Ministries tend to have agencies cut costs in their stead
Ministries seem to be delegating budget cuts to their subordinate agencies, often at the expense of deferrable IT investments, inquiries made by Riigikogu Finance Committee member Andrei Korobeinik (Center) reveal.
Korobeinik requested data on budget cuts within the ministries themselves to discuss them in the parliament's Finance Committee. According to him, some ministries responded with significant delays, while Minister of Economic Affairs and Communications Erkki Keldo (Reform) did not respond at all.
"Some of the responses were rather peculiar. For example, in the case of the Ministry of Culture, the budget cut plan essentially amounted to one person, which is less than 1 percent of their personnel budget, while they are cutting 4-5 percent in their field overall. We discussed in the committee whether ministries should perhaps start with cuts to their own budgets before impacting others," Korobeinik said.
"There was a major discussion regarding the Ministry of Regional Affairs, where Minister Piret Hartman (SDE) claimed their largest cut would come from public transport subsidies. But when I questioned the committee on this, it became clear that although a six-million-euro reduction in public transport funding was noted, the actual funding would increase by two million euros due to separate agreements in the government to allocate funds from reserves," Korobeinik explained.
"Even putting aside that paid public transport is more costly for the state than its alternative, cutting in this way is misleading. You communicate one figure and place it in the budget, which less-informed Riigikogu members see and draw conclusions from, but in reality, you're spending more," Korobeinik added.
Korobeinik also pointed out that the procurement departments of ministries have very unusual structures.
Korobeinik highlighted that, for example, the Ministry of Regional Affairs has to procure its own IT systems despite not having anyone in its procurement department with the necessary expertise. "Instead, there should be specialized centers with this competence. Currently, these people are scattered across ministries, and it's impossible to make cuts that way because you need someone who at least understands what they're dealing with. The current setup hampers efforts to increase efficiency," the MP said.
Korobeinik also criticized the practice of making cuts by deferring technology purchases and maintenance, as done by the Ministry of Justice, the Ministry of Climate and the Ministry of Foreign Affairs.
"If a server's lifespan is five years, nothing happens if you replace it in the sixth year. But waiting until the tenth year to replace it becomes problematic. It amounts to postponing investments. It comes from the belief – like in the past three years – that the economy will start to grow quickly again and all problems will be solved, allowing these necessary investments to be deferred. Alternatively, it's merely pretending to cut back, like they're doing with public transport," Korobeinik said.
He pointed out another issue where there were cases in which the minister simply didn't know what their budget cuts entailed.
"I suspect we may not get clarity on this until the third reading, meaning the government has essentially sent the Riigikogu a budget that lacks substance and the Riigikogu just might approve it," Korobeinik remarked.
ERR also asked the Ministry of Finance to comment on planned cuts in the government sector but was merely told that every ministry can comment on its decisions.
"The cuts at ministries are in the agreed-upon volume," the ministry added.
This is what the ministries said
The Ministry of Climate and Infrastructure is set to cut €610,600 in central IT services, including a €200,000 reduction in IT development costs. Operational savings will also come from reductions in IT applications, as well as the disposal of some vehicles and a cutback in employee training expenses.
Personnel costs will be reduced by a total of €1,402,500, with €500,000 in savings within the transport sector under the infrastructure minister's purview. The climate minister's domain will see a reduction of €475,100, broken down into €174,700 from the Environment Agency, €387,600 from the Environmental Board and €340,200 within the Ministry of Climate itself. Additionally, staff numbers across the ministry's administrative area are planned to be reduced by 54 positions.
Across expenses managed centrally by the Ministry of Climate, workforce costs will decrease by €340,200. Employee-related operational costs and other administrative expenses (including training, legislation, crisis management and costs related to implementing the Open Data Directive) will be reduced by €233,800.
Minister of Social Protection Signe Riisalo (Reform) stated that she has already trimmed down the Ministry of Social Affairs significantly but is still constantly seeking further efficiency improvements.
In 2023, the Ministry of Social Affairs laid off five employees and eliminated 17 positions. The final number of layoffs planned for 2024 is not yet available.
Riisalo stated, "On one hand, we are restructuring positions, leading to some layoffs – eight people in total. The specific breakdown of the €438,000 cut in labor and operational costs within the Ministry of Social Affairs will be finalized by the end of the year, as we are just starting on the work plans and detailed budget for next year."
In the Social Insurance Board, which falls under the Ministry of Social Protection's responsibility, cuts and staff reductions have already been implemented. Compared to last fall, the Social Insurance Board now has a quarter fewer positions, according to Riisalo.
The Ministry of Foreign Affairs plans to save primarily through reductions in project and operational support as well as administrative expenses next year. There are no plans to close foreign missions or reduce Estonia's diplomatic activity in 2025.
The Foreign Ministry's savings plan includes a 10 percent cut in operational support for foundations (such as the Estonian Center for International Development and the International Center for Defense and Security), amounting to a total of €200,000. Additionally, project and operational support will be cut by €2.5 million.
Administrative and IT costs within the ministry will also be reduced by €1 million, mainly by deferring ongoing maintenance work and limiting new purchases of equipment and furnishings.
The Ministry of Justice and Digital Affairs reported that all administrative areas are subject to cuts, except for cybersecurity, which was exempted from nationwide cuts. Personnel costs in the ministry will be reduced by €600,000. The exact distribution of cuts is still being determined and no layoff decisions have been made yet.
The Ministry of Education plans additional layoffs, continuing reductions it has implemented since 2021. Funds saved from operational and personnel expenses have been redirected toward educational activities, such as the additional teacher pay raise in 2024. By the end of this year, the ministry intends to reduce positions by 25.
In the Ministry of Defense, personnel expenses account for only 16 percent of the total budget, of which 59 percent goes to the salaries of active-duty personnel and 11 percent to their special pensions. However, workforce cost savings are being planned through restructuring efforts at the Estonian War Museum and the State Defense Investment Center.
The Ministry of Culture noted that it is the smallest ministry with a staff of fewer than 100, mainly top specialists and leaders in their fields. "Each substantive area – such as performing arts or music – has only one highly qualified adviser, not a full department. Given this structure, significant layoffs are difficult from a state budget perspective. We have reduced the position of one ministerial adviser, and as of 2025, the cultural adviser position in Sweden will also be discontinued," said Minister Heidy Purga (Reform).
The Ministry of Finance is cutting back on training and travel expenses. "Additionally, we are optimizing office space, reviewing the scope and costs of support services provided in the ministry's shared building," stated Finance Minister Jürgen Ligi (Reform).
The Ministry of Regional and Rural Affairs has laid off 27 staff members in 2024, including some vacant positions, accounting for about 10 percent of the ministry's workforce. Further layoffs are not currently planned.
The Ministry of the Interior has reduced its workforce by seven positions and is leaving several vacant roles unfilled. Areas such as strategic management, procurement, human resources and internal services have been restructured. Layoff decisions for other agencies under the Ministry of the Interior are still in progress, and the exact number of necessary layoffs has yet to be determined. Core operational positions are not subject to these reductions.
The responses from the ministries to Korobeinik were sent between October 10 and October 22, meaning it's possible that some ministries' budget cut plans have since been clarified or adjusted.
--
Follow ERR News on Facebook and Twitter and never miss an update!
Editor: Marcus Turovski