The problem of unclearly defined state administration authorities is manifested very clearly in the organization of their financing. The Ministry of Finance issuing the binding budget composition in a form of decree of the Minister of Finance (based on his authorization under Section 10 of the Rules of the Budget Funds Management Act No. 576/1990 Sb.) considers state administration authorities to be those bodies upon which the establishing or other legislation directly imposes the exercise of state administration. It is known, however, that courts have ruled against this classification in some cases. The classification of 1997 stated there were 146,000 employees in state administration not including members of the Police, prison services and customs officers.
| Type of organization | Number of employees | Structure in % |
|---|---|---|
| Cenral government | 13,198 | 2.6 |
| Cenrally controllded administration authorities | 116,970 | 23.3 |
| Total for state administration | 130,168 | 25.9 |
| Other budgetary organizations (fully financed from the state budget) | 170,952 | 33.9 |
| Total for budgetary organizations (receiving contributions from the state budget) | 301,120 | 59.8 |
| Contributory organizations | 202,065 | 40.2 |
| Budgetary and contributory organizations | 503.185 | 100.0 |
Note: These figures do not include employees of district authorities (the figures for 1997 are 15,765 employees). The total number of government and public administration employees, i.e. 146,000, thus represents the sum total of 130,168 from the above table and 15,765 employees of district authorities.
The financing of state administration is included in 26 chapters out of the total of 33 chapters of the state budget. In 23 cases, the central bodies act as administrators of these chapters (14 of them are headed by the Government members), the remaining chapters are attached to this group from a technical viewpoint (the office of the President of the Republic, the Office of the Government, the Constitutional Court). Other subordinated administration authorities either with territorial competences (e.g. job centres, tax offices etc.) or with specialized competences (the Hallmark Office, the Czech School Inspection etc.) are also financed through these chapters.
When this issue is viewed from a wider perspective, the public sector could be perceived as a "non-business sector". This view is applied by the Czech Statistics Office in its statistical surveys at present; it shows around 780,000 employees in actual numbers or 730,000 in converted numbers in this category for 1997. The above figures comprise employees of organizations financed fully or partially from the state or local budgets and non-profit-making organizations (e.g. publicly beneficial institutions, health insurance companies etc.).
The budget of state administration authorities is prepared on a yearly basis. Three-year budget estimates of some indicators are prepared only as a background material. The whole system of creating and approving budgets of state administration is included in the preparation and approval system of the state budget as its inseparable part. There are no binding aggregate budget indicators in the chapters assigned for state administration which would determine the volume of funds allocated for the operation of state administration. The amount available for state administration authorities and organizations in the current year is determined only after the approval of the state budget by the House of Deputies of the Parliament. The administrator of each chapter makes the budget allocation to all its organizations and to its own office, thus deciding about itself. The only exceptions are the numbers of employees and wages funds which the Government approves as a binding indicator according to the bodies of groups of organizations and including also the organizations of state administration.
The development of state administration characterized by staff numbers has shown an increasing trend in recently, particularly due to the fact that the State has taken over some activities from employers which were carried out in a decentralized way in the period of centrally controlled economy (e.g. the calculation of social benefits) and also due to the extension of some traditional activities which have substantially grown under the new conditions (e.g. the increase in the number of border crossings and increased border activity has required an increase in the number of customs officers). Some significant increases in the number of state administration employees do not actually mean an increase in the number of civil servants as the only change is in the constitutions of organizations and employees (e.g. the Railway Office existed in the past but it did not have the status of a state administration body etc.). However, the total number of civil servants shows a declining trend over a long period - see the comparison of the years 1994 and 1998 in the table below.
| Type of organization | 1993 | 1994 | 1995 | 1996 | ||
|---|---|---|---|---|---|---|
| State administration | 65,498 | 68,134 | 69,022 | 135,861 | 130,168 | 154,356 |
| Other budgetary and contributory organizations | 344,531 | 544,266 | 476,477 | 407,295 | 373,017 | 369,158 |
| Total of budgetary and contributory organizations | 410,029 | 614,400 | 545,499 | 543,156 | 503,185 | 523,514 |
Note: The statement above about the flows between state administration and budgetary and contributory organizations is documented especially by a comparison of the 1995 and 1996 numbers when state administration employees number increased dramatically by 67,000 whereas the total number of civil servants declined by 2,000.
About 11% of the total number of employees in the Czech Republic are employed by the budgetary and contributory organizations. From a perspective of wages funds this is a budget expenditure of about CZK 74.3 billion in 1997. Together with the corresponding funds allocated to social and health insurance, including basic allocations to the so-called Fund of cultural and social needs, this amounts roughly to CZK 100 billion. In relation to total budget expenditures, the share of these
"personnel" costs is almost 20% (the actual salaries represent 14.2%). In comparison with France (where the share of personnel costs is 40%), but also with Austria and Germany, personnel costs are not too high and pressure to increase it can be expected.
Furnishing the state administration bodies and organizations with equipment has not been centrally co-ordinated, therefore, it is highly differentiated. What is extraordinary in this respect is the fact that administrators of individual budget chapters, who are simultaneously state administration bodies, decide about their budgets quite independently within the limits given by the size of their chapter. Unsystematic random surveys made from time to time show a wide range of levels of funds supply and of movable and immovable property, which, in practice, has led to no conclusions in respect of financing (attempts of the Ministry of Finance in this direction have been refused).
The unification of the method of remuneration in the whole budget sector was introduced in 1992 through the adoption of the Salaries and Remuneration for Emergency Work in Budgetary and Some Other Organizations and Bodies Act No. 143/1992. In simple terms, this Act governs the remuneration of employees of those employers whose expenses or staff costs are covered from the state budget or from coverage in accordance with special legislation. In addition to budgetary and most contributory organizations, they include, for example, employees of local authorities, of some state funds, of state health care facilities etc. Under the above mentioned Act, state administration has higher basic tariffs (the tariffs represent 60 - 70% of the overall salary) which are by 25% higher compared to other budgetary and contributory organizations.
This Act provides for basic principles of remuneration of the above employees and it also contains an authorization for the government to regulate some details and specific factors by means of a government decree. It concerns, in particular:
It is obvious from the overview of authorizations that a whole number of very significant parts of the salary model are regulated by delegated legislation. We would like to stress this fact in relation to salary tariffs and to conditions for providing additional salaries in the above list. They are the most striking examples of a subsequent purpose-led attitude of the Government to the salaries of public administration employees. Interference with the provision of additional salaries in 1997 and 1998 and the attitude to salary tariffs in 1998 could serve as an example. Such a situation does not contribute to legal certainty in the area of remuneration of the employees in the public sector.
Basic characteristics of the salary system is as follows:
The most significant dilemma is the fact that although this system is conceived as a system with the tariff salary as its skeleton followed by obligatory enumeration of additional pay items, the following salary components, however, are conceived in such a way that they enable the superiors to differentiate the actual salary levels of individual employees in a very significant way (the item "personal evaluation " is typical - up to 100% of the tariff) and, therefore, to modify the basic differentiation intentions based in the salary model. This problem is further intensified due to insufficiently transparent construction of job catalogues for individual public administration areas enabling considerably "creative" approach to the classification of employees in salary classes. Significant scrutiny of this key area of the remuneration policy has also been missing.
Natural consequences of the above-mentioned trends are earnings disproportions appearing in various cross-sections of employees in public administration. Earnings levels of individual bodies and organizations are not primarily determined by a salary model (i.e. by means of the description of demands of their work as set by the job catalogues, and by other influences of an objective nature), but actually by the volume of wages funds enforced in individual chapter budgets or in concrete organizations. A flexible salary model is capable of absorbing any influx of wages funds. There are, however, pressures of generally political or lobbyist nature in this area which are very difficult to cope with in the current situation.
Earning relations that are developing spontaneously to a certain extent become a serious problem in the remuneration of individual groups of public administration employees. Dramatic reactions of some trade unions can be expected in the future (and this has already been seen in a number of cases - e.g. in the case of teachers). The solution of such problems usually has political consequences, it is usually not systematic and creates additional disproportions.
The dynamics of remuneration development in state administration is again slower than in the business sector, after a short-term increase in the middle of the 1990s. The fact that the average salaries in state administration are higher than the average salaries of employees nationwide is primarily due to the higher demands with respect to qualifications and responsibility which concentrates in state administration. The comparison of salaries in comparable jobs between state administration and private sector or banking shows that the average income is lower by 30% or more in state administration. The fact that the State does provide no other compensation to its employees has naturally been reflected in the low stability, quality and efficiency of the staff. Another significant deficiency is the minimum level of relevant information concerning the details of remuneration in state administration which is available from formal sources.
The development of nominal and real salaries(a comparison of budgetary and contributory organizations and state administration with the business sector)
| Adj. | To adj. 1996 | ||||||
|---|---|---|---|---|---|---|---|
| Year | 1989 | 1993 | 1994 | 1995 | 1996 | 1996 | 1997 |
| Inflation rate in % | 20.8 | 10 | 9.1 | 8.8 | 8.8 | 8.5 | |
| Business sector - data of the Czech Statistical Office | |||||||
| Average nom. salary growth index | 119.1 | 117.8 | 111.9 | ||||
| Average nom. salary converted x) | 7,090 | 8,445 | 9,944 | 11,129 | |||
| Real salary increase previous year = 100 | 109.2 | 108.2 | 103.1 | ||||
| Business sector - data of the Czech Statistical Office | |||||||
| Average nom. salary growth index | 117.6 | 118.0 | 117.9 | 117.2 | 105.6 | ||
| Average nom. salary converted x) | 3,450 | 6,770 | 7,962 | 9,392 | 11,076 | 11,005 | 11,625 |
| Real salary increase previous year = 100 | 106.9 | 108.1 | 108.4 | 107.7 | 97.4 | ||
| of which: | |||||||
| State administration - total | |||||||
| Average nom. salary growth index | 119.6 | 115.1 | 124.0 | 120.7 | 104.9 | ||
| Average nom. salary converted x) | 8,110 | 9,700 | 11,169 | 13,855 | 13,486 | 14,146 | |
| Real salary increase previous year = 100 | 108.7 | 105.5 | 114.0 | 111.0 | 96.7 | ||
| of which: | |||||||
| Central government | |||||||
| Average nom. salary growth index | 124.9 | 116.7 | 114.2 | 113.8 | 104.4 | ||
| Average nom. salary converted x) | 9,418 | 11,761 | 13,724 | 15,668 | 15,621 | 16,302 | |
| Real salary increase previous year = 100 | 113.5 | 107.0 | 104.9 | 104.6 | 96.2 | ||
x) Qualified estimate of 1998
Average salaries are calculated from the converted number of employees in full-time employment.
Adjusted reality of 1996 reflecting the methodological change of excluding judges, constitutional justices and prison employees from the number of employees.