The 70/30 wage system has become an under-reform

Ten years ago, Europe’s demand to introduce fair pay for officials was excluded from the civil service law; Currently, civil service reform in Ukraine is developing slowly, and the National Agency of Ukraine for Civil Service Affairs is losing its leadership status, endlessly preparing a bill on a new remuneration system.

Let us recall that Europe’s demand to introduce fair remuneration for officials (one of the conditions is a salary of 70%, a bonus of 30%) was deleted from the adopted law on the civil service almost ten years ago. Then the civil service reform had just started, but it is still in the status of under-reform. During the pandemic, competitions for public positions were abolished, which allowed “servants of the people” to put their people in important positions. And the National Agency of Ukraine for Civil Service (NAGS) had to fight all this. But, to put it mildly, it has lost its leadership role in the reform, immersed in the endless preparation of a bill on a new European system of remuneration for civil servants.

And then, as usual, the new budget year took everyone by surprise, as did the 70 to 30 system. And they did it in a very strange way - through a line in the 2024 budget and a government resolution without a basic bill (the initiative passed only the first reading), which should introduce a systemic classification of positions and salaries of civil servants. And this is a large field for possible manipulations that could lead to an increase in  the costs of maintaining the state apparatus during the war. Therefore, it is not surprising that they are now changing staffing schedules in government agencies and courts, where there are also civil servants.

Why was this legislative innovation not for everyone? What were the deputies thinking when they adopted the budget and implemented this norm? What is the position of the National Agency on Civil Service Issues? And what does the Ministry of Finance have to do with it?

Strategy of the Ministry of Finance and privileges of the Verkhovna Rada&Co

The most interesting thing about the 2024 budget lies in the final provisions . Namely: the conditions for remuneration of civil servants, determined by other provisions, are not applied when determining the remuneration of civil servants of the Verkhovna Rada apparatus . That is, nothing will change for them.

Thus, special working conditions were created in the public sector. Institutions such as ministries and courts found themselves in different conditions - according to the 70/30 formula.  classification by the end of 2023 . New salaries have not yet been approved, and therefore a number of budgetary institutions are racing to change their staffing levels and increase the number of management positions.

People's Deputy Alena Shkrum (Batkivshchyna), who has been involved in civil service reform for a long time, says: “Ukraine should have carried out reform before a full-scale war . SIGMA ( the main goal of the organization is to strengthen and improve public administration in the European space. - I.F. ) provides a report annually, including on our fulfillment of these requirements during the European integration processes. A few years ago we scored 0 on all assessment criteria. One of the demands is to change the terms of remuneration. All civil servants should be divided into categories and in all government agencies receive plus or minus the same pay for the same work. And this is not due to the bonus. So that there is no minimum salary, and the bonus is 200 thousand hryvnia.”

When there is such an imbalance between salary and bonus, this can cause corruption risks. In addition, the state still did not have a classification of civil service positions according to a functional principle, which did not allow payment of labor taking into account the complexity and responsibility of the work in the position. And resolving this issue is one of the tasks of the State Anti-Corruption Program for 2023–2025.

Alena Shkrum emphasizes that there should be a normal salary level, but there are some nuances here.

“Since reforms have not been carried out, each body requires exceptions and special conditions. The Antimonopoly Committee demands separate salaries for itself. Customs, tax authorities, the Accounts Chamber and the Central Election Commission want higher salaries. The courts were also unhappy from the very beginning, but there are not many civil servants there. And we have what we have. As a people’s deputy, I may not be objective here, but the parliamentary service must be taken out separately, as in the whole world. But we didn’t do enough work because we had to pass the law “On Parliamentary Service”. Of course, now all authorities are playing with this - with bonuses, salaries, positions. Especially when there are no funds and no strategy,” she adds.

The people's deputy notes that the problem is also that the ministries are financed differently. And he talks about the budget of the Ministry of Finance, which has the ability to hire personnel and create departments, unlike the Ministry of Culture or the Ministry of Foreign Affairs. Of course, there is no open official data on this delicate matter. Therefore, ZN.UA is working on a request to the government to find out what the imbalance is between bonuses and salaries in different ministries. Because it may turn out that the income of a driver in one department is greater than the income of the head of a department in another.

The Ministry of Finance confirms that government agencies may have different levels of funding, but does not agree that their budget is too high.

“The imbalance in funding may be due to parliamentarians who lobby for increased funds for certain ministries. To prevent this from happening, the Ministry of Finance initiated  a change in approaches to wage conditions in the 2024 budget If were satisfied with everything, then why would the Ministry of Finance change approaches? The question is rhetorical. And it’s not difficult to make a simple arithmetic calculation: take the wage fund of each organ, divide it by the actual number and understand which organs are rich and which are poor. And this is definitely not the Ministry of Finance,” says Deputy Minister of Finance Roman Ermolichev.

Alena Shkrum emphasizes: due to the fact that the Ministry of Foreign Affairs does not have sufficient resources, a large burden falls on the apparatus of the Verkhovna Rada, which should help people’s deputies prepare, including for foreign business trips. And therefore the parliament decided not to change their working conditions.

The head of the budget committee, Roksolana Pidlasa (“Servant of the People”), also explains why such special conditions arose for parliament.

“Here there is an incomparably high number of norm drafters versus administrative staff. In fact, all committee secretariats are norm drafters. Therefore, they do not yet fit very well into the grading system. In addition, the plans include a law “On Parliamentary Service”, where salaries will be fixed. We removed almost all bodies with salaries fixed by law - the National Agency for the Prevention of Corruption, the National Anti-Corruption Bureau of Ukraine, the Antimonopoly Committee, the National Commission that carries out state regulation in the fields of energy and utilities,” she notes.

However, not only people's deputies defend their apparatus. Similar processes have begun where the new 70/30 payment system is to be launched. To guarantee better salaries, some institutions are reworking their staffing schedules. For better salaries, the names of positions and structural units are changed.

The number of departments is added and management appears. Managements multiply and departments arise. Or independent divisions of the apparatus are created. This increases the number of managers, and also increases the level of the unit. And this has a positive effect on wages. On paper, everything looks simple - the number of employees is not increasing. True, either those who received leadership positions or those who changed their division to a higher one (either by transferring an employee “up” or simply changing the name of the division) become more financially protected. The rest remain under the same conditions of detention.

And this is where the chain reaction principle comes into play. If one body has better conditions, then those who have not transformed will lose personnel who can move to other bodies in the civil service.

Lost Time Agency

The NAGS is responsible for introducing the classifier and grades. wrote that this had to be done several years ago, calling NAGS an agency of wasted time. Nothing changed. The Ministry of Finance says that the 2024 budget was formed before September 15, and therefore there was enough time to complete the relevant work, and they add that the government will soon approve official salaries.

The head of the National Agency, Natalia Alyushina, for her part, emphasizes that the 2024 budget provided for exceptions, and adds that this is the first step of the reform, and not the reform itself.

“Indeed, next year there will be several different approaches and models for remuneration of civil servants, depending on the body in which they work . Today, we observe a certain reflection on the government’s approval of a new salary scheme, which, however, is not supported by law . Now it is important not to make “standards”, but to make efforts to carefully and conscientiously classify. Avoid formalities or inaccuracies. The task of the National Agency for Civil Service Affairs here is to verify the correctness of the classification. For a clear understanding of what the new salaries will be, we are preparing, including together with the Ministry of Finance, a corresponding draft resolution,” explains Natalia Alyushina.

She notes that the department expects parliament to consider the government bill “On the Civil Service” (No. 8222 ) , which should introduce a unified approach to the remuneration of civil servants based on a new job classification. It is just being prepared for the second reading. But the responsibility for the reform, which has essentially now failed, lies not only with the people’s deputies or the government, but also with the National Agency for Civil Service Affairs, which must take a proactive position. And not just watch how the civil service is falling apart, in particular, by adopting key wage standards for the management system on the initiative of the Ministry of Finance, and not in accordance with the law, which was supposed to lobby the authorized relevant agency at all levels - government, parliamentary, public .

Due to the fact that the political system has not made appropriate decisions, staffing in the Supreme Court is being urgently changed. There are also civil servants in the apparatus. Judge Victor Prophet at the plenary session on November 24 noted that retaining valuable personnel is important, but the Supreme Court has special conditions and can wait until next year with this decision. His position to postpone the issue was not heeded. The number of positions on the staff has remained the same, although more than two dozen judges have resigned over the past year. Almost a hundred positions had to be cut. But no one knows what salaries will be in the new year, and therefore they are playing it safe.

The head of the Armed Forces Viktor Kapustinsky convinces that there are problems with the current staff, but says that “all changes are proposed within the framework of the approved budget for 2024.” But here it is important to understand that now, without a final decision from the Ministry of Finance on base salaries, indicate the exact amount the institution's budget is impossible.

Judge Konstantin Pilkov, coordinator of the working group on judicial management standards, noted that the new “ staff ” was received, in fact, before the meeting . “It is hardly possible to say that these changes are included in the optimization concept that was developed by the previous working group and with which this working group continues to work, just as it is hardly possible to say that this  staffing table meets all those principles , and in general the direction of optimization operation of the device ,” he explains. Judge Elena Kibenko shares the same opinion

Indeed, last year, to save money, the number of positions on the Supreme Court was reduced by 21%. UAH 2 billion was spent on salaries. The state could spend the saved funds to support the Armed Forces of Ukraine. Then, during the reduction, they paid attention to the relationship between their apparatus and the apparatus of the Verkhovna Rada, which indicated a high level of bureaucratization of the court.

Now it is important that the new conditions of remuneration in all instances do not provoke an artificial increase in the number of managers , as well as the dubious transfer of employees to higher-level units.

How will the Ministry of Finance act in conditions where the government, NAGS and parliament have not agreed?

Deputy Minister of Finance Roman Ermolichev notes that the formation of the structure of the body is the responsibility of the head, but these processes will be controlled.

“If someone does not invest in the salary fund and comes for additional funds, the Ministry of Finance will check this. We will introduce electronic reporting of the structure of each body, classification of positions, salary components, etc. We expect effective management. The success of the reform depends on this. There is a limit on the number of “expensive” positions to avoid this artificial increase. What is important for us is not the number of civil servants, but the quality of their work, which affects the efficiency of the public administration system as a whole,” he says.

Roman Ermolichev  adds that international partners have commented on a significant number of existing vacancies and recommend canceling them : “This is an artificial increase in the fund for paying incentive bonuses. That is why, in order to optimize the number of government bodies, the Ministry of Finance will initiate a reduction in their number.”

But the Verkhovna Rada, the Ministry of Finance and the National Agency for Civil Service Issues must act synchronously. If a key step in the reform is written down as a line in the budget on the initiative of the Ministry of Finance, and then government regulations are adjusted to it, it looks strange. This creates a wide field for manipulation, primarily for the heads of government agencies, who, despite the norms of the law, will find an opportunity not only to maintain the status quo, but also to feed their own. And all this happens when the necessary law has been in parliament for a year.

And we are not even talking about the quality and speed of the NAGS work, but about the coordination of actions between the government and parliament. It looks like she's not there. And from this it is clear that there is no transparent and competent civil service in Ukraine. And our international partners cannot help but see this.