Ministries of Health, Economics, Agriculture and Finance are the wealthiest in public administration - auditor general

RIGA - The Ministries of Health, Economics, Agriculture and Finance are the wealthiest in Latvia's public administration, whereas the Ministries of Justice and Culture are the poorest, Auditor General Edgars Korcagins said in an interview with TV3 channel on Wednesday.

Outlining the findings of the audit on the reform of the public administration remuneration system, Korcagins acknowledged that good things have been done, such as the creation of a clear and modern job catalog.

"But I have to say that the devil is probably in execution, or the amount of money that institutions can live on in this system," he said, adding that the actual pay gap between institutions has only widened.

Asked whether it was legal to use of bonuses and additional payments as a substitute for salary increases, Korcagins said that everything was fine on the legal side, but the question was more about internal fairness in the public administration. He mentioned that there are institutions where employees receive bonuses for six months of the year or even the whole year, while in others they are not paid any extra money because the institutions cannot afford it.

Asked whether he accepts Finance Minister Arvil Aseradens' (New Unity) criticism about the audit carried out by the institution on the state's approach to curbing the shadow economy, Korcagins said that he does not accept it and stressed that the report is the result of a thorough and comprehensive work.

Asked whether the State Audit Office is feeling increased political activity ahead of this year's elections, Korcagins said he could sense a little more initiative from politicians to suggest issues for the auditors to focus on. However, he stressed that any information is useful for auditors.

He urged politicians not to postpone tackling important issues in the run-up to the elections.

As LETA reported, although the legal framework for the reform of Latvia's public administration pay system has been provided, the objectives of the reform, which was started in 2022, have not been achieved, the State Audit Office (SAO) has found in an audit.

The SAO notes that the reform was aimed at creating a uniform, transparent and competitive pay system for Latvia's public servants. While total expenditure on public sector salaries has increased substantially, pay inequalities between various departments and institutions persist. Remuneration of staff is still determined by historically established base funding rather than by the value of the post and the content of the work, the SAO concluded.

Gatis Litvins, a member of the SAO Council, says that the reform of the remuneration system was necessary, but that the established system does not ensure equal and competitive remuneration if the objectives of the reform are not consistently followed throughout the public administration.

"The audit shows that the problem is not the amount of money available to the public administration as a whole, but its distribution. As long as the salaries are determined by the historically established base funding, equal pay for equal work in the public administration is not possible," says Litvins, adding that the audit report is "about values - fairness and respectful treatment of everyone".

The positive achievements of the remuneration system reform include the development of a job catalog with an updated job structure and a clear classification, where the job coefficients are set in relation to the basic salary. The salary coefficients for senior public officials have also been specified, respecting the principle of branches of power and hierarchy, which strengthens the internal consistency of the system, the SAO says in the audit report.

At the same time, according to the State Audit Office, salary inequalities for similar positions in the public administration persist. For the same or very similar positions with comparable job content and responsibilities, salaries can vary between institutions by up to 30 percent.

Although the total expenditure on public servants' remuneration in the sampled institutions increased significantly in 2024, inequality in the distribution of funding between institutions has not decreased, the SAO stresses. Historically established baseline funding has proved resistant to reform, the auditors say, with some institutions able to reach the midpoint of the salary scale with existing funding, while others are left up to 62 percent underfunded.