, decision makers did not at an early stageput in place programs that would reduce the negative impacts of the crisis. On the contrary,decisions were made when the crisis had already affected the country, and no time was left toconduct a proper policy analysis.

In Estonia, there has been a shift of responsible institutions in the area of HRM policy. Before2010, the Ministry of Finance (MoF) was only responsible for remuneration whereas HRM policyplanning was the responsibility of the State Chancellery. As of January 2010, the MoF isresponsible for civil service development, and experts and policy planners from the relevant unitin State Chancellery were transferred to the Ministry of Finance. The development of the seniorcivil service - secretary generals and head of agencies - still remains the responsibility of StateChancellery. The Ministry of Justice is responsible for drafting legislation concerning the civilservice, whereas the Ministry of Social Affairs is responsible for pensions. Although the CivilService Law regulates the civil service on the local government level as well, certain conditionsare decided in every local government unit level, under the supervision of the Ministry of InternalAffairs.

The level of involvement of social partners in decision-making is perceived as medium in Estonia.

The Federation of Trade Unions of State and Local Government Employees (ROTAL) have been


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involved in the discussions related to the new Public Service Law. There is also a governmentalcommittee engaged in annual negotiations with trade unions in issues of remuneration, etc.

Maintaining the social dialogue is one of the tasks of the Ministry of Finance. However, the civilservice is not a very active group, and the union membership rate is low. The level ofcentralisation of decisions is also characterised as medium. The Ministry of Finance coordinatesHRM policy and develops centrally agreed personnel management principles, but it does nothave centralized decision making power on how exactly institutions should implement thesepolicies. When the Government decides to cut the operational expenditure, every Ministry hasdiscretionary power to decide which measures to implement. The new Civil Service Law will leadto a higher level of centralisation in the planning, recruitment and selection of human resources,as well as remuneration, with the aim of providing a better planning tool for policy maker.

The responsibilities of Ministry of Finance are the

following:

co-ordination of HRM policy and support todeveloping the public service in general;

preparation of all government decrees; preparation of personnel plans, attached to

annual budget law (in the planning phase); development of centrally agreed personnel

management principles and formulation ofnational training priorities;

promotion of cooperation between HR andtraining managers;

supporting the development of public serviceethics and common values; collecting public service statistics; developing remuneration policies; providing guidelines and best practice

information.

The responsibilities of the State Chancellery are:

support to training and development of top civilservice officials;

co-ordination of the recruitment and promotionof top officials through managing theCompetition and Evaluation Committee ofHigher State Public Servants headed by theState Secretary.

In Hungary, there have been no changes in the division of responsibilities for HRM policyplanning and implementation, or in the centralisation versus decentralisation of decision-making.It is obligatory by law to involve the social partners.

In Latvia, the Policy Coordination Department of the State Chancellery is responsible for HRMpolicy planning and policy coordination. The Ministry of Finance is responsible for developing theremuneration policy. Other public administration institutions are responsible for theimplementation and coordination of HRM policies within their organisation. The civil serviceadministration, responsible for maintaining a civil service registry and investigating disciplinaryissues, was abolished in January 2009. The level of involvement of social partners in Latvia isregarded as medium. During the crisis, the level of interaction between the social partners hasbeen higher, but not necessarily productive. A variety of mechanisms for consulting socialpartners on economic issues exist, such as the National Tripartite Council, and the ReformSteering Group.


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The centralisation versus decentralisation issue is controversial in Latvia. On the one hand, thedecision making process has become more centralized, to allow for the implementation of

appropriate measures in reducing public spending. On the other hand, the responsibility anddiscretionary powers of senior managers for policy implementation, including resources allocationand employee appraisal, has increased.

There are several projects designed to support HRM development in Latvia, financed, amongothers, by EU structural funds (project postponed) and the European Institute of PublicAdministration (EIPA). Concerning policy analysis, the short time frame for legislative drafting anddecision-making during the crisis period has limited the possibilities to provide qualitative and in-depth analysis. The sheer number of decisions required, combined with the conditions set byinternational creditors, complicates the process. Nevertheless, policy planners keep working onproviding ex-ante analysis and involving stakeholders as it is an integral part of Latvias public

administration policymaking process.

In Lithuania, there have been no changes in the division of responsibilities related to HRM policyplanning and implementation during the period of 2008-2010. The level of centralisation ofdecisions has also remained unchanged. The level of involvement of social partners, perceivedas medium, is promoted in the framework of the National Agreement, between trade unions andbusiness. A new concept for civil service reform is under discussion with various social partners,including trade unions, universities, and political parties. Several projects supported by EUstructural funds assistance have been launched to support the HRM policy planning andimplementation initiatives.

Projects launched to support HRM policy planning and implementation inLithuania:

Analysis of necessary civil service competencies and job descriptions for civilservants directory;

Improvement of the civil servants selection system; Modernization of the Register of civil servants; Research on improving civil servants main motivation factors (remuneration,

evaluation of their performance, social security, pensions).

In Moldova, a Public Administration Reform Unit (PAR Unit) under the Prime Minister functionedin the period 2006 2008. Since April 2008, a Personnel Policy Division, sponsored by a Multi-Donor Trust Fund for the Central Public Administration Reform, was created within the StateChancellery. The new division, staffed by five employees and four local consultants, isresponsible for HRM policy planning and monitoring, or more specifically, monitoring ofimplementation of HRM procedures providing methodological and assistance/support in the fieldof HRM; and professional and personal development of HRM practitioners linking HRM policywith overall strategic planning and management analysis and reporting on HRM. The Ministry ofFinance is also involved in setting upper staff ceilings and limiting personnel costs. The Ministryof Labour, Social Protection and Family is in charge of the remuneration policy and initiates

measures to optimize use of personnel.


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The involvement of social partners in HRM policy-making is characterised as below medium. The

National Commission for consultations and collective negotiations involves representatives of theGovernment, Employers Associations, and Trade Unions. The purpose of the Commission is toparticipate in consultations and solve labour- and socio-economic related problems. In addition,the 2010 Ruling for Public Authorities envisages that drafting of normative acts on remuneration,health protection, price formation, which must be discussed with trade unions.

Since the beginning of 2010, ex-ante policy analysis is being piloted in five ministries, and the2009-2010 Economic Stabilization and Recovery Program has been discussed with relevantstakeholders.

Several projects to support HRM policy planning and implementation have been initiated within

the framework of the EU structural funds, including the Multi-Donor Trust Fund under the WorldBank to assist the Government in the implementation of the Central Public Administration Reform(CPAR); the Institutional Capacity Building of Public Authorities, funded by the EuropeanCommission (currently in the planning phase), and several other projects focusing on capacitybuilding of civil servants, supported by UNDP, SIDA, USAID, and the European Commission.

In Serbia, the Government is responsible for HRM policy planning, whereas the HumanResources Management Service, whose Director is responsible to the Secretary-General of theGovernment, is responsible for policy implementation. The HRM service was established in 2005and its tasks include: announcing competitions for vacancy positions; providing HRM advice;ensuring professional development of civil servants; providing logistical and technical support tothe High Administrative Council; and promoting professional and technical activities ofsignificance for the Governments HRM policies. Concerning the involvement of social partners,the trade unions are generally involved in proposing initiatives and discussing the adoption oflaws or by-laws in the area of HRM. However, it is difficult to evaluate their impact.

In the former Yugoslav Republic of Macedonia, the Government is responsible for HRM policyplanning, and the individual institutions are responsible for implementation. The Civil ServantsAgency (CSA) is responsible for developing HRM policies, and the main tasks of the Agency arethe development of a merit-based system for recruitment and selection; horizontal coordination ofdevelopment and management of HR; introduction and implementation of HRM standards;

standardizing job descriptions; and presiding over, as well as coordinating the HRM network. Theinvolvement of social partners in the HRM policy making is perceived as below medium. Socialpartners are consulted, but their contribution tends to be minimal. A debate developed on anti-crisis measures, and some suggestions put forward by the social partners were accepted, but themajority of the solutions adopted stemmed from the Government.

In Ukraine, the Main Department of the Civil Service is responsible for HRM policy planning andimplementation. The School of Senior Civil Service, established in October 2008, is responsiblefor training. The institutional setup did not change in light of the crisis, and the involvement ofsocial partners in the HRM policy making is characterised as medium, with few or no socialpartners who assert actual influence on the public sector decision-making process. There are


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some signs of a more decentralised HRM policy implementation practice, as some functions havebeen delegated to territorial units.

IV.5 Communication policiesThe issue of communication seems to be critical when it comes to cost cutting and downsizing ofthe public service, since the impact on the personal well-being of public servants is significant.Nevertheless, the information gathered reveals that there have been few efforts at developingconsistent communication policies in the majority of the countries studied.

In Bosnia and Herzegovina, decisions are made at the highest level without consulting theaffected civil servants or the general public.

In Estonia, there has been regular communication between, and within the institutions, mostly on

a top-down approach, with some observed differences in approaches between differentinstitutions. Towards the general public, there has been a steady stream of information, in theform of press releases, press conferences of the Government, and comments of civil servants ontelevision and radio, in particular related to the state budget. During this period, there has beenincreased media interest, among other about costs and measures of cost cutting.

In Hungary, as far as the cost cutting and downsizing of the public sector was limited, there waslittle communication surrounding these issues.

In Latvia, the communication pattern and practice depends on the institution; there was nocommon communication plan. The cost cutting and downsizing measures were put forward as

one of the main priorities of the government.

In Lithuania, there was no special communication plan put in place. The main message was thatbecause of the crisis and cuts in various areas of the economy, similar measures will have to beimplemented in the public sector. The National Agreement was published on the Governmentsofficial web page7.

In Moldova, the main form of communication was internal meetings. Official documents werepublished and presented to the general public through the media (TV and newspapers) and theGovernment website.

In Serbia, after adoption of the Law on determination of the maximum number of employees inthe Republics Administration, the Government published an upper limit on the number ofemployees in the Administration, with precise figures for each body, obliging all institutions to actin accordance with this decision. All relevant acts were published in the Official Gazette of theRepublic of Serbia, and numerous press conferences were held to inform the general public.

In Ukraine, as cost cutting was limited, no special measures to communicate the proposedchanges were taken.

7

See http://www.lrv.lt/en/activities/national-agreement/


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IV.6 Impact of the crisis on the motivation of civil servants and development of publicservice in the longer term

Attempting to assess the impact of recent reforms represented a challenge for the practitionersinvolved in this study. Nevertheless, the optional questions on possible impact of the crisis, thelonger-term gains and losses, and the likelihood of the crisis leading to innovation, wereanswered by 2/3rds of the participants.

In Azerbaijan, the development of an HR strategy, based on principles of results-basedperformance assessment and increased mobility, is seen as the most beneficial outcome of thecrisis, whereas the potential negative impact is related to the lack of salary reviews.

In Bosnia and Herzegovina, the degree of motivation among civil servants has not beensignificantly affected as far as the prospect for a better paid job is very limited, since the privatesector was hit harder by the economic crisis. No major innovation in HRM has come about; in themedium- and long-term, the current salary reduction may have a negative impact on staffing andcorruption levels, in particular if other sectors of the economy will recover and raise salaries.

In Estonia, no general survey has been conducted on how the crisis has influenced themotivation of civil servants. Nevertheless, there exists a certain amount of dissatisfaction over thereduction of salaries, which in turn is translated into less willingness to make an extra effort whenrequired. At the same time, due to the fact that the Estonian private sector was hard hit by thecrisis, there is a general acceptance and understanding of the need to reduce salaries and costsin the public sector.

Since Hungary did not experience any significant cost cutting or downsizing measures, it isdifficult to judge the longer term impact of the crisis. Nevertheless, the introduction of new HRapproaches like performance management and evaluation, and the placement of additionalemphasis on the role managers, which have led to a modernization of the governmental systemas a whole, are perceived as useful for the advancement of the public sector in the future.

In Latvia, which was severely hit by crisis, the impact of the crisis on the motivation of civilservants is perceived as negative in the short- and long term, as it has affected salaries, socialbenefits, and training and career prospects. Nevertheless, taking into account the generalunemployment level in Latvia, simply having a job seems to be a powerful motivation factor to

remain in the public sector. Moreover, the streamlining of processes review of functions,centralisation of record management and bookkeeping, introduction of IT tools to decrease theproportion of manual work, standardization of processes within the public administration (recordsmanagement in HRM) can be characterised as innovations or beneficial impacts of the crisis.

In Lithuania the move towards results orientation in the civil service can be characterised asbeneficial. Several strategies related to, for example, the rotation of senior civil servants, andintroduction of limits of tenures for senior civil servants (maximum eight years in the sameposition) are under discussion. Efforts to strengthen the accountability and responsibility of seniorcivil servants, while giving them more freedom to manage, are also among the perceived gains.


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For Moldova, any measure related to cost cutting and downsizing are influencing negatively themotivation of civil servants and other public sector employees. In this context, the possible risks

are high turnover, difficulties in recruiting qualified personnel and retaining top performers,reduced levels of productivity and performance, and low appeal of civil service employmentamong young professionals.

For the former Yugoslav Republic of Macedonia, the development of a training strategy, therestructuring of bodies involved in the coordination of training for civil servants, as well as variousnew capacity building measures all represent positive improvements. Moreover, theestablishment of a Human Resources Management Network among HRM units in the civil servicewill probably bring benefits in the medium-term. Among the negative impacts are theGovernments reductions in capital investments, and the postponement of a new action plan forcapital investments.

In Ukraine, the motivation of civil servants was not negatively affected by the crisis as far aspublic service salaries remained stable, whereas salaries in the private sector fell.


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V COMPARATIVE ANALYSISV.1 Approach to public sector cost cutting and downsizingThe study shows that among the 10 cases analysed in this research, three types of approachesto cost cutting may be identified:

minor cost cutting, not affecting staffing or salary levels, focusing on streamlining ofother expenses and natural staff reduction (Hungary; Azerbaijan). In some countries,salary reductions or elimination of benefits are prohibited by Law (Azerbaijan; Ukraine);

medium cost cutting measures, resulting in salary and staff reductions of no more than10% (Estonia; the former Yugoslav Republic of Macedonia; Moldova);

severe cost cutting, reducing personnel budgets, salaries and/or the number of staff bymore than 10% (Bosnia and Herzegovina; Latvia; Lithuania; Serbia; Ukraine).

The approach adopted seems to be based on a number of considerations:

scale and proportion of public service expenditure as part of the overall budget beforethe crisis, including the number of civil servants/public sector employees and the levelof their remuneration;

scale and severity of the economic downturn; the extent to which additional (social) benefits granted to civil servants/public service

employees are protected by legislation; stability and effectiveness of the government; obligations towards international organizations like IMF; WB; EU; culture and traditions of the country.V.2 Trends of civil service transformationThere have been no significant developments pointing to a transformation of the civil service as aresult of the crisis. The new Civil Service Law prepared in Estonia was drafted independently ofthe crisis, and recent developments in Lithuania and Moldova are mostly an integral part of theoverall public service reform process initiated before the crisis in these countries.

Of the countries included in this study, the crisis has served as a catalyst for change in the civilservice legislation only in Latvia and the former Yugoslav Republic of Macedonia. In Latvia, thecrisis revealed that in certain aspects, the rights of civil servants were less well protected bylegislation compared to the rights of employees under regular labour contracts, thus, the crisiswas a direct reason for reviewing the civil service legislation. Moreover, the new Law onRemuneration of State and Local Government Authorities Officials and Employees wasdeveloped as a response to the crisis. Both these initiatives are not only aimed at reducing andoptimising costs, but also to improve the functioning of the civil service and the public sectorremuneration system. Some initiatives, like extending the central government remunerationsystem to the local level in Latvia, seemed impossible to implement before the crisis, but it were


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implemented after the crisis hit. In the FormerYugoslav Republic of Macedonia, a Law on PublicService is in the process of being adopted by the National Assembly for the first time.

The level of politicization of the civil service, estimated on a scale from 1 (very low to non-existent) to 10 (very high)8, is generally perceived as medium to low, with the exception ofAzerbaijan and Ukraine (see Figure 1).

Figure 1: The level of politicization of civil service

8 The similar definition and the scale have been used in Expert survey for the SIGMA-OECD project on civil service

developments in East Central Europe since the 2004 European Union Enlargement, November 2007.

8

3

5

5

4

24

2

8

Azerbaijan

Bosnia and Herzegovina

Estonia

Latvia

Lithuania

MacedoniaMoldova

Serbia

Ukraine

Level of politicization1 (minimum) - 10 (maximum)


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VI Strategic human resources management developmentStrategic HRM progressed in most of the countries during the years 2008-2010. Noteworthy andcomprehensive HRM reforms have been implemented or are in the planning stage in Azerbaijan,Estonia, Hungary, Lithuania, and Moldova. In Latvia, the adaptation of the new Law onRemuneration of State and Local Government Authorities Officials and Employees ischaracterised as one of the few positive outcomes of the crisis. The majority of the participants, inthis survey, expressed hope that the current developments in performance management anddevelopment of training systems, as well as the streamlining of processes will improve the publicadministration in the future. On the other hand, certain important initiatives were put on hold ordropped, for example, a major reform of performance management practices and several traininginitiatives in Latvia; pay and promotion freeze in Azerbaijan, pay freeze in the FormerYugoslav

Republic of Macedonia and a hiring freeze in most countries. All these measures have had someimpact on the career prospects for civil servants, but the impact varies from country to country,and depends in part on how public sector employment compares to other types of employmentwithin the country in terms of prospects and remuneration.

VI.1 Changes in HRM policy planning and implementationNo major changes have been noticed in the area of HRM policy planning and implementation. InEstonia, the responsibility for HRM policy development has shifted from the State Chancellery tothe Ministry of Finance. A similar shift is being discussed in Latvia, motivated by the perceptionthat staffing costs represent such a major expenditure that it should be managed by the institution

in charge of state finances. Nevertheless, in most of the cases studied, HR development andimplementation remain the responsibility of an institution close to the centre of government.

The extent of the involvement of social partners in HR policy-making is perceived mostly asmedium to low (see Figure 2). Although social dialogue is stipulated by law or is an inherent partof the political culture in many of the countries studied, the actual impact of the dialogue isperceived as low, among other reasons, because the low level of union membership among civilservants; the limited time available for consultations, in particular in relation to crisis-relatedmeasures9; and the conditions imposed by external actors such as the World Bank, effectivelylimit the space for local dialogue and participation in decision-making. Even in countries whereex-ante policy analysis and impact assessment are perceived as an integral part of the policyplanning process and culture, the crisis did not allow for such time-consuming processes to runtheir course before decisions were made. Most decisions were made at the centre of governmentconstituted fast responses to the crisis, as time has been a critical factor. This mode of decision-making may increase the risk that countries adopt ill prepared measures and in some casescounter-productive ones.

9Randma Liiv, T. The Impact of the Economic Crises on the Governance in the Baltic States


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Figure 2: The involvement of social partners in HRM policy planning

The centralisation/decentralisation tendencies in relation to HR policy planning andimplementation have not been significantly affected (see Figure 3). This can partly be explainedby the fact that the current HRM policy planning practice is highly centralised in most of thecountries surveyed, and during the crisis, the existing patterns were simply reinforced10.

Figure 3: The involvement of social partners in HRM policy planning

10 Randma Liiv, T. The Impact of the Economic Crises on the Governance in the Baltic States

2

1

2

2

3

3

2

2

3

Azerbaijan

Bosnia and Herzegovina

Estonia

Hungary

Latvia

Lithuania

Macedonia

Moldova

Ukraine

Involvement of social partners1 (no impact) - 5 (major impact)

-2

1

0 0 0 0 0

1

Centralisation/decentralisation tendencies-2 (centralised), 0 (the same), 2 (decentralised)


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VI.2 Communication during crisisObservations from the countries included in this study do not reveal any innovative or creativeapproaches to providing, sharing, and exchanging information about the crisis and thegovernments response. Moreover, it seems that not much attention has been paid to thenecessity and importance of communication, in particular internally - within the public sector -between managers and subordinates. In most cases, formal channels of communication likepress conferences, official newsletters and web pages have been used to make informationknown, but little has been done to engage public sector managers in internal information sharingand exchanges with their staff.

VI.3 Motivation, innovation and the possible impact of the crisis in the longer termThe following can be characterised as possible gains of the crisis: drive towards more resultorientation in the public service; streamlining of processes; and new and creative approaches totraining.

The losses are as follows: higher risk of corruption as a consequence of reduced remuneration;reduced motivation and limited career prospects, sometimes accompanied by an outflow ofqualified staff from the public service, and difficulties

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20100930 HRM Survey Report FINAL

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