The plan to cut back the public sector is nothing new. From time to time, such efforts have been undertaken on a large scale or entrepreneurs have attempted to urge policymakers to rein in an expanding public sector.

"The peak of state reform efforts was probably in 2015 when the topic was highly relevant in society, with private sector initiatives and political will in place," said Arto Aas, who served as minister of public administration from 2015 to 2019 and was responsible for implementing these initiatives.

"There was a zero-bureaucracy project in which entrepreneurs submitted over 200 proposals. Now, seven or eight years have passed and momentum has waned. There is no longer a designated official responsible for this in the government," Aas noted.

Not all initiatives have led to change. Comprehensive proposals from the State Reform Foundation, initiated by large businesses, as well as suggestions from the Estonian Employers' Confederation under the "State Reform Radar" initiative, have been shelved.

"When I was also with the Employers' Confederation, we kept making proposals for a couple of years, but at some point, the energy faded on the private sector's side as well, because we saw that there was no partner on the state's side. There was no one to talk to, and how long can you keep banging your head against the wall?" said Aas, who led the Employers' Confederation from 2019 to 2024.

"The issue has been that state reform has not been a top political priority. However, today I see that society expects change and there is also political will to make it happen," said State Secretary Keit Kasemets.

"The issue of making the state more efficient and cutting costs will never disappear. It is, in fact, an ongoing process. The public sector cannot function in a way where we implement one major reform and then expect peace for years to come," explained public administration expert Külli Taro.

While discussions now focus on closing certain institutions, state agencies have also been merged over the years, often to achieve cost savings.

One such example is the Transport Administration, which was created a few years ago by merging three agencies. Now, the new government is once again aiming to improve state efficiency. But where should cuts be made to achieve this efficiency?

"The goal should not be to fire 100 civil servants but rather to create a more attractive and simpler regulatory environment — one where you don't have to wait ten years for a detailed zoning plan or five years for an environmental permit. Meanwhile, your money is burning and it becomes much easier to invest in another country instead," Aas explained.

"The most foolish approach would be to arbitrarily decide on a percentage by which the workforce should be reduced, assuming that this automatically leads to cost savings. You could shut down the Environmental Board, but the state still has to fulfill the legal responsibilities assigned to it. So who will carry them out?" Taro asked.

"Right now, the government should start by defining the main objective. Is the goal to cut costs? Is it to reduce the number of civil servants? Or is it to make life easier for citizens and businesses? It may not be possible to achieve all of these at once as they require very different approaches," said Aas.

"Simply reducing the number of civil servants while tasks and regulations remain unchanged is, first of all, very difficult to do. Secondly, it does not lead to good results," Kasemets noted.

"I firmly believe that success will come when political will aligns with the will of civil servants. If politicians want change but officials don't understand it, nothing happens. And vice versa," Aas stated.

"I tend to think there may be more pressing issues to address. Over the past four to five years, I would say there have been four government-level cost-cutting decisions, each reducing our operating expenses by around 30 percent per year. Perhaps we should implement these first before discussing new cuts," commented Priit Sauk, director general of the Transport Administration.

"The solution is to simply do less. The state should take on fewer responsibilities. This is a matter of regulations and legislation. It's not something that can be decided by a middle manager or even a top official in the public sector," Taro stated.

However, reversing European Union regulations that have already been adopted is particularly difficult. State Secretary Kasemets does not believe that any agency will be shut down entirely, as essential functions will still need to be carried out. However, merging certain agencies is not out of the question.

Kasemets sees the greatest savings potential in implementing already agreed-upon cost-cutting measures, reducing administrative support services related to oversight or outsourcing them to the private sector.

"To a large extent, the state can decide what we do and what we don't do. We should focus on what is mandated by the Constitution. Other laws can be adjusted so that we meet our obligations under EU regulations but without going overboard, as politicians themselves have pointed out that we tend to be excessively diligent in fulfilling these requirements," Taro explained.

Sauk agreed, saying that oversight responsibilities have only increased over the years, yet agencies are not allowed to reduce them on their own.

"None of these requirements or conditions were invented by the agency itself, nor do we have a strong desire to conduct more inspections or oversight. These are regulations imposed on us through laws, regulations, or EU directives," Sauk noted.

"We would likely prefer to do significantly less, provided we have the legal backing to do so," he added.

Half of the Transport Administration's operating expenses stem from long-term road maintenance contracts with private companies, which are based on state-defined standards. For instance, on main highways, snow removal must begin within two hours of snowfall starting.

"If we want to save money, then our service standards and requirements must also be reduced. We strongly emphasized this message to the ministry last summer. However, there has been little enthusiasm or concrete action in response. The prevailing attitude has been to mow less grass in the summer and put up fewer traffic signs, but saving 10 percent — or €4.5 million — this way is quite difficult," Sauk said.

Digitization is another topic frequently discussed at the government level. The Transport Administration has created a widely used e-environment and would be happy to close some regional offices. However, the government's enthusiasm for digitization has waned.

"We have attempted this a few times, even incorporating it into the government's action plan. But these efforts usually end with arguments that, for regional policy reasons, we should continue to maintain physical offices in all locations," Sauk noted.

"Our public sector is very lean compared to the responsibilities it has to fulfill. We are required to perform the same tasks as large countries. In proportion to our total workforce and budget, our public sector is large, but due to the realities of a small country, we have to shoulder a heavier burden compared to others. Nonetheless, in absolute terms, we are already operating quite efficiently," Taro explained.

According to the Ministry of Finance, approximately 137,000 people currently work in the public sector. Of these, 42 percent are employed in central government, 47 percent in local governments, 1 percent in social security and 10 percent in other public sector areas, such as state- or municipally-owned companies like Eesti Energia or the Port of Tallinn.

By sector, the highest number of public sector employees — around 50,000 — work in education, most of them in local schools. Approximately 20,000 are employed in healthcare, primarily in hospitals established by the state or local governments. A similar number work in the economy, mainly in energy, communications, and transport. Around 10,000 people are employed in law enforcement and security.

One segment of the public sector is the civil service, which involves working in state or local government institutions. Approximately 22,000 people are employed in state agencies.

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