Central Decisions, Decentralized Solutions: Comparing the Implications of Central Cutback Policy for the Agency Level in Estonia and Latvia

Abstract

The paper investigates the implications of governmental cutback strategies related to the recent fiscal crisis at agency level in Estonia and Latvia. For this purpose, the article applies a comparative case study approach, through a purposeful selection of five agencies – three in Estonia and two in Latvia – to map the maximum possible variation of before-and-after effects of the crisis on organizational responses and individual-level coping. The selected agencies represent a range of regulatory and social policy domains directly and severely affected by the crisis through budget cuts and increased demand for services, and therefore most affected by the crisis. The study demonstrates that the budget cuts imposed by the cabinets of both countries and widely praised internationally actually left agency-level actors in an extremely difficult situation. Centrally imposed across-the-board cuts resulted in diverse public service gaps, leading to a range of hardships for the citizens, and therefore turning out to be neither equal nor fair for the target groups. The study concludes that centrally decided cutbacks shifted the burden to street-level bureaucrats, who in turn took on the role of key policy actors by ensuring the delivery of public services during the fiscal crisis.

Keywords:

• comparative case study
• Estonia
• Latvia
• public service cuts
• crisis management

Acknowledgements

The authors would like to thank the editor of this special issue and two anonymous reviewers for their valuable comments and suggestions. All the remaining mistakes and omissions are our own.

Notes

1. For the reasons of symmetry and comparability, the authors also addressed the Latvian Labour Inspectorate, however, management of the agency refused to cooperate.

2. Only defence, education and internal security standing out as exceptions cut slightly less or left untouched (Estonian Ministry of Finance 2008)

3. Between 2008 and 2010, some policy areas faced deeper cuts than others – defence (−52.5 per cent), healthcare (−23.8 per cent) and education (−37.2 per cent).

4. As the agency could not provide competitive pay, outflow of employees resulted.

5. For comparison, for the first half of 2009 the number of unemployed per employment service employee in Germany was 37, in the Netherlands 83 and in Estonia 156 (Latvian Cabinet of Ministers 2009).

Additional information

Funding

This work was supported by the European Union’s Seventh Framework Programme under grant agreement No. 266887 (Project COCOPS), Socio-economic Sciences & Humanities and from the Estonian Science Foundation [grant numbers 9435, 9395].

Notes on contributors

Riin Savi

Riin Savi is a Junior Research Fellow at Ragnar Nurkse School of Innovation and Governance, Tallinn University of Technology, Estonia. Her main research interests are comparative public policy, policy transfer and transitional societies and the impact of fiscal crisis on public administration.

Aleksandrs Cepilovs

Aleksandrs Cepilovs is a Junior Research Fellow at Ragnar Nurkse School of Innovation and Governance, Tallinn University of Technology, Estonia. His main research interests are innovation policy, policy transfer and comparative public policy with a specific focus on transitional Baltic States.