New public sector wage setting system in Serbia postponed again

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Minister of Public Administration and Local Self-Government of Serbia Branko Ruzic said today that the proposed changes to the law on salaries of civil servants, for another year – until 2021, delay the transition to a new salary determination system with the introduction of “pay grades”.

Ruzic said this at a session of the Serbian Parliament, explaining the proposed changes to the Law on the Salary System of Public Sector Employees, amendments to the Law on Salaries of Officials and Employees in Autonomous Province Bodies and Local Self-Government Units, and amendments to the Law on Employees in Public Services.

The minister said that employers and employees were given a new preparation period to prepare new solutions. The changes he explained were needed, he said, to carry out a “more detailed assessment of the fiscal impact of the inclusion of all public sector employees in the new wage system” and to allow the planning and determination of staff costs under the new wage system.

The goal is to prevent “the share of general government earnings in gross domestic product from growing” and “not to impair the financial sustainability of the republic, provincial and local budgets”, said Ruzic.

“This has all necessitated an adequate time period between the adoption of the law and its implementation, which would allow the reform of the wage system to have a financially sustainable effect from January 1, 2021”, said Ruzic.

He also pointed out that salary classes exist in the system of state bodies since January 1, 2007, when the then reformed Law on Salaries of Civil Servants and Employees was adopted.

“The work of civil servants is already being monitored and the salaries of civil servants are moving through pay grades, depending on the performance appraisal”, the minister said. He explained that “pay grade means that salaries are increased for employees based on the quality of their work, even if the pay basis is not increased. Pay grades mean good performance and people management, which should be monitored and rewarded through pay.”

Ruzic stressed that the Government’s commitment to the reform of the wage system would enable the implementation of “pay grades” in the entire public sector with more than 400,000 employees in institutions, state bodies, public agencies.

“The specifics of each part of the public sector must be analyzed and respected through a system of wages, allowances and other rights arising from work, as well as through the process of planning financial costs of labor”, said Ruzic.

He added that all this required extensive financial analysis of each sector, how they were organized, financed and the cost of operation, all necessary to make “a meaningful and budget-friendly transition to a new system in all parts of the public sector.” Reform processes in this area in other countries have been prepared and implemented for more than 10 years, said Ruzic for Danas.