Significant Growth in Public Sector Earnings (2020-2023): Citizens Pay Nearly 150 Million Euros More

The number of public administration and state-owned enterprises employees increased by over 5,000 from 2020 to the end of 2023. Meanwhile, between 2017 and 2023, local self-government saw an increase of more than 3,500 employees

Kristina Radović

In just four years, state-owned enterprises have added thousands of new employees, with some nearly doubling their workforce. Public administration has also seen growth at both the state and local levels, despite calls from the European Union (EU) and international financial institutions urging Montenegro to streamline its public sector and administration.

The Ministry of Public Administration's (MPA) Report on Implementing the Public Administration Optimization Plan 2018-2020 states that by the end of 2020, just over 42,000 people were employed in public administration at the central or state level. According to MPA data from November 2021, this number had risen to nearly 45,000, indicating an increase of 2,743 employees in less than a year. The Ministry of Public Administration projects that by June 2024, before the planned reconstruction of the Government of Montenegro, the number of public sector employees would reach 46,489.

Until December 2020, the Government was led by the Democratic Party of Socialists (DPS) under Prime Minister Duško Marković. This administration was succeeded by Zdravko Krivokapić's Government, which lasted until February 2022. Since then, two additional governments have taken office: one led by Dritan Abazović and the current administration under Prime Minister Milojko Spajić.

According to official data from the Ministry of Public Administration, as of June 2024, the largest public sector employees at the national level were in education and science, with more than 17,500 workers. Additionally, over 11,000 individuals were employed in various ministries.

The Government's website does not provide information on the number of employees following the reconstruction of Prime Minister Spajić's cabinet, which saw an increase in the number of ministries. The reshaped Government is notably larger than its original composition, now featuring seven vice presidents, 25 ministries, and one minister without portfolio.

Local governments are also seeing significant growth. At the end of 2017, just over 12,000 people were employed in local administration bodies and companies, while by the end of 2023, that number had risen to nearly 16,000.

The Report on the revision of the Bill on the final account of Montenegro's 2022 budget notes that between 2019 and 2022, the largest increase in public administration employment occurred in the health sector, with over 1,000 new hires, followed by education, which saw nearly 1,000 additional employees.

Municipalities Also Burdened by Growing Administrative Staff

These figures do not account for temporary, casual, and work contracts, of which thousands have been signed in recent years. For instance, the Municipality of Budva, with the approval of Mayor Marko Carević, signed 136 temporary and casual contracts in 2020 alone. Similarly, the Municipality of Ulcinj, under the consent of President Ljor Nrekić, concluded 189 such agreements.

Milena Muk from the Alternative Institute (IA) told CIN-CG that while the official data is quite conservative and its reliability may be questionable, it reflects a consistent growth trend in public-sector employment. She also pointed out that there is no comprehensive record of the number of people working in companies that are majority owned by the state or local governments.

According to the Ministry of Education and Culture's data from June 2024, Podgorica has the highest number of employees in local administration, with 1,129 staff members. In second place is Budva, which, despite having a significantly smaller population than the capital, employs 729 people.

It is noteworthy that Budva, with roughly two and a half times fewer inhabitants than Nikšić, has more public administration employees.

According to Ines Mrdović, executive director of Action for Social Justice (ASP), one of Montenegro's biggest challenges is that the Government rewards political loyalty, family members, and close associates with jobs rather than ensuring that the administration is staffed by highly skilled professionals who prioritize the interests of citizens.

"In addition to this issue, we must not forget the thousands of diplomas that have been purchased, resulting in a public administration that is not only dominated by party loyalty and nepotism but also compromised. Many individuals falsely present themselves as qualified professionals, such as lawyers or economists, which undermines the administration's ability to perform its duties effectively," Mrdović emphasizes.

Annual Growth in the Budget: A Persistent Trend

Public administration spending continues to rise each year. According to an analysis by IA, when the DPS government under Prime Minister Duško Marković began its mandate in 2016, the annual gross wages for state-level employees totaled 422 million euros. By the end of its term in 2020, this figure had nearly reached half a billion euros.

The new Government further increased these expenditures to 535 million euros in 2021. Last year, this amount hit a record high of 643 million euros.

Until December 2020, there was a majority Government of the Democratic Party of Socialists (DPS) of Prime Minister Duško Marković. The Government of Zdravko Krivokapić replaced that administration until February 2022. After that, two more governments were led by Dritan Abazović and the current Prime Minister Milojko Spajić.

Until December 2020, the Government was led by the Democratic Party of Socialists (DPS) under Prime Minister Duško Marković. This administration was succeeded by Zdravko Krivokapić's Government, which lasted until February 2022. Since then, two additional governments have taken office: one led by Dritan Abazović and the current administration under Prime Minister Milojko Spajić.

According to official data from the Ministry of Public Administration, as of June 2024, the largest public sector employees at the national level were in education and science, with more than 17,500 workers. Additionally, over 11,000 individuals were employed in various ministries.

The Government's website does not provide information on the number of employees following the reconstruction of Prime Minister Spajić's cabinet, which saw an increase in the number of ministries. The reshaped Government is notably larger than its original composition, now featuring seven vice presidents, 25 ministries, and one minister without portfolio.

Local governments are also seeing significant growth. At the end of 2017, just over 12,000 people were employed in local administration bodies and companies, while by the end of 2023, that number had risen to nearly 16,000.

The Report on the revision of the Bill on the final account of Montenegro's 2022 budget notes that between 2019 and 2022, the most significant increase in public administration employment occurred in the health sector, with over 1,000 new hires, followed by education, which saw nearly 1,000 additional employees.

Municipalities Burdened by Growing Administrative Staff

These figures do not account for temporary, casual, and work contracts, of which thousands have been signed in recent years. For instance, the Municipality of Budva, with the approval of Mayor Marko Carević, signed 136 temporary and casual contracts in 2020 alone. Similarly, the Municipality of Ulcinj, under the consent of President Ljor Nrekić, concluded 189 such contracts.

Milena Muk from the Alternative Institute (IA) told CIN-CG that while the official data is quite conservative and its reliability may be questionable, it reflects a consistent growth trend in public-sector employment. She also pointed out that there is no comprehensive record of the number of people working in companies majority-owned by the state or local governments.

According to the Ministry of Education and Culture's data from June 2024, Podgorica has the highest number of employees in local administration, with 1,129 staff members. In second place is Budva, which, despite having a significantly smaller population than the capital, employs 729 people.

It is noteworthy that Budva, with roughly two and a half times fewer inhabitants than Nikšić, has more public administration employees.

According to Ines Mrdović, executive director of Action for Social Justice (ASP), one of Montenegro's biggest challenges is that the Government rewards political loyalty, family members, and close associates with jobs rather than ensuring that the administration is staffed by highly skilled professionals who prioritize the interests of citizens.

"In addition to this issue, we must not forget the thousands of diplomas that have been purchased, resulting in a public administration that is not only dominated by party loyalty and nepotism but also compromised. Many individuals falsely present themselves as qualified professionals, such as lawyers or economists, which undermines the administration's ability to perform its duties effectively," Mrdović emphasizes.

Annual Growth in the Budget: A Persistent Trend

Public administration spending continues to rise each year. According to an analysis by IA, when the DPS government under Prime Minister Duško Marković began its mandate in 2016, the annual gross wages for state-level employees totaled 422 million euros. By the end of its term in 2020, this figure had nearly reached half a billion euros.

The new Government further increased these expenditures to 535 million euros in 2021. Last year, this amount hit a record high of 643 million euros.

In 2016, local governments spent 45 million euros on employee wages; by 2019, this figure had risen to 51.7 million euros across all local administrations. According to the Public Administration Reform Strategy 2022-2026 (Strategy), this period also saw an increase in expenditures for work contracts and temporary and casual job contracts.

"Until now, no government has dared to tackle this issue seriously, as this type of employment benefits political parties in power. Any government attempting to rationalize the number of public sector employees would likely lose the next election. Moreover, such a move would undoubtedly have a significant financial impact on the budget, as public sector employees, protected by collective agreements, are entitled to substantial severance pay, unlike their counterparts in the private sector," says Mrdović.

Fast-Tracking Employment in the Public Sector

The former Government was characterized by a lack of transparency, nepotism, and party-based employment practices, which have persisted under the current administration.

"Regarding employment systems and transparency, the DPS developed mechanisms for what we call a 'shortcut' to the administration, such as work contracts, consulting engagements, volunteering, and more. This system is still in place today. For example, you hire someone on a temporary work contract, extend it month by month, and eventually announce a competition. The individual receives the test questions in advance, and as a senior official, you give them the highest marks, leading to indefinite employment. These shortcuts have become the standard way of hiring," explains Mrdović.

The Report reveals that in 2020 alone, the number of employees at the central level increased by 1,179, and at the local level by 319. "The largest number of new hires and engagements occurred in the second half of 2020, coinciding with the parliamentary elections in August," the document states.

Muk notes that the underlying issues are flawed employment procedures and the absence of a meritocratic vision within the Government. "I use the term 'meritocracy' intentionally, as many of today's politicians promised it when they were in opposition," Muk adds.

A recent example of returning to old practices is the reintroduction of a rule allowing the Minister of Education, rather than school boards, to decide on the appointment of school principals.

"For less than two years, these provisions were repealed and reintroduced in the same way—through the Assembly, without public discussion, explanation, or a systematic approach. The new parliamentary majority, led by the Europe Now Movement (PES), justified stripping school boards of their powers by citing poor results," Muk explains.

He emphasizes that true depoliticization or professionalization cannot occur without a clear, predictable procedure and transparent criteria for evaluating all candidates.

One anonymous source told CIN-CG about their experience with recruitment in exchange for votes. "During the summer of 2020, I worked at one of Montenegro's companies, and I saw that four colleagues were given indefinite contracts in exchange for votes in the elections held on August 30, 2020."

Hiring Without Transparency: Jobs Granted Without Public Advertisements

Between 2020 and 2024, large state-owned enterprises hired thousands of new employees, with some adding hundreds to their workforce.

For example, Pljevlja Coal Mine hired 477 people over four years—an increase of two-thirds from 2020, when the company had 691 employees. By the end of 2023, the workforce at Coal Mine had grown to 1,168.

The 2023 Annual Financial Report for "Coal Mine" Pljevlja, published by the State Audit Institution (DRI), states that in 2022 and 2023, the company filled positions by transferring employees from other employers, primarily from the private sector, and signing work contracts with them.

"The actions described above violate Article 24 of the Labor Law, which mandates that the Employment Service must publicly advertise vacant positions in companies, public institutions, and other public services that are founded or majority-owned by the state or local governments, upon the employer's request," states the SAI Report.

Over the past four years, the number of employees at the Montenegrin Electric Distribution System (CEDIS) has increased by 361, reaching 1,721 workers by the end of 2023.

The 2022 annual financial report for "Montenegro elektrodistributivni sistem" LLC, prepared by the SAI, notes that the internal organization and job systematization, revised on September 8, 2022, included 511 positions. "The total number of employees in the company at the end of 2022 was 1,643, with 1,334 holding indefinite-term contracts and 309 on fixed-term contracts, marking a 4.8% increase from 2021, despite the workforce plan aiming for a reduction to 1,549 employees for 2022."

The Report further states that CEDIS hired employees without conducting public advertisements.

Over the past four years, the Post of Montenegro (PCG) hired 201 people, while the Hotel Group "Budvanska Riviera" (HGBR) added 183 employees, bringing its total to 595. Additionally, AAD "Elektroprivreda Crne Gore" Nikšić (EPCG) employed 163 people, resulting in 1,124 employees by the end of 2023.

Research by the Balkan Investigative Reporting Network of Montenegro (BIRN-CG) revealed a significant increase in the number of employees across five state-owned power companies: Elektroprivreda Crne Gore AD Nikšić, CEDIS, Montenegrin Electric Transmission System AD Podgorica, EPCG Solar Gradnja LLC Nikšić, and EPCG - Željezara Nikšić LLC.

The growth in the number of companies over the years must also be considered.

BIRN researchers highlight that the workforce in the electrical sector has grown significantly, from fewer than 2,600 employees in 2018 to over 3,800 by 2023. This increase includes Željezara, which EPCG acquired, and the newly established Solar Construction.

The Report also notes that in sectors such as state administration, defense, and mandatory social insurance, the number of employees in 2022 had risen by more than 20 percent compared to 2010.

Diverse Data on Employee Numbers

Mrdović emphasizes that the burdensome public administration is a significant financial cost, not only through wages but also due to a range of additional benefits provided to public sector employees, including cars, fuel, phones, daily allowances, bonuses, workgroup payments, commissions, and more.

Interestingly, the Ministry of Justice's Report reveals that during the final three months of Predrag Bošković's mandate, there was a sudden spike in the number of employees in the Ministry of Defense (MO) and the Army of Montenegro (VCG). From August 31, 2020, when the DPS lost power, until November 30, 2020, before Bošković left office, 186 new hires were made. As of March 2024, the Ministry of Justice data show that VCG has 1,920 employees.

CIN-CG's research also revealed discrepancies between the employee numbers reported by the Ministry of Internal Affairs (MJU) and the Tax Administration (TA). For 2020, there was a gap of approximately six thousand employees between the figures from the Public Administration (PU) and MJU.

A similar disagreement occurred in 2021. Official data from the Ministry of Education and Culture reported that there were nearly 45,000 employees at the state level and over 6,500 at the local level in November 2021. However, PU data showed significantly higher numbers, with the Tax Administration reporting just over 50,000 at the state level and slightly over 6,000 at the local level.

The MJU website does not have data for 2022. The 2023 data also differ significantly, showing discrepancies of nearly 5,000 employees at the state level and about 400 at the local level.

On the MJU website, it states, "This scope does not include companies majority-owned by the state and municipalities." Similarly, in a response to CIN-CG, the PU clarified that these numbers do not account for state-owned or locally owned companies.

In response to these discrepancies, CIN-CG contacted the Ministry of Justice, which referred us to the Ministry of Finance (MoF), but no answers were received by the time of publication.

The PU informed CIN-CG that the data they provide are registration-based and represent figures for the entire year, suggesting that comparing monthly data with annual data might explain some inconsistencies.

Experts interviewed by CIN-CG suggest that PU tracks all payments, including those based on work contracts, which could contribute to the discrepancies in the reported figures.

Optimization Plan: A Mere Formality

Muk explains that efforts to reduce and align the number of employees with the actual needs of the public sector—referred to as "optimization"—have disappeared from the Government's reform plans, including the recently presented Fiscal Strategy Draft. This comes despite a decision made during the last DPS government to reduce public administration staffing levels significantly.

The Plan for the Optimization of Public Administration in Montenegro 2018-2020 set a target of reducing the number of employees by 3%—or 1,179 employees—by the end of 2018. However, instead of streamlining, the administration has only expanded.

"The Government's approach to the public sector is fragmented, with the rules scattered across various sectors. Data management and accountability are lacking, even where clear rules and penalties for monitoring wages and employees exist," Muk emphasizes.

It is difficult to determine the actual number of employees in public administration accurately. Muk points out that records are often not kept for individuals hired on work contracts or temporary jobs and stresses the need for more transparent contracting practices, with clear plans and justifiable needs.

The EU is also calling for greater transparency in this area. According to the European Commission's 2023 report on Montenegro, the Parliament adopted amendments to the Law on Local Self-Government to align it with the Law on Civil Servants and State Employees, despite the Commission's recommendation.

"Relaxed conditions remain a major concern for ensuring employment based on merit, expertise, and the independence of civil servants. Ongoing personnel changes in the public administration have resulted in a loss of crucial knowledge on EU accession issues and a general slowdown in reform progress," the report states.

Although all post-August 30 governments have highlighted the acceleration of European integration as a key goal, none have yet implemented the Brussels recommendations regarding public administration and employment practices.