Republic of Montenegro: Public Expenditure and ... - Vlada Crne Gore

3. PUBLIC ADMINISTRATION REFORM
3.1 While containing the costs of public employment, the government must also strongly
pursue the task of creating a modern and effective public administration if EU integration
is to become reality. The key challenge in Montenegro is to re-orient and reorganize the role
and functions of the State Administration from one with heavy state involvement in economic
management and direct delivery of services, to one supporting a market economy and EU
integration. This process began with the Government’s adoption of its Public Administration
Reform (PAR) strategy in 2003.
3.2 Since 2003, Montenegro has adopted several pieces of key legislation that provide a
good foundation for long-term public administration reform. It has, among others, adopted
the Law on State Administration, the Law on Civil Servants and Employees, the Law on Salaries
of Civil Servants and Employees, the Law on Administrative Procedure, and the Law on
Ombudsman. Implementation of these laws is well underway. Two of the key institutions that
assure accountability of the State Administration have been established and are well-functioning.
Government has also made progress in promoting a professional and merit-based civil service,
including the creation of a specialized agency for managing the civil service.
3.3 Notwithstanding these legislative milestones, however, Montenegro is only at a halfway
point of its seven-year long PAR strategy, and several implementation challenges
remain ahead. First, the current institutional mechanisms for central policy coordination within
government are poorly functioning, and there is a need to ensure a more effective center-ofgovernment
coordination across sectors. Second, even with new laws in place, the civil service
pay structures and incentives are still inadequate to attract and motivate highly skilled personnel.
Implementation of performance-based pay is planned, but it is undermined by other policies and
practices that emphasize longevity. Third, the Law on State Administration has redefined some
existing structures and accountability relationships, but without adequately addressing whether
all the functions within those structures are still needed, or whether such functions could be done
with fewer resources. The process of EU integration is already highlighting some areas of public
administration that are woefully under-capacity and the government will need to make key
policy choices to reduce staffing in some functions in order to build up capacity in others.
3.4 This chapter discusses the progress in public administration reform (PAR) since
2003 and highlights some of the outstanding policy issues that need to be addressed in the
future. Section A provides a background to the legal and institutional arrangements for PAR.
Section B reviews the progress to date in implementing civil service and wage reform, and the
performance appraisal systems. Section C examines the new accountability institutions. Section
D deals with the challenges of addressing structural and organizational fragmentation and
creating European integration structures. Section E offers conclusions and a summary of major
policy recommendations.