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General overview
In general, but with significant variation, the administrative capacities and legal frameworks in Phare candidate countries are still inadequate compared to the obligations of Membership. Main risks faced by the Union due to weak capacities are:
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Difficulties in the smooth running of the Union’s policy process.
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Inadequate enforcement of the acquis.
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Weak protection of the financial interests of the Community.
To mitigate such risks, countries must reinforce their efforts to upgrade administrative capacities and legal frameworks prior to accession, and to continue their efforts in the post accession period. But over the next few years, reform will be overshadowed by the immediate impact of accession. The key issue is personnel. Neither legal frameworks, management systems nor budget envelopes are adequate to recruit and retain the necessary quality of staff, and ensure their reliability in the execution of public tasks.
Raising the professionalism of the public service and improving the legal framework in which public tasks are carried out, is a prerequisite for successful participation in the European Construction. But reform of the public service lags; there is even evidence of backsliding, And, because regulatory management systems ("production normative"), including for example impact assessment, have not developed sufficiently, the substantive laws which public servants implement do not provide a sufficiently rigorous basis for administrative decision-making thereby reducing legal certainty and opening opportunities for corruption. Such weaknesses are not compensated by the relatively under-developed systems of administrative justice and the under-regulated general administrative procedures laws. In this year’s assessment we look at public service and the administrative framework and the sustainability of reform.
Integrity systems are part of the legal framework and we have focussed on external audit. The Constitutional independence enjoyed by Supreme Audit Institutions has permitted them to consolidate their reforms. Most now are in a position to assure the main functions of SAIs and have a sufficient base on which to develop more sophisticated types of audit. In parallel with the External Audit assessment, we are working with DG Budget on a country-by-country cycle of in-depth peer reviews of "Public Financial Internal Control Systems (PFIC) which is scheduled for completion in 2003. For this reason, financial control is not included in this assessment cycle.
Bulgaria and Romania are in a separate category and our assessment covers all the main horizontal management systems. Bulgaria has made significant advances in formal systems, laws and structures, but the reality is of weak public institutions. Although some improvement is needed in civil service law, the main effort for the next years must be directed to bringing practices and culture into line with the formal system. Although the present Government of Romania is showing determination to reform, the missed opportunities of the last several years have allowed interests to become entrenched and made the politics of reform even harder to manage. The difficulty of managing reform has been worsened by distortions introduced into the public service management architecture. A concerted action by donors to assist reform leaders should focus on basic legal frameworks consistent with Romanian reality and traditions.
This introduction ends with some general Recommendations to the Commission.
Public service and the administrative framework
Civil services have not yet reached required levels of professionalism
The systems which promote professionalism of the civil services are not up to the standards of EU member countries, but they are in a transitional phase in most of the countries. This is a situation which inevitably militates against the attraction and retention of quality staff and the development of high standards of professionalism, thus adversely affecting the medium to long-term development of a more professional civil service.
And the legal base is still incomplete
In most countries there is an inadequate legal basis on which to build a modern, politically impartial and professional civil service. This results in high levels of politicisation and management patronage with adverse consequences for professionalism, certainty and predictability in decision-making. In countries where the legal basis is adequate, implementation is slow and in some countries is faltering in general. Political classes in the majority of countries have not yet fully accepted, in practice, the need for a professionally autonomous civil service.
Recruitment and promotion are not merit driven
Moves are underway to improve recruitment and promotion procedures, which currently are not, in the main, based on open, merit-based competition. Where there are competitive procedures in place, they are frequent exceptions and a lack of consistency in applying them. In other cases they are plainly circumvented. Merit systems appear to apply more to initial recruitment and are less used for promotion, which is made more arbitrary by the inadequacies of most appraisal systems.
And salary levels and salary determination systems create risks of abuse
Salaries affect professionalism in two ways:
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Low levels of pay affect recruitment and retention as well as propensity to corrupt behaviour.
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Discretionary power over pay creates conditions for exercise of undue influence. In most countries, basic salary is a relatively small percentage of total pay. A multiplicity of supplementary and bonus payments are used which are usually at the discretion of Ministers or managers. Their use is not subject to rules or the rules provide wide discretion and weak control. They are thus not applied with openness and transparency. This creates an unhealthy dependency situation.
Performance pay has been introduced into an unprepared managerial culture
A large part of salary is nominally "performance-related" pay, but, in the absence of effective and workable performance management systems, this is, in practice, only loosely linked to actual performance. Existing or planned performance management systems are not supported by adequate management capacities, robust objective-setting and performance appraisal systems, which are essential prerequisites for a workable performance management system. Moreover, it is questionable if the prevailing management culture is amenable to taking on and operating an effective system. Governments appear to have been ill-advised, generally by foreign donors and consultants, to establish performance-related pay schemes while the necessary managerial capacity and culture to do so is not in place.
A sustained effort, involving IFIs and the EU is needed to raise salaries for main functions
Reform of salary systems has budgetary consequences and is constrained by economic stability requirements. But reform is also hampered by the inadequacy of information, weak budgetary controls and the widespread use of vacancies to finance salary enhancements for incumbents. Apart from the political consequences in high unemployment societies, financing salaries through redeployment of excess staff requires careful functional and organisational analysis so as not to lose needed capacities.
Efforts to reform senior administrative levels have put past progress at risk
The introduction of a corps of senior executives operating under special regulations (with strong monetary incentives) is being tried in several countries. In theory, such systems introduce needed flexibility into management and allow for rewards to compensate for responsibility. However, the introduction of such systems without adequate safeguards opens the risk of "de-professionalisation" and increased scope for patronage. Another track for changing the top level is to use political advisers (or "cabinets"). These are often only weakly regulated, and recent experience in some Members States shows the danger of allowing members of cabinets to exercise managerial functions or of their restricting the flow of policy advice from professionals.
Non-pay motivational systems are under-developed
Apart from training, non-pay incentives to foster and sustain staff motivation are generally lacking. This reflects, inter alia, the near total absence of inter- and intra-organisation mobility, as a means of enhancing skills and career prospects, and the lack of competitive promotion. There is a growing awareness and appreciation of the operational and strategic importance of training. This is increasingly better organised and being delivered in a more structured and systematic way; it is, however, subject to serious resource constraints in some countries which hinder its effectiveness. However, in the majority of countries, training is strongly supported by foreign aid and foreign trainers, which reduces country-ownership and sustainability. Training in preparation for EU accession, which has been a feature in all countries, has been better organised and systematically delivered. All-in-all, however, motivational incentives are weak and, coupled with the politicisation and management patronage that exist, give rise to a situation that is not conducive to attracting well-qualified and talented young people to join the civil service and to retaining them in the medium to long term.
And the constraints on corrupt behaviour are not complete
Improvements in the conflict of interest regulations would contribute to de-politicisation and help in the fight against corruption. Corruption is a problem in the majority of countries and, while much of it may be petty in nature, it does not inspire public confidence in officials and in public administration as a whole. Countries in which corruption is a problem have anti-corruption programmes in place but, in many cases, these are in need of further strengthening to make them more coherent and effective.
Central capacities are not able to manage the overall evolution of the civil service and set common standards
The direct management of civil servants is, in most cases, decentralised with each ministry being more or less independent and responsible for managing its resources, including staff. Such systems, which are common in Member States, rely on a central capacity to set common standards and control their implementation, backed up by appeal and judicial instances. In the Candidate countries, where such capacities exist, they usually have insufficient powers and resources to ensure the coherent development of the public service. Weak central mechanisms have serious implications for co-ordinating policy development, managing cross-cutting issues, and ensuring consistency in implementing rules and regulations. They are critical also for the co-ordinated management of reform programmes (see below).
The incentives weighing on civil servants do not encourage accountability
In general, accountability frameworks are inadequate, though efforts to improve them are having an increasingly positive effect. Civil servants do not enjoy real protection from undue pressure from the hierarchy, and thus their role of ensuring legality is weakened. While civil servants are obliged to act in accordance with the law, politicisation and the scope of management patronage put political neutrality and impartiality at risk and reduce the protection for civil servants, if they refuse to obey unlawful or dubious orders.
Structural accountability has also been weakened, but past errors are slowly being corrected
Often under the influence of external supporters, several countries adopted "agency" type structures for execution of public tasks. This has allowed personnel-contracting to circumvent the constraints of regular systems (merit and salary). Furthermore, agencies have been introduced without clear legal frameworks and unspecified accountability arrangements. The difficulties of introducing such solutions in inappropriate circumstances, has now become apparent and countries are attempting to reverse the trend, but they are meeting problems as they encounter the clientelistic relations that agency systems can engender.
Legal certainty is also compromised by the poor quality of substantive law
Poor quality of legislation and implementing regulation provides scope for arbitrary administrative decision-making by civil servants. Quality problems exist for both individual instruments and for the overall legal system. This is compounded by the tendency to over-regulate detail and to create specific administrative procedures within each law. Although some reform efforts are in train, the capacity to develop quality legislation appears to be weak in most countries, despite the quality control systems in use. This has serious consequences, given the central importance of legal instruments to the operation of public administration in the candidate countries and to the European Construction.
Effective general regulation of administrative procedures is delayed
General Administrative Procedures Law, which regulates relations with citizens and economic actors, is crucial to ensuring an efficient administrative environment. There is variable and generally inadequate legislation on administrative procedures in place in most of the countries. Recourse against administration is not always readily accessible to the population at large, given cumbersome and often lengthy processes involved in bringing and pursuing actions for improper or wrongful administrative acts. Reforms are underway in most countries, but they should be accelerated. It will be necessary to rationalise administrative procedures so that general standards of service and distribution of rights can be made consistent and supported by Courts.
Administrative justice has not modernised
Judicial review of administrative decision-making is weak in the majority of countries. The judiciary lacks adequate procedural rules, resources and training and some may not enjoy sufficient independence. Judicial rulings are difficult to enforce, as governments have to authorise such enforcement in most countries.
The political will for reform is not sustained and basic principles are challenged With a few exceptions, the capacity to implement and sustain reforms is weak. Political commitment to and support for major reforms is variable. In some cases, reform programmes are vulnerable to a change of government. In several cases, the advantages of a neutral professional civil service are not fully accepted at the political level and there is some evidence of "re-politicisation". The link between professionalism and effective membership of the European Union has not been internalised.
Reform leadership at the professional level is weakened by diffuse responsibilities
As in most countries, responsibilities for reform are shared among different institutions including Centres of Government, Justice and Interior, with European Integration Offices having an important interest. For the thorough-going reforms needed in Candidates, it is important to have clear division of roles and political leadership. But in most cases there is unclear attribution of responsibilities and the lack of central co-ordination and oversight. The generally weak involvement of Finance in administrative reform suggests that programmes are hostage to low and uncertain budget allocations.
Conclusion
Overall, the assessments indicate that while the candidate countries continue to make progress towards better aligning their systems of public administration with EU Member States norms and practices, there is much yet that remains to be done. On balance, it would appear that candidate countries must make further reform efforts to be able fully comply with the heavy demands of EU membership. Membership will place a considerable extra burden on each country and will undoubtedly require a very substantial effort from, and a major commitment of resources by, practically every sector of public administration. In turn, this will detract resources from other activities including implementing and sustaining needed reforms.
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External audit
SAIs have actively continued their reforms
Progress has been made on external audit and the Supreme Audit Institutions (SAI) are motivated and understand for the most part their technical and operational development and institution-building needs. They seem to have benefited from their independent status to begin to organise and pursue effective reforms. Their close and effective collaboration through the network of candidate SAIs supported by the ECA has been beneficial. All SAIs have prepared and are implementing strategic development plans of varying styles and complexities.
And are reinforcing legal frameworks
Many SAIs have or are undertaking further legislative development, in particular to clarify scope and range of audit instruments. This may bring problems of implementation and change management as well as the need for significant extra resources.
The range of audit types carried out is still limited
Some progress has been achieved in the development of a more modern financial and performance audit capability and capacity. In particular some countries have made good progress in developing a financial attestation type audit, and this will be particularly important for those SAIs who plan to be the certifying body for the SAPARD system. Most SAIs need to develop and implement more effective and efficient quality assurance and quality control procedures and systems based on the appropriate EU Implementing Guideline.
The use of Audit reports needs to be enhanced
In several countries, Parliament and/or Government are not optimally set up to handle reports from the SAI and may not be required to respond. The procedures by which Parliament and the Government consider and respond to SAI reports and recommendations need, in most countries, to be improved. Most countries make efforts to communicate findings directly to the public.
Most SAIs have adapted to the prospect of membership and some have taken on new roles
All SAIs have developed good relations with the ECA. Collaboration on joint audits with the ECA have been successful and helpful, and further work needs to be done to assess how useful and relevant joint working on detailed audit standards and a further harmonisation of audit methodology could be. Nearly al have the Mandate to follow EU funds to end-user, and three are, or plan to be, engaged directly as SAPARD certifying bodies.
Despite progress, important reforms are still needed
SAIs need to build up capacities to audit:
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PIFC systems and internal audit arrangements.
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Revenues (including future own resources).
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Procurement controls and the readiness to provide sound financial management of large pre and post accession EU-funded projects.
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The effectiveness of anti fraud arrangements. Pre accession funds projects under EDIS.
Conclusion
The overall situation shows a good and improving situation concerning the adequacy of the scope and independence of public sector external audit; its report preparation procedures; and the proactive awareness of the requirements of EU accession and relations with the ECA. Work still needs to be done in most countries to adapt and adopt international auditing standards and good practices; and continue to develop a more modern approach to financial and performance auditing. The procedures by which Parliament and the Government consider and respond to SAI reports and recommendations need in most countries to be systematically developed and improved.
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Bulgaria
Interest in administrative reform is ebbing
Some necessary measures for systemic and structural changes were adopted, and some visible progress was achieved, during the last five years. The current government took office in 2001, and has not significantly changed the basic reform direction. However, there are signs that priorities have changed and public administration reform as a whole has lost speed. Divergences within the governing coalition hinder further reform efforts.
The formal system is still in need of consolidation
The high levels of cronyism and corruption could, in part, be reduced by reconsidering in depth the civil service legal framework and management practices, and by simplifying the General administrative laws which are numerous and often contradictory. Accountability mechanisms need also to be clarified and implemented. The capacity for strategic planning and cross-sectoral review is weak, impact assessment is often insufficient, leading to uneven policy output from Ministries. The process of law-making needs to be improved so as to provide a stable, predictable and efficient base for administrative and economic activity.
There is a gap between laws, institutions, procedures, and the reality of administrative practice
Most of the essential laws and bylaws, public institutions and administrative procedures are, if not satisfactory, at least in place. But trust of citizens and business in public institutions is very low. This is partly because some of the new laws, institutions and procedures are foreign imports which were not suitable in the Bulgarian environment. More importantly, citizens perceive the difference between the formal systems and the practices of administration as it affects them directly. And because judicial review of administrative decisions is weak, citizens have little recourse against mal-administration.
Only few institutions benefit from a critical mass of reformers, and this reduces the benefits of aid
Most parts of the administration are chronically under-staffed in quality terms. There is an important capacity gap between the Centre of Government, and some selected ministries such as Foreign Affairs and Finance, and line ministries, implementing agencies, and administrations of second and third level of Government, which may jeopardise acquis related reforms and the management of funds. The creation of the School of Public Administration and European Integration is a step in the right direction, and should produce over time the needed volume of reform minded public managers. The administration has not developed enough capacity to generate its own development projects and thus it is difficult for the Authorities to ensure the relevance of donor advice on PAR and to align donor inputs with the needs to upgrade Bulgarian institutions with EU standards and practices.
The Government has not allocated enough resources to reform
Reforms of Public Expenditure Management are moving in the right direction, but will take several years to have a substantial impact. Bulgaria is engaged on major reforms, but it is not sure that the Government has planned strategically and allocated enough resources to manage reform through to completion. The administration generally lacks sufficient qualified staff to ensure sustainability and salary levels must be addressed urgently. The strengthening of a central Public Administration Reform Unit could help initiate, steer and co-ordinate the reform efforts.
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Romania
The State is captured by vested interests that block reform, while the current Government wants to press ahead
During the first period of transition, a lack of interest in administrative reform allowed "State capture" by political and diverse economic interests. Under external pressure, administrative reform rose up the policy agenda in 1997, but little concrete was achieved. The current Government has taken a number of initiatives, promoted by the Prime Minister, to boost reforms (e.g. Budget). The Government has created the Inter-ministerial Council for Administrative Reform (IMCAR) chaired by the Prime Minister to steer a comprehensive reform programme. However, with some notable exceptions, up to now very few actions have lead to real change on the ground. Romania must now address key deficiencies in its institutional, administrative and legal system, which affect directly the administrative capacity to enforce the acquis, protect the financial interests of the Community and prepare for membership.
Policy capacities must be strengthened
The weakness of the mechanisms to ensure policy coherence constitutes a serious systemic handicap. This weakness is due to low professionalism in the civil service, the high degree of politicisation in policy units, the inherited culture of secrecy and compartmentalisation, and the fragmented support for the Prime Minister and the Government as a collective body. The planned reform of the budget system should be a vehicle to strengthen cohesiveness.
The regulatory framework is too complex and unstable
The propensity to legislate and to produce lengthy and detailed law creates major problems for compliance and enforcement. This tendency has its roots in the troubled relationship between political and administrative levels -- decision-makers are reluctant to delegate to public servants, who, in turn, are reluctant to take initiative. Furthermore, the complexity and heaviness of the legislative production system encourage the Government to use, and abuse, the mechanism of ordinary and emergency ordinances. Constant change of rules, going beyond the necessities of EU integration, generates an unstable, incoherent, complex, regulatory environment which is unfavourable for economic development and which fosters corrupt administration.
There is a chronic implementation deficit
The number of normative acts seems to be inversely proportional to the degree of implementation. This is a key concern for a country preparing itself to enforce the acquis. Impact assessment of policy and legislation is only performed for budgetary and EU compatibility perspectives. Economic and social impact analysis is absent as is an evaluation of the real and limited capacity of the administration to implement policies and legislation. The case of the public procurement system (PUPs) is illustrative: the PUPs legislation is one of the best in the region, but the administration in charge has such limited capacity that the credibility of the system is extremely low.
Corruption is endemic, but the weakness of integrity and justice systems precludes effective action
The government has proclaimed its determination to fight corruption but with little result to date. A systemic preventive approach should be adopted with priority to creating a consistent legal/administrative framework including for the civil service, to reforming the regulation of administrative procedures in favour of predictability and transparency and to reforming the judicial system which is also prone to corruption. The budget and internal financial control systems and the Court of Audit need strengthening and their findings exploited by the Parliament and the Executive.
The reform process relies too much on external pressures and a legalistic approach. The government must now invest sufficient resources for reform to succeed
Up to now, reform has focused on the production of legislation or creation of institutions (e.g. the Civil Service Agency) which were - rightly or wrongly - perceived by successive governments as a priority of international donors, including the EU, even if they were not suitable for Romanian circumstances. This has led to inappropriate prioritisation, a lack of coherence of the overall approach and a clear ownership deficit, reducing the chance of success. The legalistic approach meant that administrative reform suffers from the same implementation deficits as other policy areas. The government seems aware of the danger and to be considering strengthening horizontal management systems, as a prerequisite for the modernisation of all sectors of the administration. The recently created steering instrument (IMCAR) should contribute to a more strategic approach to reform, led by the Romanian authorities and thus to increased relevance and coherence of donor activities. However, without a critical mass of human and financial resources allocated to public administration, the current effort risks early failure.
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Recommendations
With reduced leverage after the end of the negotiations, communication, networks and motivation should be privileged
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Use the leverage of the financial control over EU Funds to strengthen financial control, procurement and concessions systems in general.
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Reinforce twinning quality control; ensure better balance of National representation (e.g. one institution from one MS is now present in nine out of ten SAIs); exercise more control over the recommendations of PAAs to ensure that solutions are compatible with institutional capabilities (legal, cultural and administrative) and are sustainable.
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Conduct post-twinning "sustainability audits".
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Support networks, especially Financial Control and SAI Presidents, and sectoral bodies.
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Assist in the development of self-assessment frameworks (e.g. CAF).
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Relax constraints on countries' ability to pay proper salaries against conditionality.
Give priority to horizontal management systems
Horizontal management systems can promote common standards and sustainability. They are the main levers with which governments can pursue change in the future. They act as the "carriers" of administrative values, and regulate the rights of citizens relative to the administration. They thus are key weapons to reduce the main risks to the Union of accession -- policy paralysis, uneven enforcement of the acquis and fraud against the financial interests of the Union. Priority should be given to encouraging reform of:
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Financial control systems and budget reform.
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General administrative procedures regulation and administrative justice.
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Integration of funds and agencies into standard administrative, accountability and budgetary frameworks.
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Finalise the civil service and administrative legal frameworks, and promote basic salary systems.
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Policy co-ordination and regulatory management systems.
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