The number of Ukrainian civil servants has already decreased by a third in three years (to 156,000), but labor costs have remained almost unchanged, the number of positions has been reduced by 282 (to 191,000), and there are still 30,500 vacancies.
Every time there is an initiative to reduce the number of civil servants, we never tire of repeating that without a review of state functions, staff reductions only lead to a deterioration in performance and the inability of civil servants to perform their duties.
Very often, when a mechanical decrease of a certain percentage of civil servants begins, after a while, it all ends with an expansion of the civil service, because it turns out that there are many functions and no one to perform them, so they begin to hire people again with renewed enthusiasm.
The digitization of certain functions can create opportunities to reduce the number of lower-level civil servants. However, with the bloated and conflicting functions of state institutions, digitization is of little help. As they say, if you digitize chaos, you will end up with digitized chaos. Therefore, you need to start by reducing functions to do everything well.
Now about savings. Reducing the number of civil servants sounds like an attractive mantra, but in reality, such a step does not provide impressive direct savings, because the state budget spends approximately UAH 110 billion on civil servants’ salaries, or 2.8% of all expenditures.
For comparison, the subsidy from the state budget to the Pension Fund in 2025 is twice as much, amounting to UAH 236.9 billion (6% of state budget expenditures). If the government wants to save significant amounts, it should look at other spending that brings questionable returns, in particular, stop playing at being a welfare state by handing out “Natskeshbek,” “eSupport,” and “eBook.” Social assistance is only practical when it targets those who need it.
The same applies to special pensions, to which more than 21% of pensioners are currently entitled. For comparison, the highest share of preferential pensions in OECD countries is about 6% in Poland. The optimal solution is to raise the retirement age and replace status-based pensions with targeted social assistance payments that depend on the total income of the individual or household. It is worth continuing the privatization of state-owned enterprises, which brought UAH 11 billion to the state budget in 2024, and market reforms in education: reducing the number of universities from 160 to 100, introducing market prices for contract-based education and dormitory accommodation.
It is also highly desirable to ensure that law enforcement agencies actively work to shut down schemes rather than cover them up. To this end, it is necessary to hold a competition for the head of customs, adopt a draft law on KPIs for fiscal authorities and on the reboot of the State Tax Service, and appoint a new director of the State Bureau of Investigation. It is necessary to carry out market reforms and stop playing at being a welfare state.
The countries held up to us as examples of social democracies first built a genuine market economy—for example, Denmark, whose myth of social democracy we previously debunked in a video.