The Ukrainian economy survives solely through business operations and financial assistance from other countries. However, businesses operating under immense pressure struggle to make ends meet, and international donations to the budget will eventually run out.
In such circumstances, the government allocates billions of hryvnias each year without hesitation to maintain the bureaucratic apparatus. For instance, the budget for 2024 includes 21.3 billion hryvnias for salary funds across all government agencies, excluding the Ministry of Internal Affairs, Ministry of Defense, Security Service, and Border Guards. Is our state in such dire need of a bureaucratic army? Entrepreneur and public figure Yana Matviychuk explored this issue and shared her thoughts
Nearly 200 thousand officials consume the lion’s share of the budget
There is a confirmed assertion that the state is the largest employer in Ukraine. As of mid-2023, practically 173.1 thousand people work in 107 state authorities. In total, over 5 million Ukrainians are employed in the civil service, local self-government bodies, state agencies, commissions, inspections, services, and state enterprises. This constitutes approximately one-sixth of the entire country’s population!
Let’s focus specifically on the 173 thousand civil servants. Why does their maintenance cost the state so much? Despite this, arguments regularly arise in the public sphere about the low salaries of civil servants, and the claim that lower-ranking officials work for minimum wage. Supporters of such arguments often declare, «This is where corruption comes from!».
«In the salary structure of the civil service, the base salary accounts for approximately 30%. The remaining 70% consists of various allowances and bonuses. So, the ‘minimum wage’ of a person, for example, who cleans premises and a bureaucrat, are two different concepts. After all, civil servants have the corresponding levers in their hands: impunity and manipulation», explains Yana Matviychuk.
Vacancies as the basis for budget misappropriation
For instance, where do government officials get the money for bonuses? It’s elementary: by creating fake job openings. Each department declares a planned number of vacant positions, and the corresponding payments are recorded in the state budget. However, in reality, no new employees are sought. The established salary fund is simply distributed among existing staff. Clearly, the leadership takes the lion’s share (yes, an official in the Cherkasy City Council paid himself over a 300% bonus for several years), while the «leftovers» go to loyal employees and those involved in «schemes» alongside the bosses.
According to the Ministry of Finance, at the beginning of the year, up to 25% of positions in the civil service were vacant. For example, in the State Inspection of Architecture and Urban Planning, nearly 59% of positions are «advertised», and in the National Health Service, it’s over 69%. It is from these funds that they create additional payments for themselves.
«This is how our taxes are being «dispersed» by civil servants», — says Yana Matviychuk.
The population in Ukraine, according to the estimate of the Institute of Demography and Social Studies of the National Academy of Sciences of Ukraine in 2023, averages around 30 million people. They serve 173.1 thousand officials. In other words, one civil servant is responsible for approximately 170 Ukrainians. Comparing this ratio with Europe, it is not critical (the ratio is approximately the same there). However, there are factors that prevent us from aligning with the EU experience:
- a full-scale war requires effective solutions, cost reduction, and fund redistribution;
- the actual reduction of Ukraine’s territory due to occupation, as well as the departure of about 6 million people abroad, renders the work of numerous officials unnecessary;
- the implementation and development of digital administrative services create opportunities for the dismissal of thousands of no longer needed officials;
- The Key Performance Indicator (KPI) of the average civil servant is «below the standard». Therefore, it is entirely possible to streamline processes and consolidate positions.
Why is no one doing anything?
The issue of an inflated bureaucracy has been relevant throughout all the years of Ukraine’s independence, and numerous politicians have manipulated it. Promises to reduce the number of officials are made almost every year. However, each time, the loud reforms and scandalous initiatives turn out to be empty promises.
Yes, in 2022, at a conference on the reconstruction of Ukraine in Lugano, Switzerland, representatives of Ukraine presented a project for reforming the civil service. It envisioned the reduction of several thousand officials through digitization, outsourcing, and the consolidation of ministries. The idea remained at the impressive presentation stage. In reality, there were no changes.
Even before the full-scale war, the National Agency for Civil Service developed a draft law that addressed the organization and optimization of the bureaucracy. The authors proposed creating 28 structural areas of work (so-called «family position») to simplify the state structure. In addition, the plan was to establish clear job instructions and offer understandable working conditions. This was an attempt to «kill two birds with one stone» — reduce the apparatus and make government work attractive to talented and initiative-driven individuals rather than outdated bureaucrats. However, this project only passed the first reading, so hoping for quick changes was in vain.
Why do such initiatives fail? There are at least two reasons for this:
- lack of political will. Reducing the number of officials is an unpopular step that can lead to dissatisfaction among civil servants and disrupt established corruption schemes. Therefore, politicians hesitate to take this action, even if they understand its necessity.
- complexity. Downsizing officials requires a thorough audit and a review of the structure of government entities. This is a complex and lengthy process, often met with resistance from civil servants themselves.
Thus, the problem resembles a Möbius strip: it has no beginning or end. «An excess of officials complicates the lives of citizens and businesses. If we genuinely want to create the Ukraine of the future, we need to reduce the role of the state and develop the principles of a free economy. This entails a significant downsizing of the bureaucracy», comments Yana Matviychuk.
Cost reduction and efficiency: experience of countries that implemented reforms
In 2010, the United Kingdom initiated a program to reduce the size of its government personnel. As a result, approximately 400 thousand civil servants were laid off. By 2016, the number of officials had reached 384 thousand — the lowest in the country’s modern history. In May 2022, Boris Johnson launched a program to reduce nearly a hundred thousand civil servants to alleviate the tax burden on citizens.
Successful examples can be found in other countries as well. The development of online services helped Lithuania and Estonia abandon paper workflows, among the first in the world (in Estonia, electronic voting is even implemented). Thus, in Lithuania, with a population of 2.7 million, there are only 60 thousand officials, and in Estonia, with a population of 1.3 million, there are approximately 25 thousand.
3 reasons to downsize the Ukrainian bureaucracy now
- Improved service quality. The excessive number of officials has led to a decline in the effectiveness of government administration. Civil servants spend time on unnecessary or inefficient tasks, and are also inclined to complicate procedures for citizens and businesses. Optimization is meant to address this issue.
- Cost reduction. Over 20 billion UAH in salaries is an excessive amount for a country at war, not to mention the costs of maintaining the bureaucracy. The freed-up funds can be redirected to support the army and move closer to victory.
- Development of alternative services. Digitization has shown that people are ready for online interaction with the government. This direction can and should be developed, thereby optimizing the staff of unnecessary civil servants and reducing the associated expenses.
«Of course, reducing the number of officials is not a panacea for all problems in public administration. However, it is an important step that will make the system more efficient and transparent, optimizing government expenditures. Society should demand that the government and the President take this action», says Yana Matviychuk.
