VSB TECHNICAL
|. J UNIVERSITY
OF OSTRAVA
FACULTY
OF ECONOMICS
Proceedings of the 14th
International Scientific Conference
Public Economics and Administration 2021
2021
Ostrava, Czech Republic
ISBN 978-80-248-4581-4 (On-line)
Proceedings of the 14th
International Scientific Conference
Public Economics and Administration 2021
8th
September 2021
https://www.ekf.vsb.cz/ves/en
Ostrava, Czech Republic
Programme Committee
Ing. Be. Jiří Bečica, Ph.D., VSB - Technical University of Ostrava, Czech Republic
prof. Ing. Marin Dlouhý, Dr., M S c , University of Economics, Prague, Czech Republic
prof. Olena Dymchenko, DSc, O. M . Beketov National University of Urban Economy in
Kharkiv, Ukraine
prof. Ing. Beáta Gavurová, PhD. M B A , Technical University of Košice, Slovak Republic
Salomon Alcocer Guajardo, Ph.D., Nova Southeastern University, USA
doc. Ing. Martina Halásková, Ph.D., VSB - Technical University of Ostrava, Czech Republic
dr. Gražyna Kozuň-Ciešlak, Kazimierz Pulaski University of Technology and Humanities in
Radom, Poland
doc. Ing. Igor Ivan, Ph.D., VSB - Technical University of Ostrava, Czech Republic
prof. Ing. Vojtech Krebs, C S c , University of Economics, Prague, Czech Republic
doc. Ing. Martin Kvizda, Ph.D., Masaryk University, Brno, Czech Republic
prof. Ing. Beáta Mikušová Meričková, PhD., Matej Bel University in Banská Bystrica, Slovak
Republic
doc. Ing. Erika Neubauerová, PhD., University of Economics in Bratislava, Slovak Republic
prof. PhDr. František Ochrana, DrSc, Charles University, Prague, Czech Republic
doc. Ing. Romana Provazníkova, Ph.D., University of Pardubice, Czech Republic
doc. Ing. Lucie Sedmihradská, Ph.D., University of Economics, Prague, Czech Republic
prof, dr hab. Janusz Slodczyk, University of Opole, Poland
prof. Ing. Jan Stejskal, Ph.D., University of Pardubice, Czech Republic
doc. Mgr. Pavel Šaradín, Ph.D., Palacký University Olomouc, Czech Republic
doc. Ing. Petr Tománek, CSc, VSB - Technical University of Ostrava, Czech Republic
Ing. Ivana Vaňková, Ph.D., VSB - Technical University of Ostrava, Czech Republic
prof. PhDr. František Varadzin, C S c , Silesian University in Opava, Czech Republic
doc. Ing. Iveta Vozňáková, Ph.D., VSB - Technical University of Ostrava, Czech Republic
doc. Ing. Iveta Vrabková, Ph.D., VSB - Technical University of Ostrava, Czech Republic
prof. Ing. Elena Žárska, C S c , University of Economics in Bratislava, Slovak Republic
Conference Guarantee
doc. Ing. Iveta Vrabková, Ph.D., VSB - Technical University of Ostrava, Czech Republic
Conference Organizing Guarantee
Ing. Ivana Vaňková, Ph.D., VSB - Technical University of Ostrava, Czech Republic
Editor and Technical Editor
Ing. Ivana Vaňková, Ph.D., VSB - Technical University of Ostrava, Czech Republic
Suggested Citation:
AUTHOR, A. Title of paper. In: VAŇKOVÁ, I. (ed.). Proceedings of the 14th
International
Scientific Conference Public Economics and Administration 2021. Ostrava: VSB - Technical
University of Ostrava, 2021. pp. xxx-xxx. ISBN 978-80-248-4580-7. ISSN 1805-9104. ISBN
978-80-248-4581-4 (On-line).
This publication has not been linguistically corrected. The authors are responsible for substance,
professional level and linguistic accuracy of papers. All papers passed a double-blind review
process.
© Authors of papers
ISBN 978-80-248-4580-7
ISBN 978-80-248-4581-4 (On-line)
ISSN 1805-9104
Reviewers (in alphabetical order)
Ing. Eva Ardielli, Ph.D., VSB - Technical University of Ostrava, Czech Republic
Ing. Be. Jiří Bečica, Ph.D., VSB - Technical University of Ostrava, Czech Republic
Ing. Izabela Ertingerová, Ph.D., VSB - Technical University of Ostrava, Czech Republic
doc. Ing. Martina Halásková, Ph.D., V S B - Technical University of Ostrava, Czech Republic
Ing. Eva Kovářová, Ph.D., VSB - Technical University of Ostrava, Czech Republic
prof. Ing. Vojtěch Krebs, C S c , University of Economics, Prague, Czech Republic
Ing. David Lenert, Ph.D., M B A , VSB - Technical University of Ostrava, Czech Republic
prof. Ing. Beáta Mikušová Meričková, PhD., Matej Bel University in Banská Bystrica, Slovak
Republic
prof. PhDr. František Ochrana, DrSc, Charles University in Prague, Czech Republic
doc. Ing. Romana Provazníkova, Ph.D., University of Pardubice, Czech Republic
doc. Ing. Lucie Sedmihradská, Ph.D., University of Economics, Prague, Czech Republic
Ing. David Slavata, Ph.D., VSB - Technical University of Ostrava, Czech Republic
doc. Mgr. Pavel Šaradín, Ph.D., Palacký University Olomouc, Czech Republic
doc. Ing. Petr Tománek, CSc, V S B - Technical University of Ostrava, Czech Republic
PhDr. Roman Vavrek, PhD., VSB - Technical University of Ostrava, Czech Republic
doc. Ing. Iveta Vrabková, Ph.D., V S B - Technical University of Ostrava, Czech Republic
Prologue
The International Conference on Public Economics and Administration is organized by members
of the Department of Public Economics, Faculty of Economics, VSB - Technical University of
Ostrava, in two-year cycles since 1995. This year's conference was a one-day conference on
September 8, 2021, because the COVID 19 pandemic did not allow for multi-day planning.
The conference creates a space for the presentation of new findings in the field of public
economics and management from the research by scientists, academics, and practitioners.
These proceedings summarize the contributions, which are aimed at presenting the results of
research on issues of public economics and administration. The international character of the
proceedings is due to the representation of the contributions of experts from Poland, Ukraine,
Slovakia, and the Czech Republic.
The papers registered at the conference were subjected to peer review and the proceedings of the
conference include 41 peer-reviewed contributions. Peer review of the contributions focused on
the scientific benefits, application of appropriate research methods, evaluation of the
conclusions, etc. The reviews were carried out by the members of the Scientific Committee of
the conference and other experts.
The issue of the public economics and administration is going through a series of changes within
the changing economic conditions of the current period, changes in connection with
computerization, etc., which place demands on relevant research. Proceedings bring new
knowledge of this issue that has meaning not only for applications, but also for the development
of theoretical knowledge.
The importance of the proceedings is due to the fact that they represent a broad spectrum of new
knowledge concerning the functioning of public economics and administration, which is
intended for the further development of public economics and administration, and it is already
applicable in practice, but it may also serve for further development of scientific knowledge, for
teaching, or focusing of students' theses as well as exchange of scientific knowledge at
international level.
doc. Ing. Iveta Vrabkovä, Ph.D.
Head of the Department of Public Economics
Faculty of Economics
VSB - Technical University of Ostrava
CONTENTS
P R O L O G U E 10
P E R F O R M A N C E E V A L U A T I O N O F H E A L T H C A R E I N T H E E U R O P E A N U N I O N
M E M B E R C O U N T R I E S 11
E V A A R D I E L L I , D O M I N I K A B É M O V Á 11
T E C H N I C A L E F F I C I E N C Y E V A L U A T I O N O F A C U T E C A R E P U B L I C H O S P I T A L S
I N T H E C Z E C H R E P U B L I C A N D B A D E N - W Ü R T T E M B E R G 20
E V A A R D I E L L I , I V A N A V A Ň K O V Á , S A B R I N A L E E 20
P U B L I C P R O P E R T Y I N T H E F R E N C H L A W 3 3
R I C H A R D B A R T E S 33
U S I N G T H E T H E O R I E S O F B E H A V I O R A L E C O N O M I C S I N T H E P R O C E S S O F
A N A L Y Z I N G T H E F I N A N C I A L M A R K E T A S A M E T H O D O F I N C R E A S I N G T H E
E F F I C I E N C Y O F T H E F U N C T I O N I N G O F T H E S T A T E E C O N O M Y 42
H A N N A B AZETSKA, D A R I A SEROGINA, N A T A L I I A O B U K H O V A 4 2
T H E I N N O V A T I V E T O O L S T O S U P P O R T T H E E M P L O Y M E N T O F P E O P L E W I T H
M E N T A L I L L N E S S I N T H E C O N T E X T O F P S Y C H I A T R I C C A R E R E F O R M I N T H E
C Z E C H R E P U B L I C 54
V O J T Ě C H B E C K , IVO Š K R A B A L 54
R E A L E S T A T E T A X I N T H E B U D G E T S O F C Z E C H M U N I C I P A L I T I E S 66
M í B E Č I C A , M A R C E L A V A Š A T O V Á 66
I M P A C T S O F T H E C O V I D - 1 9 P A N D E M I C O N P U B L I C F I N A N C E S I N E U
C O U N T R I E S 79
L U K Á Š CÍBIK, D U Š A N G U Ť A N 79
G E N D E R A N D E X P E N D I T U R E S T R U C T U R E O F S L O V A K L O C A L
G O V E R N M E N T S 91
T O M Á Š Č E R N Ě N K O 91
A S S E S S M E N T A N D F O R E C A S T I N G O F H U M A N R E S O U R C E S P O T E N T I A L I N
U K R A I N E 100
O L E N A D Y M C H E N K O , O L H A R U D A C H E N K O , V A L E R I Y A Y E S I N A , IURII T A R A R U I E V 100
R H E T O R I C O F U S E R S S A T I S F A C T I O N W I T H P U B L I C S E R V I C E S N E W P U B L I C
M A N A G E M E N T 110
SAID E D A I C H , R O M A N ŠMIETAŇSKI 110
S P A T I A L A C C E S S I B I L I T Y O F S E L E C T E D A M B U L A T O R Y S O C I A L S E R V I C E S
F O R T H E E L D E R L Y I N T H E M O R A V I A N - S I L E S I A N R E G I O N 118
I Z A B E L A ERTINGEROVÁ 118
C I V I L S E R V I C E S Y S T E M S A N D E V A L U A T I O N O F S E L E C T E D I N D I C A T O R S I N
E U R O P E A N U N I O N C O U N T R I E S 130
M A R T I N A H A L Á S K O V Á , R E N A T A H A L Á S K O V Á 130
W O R K P L A C E H E A L T H A N D S A F E T Y P R O M O T I O N I N P U B L I C
A D M I N I S T R A T I O N O R G A N I Z A T I O N S 144
P E T R A H O R V Á T H O V A , K A T E Ř I N A M O K R Á , L E N K A K A U E R O V Á 144
C O M P A R I S O N O F E - G O V E R N M E N T I N T H E S L O V A K R E P U B L I C A N D T H E
C Z E C H R E P U B L I C 157
M A R T I N A C H R E N O V Á 157
E U C O H E S I O N P O L I C Y G O V E R N A N C E I N T H E C O V I D - 1 9 E R A 173
I G O R J A Š U R E K 173
T H E P O S I T I O N O F P U B L I C A D M I N I S T R A T I O N I N T H E M A N I F E S T O S O F C Z E C H
P A R L I A M E N T A R Y P O L I T I C A L P A R T I E S : 2017 E L E C T I O N S T O T H E H O U S E O F
D E P U T I E S O F T H E P A R L I A M E N T O F T H E C Z E C H R E P U B L I C 187
JIŘÍ K O H O U T E K 187
E V A L U A T I O N O F K E Y P E R F O R M A N C E P A R A M E T E R S O F T R A N S P O R T
C O M P A N I E S I N T H E C Z E C H R E P U B L I C 198
N A T A L I E K O N E Č N Á , D A V I D L E N E R T 198
H E A L T H C A R E P A Y M E N T - F O R - P E R F O R M A N C E I N T H E C Z E C H R E P U B L I C
F R O M B E H A V I O R A L E C O N O M I C S A N D N U D G E T H E O R Y P E R S P E C T I V E S . . . . 207
R A D E K K O V Á C S 207
F I N A N C I A L A L L O C A T I O N S T O B I L A T E R A L P R O J E C T S O F T H E C Z E C H
D E V E L O P M E N T C O O P E R A T I O N R E A L I Z E D B Y N O N - G O V E R N M E N T A L N O N P
R O F I T O R G A N I Z A T I O N S 2 1 8
E V A K O V Á Ř O V Á 218
T H E R I S E O F P O P U L I S T R A D I C A L R I G H T P A R T Y Ľ S N S I N S L O V A K I A : T H E
R O L E O F E D U C A T I O N 235
D A N A K U B Ě N K O V Á 235
F I N A N C I A L P O L I C Y O F S U S T A I N A B L E D E V E L O P M E N T O F T H E S T A T E :
C O M P O N E N T S A N D E V A L U A T I O N O F E F F I C I E N C Y O N T H E E X A M P L E O F
U K R A I N E 244
R A I S A K V A S N Y T S K A , I N N A D O T S E N K O , L E S I A M A T V I I C H U K 244
E - G O V E R N M E N T I N T H E C Z E C H R E P U B L I C : D I G I T A L C O N S T I T U T I O N A N D
S U B S E Q U E N T L E G A L D E V E L O P M E N T S 258
T O M Á Š L E C H N E R , L E N K A V A Ň K O V Á 258
I N D E P E N D E N T C A N D I D A T E S I N T H E E U R O P E A N C O M P A R I S M 270
JÁN M A C H Y N I A K , KRISTINA D Z U R E K O V Á 2 7 0
E V A L U A T I O N O F T H E H E A L T H F A C I L I T I E S P E R F O R M A N C E B Y V A L U E F O R
M O N E Y M E T H O D 2 7 9
D A N I E L A M A L I Š O V Á , J A N A Š T R A N G F E L D O V Á 2 7 9
T H E S O C I A L A S P E C T O F C H I N E S E C R A F T S 2 9 3
K A T A R Z Y N A M A Z U R - W L O D A R C Z Y K 293
E F F I C I E N C Y O F C O N T R A C T I N G O U T S E R V I C E S I N T H E P U B L I C S E C T O R E
X P E R I E N C E F R O M T H E C Z E C H A N D S L O V A K R E P U B L I C 3 0 4
B E Á T A MncušovÁ M E R I Č K O V Á , N I K O L E T A J A K U Š M U T H O V Á 3 0 4
E V A L U A T I O N O F S E L E C T E D I N D I C A T O R S O F H O M E H E A L T H C A R E I N T H E
C Z E C H R E P U B L I C 3 1 9
E V A M O L N Á R O V Á 3 1 9
T H E R O L E O F T H E S T A T E I N F I N A N C I N G O F L O C A L S E L F - G O V E R N M E N T I N
T H E S L O V A K R E P U B L I C 3 2 9
V I E R A P A P C U N O V Á , J A R M I L A H U D Á K O V Á 329
A R T I F I C I A L I N T E L L I G E N C E I N H E A L T H C A R E : F O C U S O N H U M A N
R E S O U R C E S S U B S T I T U T I O N A N D E A R L Y A D O P T E R S I N S L O V A K I A 3 3 9
PETER PAŽITNÝ, D A N I E L A K A N D I L A K I , KRISTINA R A N D L O V Á , Z U Z A N A R A J D L O V Á 3 3 9
F I N A N C I A L M A N A G E M E N T A N D C O N T R O L A S S E S S M E N T T O O L F O R L O C A L
G O V E R N M E N T A U T H O R I T I E S 3 5 0
R O M A N A P R O V A Z N Í K O V A , R U S L A N A R U D N I T S K A 3 5 0
T R A N S F O R M A T I O N O F T H E M O D E L O F O P E N I N N O V A T I O N I N T H E D I G I T A L
S P A C E 3 6 4
T E T I A N A P U S H K A R , VIKTORIIA P A R K H O M E N K O , H A N N A SOBOLIEV A, H A N N A Z H O V T I A K 364
E S T I M A T I O N O F U N E M P L O Y M E N T U S I N G C H A N G E S I N T H E H O U S I N G
M A R K E T 3 7 5
D A V I D S L A V A T A 375
G E N D E R A N D E L E C T R O N I C S U B M I S S I O N O F T A X R E T U R N S 3 8 3
JIŘÍ S L E Z Á K , I V A N A Č E R M Á K O V Á 383
E X P E N D I T U R E S O F R E G I O N S O N R O A D S 3 9 3
PETR T O M Á N E K 393
M U L T I - C R I T E R I A E V A L U A T I O N O F T H E P E R F O R M A N C E O F H E A L T H
S Y S T E M S O F E U M E M B E R S T A T E S T O T H E H E A L T H 2 0 2 0 T A R G E T S 4 0 3
I V A N A V A Ň K O V Á , I V E T A V R A B K O V Á 4 0 3
F O R M I N G O P I N I O N S O N T H E R O L E O F T H E S T A T E I N T H E B E G I N N I N G S O F
E C O N O M I C T H E O R Y 4 1 4
F R A N T I Š E K V A R A D Z I N 4 1 4
U S A G E O F M E T H O D S O F F I N A N C I A L A N A L Y S I S A T T H E L E V E L O F R E G I O N A L
S E L F - G O V E R N M E N T : C A S E S T U D Y O F T H E T R E N Č Í N R E G I O N 429
R O M A N V A V R E K , P E T R A G U N D O V Á , JIŘÍ BEČICA, E V A B E N K O V Á 429
A L L O C A T I V E E F F I C I E N C Y O F P R O V I D I N G L O N G - T E R M S O C I A L C A R E :
E V I D E N C E F R O M T H E P R A C T I C E O F P U B L I C A N D P R I V A T E N U R S I N G H O M E S
4 3 8
I V E T A V R A B K O V Á , I V A N A V A Ň K O V Á 4 3 8
R E G I O N A L A N D L E G A L A S P E C T S O F T R A N S P O R T S E R V I C E S I N T H E C Z E C H
R E P U B L I C , W I T H S P E C I A L R E G A R D T O P E R I P H E R A L R E G I O N S 455
R E N É W O K O U N , PETR Č E C H Á K , P A V E L M A T E S 455
A N A L Y S I S O F T H E B U D G E T P O T E N T I A L O F L O C A L A U T H O R I T I E S : O N T H E
E X A M P L E O F T H E K H A R K I V R E G I O N 467
V A L E R I Y A Y E S I N A , O L H A R U D A C H E N K O , N A T A L Y A BIBIK, M A K S Y M K O L Í N K O 467
T A X S O L I D A R I T Y F O R T H E D E V E L O P M E N T O F A S E L F - G O V E R N I N G R E G I O N
I N T H E C O N D I T I O N S O F T H E S L O V A K R E P U B L I C 479
E L E N A Ž Á R S K A 479
Performance Evaluation of Health Care in the European Union
Member Countries
Eva Ardielli, Dominika Bémová
Abstract: Health policy of European Union aims to protect and improve citizens' health, support
the modernization of health infrastructure and improve the efficiency of European healthcare
systems. However, each European Union member country is responsible for its own health policy
and has its legislative and financial instruments at its disposal. The paper is focused on the
performance evaluation of health care systems of the European Union member countries. The
importance of international performance evaluation lies in particular in the possibility of
developing more responsible health policies, improving the quality of health care and increasing
general government capacity. The result of the research is a comparison of health care
performance in the E U member countries in the period 2012 - 2018. The outputs are processed
using the Technique for Order of Preference by Similarity to Ideal Solution method. Large
differences in the performance of health systems in E U countries were found. The highest health
care performance was confirmed in the case of Germany, Austria, Finland, Belgium and France,
while the lowest performance was found in the case of Poland, Slovakia, Bulgaria, Latvia and
Romania.
Keywords: E U countries, evaluation, health care systems, health indicators, performance,
TOPSIS
JEL Classification: CIO, 114,115,118
1 Introduction
International comparison of health system performance is a significant topic at all levels of
government. Based on international comparisons, practical decisions are made that affect the
health and lives of patients as well as the operation of medical facilities (Fuchs, 2018). In general,
international comparisons are very appropriate and desirable, however, it is necessary to pay
attention to its implementation and especially to the interpretation of the acquired knowledge
(Barták, 2012).
The topic is significantly addressed by the WHO, which in recent years has published a series of
publications European Observatory on Health Systems and Policies (WHO, 2000 or WHO,
2014). In the Czech environment, a number of authors also deal with this topic, such as (Barták
2012, Bjórkman and Nemec 2013 or Dlouhý, 2016). At E U level, comparisons of progress in
this area in E U countries have been also carried out every two years since 2010, see Health at a
Glance: Europe (OECD/EU, 2020). This publication provides analysis of the state of health of
E U citizens and the performance of E U health systems. The long-time monitoring activity is
carried out in cooperation with the OECD. The increasing availability of health data allows for
international performance comparisons, which is currently becoming the most important lever in
driving health care reforms (Barták, 2016).
Currently, the health care systems in the European Union are managed in a different way because
there are distinguished three health care models in E U countries (Beveridge, Bismarck and
Mixed system), see Gaeta et al. (2017). The organization and provision of healthcare is the
responsibility of the E U member states (Svejkovský, Vojtek and Arnoštova, 2016). The EU's
role is to complement national policies - to help achieve common goals, economies of scale,
share resources and help countries address common challenges such as pandemics, chronic
diseases and the impact of rising life expectancy on healthcare systems. It generates global public
11
health legislation and standards, but also provides funding for health-related projects (European
Commission, 2019).
The European Union is working to modernize health systems across Europe. For this reason, it
is very important to monitor health indicators in individual countries and evaluate the quality of
health care provided. Based on these evaluations, appropriate recommendations for the
modernization of health care systems in E U countries are adopted. Assessing the development
of health indicators in E U countries is therefore an important topic (Bj órkman and Nemec, 2013).
Among the very important indicators are health expenditure. Gaeta et al. (2017) points out that
the total health expenditure is a crucial part for a good performing health system. Public
expenditure on health care has been increasing over the last decades in all E U member countries,
and is expected to rise even further as a consequence of an ageing population (OECD, 2018). In
2015, it accounted for 8.7% of GDP in the E U and could reach up to 12.6% of GDP in 2060
(European Commission, 2019).
Evaluation of performance is also addressed on areas such as population health, results in health,
equity (fairness in health), finance and sensitivity to the needs of patients, see Hurst and JeeHughes
(2021) or Barták (2012). For example, indicators such as life expectancy, overall and
specific mortality, morbidity, preventable mortality or population risk factors are used. The
performance and functioning of individual areas of health care, such as preventive care, primary,
secondary care, long-term care or mental health, are measured (WHO, 2000). Inequality in access
to health services, inequality in the financing of health services and also inequality in the
sensitivity of the health care system to individual population groups are also examined. Patient
satisfaction, patient choice, respect for patient dignity and speed of care provision are evaluated,
i.e. for how long the patient's health situation is resolved (Čeladová and Holčík, 2017).
The aim of the paper is to evaluate the performance of health care in the E U member countries
based on selected health indicators for the period 2012 - 2018. Two research questions are solved:
• RQ1: Is there a linkage between a country's healthcare performance and the healthcare
model applied?
• RQ2: In the long run, which countries have shown the greatest health care readiness for
the COVID 19pandemic?
The assumption is that there may be a linkage between the applied model of health care and the
performance of health care in the country.
Given that the data examined cover the period 2012-2018, the intention is to verify which
countries had the highest pandemic preparedness in terms of access to health care and population
health.
1.1 Health Care Models in the European Union
There is great diversity in the provision and financing of health care in the E U countries which
is reflected in the application of different health care models. For the typology of health care
models, the criteria for the breakdown of the predominant source of funding from which health
care is paid are used.
According to the criterion of the predominant source of funding, health care models are divided
into four types:
• Market model
• Bismarckian model (financed by health insurance)
• Beveridge model (financed from taxes)
• Mixed model.
12
These models mostly answer the questions:
• Who guarantees citizens health care and how does the population react to it?
• From what resources is health care financed?
• What is the role of health care providers?
Market model is applied especially in the USA where health care is not guaranteed by the state.
Thus, the state does not interfere in any way with the decision of individuals, as it depends on
the free choice of each individual. The state does not enter into a relationship between provider
and patient, but through programs in the public interest solves the problem of access to health
care for social groups. Healthcare is considered a commodity at a certain price. Physicians are in
the role of private entities, both for-profit and non-profit. The patient can choose a doctor and a
medical facility according to their requirements and possibilities. Like doctors, hospitals provide
healthcare privately, but sometimes in combination with public providers. Under the market
model, health care is reimbursed from private sources either by direct payment or by private
health insurance companies of a commercial nature. Health insurance is voluntary here and can
be insured by the insured himself or by the employer. Funding is based on performance
payments. The problem with this model is mainly inequality in access to health care, high health
care costs and a lack of complexity of care (Durdisova, 2005).
The Bismarckian model (also referred as Social Health Insurance System) is based on general
health insurance. Relations between providers and payers are a compromise combination of
market share and public oversight. Sources of financing selected in the form of insurance
premiums are mandatory payments arising from the law. In this model, health care is guaranteed
by the state in such a way that the law stipulates the obligation to pay premiums to the health
insurance fund, which is administered by the health insurance company (Kos, 2019). The
principle of solidarity applies here, which means that everyone pays according to their income
and then receives health care according to their needs, while the scope and quality of care
provided is determined by the doctor. The predominant method of payment here is payment for
performance, which is usually combined with capitalization payment. This model is used, among
others, by the Czech Republic, but also by other E U countries such as Germany, Poland and
others.
The traditional representative the Beveridge model (also referred to as National Health System)
is the National Health Service, which is a funding model used in the United Kingdom. A
characteristic feature of the model is the provision of free health care guaranteed by the state.
Health care here is financed from the state budget, especially from public budgets. Within the
model, the source of health care financing is not insurance, but taxes (Delnoij, 2013). The level
of financial participation is very low here. Medical facilities are owned by the state and medical
workers are state employees, or private entities of a profit or non-profit nature. The basic element
of the health care system are general practitioners who control the patient's entry into specialized
care and are the coordinators of the provided health services. This model is mainly used in United
Kingdom, but also in Spain and other countries.
While the market model of health care does not apply in E U countries, we often encounter a
Mixed model (also referred as the Private Health Insurance System), which is based on the
principles of the Beveridge and Bismarck models. In the Mixed model, private funding from
voluntary insurance schemes or upfront payments is significant (Gaeta et al., 2017). In the E U
the mixed model is adopted for example in Austria. The division of E U countries by adopted
model of health care including the United Kingdom is summarized in Table 1.
13
Table 1 - Division of EU countries by adopted model of health care
Model of health care E U member countries
Bismarck health care system
Belgium, Czech Republic, Estonia, France, Lithuania,
Luxembourg, Hungary, Germany, Netherlands, Poland,
Romania, Slovakia, Slovenia
Beveridge's health care system
Denmark, Finland, Ireland, Italy, Cyprus, Latvia, Malta,
Portugal, Spain, Sweden, United Kingdom
Mixed model Austria, Bulgaria, Greece, Croatia
Source: Durdisová (2005), Gaeta et al. (2017), own processing
2 Material and Methods
The aim of the paper is to evaluate the performance of health care in the E U member countries
based on selected health indicators for the period 2012 - 2018. The evaluation is performed by
usage of the multi-criteria decision-making methods. The selected method for calculation is
TOPSIS method. Two research questions were also solved in the research:
• RQ1: Is there a linkage between a country's healthcare performance and the healthcare
model applied?
• RQ2: In the long run, which countries have shown the greatest health care readiness
for the COVID 19 pandemic?
In the presented research the performance of health care is evaluated based on 8 health indicators.
The data were obtained from the database Eurostat (Eurostat, 2021). The research monitors the
period 2012 -2018.
2.1 TOPSIS
The TOPSIS method is one of the methods of multicriteria evaluation of variants. The aim of the
methods of multi-criteria evaluation of variants is, in addition to finding the best variant, also to
determine the order of individual variants according to the specified criteria. The basis of the
TOPSIS method is the search for the degree of conformity of the assessed variants with the socalled
ideal variant (Technique for Order of Preference by Similarity to Ideal Solution) and the
distance from basal variant, viz Kubišová (2014).
The ideal variant is represented by the vector H\ to Hk, the basal variant by the vector D\ to Dk.
The compromise variant according to the TOPSIS method is then the one that is closest to the
ideal variant and, conversely, the furthest from the basal variant.
The process of TOPSIS procedure is as follow:
• data are organized into the criteria data matrix
• the normalized data matrix is created
• weight normalized data matrix is created
• determination of the ideal and basal variant relative to the matrix values
• distance calculation of variants from the ideal variant, respectively basal variant is made
The result of the TOPSIS method is the calculation of the relative indicator of the distances of
individual variants from the basal variant according to the relation (1):
q = + ' ~ (1)d
i + dj
14
where i = 1,2, ... m;
The indicator c; takes values from 0 to 1, where 0 indicates the basal variant and 1 the ideal
variant. Finally, a descending order of all variants is performed according to the indicator of the
relative distance from the basal variant, while the variants with the highest values are then
referred to as the solution of a multicriteria problem (Subrt, 2011).
2.2 Weights of Criteria
The performance of health care in the E U member countries is analysed on the basis of the
following selected indicators, see Table 2. Indicators Ii - I8 comprise the area of:
• availability and capacity of healthcare and
• health care system performance
Table 2 - Weights of individual indicators
Indicator Ii - 1 8 Weight of indicator
Availability and capacity of healthcare 50%
- Available beds in hospitals (Ii) 0,125
- Medical doctors (I2) 0,125
- Share of nurses on total employment (I3) 0,125
- Health care expenditure by all healthcare providers (L) 0,125
Health care system performance 50%
- Healthy life years (I5) 0,125
- Infant mortality (k,) 0,125
- Health expectancy at birth (I7) 0,125
- Health expectancy at 65 (Is) 0,125
Source: Eurostat (2021), own processing
Indicators Ii - 1 4 indicate the importance of health care in a given country, the capacity readiness
of the system and the availability of health care. Indicators I5 - 1 8 are performance indicators of
population health. They describe how health systems and health services contribute to the health
of the population.
In calculations using TOPSIS, there are considered also the weights of individual criteria. All
criteria are maximizing nature with the exception of indicator I6 , which is of a minimizing nature.
The weights were determined by equal weight method.
3 Results and Discussion
In this part of the article, there are presented the results of research. First, the E U countries are
evaluated in terms of health care performance using the TOPSIS method. Furthermore, the
grouping of countries according to the achieved health care performance is performed using
cluster analysis and research questions are verified.
3.1 Performance Evaluation of Health Care in EU Member Countries
On Figure 1 there are shown the results of the TOPSIS method for period 2012 - 2018. E U
member countries are ranked according to health care performance from best to worst. It is
evident that Germany, Austria, Finland, Belgium and France ranked best within the E U member
countries. According to the monitored health indicators, Poland, Slovakia, Bulgaria, Latvia and
Romania were in the worst positions.
15
Figure 1 - Evaluation of health care performance in EU member countries (period 2012 -
2018)
Source: Eurostat (2021), own calculations
ON
3
Ö
M Z, Ü
o
o
o
00
oo o
oI— I—
o\
d Ö Ö
o
5
0 > ^ » ^ n c / a « c / a o : z : o r ' _ c / 3 o r r a ^ c K 2 n ^ c / 3 B r ' ? o
» C Ä ^ r > m m S O m H 2 ; ^ ^ > ^ X H
f i
ö " Z r O r O r H _
c
2
E U M E M B E R C O U N T R Y
3.2 Clustering of EU Countries According to the Health Care Performance
In Table 3, there are evaluated the E U member states according to the performance of health care
based on the Cluster analysis, Ward's method. The countries are divided into 3 groups on Aboveaverage
countries, Average countries and Below-average countries.
Table 3 -Distribution of EU countries according to cluster analysis
Above-average countries Average countries Below-average countries
Austria, Belgium, Czech
Republic, Finland, France,
Germany, Sweden
Cyprus, Denmark, Estonia,
Greece, Italy, Ireland,
Lithuania, Luxembourg,
Netherlands, Portugal,
Slovenia, Spain, United
Kingdom
Bulgaria, Croatia, Hungary,
Latvia, Malta, Poland,
Romania, Slovakia
Source: Eurostat (2021), own processing
The most successful group of countries with high pandemic preparedness includes Austria,
Belgium, Czech Republic, Finland, France, Germany and Sweden. These are countries with a
16
high number of beds per capita, a high number of doctors and nurses per capita, high health
expenditures and good population health. Although the health preparedness of these countries is
good, in some countries the capacities of hospitals have been filled and some have been on the
edge of their potential (for example France, Czech Republic).
On the contrary, the countries in the third group, namely Bulgaria, Croatia, Hungary, Latvia,
Malta, Poland, Romania and Slovakia, showed the least preparedness. Nevertheless, during the
pandemic, their healthcare systems did not collapse. In some cases, strong restrictive measures
have been taken to restrict movement and economic activity, which have prevented the massive
spread of the disease (for example Slovakia, Hungary, Poland).
Research question RQ2 was solved. According to the performance evaluation of E U countries
by usage of TOPSIS method and clustering of countries was confirmed the long-term readiness
for COVID 19 pandemic above all in case of the countries placed in the first cluster: Austria,
Belgium, Czech Republic, Finland, France, Germany and Sweden.
3.3 Evaluation of Health Care Systems in EU Member Countries
Figure 2 shows the values of the c,- indicator of the E U countries according to the affiliation to
the health care model. The red line represents an average value of 0.50863. It can be stated that
in all types of health care systems both above-average and below-average countries in terms of
health care are represented. It can only be stated that in the first and in the third cluster there are
more countries applying the Bismarck model (4 from 7 items and 4 from 8 items), while in the
second cluster there are more countries of the Beveridge model (7 from 13 items).
Representatives of the Mixed model (Austria, Bulgaria, Greece, Croatia) are also found in all
clusters.
Figure 2 - Evaluation of health care performance according to the applied health care
system
Source: Eurostat (2021), own calculations
0.90000
>
H 0.20000
3 o.ioooo
2
0.00000
0 5 10 15 20 25 30
N U M B E R O F E U C O U N T R I E S
The research question RQ1 was verified. It has not been confirmed that there is any demonstrable
dependence between the performance of health care in the country and the applied health care
model.
17
This result is also confirmed by other authors, see Gaeta et al. (2017), OECD (2002) or OECD
(2019). Other factors, such as the geographical area, have a greater influence on the achieved
values in the health indicators than the applied model of health care (Papanicolas and Smith,
2013).
4 Conclusion
International comparisons of the performance of health systems are increasingly established in
academic and public policy discourse. The topic is relevant at all levels of government.
International institutions often reflect the work of national governments within the health system,
make recommendations, deal with general health requirements, while national governments
usually have full competence in health care, legislative, financial and other tools for its
administration and management.
The presented paper deals with the evaluation of health care performance in E U member
countries with regard to the applied health care model. Significant differences were found
between health care performance in individual countries, which can imply how the country is
prepared for a possible pandemic. This knowledge has a direct application in the country's
national policy. In the event of a pandemic, countries with below-average performance and low
health capacity must pursue more restrictive policies to prevent health care collapse than in
countries with above-average performance. The linkage between the applied health care model
and the level of performance has not been confirmed.
Acknowledgements
This paper was supported within the project SGS No. SP2021/67, International Evaluation of the
Performance of Health and Social Services with a Focus on the Application of Multicriteria
Methods, Faculty of Economics, VSB - Technical University of Ostrava.
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[8] GAETA, M . et al. (2017). An overview of different health indicators used in the
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performance management in OECD health systems. Paris: OECD
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a veřejného zdravotnictví. Praha: Univerzita Karlova.
[13] DURDISOVÁ J. (2005). Ekonomika zdraví. Praha: Oeconomica, 2005.
[14] OECD (2002). Measuring up: improving health system performance in OECD
countries. Paris: OECD Publishing.
[15] OECD (2018). Health at a Glance 2019 [online], [cit.2021-07-15]. Available:
http ://www.oecd.org/health/health-systems/health-at-a-glance-19991312.htm
[16] OECD/EU (2020). Health at a Glance: Europe 2020: State of Health in the E U Cycle.
Paris: OECD Publishing
[17] PAPANICOLAS, I., and P. SMITH. (2013). Health system performance comparison:
an agenda for policy, information and research. London: McGraw-Hill Education
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Contact information
Ing. Eva Ardielli, Ph.D.
VSB - Technical University of Ostrava, Faculty of Economics, Department of Public Economics
Sokolská třída 33, 702 00 Ostrava 1, Czech Republic
E-mail: eva.ardielli@vsb.cz
Be. Dominika Bémová
VSB - Technical University of Ostrava, Faculty of Economics, Department of Public Economics
Sokolská třída 33, 702 00 Ostrava 1, Czech Republic
E-mail: dominika.bemova.st@vsb.cz
19
Technical Efficiency Evaluation of Acute Care Public Hospitals in the
Czech Republic and Baden-Württemberg
Eva Ardielli, Ivana Vaňková, Sabrina Lee
Abstract: International evaluation of the efficiency of health care is a very appropriate and
desirable topic. Based on international comparisons, practical decisions are made that affect the
health and lives of patients as well as the functioning of medical facilities. Presented paper is
focused on the international comparison of the efficiency of selected public acute care hospitals
in the Czech Republic and Germany. The aim is to evaluate the technical efficiency of selected
public acute care hospitals of regional level in the Czech Republic and the chosen federal state
of Germany - Baden-Württemberg in the year 2018. The assessment of the efficiency of hospitals
is performed by usage of Data Envelopment Analysis (DEA) models. Based on the results it was
confirmed, that the hospitals with 250-500 beds achieve a higher value of the degree of technical
efficiency than hospitals with 501-1000 beds and that the acute care hospitals in BadenWürttemberg
achieve higher levels of technical efficiency than hospitals in the Czech Republic.
Keywords: Baden-Württemberg, Czech Republic, DEA, efficiency, healthcare, hospitals,
Germany
JEL Classification: C10, D24,110
1 Introduction
International comparisons necessarily differ from national comparisons, in particular because
international comparisons must inevitably consider a certain global consensus on the objectives
and different parts of the health system and must focus on a number of actors (Barták et al, 2016;
Varabyova et al., 2017). International institutions often reflect the work of national governments
within the health system, make recommendations, deal with general health requirements, while
national governments usually have full competence in health care, legislative, financial and other
tools for its administration and management (Svejkovský at al., 2016; European Commission,
2019).
Evaluating of the efficiency of health systems is more desirable than widely implemented
(Barták, 2010). The W H O Health Report of 2000 (WHO, 2000) showed how complex this
assessment is from both a methodological and a practical point of view. The problem is both the
large number of existing definitions of efficiency and no international agreement on them, as
well as a number of methods and their very different reliability. Another problem is their
procession, which can lead to significant distortion (Barták, 2012). When taking over the results
of an international comparison, it is always necessary to carefully consider not only the compared
quantities, but also the broader context of the health care system (Dlouhý, 2016; Gaeta et a l ,
2017).
Health is a key category that affects all other levels of human life, such as family, work,
education, etc. There is a relationship between the level of health and economic prosperity both
at the level of the individual and from the point of view of society as a whole (Transparency
International, 2020). In addition to various socio-economic and individual factors, the level of
health is also directly and significantly affected by the availability, quality and efficiency of
health services in the country (Suhrcke, 2006).
20
The public economy and public policy of each developed country addresses the issue of possible
efficiency gains in health care. The aim of health policy is primarily to increase efficiency on the
part of health care providers, such as hospitals (Dlouhý, Jablonský and Novosádová, 2007).
The subject of the presented paper is an international comparison of the efficiency of hospitals
in a selected federal state of Germany and in the Czech Republic. Both countries are quite similar
in terms of the functioning of the health system. Bismarck's model of healthcare is applied in the
Czech Republic and Germany as well (Hamplová, 2019). The structure and organization of
health care in the Czech Republic and Germany is very similar, see Ardielli, Lee and Vaňková
(2021). The efficiency of public district hospitals is an important topic of many authors (Ahmed
et al., 2019; Blatnik et al., 2017; Vrabková and Vaňková, 2015).
The aim of the paper is to evaluate the technical efficiency of selected public acute care hospitals
of regional level in the Czech Republic and the chosen federal state of Germany - BadenWürttemberg
in the year 2018.
As there are a total of tens of thousands of medical facilities in the Czech Republic, for the
purposes of our analysis we limited ourselves only to medical facilities of institutional care,
namely acute care hospitals in public ownership.
To maintain the condition of homogeneity of production units, the selection of hospitals was
targeted at medium-sized and large acute care hospitals in terms of the size of the inpatient fund,
which provide a comprehensive range of health care for their patients. This condition to some
extent limits the selection of the examined sample of production units, but on the other hand it is
necessary for the rational interpretation of the achieved results and recommendations.
Two research questions (RQ1 and RQ2) were formulated to support the aim of the paper:
• RQ1: "Do hospitals with 250-500 beds achieve a lower value of the average level of
technical efficiency than hospitals with 501-1000 beds?"
• RQ2: "Do acute care hospitals in Baden-Württemberg achieve better average level of
technical efficiency than hospitals in the Czech Republic?"
The scope and size division of hospitals is not uniform in the Czech Republic and Germany. For
the purposes of the analysis, predominantly medium-sized and large hospitals with a number of
beds from 250 to 1000 were selected. The research did not monitor hospitals with fewer than 250
beds and more than 1000 beds, as their number would not be significant for regional level. In the
Czech Republic and Germany, in these categories are predominantly aftercare hospitals,
preventive or rehabilitation institutions and university hospitals, which were not included in the
research. The research focused only on regional-level acute care hospitals.
The research question RQ1 assumes that within this category of hospitals it is possible to
distinguish the level of technical efficiency in hospitals of medium size (examined sample of
hospitals with 250-500 beds) and hospitals of large size (examined sample of hospitals with 501 -
1000 beds).
The research question RQ2 assumes that the analysis according to the DEA model works with
only one output parameter, namely the number of hospitalization cases. This parameter is closely
related to the valuation (reimbursement) of acute inpatient care through the DRG classification
system. The implementation of the DRG classification system is different in each state in terms
of time period and the setting of basic economic standards in the provision of health services,
which can also affect the production of hospital activities.
21
2 Property Structure of Acute Care Hospitals in the Czech Republic and Baden-
Württemberg
Comparison of the number of individual types of hospitals and the number of available beds in
the Czech Republic and Germany is given in Table 1, see (ÜZIS, 2019; State statistical office,
2018; Joint federal committee, 2021). Acute care hospitals in the Czech Republic make up 79%
of all facilities in the Czech Republic, and aftercare hospitals account about 21%. Of the total
capacity of the fund, acute inpatient care makes about 95%, aftercare makes about 5%. The vast
majority of bed capacity (73%) is located in general hospitals, which have a non-state owner as
region, municipality or private entity.
Table 1 - Hospital facilities in the Czech Republic
Type of health care provider
Number of hospital
facilities
Number of available beds
Type of health care provider
Czech
Republic
Baden-
Württemberg
Czech
Republic
Baden-
Württemberg
University hospital 10 6 13 757 8 228
General hospital 144 250 46 571 55 570
Acute care hospital (university
and general hospital)
154 256 60 328 63 798
Aftercare hospital and preventive
or rehabilitation institutions
40 198 3 123 25 911
Total number of facilities 194 454 63 451 89 709
Source: (UZIS, 2019; State statistical office, 2018; Joint federal committee, 2021), own
processing
In the Czech Republic, hospitals are divided according to the size of the bed stock into:
• Small hospitals (less than 100 beds),
• medium-sized hospitals (100-499 beds),
• large hospitals (500 and more beds).
In Germany there are about 2000 acute care hospitals. They differ by sponsorship and by service
level. German state laws mostly regulate four types of hospitals:
• Basic service hospitals - (usually up to 200 beds),
• Regular service hospitals - (up to 300 beds),
• Central service hospitals - (usually up to 500 beds),
• Maximum care hospitals - (usually more than 1000 beds).
Acute care hospitals in Baden-Württemberg make up 56% of all facilities in the Czech Republic,
and aftercare hospitals account about 44%. Of the total capacity of the fund, acute inpatient care
makes about 71%, aftercare makes about 29%. Similarly, as in the Czech Republic, the vast
majority of bed capacity (62%) is located in general hospitals that have a non-state sponsor as a
region, municipality or private entity.
2.1 Property Structure of Medical Facilities in the Czech Republic
The property structure of medical facilities in the Czech Republic is very diverse and very
inconsistent. The public law element in the form of ownership of facilities, which was 100 %
present before 1989, was maintained even after 1989. However, medical facilities logically had
to deal with a change in the economic system. Some thus remained in the hands of public (i.e. in
the hands of municipalities, regions, state) but in the form of limited liability companies, joint
22
stock companies (form of private entities), or in the form of contributory organizations or
university hospitals. Some facilities were privatized to private hands.
Acute care hospitals in the Czech Republic currently have the following types of ownership
structure:
• State
o established by the Ministry of Health of the Czech Republic (university
hospitals, general hospitals)
o established by the Ministry of Defense of the Czech Republic (military
hospitals)
• Non-state
o regional hospitals
o municipal hospitals
o private hospitals
o church hospitals
Due to the absence of a comprehensive database of medical facilities in the Czech Republic and
their ownership, our summary of ownership structure of hospitals in the Czech Republic is based
on an Analysis of the Quality of Hospitals performed by Transparency International on a sample
of 146 acute care hospitals in the Czech Republic (Transparency International, 2020). In the
research, there was analyzed a total of 146 hospital acute care facilities in the Czech Republic in
the year 2020.
A significant part of acute care hospitals throughout the Czech Republic is concentrated in the
center of the country (the capital city of Prague, or the Central Bohemian Region) and then in
the largest regional cities (Brno, Ostrava, Ústí nad Labem). Hospitals established by the state
(university hospitals, general hospitals and military hospitals) can be found primarily in large
university cities - Prague (7), Brno (3), Ostrava (1), Pilsen (1), Olomouc (2) and Hradec Králové
(1). Regarding the type of ownership of medical facilities in the Czech Republic, the largest
representation is owned by the region, followed by private, municipal, state and church
ownership and mixed form with representation of public and private element, see Table 2.
Table 2 - Ownership structure of acute care hospitals in the Czech Republic
Ownership
Number of acute care
hospitals
Percentage (%)
State 15 10.3
Region 65 44.5
Municipality 24 16.4
Church 4 2.7
Private 37 25.3
Mixed form 1 0.7
Source: (ÜZIS, 2019; Transparency International, 2020, own research), own processing
In total, regional hospitals account for almost half of the hospitals surveyed (65 out of 146). The
most regional hospitals were found out in the South Moravian Region (9) and the South
Bohemian Region (8). In addition, the region also owns the vast majority of the total number of
hospitals in the Vysočina Region (5 out of 7), Pardubice Region (6 out of 7) and Hradec Králové
Region (6 out of 9) regions. Hradec Králové Region, Pardubice Region, Vysočina Region,
Liberec Region, South Bohemian Region, Plzeň Region - these six regions are united by the fact
that the medical facilities located here are almost entirely owned by the regions, resp.
municipalities or the state. The private owner is always represented only marginally.
23
In contrast, in the Central Bohemian Region and the Olomouc Region, hospitals are mostly
owned by private owners (9 out of 19 and 6 out of 8). The highest share of private facilities is in
the Central Bohemian Region (9), where dominates, in terms of ownership, the Austrian jointstock
company V A M E D Mediterra a.s., owned by the global company V A M E D a.s., based in
Vienna. In the Czech Republic, this company is owned by a total of 5 acute care hospitals - in
the Central Bohemian (3) and Liberec (1) regions and in the Vysočina region (1). However, in
terms of the number of medical facilities, the largest private player in the Czech Republic is
A G E L a.s., which owns a total of 12 acute care hospitals. The company dominates mainly in
Moravia, namely in the Moravian-Silesian Region (5), the Olomouc Region (4), the Zlín Region
(1) and also operates in the Ústí Region (1) and the Central Bohemian Region (1). On the
contrary, in addition to V A M E D , Penta Hospitals CZ, s.r.o. is also present in the Czech Republic,
in the Karlovy Vary Region (2), the Ústí Region (1) and the Hradec Králové Region (1).
2.2 Property Structure of Medical Facilities in Baden-Württemberg
In Germany, too, the trend toward privatization has led to more private and non-profit hospitals
and fewer purely state-run hospitals. Germany has a mixed healthcare system with state and
market-oriented components. The underlying welfare state principle is anchored in the Basic
Law. In accordance with the federal principle, regulation is carried out at the federal, state and
municipal (districts and municipalities) levels (Augurzky and Penter, 2014).
Acute care hospitals in Germany currently have the following types of ownership structure:
• State
o Federal Republic of Germany (military hospitals; one in Baden-Württemberg)
o State of Baden-Württemberg (Ministry of Social Affairs, Health and
Integration) (university hospitals)
• Non-state
o public: district hospitals
o public: municipal hospitals
o private hospitals
o non-profit hospitals (welfare association of churches, non-profit registered
associations, non-profit foundations)
Table 3 - Ownership structure of acute care hospitals in Baden-Württemberg
Ownership
Number of acute care
hospitals
Percentage (%)
State 6 2.4
District 80 32.0
Municipality 6 2.4
Non-profit 54 21.6
Private 63 25.2
Separately listed day clinics
and centres for psychiatry
(partly state owned)
41 16.4
Source: (state statistical office, 2018; Ministry of social affairs Baden-Württemberg 2019; own
research), own processing
As Table 3 shows, the ownership structure in Baden-Württemberg is also uneven. Slightly more
than one-third (36.8 %) are publicly owned (state, district or municipality). At 25.2%, private
providers of hospital services are the second strongest group of owners, followed by non-profit
24
providers with around one fifth. Hospitals in the form of day clinics and centers for psychiatry
are not included in the calculation for this paper.
The legal forms in Germany also present a mixed picture. Only public hospitals can choose the
public legal forms such as public law institution (Anstalt öffentlichen Rechts) and public law
corporation (Körperschaft öffentlichen Rechts). All university hospitals, for example, have these
public legal forms. Public and private operators can furthermore run their hospitals in the form
of a limited liability company or a hospital association. Private operators may even run their
hospitals in the legal form of a capital stock company.
Baden-Württemberg is divided into four administrative regions (Stuttgart, Tübingen, Karlsruhe
and Freiburg), including 12 regions and then 35 administrative districts. In these areas, however,
the respective districts are responsible for the hospitals. With approx. 28.22 %, the administrative
region of Stuttgart has the most hospitals in percentage terms, and the administrative region of
Tübingen has the least with approx. 20.57 %. Nevertheless, according to the regional distribution
of hospitals, no real clusters can be identified and the hospitals are relatively evenly distributed
in terms of number.
3 Material and Methods
The aim of the paper is to evaluate the technical efficiency of selected public acute care hospitals
of regional level in the Czech Republic and the chosen federal state of Germany - of BadenWürttemberg
in the year 2018. The evaluation is performed by usage of output-oriented DEA
models.
Authors using multicriteria decision-making methods in the healthcare sector focus mainly on
the micro level. Evaluating of the efficiency of healthcare facilities is a very common issue (e.g.
Ahmed et al., 2019; Blatnik et al., 2017; Ghahremanloo, M . et al., 2020; Varabyova, et al., 2017).
Many articles are also aimed at modeling efficiency at the meso or macro level (e.g. Stefko,
Gavurová and Kočišova, 2018; Ravangard et al, 2014, Dlouhý, Jablonský and Zýková, 2018).
3.1 Data
Due to the absence of a comprehensive database of medical facilities in the Czech Republic, data
for the Czech Republic were collected using several different sources. Information on the
existence of university hospitals and other state-owned hospitals was drawn from the website of
the Ministry of Health and other Czech ministries. Information on regional hospitals was taken
from the regions' websites and their annual reports. The same procedure was followed in case of
general hospitals. Some data were also taken from the research of the Quality Analysis of
Hospitals in the Czech Republic (Transparency International, 2020). An important source was
also The Medical Yearbook for 2018 (ÚZIS, 2019). All information about specific hospitals was
then drawn from the websites and annual reports of individual hospitals. The result was the
collection of data for a total of 146 acute care facilities in the Czech Republic of which 65 are
regional hospitals.
For the hospital sector in Baden-Württemberg, general data were taken, on the one hand, from
the statistical hospital reports of the Baden-Württemberg State Statistical Office and from an
overview of the Baden-Württemberg Ministry of Social Affairs. On the other hand, information
on individual hospitals could be collected from the quality reports to be prepared annually by the
hospitals. The obligation of each licensed hospital to publish an annual structured quality report
is even legally regulated under §§136 ff. of the Social Code V on Statutory Health Insurance.
The contents to be published here are determined by the Federal Joint Committee. As a result,
25
out of a total of 250 hospitals in Baden-Württemberg, 80 public hospitals under municipal
ownership and six university hospitals under state ownership could be identified.
3.2 Methods
The methodology for evaluating the technical efficiency of selected public hospitals in an
international comparison includes specific input parameters and one output parameter. The
definition of individual parameters and their statistical characteristics is given in Table 4.
As can be seen from Table 4, a total of 58 regional hospitals from the Czech Republic (29
hospitals) and Baden-Württemberg (29 hospitals) represent different size groups of hospitals
according to the extent of inpatient fund, which also reflects the values of other selected
parameters. In particular, the staffing of acute inpatient care is determined according to the
individual specializations of health care workers and other professionals according to the type
and field of health care provided. The requirements for the staffing of this care are based on the
size of the bed stock, and these are usually calculated for 30 beds.
Table 4 - Statistical characteristics of input parameters (xl, x2, x3) and output parameter
(yl), 2018
Inputs/Outputs Min. Max. Average Mean
St.
deviation
Inputs
Number of beds 251 969 451.52 420.50 157.01
Inputs
Number of
physicians by
recalculated
number of
working hours
(xl)
68.26 372.90 143.64 126.00 57.29
Inputs
Number of general
nurses by
recalculated
number of
working hours
(x2)
150.50 925.75 376.59 349.65 144.63
Outputs
Number of
hospitalization
cases(yl)
8 681 50 350 19 298.67 18 504.50 7 202.36
Source: Own calculations and processing
The evaluation of selected production units was made according to the output-oriented D E A
model with the assumption of constant revenues from the scope, the so-called CCR DEA model.
The C C R model belongs to the group of radial models and expresses the overall technical
efficiency. Radial efficiency is based on the Pareto-Koopmans efficiency concept, which is
defined as follows: "A homogeneous production unit isfully efficient if and only if it is no longer
possible to improve any of the inputs or outputs without deteriorating another input or output"
(Coelli et al., 2005).
The mathematical notation of the primary output-oriented CCR model is determined by relation
(1):
26
minimize (1)
under conditions £ • u{ yik < YIj1
Vj *jk, k = 1,2, ..., n,
Uj>e 1= 1, 2 , r,
Vj>s, j = 1, 2 , m.
where: u; is the weight given to output i, ytqis the amount of output i produced by D M U q, vj is
the weight given to input j, xjq is the amount of input i produced by D M U q.
The optimal value of the purpose function is Uq >l. The degree of technical efficiency is given
by the ratio of the weighted sum of inputs to the weighted sum of outputs, but weights are sought
such that the value of the efficiency measure is equal to or greater than one. A value of 1 is
therefore assigned to effective units, a value greater than 1 to inefficient units.
4 Results and Discussion
The analysis of the calculations of the technical efficiency degree of a selected set of hospitals
from the Czech Republic and Baden-Württemberg proved the following findings.
Out of the total set of 58 acute care hospitals, only five hospitals reached the effective production
limit (Kliniken Böblingen, Ostalb-Klinikum Aalen, Rems-Murr-Klinikum Winnenden, Spital
Waldshut and Sdružené zdravotnické zařízení Krnov, p.o.). Other hospitals have achieved
technical efficiency rates greater than 1, so they have become inefficient units and are advised to
increase the output value while maintaining the same input parameter value. The worst results
were achieved by B G Klinik Tübingen Hospital, Jindřichův Hradec Hospital, a.s. and Karlovy
Vary Regional Hospital a.s., whose value of the degree of technical efficiency exceeded the
number 2.
The summary results of the technical efficiency modeling by usage of the output-oriented CCR
model are documented in Table 5 and Annex 1. From Table 5 and Annex 1 it is clear that in the
output-oriented model assuming constant economies of scale, technical efficiency expressed as
a percentage in case of 17 hospitals ranges from 80-89 % and in case of 14 hospitals the rate of
this efficiency was less than 59%.
Table 5 - Summary results of technical efficiency of CCR-DEA model
%
Number
DMUs
DMUs
[100] 5 H5, H13, H19, H29, H39
[99-90] 4 H25, H28, H30, H56
[89-80] 17
HI, H8, H9, H10, H12, H14, H17, H20, H21, H24, H26, H38,
H40, H43, H44, H46, H55
[79-70] 10 H2, H16, HI 8, H22, H47, H48, H50, H51, H52, H54
[69-60] 8 H3, H6, H7, H l l , H32, H36, H37, H53
[59-10] 14
H4, H15, H23, H27, H31, H33, H34, H35, H41, H42, H45, H49,
H57, H58
Source: Own calculations and processing
In Figure 1, there is illustrated the achieved level of technical efficiency according to individual
production units. Fig. 1 shows which production units oscillate around the average value of the
degree of technical efficiency of the whole examined sample. Hospitals N23 GRN-Klinik
27
Tubingen and two hospitals from the Czech Republic differ significantly from the average value,
specifically N49 Jindfichuv Hradec Hospital, a.s. and N 58 Karlovy Vary Regional Hospital a.s.
These hospitals achieve the worst levels of technical efficiency.
Figure 1 - Technical efficiency rate of production units
Source: Own calculations and processing
1 c
3
„ :.,">
1
\
g 2
U
1 1.5
1
•
3
„ :.,">
1
\
g 2
U
1 1.5
1
3
„ :.,">
1
\
g 2
U
1 1.5
1
•
3
„ :.,">
1
\
g 2
U
1 1.5
1
• * * *
3
„ :.,">
1
\
g 2
U
1 1.5
1
3
„ :.,">
1
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g 2
U
1 1.5
1
i . • * • * *
• *• . *
• • • • * •
1 2 3 4 5 6 7 8 9 1011 i : 1314 15 1617 IS 192021 2223 24 252627 2S29.1031 3:333435 36373339 40 41 4:43 44 45464748495051 5253 54 5556575S
Hospitals
average • Bacten-WiiiltcinbcrE • Czech Republic
5 Conclusion
The paper was focused on the evaluation of technical efficiency of selected public acute care
hospitals in 2018. The subject of the analysis were selected hospitals of regional character from
the Czech Republic and the federal state of Baden-Württemberg.
An output-oriented D E A model was assumed to model the technical efficiency of hospitals,
assuming constant returns to scale.
The evaluation of technical efficiency followed two research questions. The first research
question (RQ1) "Do hospitals with 250-500 beds achieve a lower value of the degree of technical
efficiency than hospitals with 501-1000 beds" can be answered as follows:
• the average level of technical efficiency of a total of 39 hospitals with 250-500 beds
reached 1.26714. This value is below the average technical efficiency of the total set of
hospitals (i.e. 58 hospitals), which is 1.30926. The closer the value of the average
technical efficiency rate is to 1, the more efficient the production unit is;
• The average level of technical efficiency of hospitals with a bed stock capacity of 501 -
1000 beds is 1.40423. This value is higher than the average level of technical efficiency
of the whole set of production units;
• Based on the above-mentioned results, it is necessary to refute the research question
RQ1.
Research question RQ2 was as follows: "Do acute care hospitals in Baden-Württemberg achieve
higher levels of technical efficiency than hospitals in the Czech Republic?" Based on the results
presented in Fig. 1, it can be stated that hospitals from the federal state of Baden-Württemberg
achieve better values of the average level of technical efficiency (1.21470) compared to hospitals
from the Czech Republic (1.40382). Therefore, RQ2 is confirmed based on the results of the
analysis.
28
International comparisons at the micro level provide many suggestions on how production units
can improve technical efficiency, but it is also necessary to perceive possible limits, which are
associated with both the chosen method of researching selected problem and the collection of
necessary data. The selected input and output parameters that were included in the analysis have
the same methodological reporting in both countries, thus they are reflecting the relevant
obtained results.
Acknowledgements
This paper was supported within the project SGS No. SP2021/67, International Evaluation of the
Performance of Health and Social Services with a Focus on the Application of Multicriteria
Methods, Faculty of Economics, VSB - Technical University of Ostrava.
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30
Annex 1 - Results of technical efficiency of output-oriented CCR DEA model
DMUs
(n=58)
Name of hospital
Number
of beds
Technical
efficiency
rate
Rank
HI Fürst-Stirum-Klinik Bruchsal 364 1.12989 8.
H2 Hegau-Bodensee-Klinikum Singen 465 1.23379 23.
H3 Kliniken des Landkreises Lörrach GmbH 308 1.22286 22.
H4 Klinik am Eichert 839 1.40506 42.
H5 Kliniken Böblingen 327 1.00000 1.
H6 Kliniken Landkreis Heidenheim GmbH 568 1.31689 35.
H7 Kliniken Sindelfingen 383 1.30657 32.
H8 Klinikum Konstanz 350 1.13652 9.
H9 Klinikum am Steinenberg 589 1.12367 7.
H10 Krankenhaus Freudenstadt 340 1.14252 11.
H l l
Ortenau Klinikum Lahr-Ettenheim Standort
Lahr
411 1.33785 37.
H12
Ortenau Klinikum Offenburg-Gengenbach
461 1.15243 14.H12
Standort Ebertplatz
461 1.15243 14.
H13 Ostalb-Klinikum Aalen 399 1.00000 1.
H14 Stauferklinikum Schwäbisch-Gmünd 401 1.18004 18.
H15 Medius Klinik Kirchheim 429 1.41273 44.
H16 Medius Klinik Nürtingen 331 1.20302 21.
H17 St. Elisabethen-Klinikum 542 1.14423 12.
H18
SLK-Kliniken Heilbronn GmbH - Klinikum
325 1.27137 26.H18
am Plattenwald
325 1.27137 26.
H19 Rems-Murr-Klinikum Winnenden 570 1.00000 1.
H20 Klinikum am Gesundbrunnen 969 1.18936 20.
H21 Klinikum Mittelbaden Baden-Baden Balg 380 1.14206 10.
H22 GRN-Klinik Schwetzingen 295 1.25830 25.
H23 B G Klinik Tübingen 340 2.01926 52.
H24 Klinikum Mittelbaden Rastatt 260 1.10400 6.
H25 Kreiskrankenhaus Emmendingen 263 1.05427 3.
H26 Rems-Murr-Klinik Schorndorf 277 1.18043 19.
H27
Schwarzwald-Baar Klinikum Villingen-
269 1.48831 48.H27
Schwenningen GmbH
269 1.48831 48.
H28 Medius Klinik Ostfildern-Ruit 280 1.07193 4.
H29 Spital Waldshut 251 1.00000 1.
H30 Nemocnice Břeclav, p.o. 419 1.02615 2.
H31 Nemocnice Kyjov, p.o. 478 1.41370 45.
H32 Nemocnice Vyškov, p.o. 431 1.31532 34.
H33 Nemocnice Znojmo, p.o. 590 1.52036 50.
H34 Nemocnice Havlíčkův Brod, p.o. 534 1.40078 41.
H35 Nemocnice Jihlava, p.o. 649 1.51802 49.
H36 Nemocnice Nové Město na Moravě, p.o. 457 1.30151 31.
H37 Nemocnice Pelhřimov, p.o. 340 1.34973 38.
H38 Nemocnice Třebíč, p.o. 422 1.14992 13.
H39 Sdružené zdravotnické zařízení Krnov, p.o. 532 1.00000 1.
H40 Nemocnice Třinec, p.o. 355 1.16811 15.
H41 Nemocnice ve Frýdku-Místku, p.o. 477 1.40582 43.
31
H42 Nemocnice s poliklinikou Havířov, p.o. 413 1.54418 51.
H43 Nemocnice s poliklinikou Karviná-Ráj, p.o. 511 1.37031 39.
H44 Slezská nemocnice v Opavě, p.o. 535 1.32181 36.
H45 Krajská nemocnice T. Bati, a.s. 914 1.43684 47.
H46 Kroměřížská nemocnice a.s. 391 1.17235 16.
H47 Uherskohradišťská nemocnice a.s. 609 1.29257 28.
H48 Vsetínská nemocnice a.s. 344 1.29431 30.
H49 Nemocnice Jindřichův Hradec, a.s. 343 2.09965 53.
H50 Nemocnice Písek, a.s 423 1.30946 33.
H51 Nemocnice Strakonice, a.s. 314 1.29300 29.
H52 Nemocnice Tábor, a.s. 466 1.24584 24.
H53 Oblastní nemocnice Jičín a. s 505 1.38185 40.
H54 Oblastní nemocnice Náchod a.s. 845 1.27537 27.
H55 Oblastní nemocnice Trutnov as. 300 1.17861 17.
H56 Nemocnice s poliklinikou Česká Lipa, a.s. 488 1.08457 5.
H57 Oblastní nemocnice Kolín, a.s., 541 1.42878 46.
H58 Karlovarská krajská nemocnice a.s. 576 3.41186 54.
Source: Own calculations and processing
Contact information
Ing. Eva Ardielli, Ph.D.
VSB - Technical University of Ostrava, Faculty of Economics, Department of Public Economics
Sokolská třída 33, 702 00 Ostrava 1, Czech Republic
E-mail: eva.ardielli@vsb.cz
Ing. Ivana Vaňková, Ph.D.
VSB - Technical University of Ostrava, Faculty of Economics, Department of Public Economics
Sokolská třída 33, 702 00 Ostrava 1, Czech Republic
E-mail: ivana.vankova@vsb.cz
Sabrina Lee
VSB - Technical University of Ostrava, Faculty of Economics, Department of Economics
Sokolská třída 33, 702 00 Ostrava 1, Czech Republic
E-mail: sabrina.lee.st@vsb.cz
32
Public Property in the French Law
Richard Bartes
Abstract: The paper focuses on the comparison of basis between Czech and French conception
of public property with regard to the introduction of the French legal model of public property.
The principle objective of the paper is to analyze main characteristics of the conception of public
property in France and to present some differences between Czech and French conception of
public property. For this reason, the analytical, comparative and descriptive methods were used
to write this paper and to fulfil its objective. A descriptive method is used for a presentation of
French and Czech conception of the public property and a historical background. Afterwards,
the comparative method is applied for a comparison and an emphasis on differences in French
and Czech legal regulation of public property. Owing to the analytical method is possible to gain
required results concerned to global distinctions between French and Czech system of legal
regulation of public property. As for results, it is necessary to mention the accomplished analysis
of comparison of public property conceptions in the Czech Republic and in France.
Keywords: France, public property, public sector
JEL Classification: K19, H40, H82
1 Introduction
The right to own property is one of the fundamental human rights guaranteed by the
constitutional order. In every modern democratic state, a property is protected, regardless of
whether it is owned by a natural or a legal person. In the same way, the property is protected
regardless of whether it is owned by a person of private or public law. Simultaneously it holds
true, that property rights have the same legal content and protection. On the other hand, the right
to own property is one of the fundamental right though, but there are also obligations attached to
this right - for example: all persons owning property are obliged to take care of their property
(the principle of "ownership is binding") or a property have not be abused to the detriment of the
rights of others. The property have not be abused in conflict with the generally protected public
interests and its performance have not harm human health, nature and the environment beyond
the limits set by law.
The specific kind of property is a public property. The mentioned specificity lies not only in the
type of property, but also in the entity handling this property and also in the purpose for which
this property is used. A public property as the legal institute belongs to the public law, specifically
an administrative law with possible overlap into other branches of law as an environmental law
(administration of the protected landscape area), as a financial law (administration of foreign
exchange reserves of the Central Bank) or as a public international law (for example issues of
acquiring territory as a result of annexation or debellatio). Although a public property is
connected with the public law, it is not possible to completely ignore certain "private law
aspects". Such cases will include, for example, the acquisition of public property by a purchase
contract (in the case of acquisition of property against payment) or by a gift contract (in the case
of gratuitous acquisition of property). In any case, the legal regulation of these institutes can be
found in the relevant civil code, although these legal institutes have often public law restrictions
or "specifics" regulated by other laws.
These elemental facts are common to many states without regard to their legal system (it makes
no difference if the state belongs to the Anglo-Saxon or Continental system, which is divided
besides other things into the French and German branch). Nevertheless, these different legal
33
systems have a different opinion of individual legal aspects and kinds of property. This could be
visible in the case of France, which has a different legal model compared to the Czech Republic.
The reason why the author has chosen the concerned topic of the article is the fact that the author
focuses on the French legal system and its comparison with the Czech one. In this field, the
author dedicates to the French conception of public finance or to the French public administration
and administrative law.
Finally, it is possible to see the intersection between a financial law and a public property,
because the state or other public entity has to match the territory where the public property will
be used with the territory to cover its operating costs. (Powadova, 2020: 709)
The objective of the paper is to analyze main characteristics of the conception of public property
in France and to present some differences between Czech and French conception of public
property.
Here we may formulate hypothesis as follows: The set of public property in France is defined
more broadly than the set of public property in the Czech Republic. To confirm or to disprove
this hypothesis, the author uses appropriate methodology and methods working on verification
or falsification.
2 Material and Methods
Regarding to the scientific literature, it is necessary to base on the French and Czech scientific
literature. Nowadays, the most important French authors in this field are Yves Gaudemet or
Christophe Roux. In the past, authors as Philippe Foillard, Jacqueline Morand or Bertrand
Serrand could be mentioned. Petr Havlan is a great specialist in the field of public property in
the Czech Republic and he is a francophone academic.
To fulfil the aim of the paper, which is determined in the introduction, analytical, comparative
and descriptive methods were used. First, it is necessary to use a descriptive method for
a presentation of the French and the Czech conception of the public property. Afterwards, the
comparative method is important for a comparison and an emphasis on differences in the French
and the Czech public property issue. Owing to the analytical method is possible to gain required
results concerned to global distinctions between French and Czech model of the public property.
3 Results and Discussion
Within the chapter "Results and Discussion" is necessary to clarify crucial term of "public
property" and to explain its historical and factual context. Generally, acts regulating public
property provides for a legal framework for a treatment of public property, especially rights and
obligations of owners or holders of public property; legal regime of handling of public property
or general theoretical background of public property as a legal institute.
Public property is usually defined as "ownership whose entity is an entity of public nature (state,
territorial self-governing unit, otherpublic corporation, independentpublic institute, public fund
...), typically an entity of public administration as a so-called legal person of public law, or
rather in general a "public body", and whose object is a public matter in the broad sense, that is
to say, a matter intended for public purposes withoutfurther ". (Havlan, 2016: 11)
Thanks to this definition, several main features necessarily associated with the institute of public
property can be discovered, namely: (1) feature of the ownership, (2) feature of the entity of
public nature, (3) feature of public matter in the broad sense as the object of public property, (4)
feature of public purposes without further.
34
3.1 Legal Framework of Public Property in the Czech Republic and in France
In the Czech Republic, the basic legal framework for the general regulation of state property is
act no. 219/2000 Coll., on the property of the Czech Republic and its behavior in legal relations.
The act regulates only a property of the state and not a property of other public entities. In any
case, this is a lex generalis regulating the management of state property. However, in addition
to the above-mentioned act, it is necessary to reflect acts such as the (already mentioned) Civil
Code (Act No. 89/2012 Coll., Civil Code) or the Public Procurement Act (Act. No. 134/2016
Coll., on Public Procurement Act). There are also acts regulating other public entities different
from the state, then it is appropriate to mention the Act on Municipalities (Act No. 128/2000
Coll., on Municipalities), the Act on Regions (Act No. 129/2000, on Regions), or rather the Act
on the Capital City of Prague (Act No. 131/2000 Coll., on the capital City of Prague).
Since there are many acts, it is therefore possible to speak about the fragmentation of the national
legislation. Due to this fragmentation, the national legislation is incoherent, confusing and
difficult to apply. If we focus on France, as a country that is subject to comparison with the Czech
Republic in the subject matter, or rather to its legal regulation regulating public property, then
we could see the opposite phenomenon. France is an example of country that codifies individual
branches of law or its sub branches - e.g. French general Tax Code, Sport Code or Tourism Code
etc. However, with regard to the topic of the paper, the most important is the General Code of
Public Property. This code contains a compact and comprehensive legal regulation of property
belonging to the so-called public persons under French law. The concept of "public persons"
may seem unusual from the point of view the Czech law, but this concept corresponds to the
concept of public corporation under the Czech law.
The General Code of Public Property has a following structure: (1) Methods of acquiring
property (the Code distinguishes between acquisition of property against payment and gratuitous
acquisition of property by public persons); (2) Procedures for the acquisition of property (the
Code distinguishes the case of property located in France from property located abroad); (3)
Property belonging to public property (in this part the Code defines public property, states its
legal classification, its use, administration and legal protection); (4) Property belonging to private
property (the Code defines methods of allocating private property to public persons, its
administration, the possibility of transfers of private property); (5) Regulation of disputes related
to public and private property of public persons; (6) Special provisions for overseas selfgovernment
units.
The public property of territorial self-governing units is regulated by the General Code of
Territorial Self-Government Units. In the case of France, departments, so-called overseas
departments (e.g. Martinique, Guadeloupe), regions, municipalities or arrondissement (e.g. in
Paris, Marseille, Bordeaux or Lyon) are considered to be territorial self-governing units. The
General Code of Territorial Self-Government Units is lex specialis in relation to the General
Code of Public Property. (Bartes, 2018: 146-147)
As can be seen from the text above, one of the main differences between the Czech and French
legal regulation of public property consist in the approach to a lawmaking. Whereas there are
many acts regulating the handling of public property in the Czech Republic (i.e. a fragmentation
of legislation), France is characterized by codification of this issue.
3.2 History of Public Property in France
Jean Bodin wrote in the 16th century: "We can only speak of a state if there is a sovereign power
that unites allfamilies and collegiums. In addition to sovereign power, there must he something
common and something public to al (i.e. in French communaute), such as public state property,
public treasure, streets, ramparts, squares, churches, markets." (Bodin, 1994: 43) The concept
35
of "public property" in France is usually derived from an edict issued by Charles IX. in 1566 (i.e.
in French Edit de Moulins). However, it can be stated that the concept of "public property" dates
back to the Ancien Regime, i.e. the 15th century. In a broader sense, it is possible to go even
further into history and mention the period of the so-called Ancien Domaine royal, or rather
Domaine de la Couronne.
The conception of Ancien Domaine royal (i.e. in English "Old Royal Property") has been typical
for the period of the 10th century. This conception was formed by a set of estates and property
directly under the authority of the king within the kingdom of France. At the time of Hugo Capet
(10th century), the royal property was relatively small and was located mainly in l'Ile-de-France
and Orleanais. In addition, this property consisted mainly of the property of the Robertians
family (the forerunner of the Capetians family).
The conception of Domaine de la Couronne (i.e. in English Property of the Crown) includes a set
of property belonging to royal power, where this property was associated with sovereignty and
was considered public and inalienable. In this sense, its opposite was private and foreign
property. The Property of the Crown was divided into so-called great and small property. The
"great property" was royal and therefore public property, and "small property" was considered
property owned by the king. The "great property" included land, underground, and generally
everything that had been marked as royal (and since the Great French Revolution as state), rivers,
canals, harbors, fortifications, and royal armories, royal forests. On the other hand the "small
property" was made up, for example, of royal palaces or financial resources belonging to the
king. It can be noted that the "small property", from today's point of view, almost corresponds to
the British Crown Estate.
Another interesting historical story associated with a public property is the story of the Banque
de France, which was established by the Banque de France Decree in 19t h
century. This central
bank was originally independent of the French government because it was a private enterprise,
a join-stock company maintaining privileged ties by the State. It was not until 1945 that the bank
became public, or rather state property, as the state became the sole shareholder. (Bartes, 2020:
61)
3.3 Public Property under the French Law
The public property of public entities consists of movable or immovable property that belongs
to these public entities. This property is meant for use by the public or by public service (in
French le service publique). The definition of public property under the French law bases on the
article 2111-L of the General Code of Public Property.
The foundation of public property in France lies in the public interest, which is in acts frequently
designated as the public utility. The relevant act states that public property is either "intended for
direct use by the public" or "intended for public service". In such a case, the public property has
to have an ability to be integrate with "the necessary planning for the performance of the public
service tasks" (the conception of the "special planning", later "necessary planning" will play the
part of the case of Dauphin, see below).
The public property of public entities in France is subjected to a highly protected legal regime,
which is based on an imprescriptible and inalienable aspect. The condition for classification of
property into the category of public property is the fulfilment of two preconditions - (1) the entity
owning the property must be a legal person of public law and (2) the property must be intended
either for direct use by the public or for public service (see above).
The decision of the Council of State (in French Conseil d'Etat) in the Dauphin case of 1959
entered the French legal history. Mr. Dauphin was used to get by a car to his house via Alyscamp
36
Avenue located in the village of Aries. However, the village decided to close this alley with
barriers and chains, as an archeological site was discovered at the place. In this way, on the one
hand, the alley was putted into a cultural public service, but on the other hand, the access to this
alley was closed, thus fulfilling the so-called "special planning" for the performance of cultural
public service tasks.
In reality, this fact had a negative impact on Mr. Dauphin, as he could not get to his property
across the alley, although the passage easement was established in his favor here. For that reason,
in 1949, Mr. Dauphin lodged a complaint with the Interdisciplinary Council of the Prefecture of
Marseille, seeking the annulment of that measure and, at the same time, a compensation for
difficulties. The Interdisciplinary Council stated that there is the absence of its competencies,
because an assessment of the existence of the easement, and therefore the claim for compensation
comes under the competence of judiciary and not under the competence of the administrative
authority. That is why Mr. Dauphin turned to the French Council of State, which issued a final
decision in plenary on 11 May 1959.
The Council of State ruled that Mr. Dauphin can not seek the annulment of the measure taken by
the Interdisciplinary Council (i.e. the annulment of the closure of the alley), because the alley is
both public property belonging to the municipality, is assigned to the cultural and tourist public
service and the alley is the subject of the so-called (already mentioned) special planning
established for this purpose. The Council of State also ruled that the alley cannot be considered
a public road and therefore Mr. Dauphine cannot seek his right of access to his property by a car.
However, Mr. Dauphine could claim damages for not being able to access his property if he
proves the existence of a passage easement through the alley, which had been already established
before the ban on access to the alley. The Council of State thus stated in its decision that it is
necessary to examine in the first place the so-called "special planning" as an aspect of a public
property, if a public property is intended for a public service.
The so-called "special planning" as an aspect of public property, or rather ownership was found
by the professional and non-professional public as inaccurate, or rather an abstract conception
which is difficult to determine. For this reason, although the General Code on the Property has
partially taken over this conception, this Code has clarified that the planning must be "necessary"
for the performance of the public service task. This clarification has deliberately slowed down
the development of a case law, which has tended to expand the material content of public
property too much. Thus, it is possible to observe the political will to limit the scope of public
property in France - this was practically reflected in the article L-2111-1 of the Code, where the
aspect of "necessary planning" was introduced. However, in my opinion, the conception of
"necessary planning" is still too abstract.
It could be mentioned that the conception of public property in France is more sophisticated than
the one in the Czech Republic. That is evident from the legal construction, or rather legal regime
of public property in France, which is based on firm and clear preconditions. On the contrary,
the Czech conception of public property is insufficiently defined compared to the French
conception defined in such detail.
3.4 Illustrations of Public Property in France and legal protection
Hertz waves are a typical and interesting example of public property in France. Unlike the legal
regime in the Czech Republic (Havlan, 2008: 11), the Hertz waves in France are the subject of
property rights and are legally established as the property of radio frequencies. However, as early
as 1989 in France, there was adopted the act, which laid down, that radio waves constituted
a private use of public property.
37
Nowadays, frequency bands are allocated by the Office for the Regulation of Electronic
Communications and Mail (in French Autorite de regulation des communications electroniques
et des poste) on instruction of the French State. This fact was also reflected in the General Code
by explicitly stipulating that "Radio frequencies in the territory of the Republic belong to the
public property of the State". The General Code also stipulates, that "the use of radio frequencies
in the territory of the Republic is a private way of using public property of the state".
Another example of public property in France is maritime property. Maritime property was
defined by Colbert's Maritime Decree of 1681, which has been applying (with some
modifications) until 2006, when the General Code has been adopted. The General Code has
amended this regulation and subsumed it under the so-called Domaine public naturel. Originally,
Colbert's decree defined the shore and the coast as "everything that the sea covers and reveals
during the new andfull moon phases, up to the distance where the March high Tide can spread".
This was a difference from Roman law, or rather Justinian's decree, which stated that this limit
was not a "March high tide" but a "large winter watercourse". Until 1973, case law has been
used in France to determine the boundaries of maritime public property on the Mediterranean
coast. In 1973, the Council of State unified the rule by ruling that maritime public property
extends to "as far as the sea can expand without causing extraordinary disruption to life on
shore". In other words, it does not matter whether the sea level is highest in winter or March,
and the threat of a possible storm or flood is taken into consideration. The case law was
subsequently reflected in the General Code.
A special category is an artificially created public property. This kind of property includes
a property intended for a direct use by the public and certain property intended for public
services. Property intended for direct use by the public includes road public ownership,
consisting of "all public property of the state, departments and municipalities intended for the
needs of land transport, with the exception of railways", which are regulated separately by the
Road Traffic Code. This group of property also includes property of public entities intended for
a public service, such as museums, schools, prisons, defense facilities or airports.
For the record, the Council of State ruled in its decision of 8 March 1993, that there was no
above-ground public property.
The legal protection of public property in France is based on these aspects: (1) inalienability - no
one can renounce relevant rights; (2) unseizable - inability to apply forms of private law to public
entities (e.g. a creditor cannot seize public property through execution in order to satisfy his
debt); (3) no statute of limitations - it makes impossible to accomplish the legal institute of
usucapio (under the French law, for example, in the case of immovable property, usucapio occurs
after 30 years).
The French legislature has introduced additional special protection for public property in the
following form: public property must be excluded from the category of public property (and take
out of assignment for public use) before it is subsequently transferred to an entity of private law.
However, the process of transferring public property to a private person in some cases requires
the form of an act. E.g. in 2006, this was an example of the act on the privatization of the energy
sector (the privatization of EDF being probably the most well - known case, just to name a few)
or the privatization of France Telecom by Orange in 2000. Furthermore, as an interesting
example of the same issue, it could be mentioned the case of the so-called Maori heads from
2010.
In selected cases, a person of private law may use property in the public ownership regardless of
the transfer of the ownership. In the practice, it is the case of an interim use of public property
for a remuneration and the relevant public entity has to authorize such use. The important
condition, however, is that this interim use of public property by a person of private law must be
38
necessarily compatible with original function of this property. Public property is further protected
by many sanctions, whose purpose is to prevent endangering the property or reducing its value.
The process of a taking out property of the category of public property of public entities is
regulated in the General Code on the Public Property as follows: "The property of public entity
referred to in Article L. 1, which is no longer assigned to public service or direct use by the
public is no longer part of the public property, from the time when the administrative act
declaring its exclusion was put out".
The taking property out of the category of public property of public entities can be characterized
in French law as a two-phase process. In the first phase (in French la desaffectation), the public
property must be separated either from direct use by the public or from assignment to a public
service. After the successful implementation of the first phase, it is possible to proceed to the
second phase, i.e. a taking a property out (in French le declassement) of the category of public
property of a public entity. While the first phase (i.e. defacto a separation of property) could be
characterized as a factual situation (i.e. separation either from direct use by the public or from
assignment to a public service), the second phase (i.e. taking a property out) presupposes
a decision of the relevant public entity in the form of a decree as a result of an administrative
procedure, which in some cases involves a public inquiry or the need to obtain the consent of
a third public entity. The eliminated property of public entity becomes a private property of
a public person. (Bartes, 2018: 148-149)
If there is a situation when the property of a public entity is straight take out of the public property
without its factual separation from the direct use of the public or the separation from the public
service assignment, such property remains classified as public property. It follows from the above
that both of the phases of the two-phase process of exempting property from public property of
public entities are obligatory. (Bartes, 2018: 149)
4 Conclusion
The presented paper was dealing with differences between Czech and French conception of
public property and its legal regulation. This fact means that theoretical questions relating to the
conception of public property were also solved. The principal objective of the paper was to
analyze main characteristics of the conception of public property in France and to present some
differences between Czech and French conception of public property.
Having analysed first the Czech form and construction of the legal regulation of public property,
it can be noted that there are differences consisting in approach to the legislation of public
property. While in the Czech Republic, there are many acts regulating field of public property
and this field is thus fragmented, in France this field is on the contrary codified and therefore it
is better arranged and approachable for citizens.
Another interesting juridical phenomenon is a legal protection of public property. We can see
a standard legal protection of public property in the Czech Republic, which is comparable to
most European Union countries. In France, there is a special and increased legal protection of
public property concerning an ownership transfer of public property to private entities; thereby
the public interest and the legal certainty are provided.
In the paper, there were also described the history of public property in France starting from 10t h
century to the present day.
Therefore, I focused on the essence of the legal construction of public property in France,
especially on its purpose. The role, or rather the function of public property was illustrated in
39
a specific case from the French history, which showed the importance of a precise conceptual
definition of the purpose of public property in practice.
The article also mentioned individual examples of public property in France. The example of
Hertz waves proved that the Czech and French conceptions of public property approach to this
area differently.
In the conclusion, I can say that the hypothesis given at the beginning was confirmed thanks to
a comparison of the French and Czech legislation regulating the definition of public property in
the relevant country. The French legislative approach shows, that a more comprehensive
legislation guarantees a strongest legal certainty. Another fact that helped confirmed this
hypothesis is a comparison of the French and Czech examples of public property. This
comparison showed that the French examples of public property are more varied as for kinds of
public property.
References
[I] BARTES, R. (2018). Legal Aspects of Public Property in the Selected E U Countries.
In Proceedings of the 2018 4th International Conference on European Integration,
ICEI2018. pp. 145-150.
[2] BARTES, R. (2020). Monetary Aggregates in Selected E U Country. In Proceedings
of the 2020 5th International Conference on European Integration, ICEI 2020. pp. 60-
67.
[3] BODIN, J. (1994). Les six livres de la République. In Proceedings of the 1994 Dejiny
politického a právního myslenia, E L F A 1994. p. 43.
[4] H A V L A N , P. (2008). Veřejné vlastnictví v právu a společnosti. Praha: C. H. Beck.
[5] H A V L A N , P. (2016). Veřejný Majetek. Brno: Masarykova univerzita, Právnická
fakulta.
[6] POWADOVÁ, T. (2020). The Theory of the Fiscal Decentralization and Its Impact
on the Economic Growth. In Proceedings of the 2020 5th International Conference
on European Integration, ICEI 2020. pp. 705-712.
[7] Act no. 128/2000 Coll., on Municipalities. In: 128/2000 Coll., 2000.
[8] Act no. 129/2000 Coll., on Regions. In: 129/2000 Coll., 2000.
[9] Act no. 131/2000 Coll., on Capital City of Prague. In: 131/2000 Coll., 2000.
[10] Act no. 219/2000 Coll., on Property of the Czech Republic. In: 219/2000 Coll., 2000
[II] Act no. 89/2012 Coll., Civil Code. In: 89/2012 Coll., 2012.
[12] Act no. 134/2016 Coll., on Public Procurement Act. In: 134/2016 Coll., 2016.
[13] General Code of Public Property.
[14] General Code of Territorial Self-Governing Units.
40
Contact information
Mgr. Richard Bartes
VSB - Technical University of Ostrava, Faculty of Economics, Department of Law
Sokolská třída 33, Ostrava 1, 702 00 Czech Republic
E-mail: richard.bartes@vsb.cz
Using the theories of behavioral economics in the process of analyzing
the financial market as a method of increasing the efficiency of the
functioning of the state economy
Hanna Bazetska, Daria Serogina, Nataliia Obukhova
Abstract: The aim of the article is to substantiate the need to use the postulates of behavioral
economics and behavioral finance as a tool for analyzing the financial market to improve the
efficiency of the public economy. The article examines the theories of behavioral economics and
behavioral finance, which allow us to conclude that economic agents behave irrationally when
forming financial strategies in the market. The study uses research methods such as analysis and
synthesis, generalization, definition of concepts, modeling. Main findings of the study is that an
economic agent is significantly influenced by such psychological factors as the phase of his life
cycle, type of temperament, psychological type, archetype and metaprograms. The authors offer
a psychological portrait of the "ideal" financial market participant, but they note that anyone can
function in the market. Sometimes the behavior of economic agents is explained by the
peculiarities of collective consciousness and behavior. Economic and psychological factors
influence the group behavior of investors and issuers and determine the pricing model and market
efficiency. Thus, the functioning of the financial market depends on the degree of irrationality
of its participants whose behavior is determined by psychological characteristics. In turn, the
efficiency of the functioning of the financial market will determine the degree of efficiency of
the public economy.
Keywords: Behavioral economics, behavioral finance, financial market, public economy
JEL Classification: D91, E71, G19, G41, H89
1 Introduction
Behavioral economics is a relatively young science, thanks to which it became clear why
classical economic theories "do not work". And namely thanks to it the economists drew
attention to the relationship of the economic behavior of subjects with their various behavioral
characteristics. The classical ideas about the functioning and development of the economies of
the countries of the world could not predict and explain the occurrence of financial crises and the
formation of financial bubbles. The development and functioning of financial markets, which are
the supporting sphere of any financial system, is subject to the influence of distorted behavior
not only of investors and traders, but also of ordinary consumers, producers, managers and their
irrationality. Behavioral economics, combining the research of psychologists, sociologists and
economists, explains the behavior of economic actors in conditions of uncertainty and risk.
Consequently, we can say that behavioral economics is a new paradigm for the functioning of
economic systems.
Based on empirical studies of people's behavior in the process of making economic decisions,
behavioral economics has formed complex models that describe the main behavioral trends. This
made it possible to expand the understanding of the principles and peculiarities of the functioning
of financial systems and move away from traditional theories based on the rationality of
economic behavior.
Behavioral economics explains the behavior of economic actors in general, but their behavior in
financial markets is investigated by its branch - behavioral finance. Thanks to these sciences, the
propensity to take risks and to the formation of aggressive financial strategies is determined.
Studies in the field of behavioral economics and behavioral finance have shown that the
42
functioning of the financial market is not always determined by the rationality of the behavior of
economic agents. On the contrary, market agents often behave irrationally, which can explain
the propensity to take risks or avoid them. Therefore, behavioral finance involves a non-standard
approach to the analysis of the behavior of investors and traders in the financial market.
Assessment and forecast of their behavior in the modern sense should be based on the study of
behavioral characteristics, such as the way of perceived information and its volume, attitude to
the reliability of information, the level of optimism, emotional background, the presence of
positive or negative experiences in the past, etc. In addition, behavioral finance is able to explain
the behavior that leads to a financial crisis, as well as predict how the market will react to them.
Since the financial market largely determines the direction of development of the public
economy, forecasting fluctuations in it and the behavior of traders and investors will contribute
to the effective functioning of the public administration system in the economy. That is why it is
advisable to use the tools of behavioral economics and behavioral finance for analyzing the
financial market and forecasting crises in it, which will avoid significant losses for the public
economy.
The aim of the article is to substantiate the need to use the postulates of behavioral economics
and behavioral finance as a tool for analyzing the financial market to improve the efficiency of
the public economy.
Thus, the following hypothesis can be formulated: it is impossible to assess and predict the
functioning of financial markets without the application of the theory of behavioral finance and
behavioral economics. To confirm or refute this hypothesis, the authors use the appropriate
methodology and research methods.
2 Material and Methods
Behavioral economics and behavioral finance have been studied relatively recently, but there is
no coherent system that would fully describe all processes in a single terminology. In our opinion,
this is due to the unification of psychological, sociological and economic terminology. It is the
description of the same process from the standpoint of different sciences that leads to some
discrepancy in concepts. However, all these sciences help to explain why a person makes this or
that economic decision under the influence of certain factors of the external and internal
environment.
Adam Smith (2005) ("Theory of Moral Sentiments") spoke about the fact that the "economic
man" is rational and always seeks to benefit from his activities. J.M. Keynes (Keynes, 1936) in
his works talked about a certain dependence of a person on a variety of psychological factors that
cause a subject's tendency to different, often irrational, patterns of behavior. For example, J.M.
Keynes identified among such factors inexplicable or excessive greed, inclination to accumulate,
unwillingness to take risks, wave-like outbursts of optimism and pessimism, "crowd effect", etc.
Subsequently, scientists from different scientific schools found confirmation of cases of the
influence of psychology on economic behavior, and also identified new patterns in the
relationship between economics and psychology and sociology. This is how behavioral
economics first appeared, and then its branch - behavioral finance.
Economic behavior due to the influence of various factors and situations has been considered by
many scientists. For example, Gary Becker (Becker, Murphy, 2009) published "Crime and
Punishment: An Economic Approach" which laid the foundation for the economics of crime. He
investigated the optimal cost of catching and punishing criminals by conducting an economic
analysis of the losses to society from the acts committed by criminals, ranging from murder to
tax evasion. M . Rabin (1998) considered many issues of behavioral economics, such as unselfish
preferences of economic agents, behavioral anomalies of a systemic nature, problems of self-
43
control, and many others. V . Pesendorfer (Gul, Pesendorfer, 2004) specializes in game theory
and choice theory, a toolkit that is actively used in behavioral economics. J. Gynakoplos, D.
Pearce and E. Stechet (Geanakoplos, Pearce, Stacchetti, 1989) considered psychological games
and their influence on human behavior, including the economic agent. Herbert's theory of
bounded rationality (1978) focuses on the study of organizational behavior and decision-making
processes. The essence of the theory is that the behavior of a person making a decision in
a rapidly changing environment and conditions of uncertainty cannot always be explained by
a rational theory of expectations. I. Fisher (Fisher, 1930) proposed the theory of intertemporal
choice, which shows what constraints consumers face when making decisions about
consumption and savings. However, the starting point for normative theories of intertemporal
choice is the discounted utility model proposed by P. Samuelson (Samuelson, 1937). According
to this model, the consumer finds himself in a situation of choice between a small benefit that
can be obtained immediately, and a large benefit that can be obtained with a degree of probability
in the future.
Of interest are the studies of M . Statman (Statman, 2018) in which alternatives to classical
finance were considered. As a result, he came to the conclusion that people are normal, and not
always rational (the main postulate of classical economic theories), the formation of the portfolio
will be influenced by social responsibility and status, and not by high expected profitability and
low risk, and that accumulation and consumption processes are determined by the characteristics
of human behavior at different stages of the life cycle, the expected return on investment is
calculated based on the behavioral rather than the standard theory of asset pricing (the Capital
Asset Pricing Model - CAPM) and the markets are not efficient, since the price of assets sold at
them is usually far from real or fair price.
Among the most significant works on behavioral economics from a practical point of view, one
should single out "Prospect Theory: An Analysis of Decision under Risk" by Amos Tversky and
Daniel Kahneman (Kahneman, Tversky, 1979), since it is they who, studying the behavior of
people in conditions of risk and uncertainty, refuted the validity of the expected utility theory.
The work of these scientists was largely based on the behavioral economics program "The Sloan
and Russell Sage Foundations", which ran from 1984 to 1992 (Heukelom, 2012). A. Tversky
and D. Kahneman revealed the predisposition of a person's consciousness to making irrational
decisions and introduced the concept of "deviation from a rational decision". Later on, Richard
Thaler (Thaler, 1980) relied on the works of A. Tversky and D. Kahneman while considering
how psychology affects the decision-making process. He also studied the process of nudging
people to behave correctly for them and proved that the nudging system works (Thaler, Sunstein,
2008). It should be noted that in many ways the theories that have received their development in
behavioral economics are based on the research of M . Allais (1953) who studied the theory of
risk and decision-making and proposed the term "Allais paradox". This paradox demonstrates
the impossibility of applying the theory of the expected utility maximization under the conditions
of uncertainty and in the face of real risk. This problem is considered in the work "Rational
human behavior in the face of risk. Criticism of the postulates and axioms of the American
school". By the way, no less valuable are the studies of D. Ellsberg (Ellsberg, 1961) who made
the empirical conclusion that known probabilities for a person are preferable to unknown ones
(Ellsberg's paradox).
Further noteworthy is the study of the "crowd effect" or "bandwagon effect". Gustave Le Bon
(1920) began to study the psychology of the masses, and his research formed the basis for the
study of the "crowd effect". This is the most common model of human behavior and one of the
main ones in behavioral finance. The behavior of people described by this effect is often typical
precisely for the financial market, when while purchasing assets, an economic agent does not
rely on available information, but follows other market participants in his acquisition. The
appearance of the crowd effect is often influenced by information cascades. It is the decision-
44
making by the subjects not on the basis of the available information in full, but under the
influence of the behavior of other economic agents (market participants), which is an information
cascade, and entails the appearance of the "crowd effect". R. Shiller (2006) in his work "Irrational
optimism", describing the crises and collapses faced by the financial market, paid attention to
how cultural traditions, rumors, speeches and statements of famous personalities, publications in
the media, etc. affect market processes. Thus, he considered the influence of the "crowd effect"
on the economic behavior of people. Also in his work "From efficient markets theory to
behavioral finance" (Shiller, 2003), he proved by tests that market prices cannot be stationary,
and the level of asset volatility, which allows an investor to weigh the risks and reliability of their
investments, is often unpredictable.
One of the striking examples of the "crowd effect", the appearance of which is caused by
information cascades, is described in the work of Charles Mackay (Mackay, 1995)
"Extraordinary Popular Delusions & the Madness of Crowds". There he described the "soap
bubbles" that had appeared as a result of the successful spread of rumors about an agreement
between England and Spain to allow the last the unrestricted trade with Latin America. The
emphasis was on the possibility and necessity of creating joint stock companies, which will be
provided with profits from trade with the countries of South America, which are rich in gold and
silver deposits in Peru and Mexico. Thus the triumphant march of the South Seas Company
began, which proposed its famous plan to pay off the national debt. As a result, a bill was passed
that raised the value of the company's shares several times. Having succumbed to the general
excitement and the thirst for speculative profit, lovers of easy money lost about one and a half
million pounds.
Behavioral finance provides an explanation for the deviation of the fair or base value of an asset
from its market value. This branch of behavioral economics proves that the price of an asset
rarely reflects its real value. This is due to the fact that prices for assets, for example, for shares,
are not formed under the influence of fundamental macroeconomic indicators, but are influenced
by the emotional factor. For example, an unexplained rise in the value of shares and the formation
of a "soap bubble" can be caused not only by the "crowd effect", but also by the "disposition
effect", which was described in the article by G. Shefrin and M . Statman (Shefrin, Statman, 1985)
"The disposition to sell winners too early and ride losers too long: Theory and evidence". This
effect is observed among investors and traders in the stock market. It consists in the fact that
investors (traders) receive less profit, because they hold (do not sell) stocks that are falling in
price until the last moment and sell stocks that are growing in price, although the rational
behavior is that falling stocks should be sold as early as possible, and stocks that are more
expensive are more prudent to be held back.
In this case, we should also mention the work by Andrei Shleifer (Shleifer, 2000) "Inefficient
markets: An introduction to behavioral finance", in which he considers the problem of the
influence of rationality (irrationality) of investors on the degree of market efficiency. He says
that the irrationality of investors and the correlation of their strategies lead to the emergence of
an ineffective market, therefore, portfolio management in such a market is an inappropriate
process. The phenomenon of market psychology or "marketing psychology" which examines the
psychological mechanisms that create price movement in the stock market, is considered by
L. Tvede (2002) in his work "The Psychology of Finance: Understanding the Behavioral
Dynamics of Markets, Revised Edition".
Particular attention should be paid to the noise trading theory which is based on two assumptions:
firstly, there are two types of operators functioning in the market - rational and irrational, and
secondly, decisions of rational investors are based only on fundamental information. Thus,
rational investors use only the data on the basis of which the pricing process can be justified.
Irrational investors, when perceiving information, pay attention not only to macroeconomic
45
indicators or forecasts, but also include various emotional components in the basis of their
decision: attitude to a particular event, their own assumptions, reaction to rumors, etc. This theory
is especially relevant for the financial market, since despite the fact that its assumptions
contradict classical financial theories, the whole process of the stock market functioning
completely fits into its framework, although the behavior of this market is often impossible to
predict.
Thus, in recent decades, scientists have come to understand that rationality in the behavior of
both economic agents and the financial market (providing the spheres of any economic system)
often "does not work". Increasingly, we are faced with irrational behavior of investors and
traders, which is explained by the influence of not economic, but psychological and social
factors. That is why it is necessary to apply the tools of behavioral economics and behavioral
finance in studies of the functioning of the financial market.
The study uses research methods such as analysis and synthesis, generalization, definition of
concepts, modeling.
3 Results and Discussion
When considering the influence of various psychological and social factors on the process of
market functioning and efficiency, it is first of all necessary to separate the actions of individual
economic agents and the collective actions of investors (traders).
Of course, many scientists are inclined to believe that it is the individual behavior of economic
agents that ultimately forms the model of behavior in the market. This is partly true, therefore, it
is necessary to take into account the fact that forecasting the dynamics of the financial market
will be based on the characteristics of the behavior of its participants and it is primarily due to
the influence of psychological mechanisms and factors.
In the case when it is necessary to predict the action of a specific market participant (this may be
a company manager, a large investor or a trader), it is advisable to draw up and consider his
approximate psychological portrait. This definition of the type of behavior contributes, firstly, to
winning negotiations, and, secondly, significantly increases the likelihood of making a forecast
for transactions and trades. An individual approach to assessing the behavior of an economic
agent assumes that typing is carried out according to the following criteria:
• life cycle stages;
• psychological type;
• type of temperament;
• archetype;
• metaprogram.
It is these parameters that will determine a person as an active and effective participant in the
financial market, and will also help predict the possibility of impulsive actions and, in general,
determine the general strategy of behavior in the market.
The human life cycle is represented by four phases: origin (childhood), development
(adolescence), stability (maturity, adulthood) and decline (advanced age, old age). Of course, the
phase of Childhood does not interest us, because at this age a person cannot yet make economic
decisions. The same can be said about the phase of Old Age, when a person can no longer actively
participate in economic life, it is increasingly difficult for him to master new technologies (for
example, online auctions or auctions), to accept new forms of interaction between market
participants, etc. Thus, two middle phases - Youth and Maturity - will be of particular interest in
determining the psychological profile of a potential or real investor (trader). These phases are
46
characterized by the desire to tap the market, and then become its effective participant. It is at a
young and mature age when a person strives to run into money, gain status and respect, acquire
connections, establish a business and increase income.
When considering psychotypes, attention is most often paid to the main seven ones: hysteroid,
epileptoid, paranoid, hyperthymic, hypothymic and emotive. In an individual assessment of
economic agents in the market, determining the psychotype is most important, since depending
on which radical turns out to be the leading one, the market participant will depend on the level
of his excitement or the degree of caution and the desire to avoid risks. Returning to the topic of
the influence of rumors and the formation of the "herd effect", it is the assessment of potential
market participants by their prevailing psychotype that can make it possible to determine whether
certain participants will be exposed to pseudo-signals and become noise traders or remain
rational investors.
Of course, any psychotype can be a participant in the financial market, but the behavioral features
of each of them will be as follows:
• hysteroid is an excellent manipulator, he is distinguished by demonstrative behavior,
can fall under the influence of third-party players if their actions satisfy his ego, can
also make an impulsive deal under the influence of emotions;
• epileptoid is a fan of control, therefore, he will most likely be inclined to collect and
analyze fundamental information, he will check rumors, he seeks to systematize
everything, gets annoyed if the rules are violated;
• paranoid - a person of a goal, an excellent achiever, always effective, very energetic,
however, excessive stubbornness can lead to the loss of profits and unprofitable trades;
• schizoid - despite the fact that this radical is inclined to reflection and in-depth study of
an interesting subject for him, he is a master of finding an extraordinary solution to a
problem;
• hypertim - is not capable of deep analysis, since he is constantly distracted, but it will
be invaluable if it is necessary to form an information cascade, since he is perfectly able
to find an approach to anyone;
• hypotim - this radical is also called "alarming", since he is inclined to double-check the
data, relies on previous experience, is not inclined to rash actions;
• emotive - he is distinguished by an increased level of responsibility for others, it is quite
easy to manipulate him, he is easy money in the market.
In addition to the psychotype, as a rule, the types of temperament are also considered: sanguine,
choleric, phlegmatic and melancholic:
• a sanguine person is consistent in his activities in the market, he is not upset with
failures, his main goal is to make money, and he makes every effort for this, he is
characterized by a strategy of a balanced ratio of profit and risk;
• choleric is too hasty, he is not suitable for long-term positions, but he will be effective
in medium-term interday trading;
• a phlegmatic person knows how to wait; as a rule, he has good analytical skills, therefore
he makes decisions weighed and deliberate, which is why he is the most promising ally
and one of the most dangerous opponents on the market;
• melancholic is prone to impulsive and chaotic decisions, so short-term operations are
his niche.
It should also be noted that behavioral finance also distinguishes three types of traders in the
market:
47
• intellectual player (active and passive) - makes quick decisions, but gets tired very
quickly;
• an intuitive trader - he knows how to play in conditions of uncertainty, despite his
nervous nature and a tendency to breakdowns;
• an instinctive trader - hard-working, but overly emotional, can be stubborn and implicit.
However, in our opinion, these features are considered more fully in the typology of radicals and
temperament, and will not play a special role in predicting market behavior.
Archetypes are usually viewed from the perspective of the archetypal square (circle) of Tom
Chetwynd (1993), which demonstrates the influence of the unconscious on human behavior at
various stages of his life cycle. T. Chetwynd built his model of the archetypal square (circle) on
the basis of the "archetypal constructions" of C.G. Jung, who distinguished between the personal
unconscious, based on the life experience of an individual, and the collective unconscious
transmitted from generation to generation. Each of the four quadrants considered (Divine Child,
Wisdom, Power and Self) has a "light" and "dark" side.
Divine Child (prince/princess - vagrant/mean girl) is the archetype of the child. As well as in the
Childhood stage of the life cycle, a person of this archetype cannot yet be a market participant,
therefore, he is not of interest to us. As in the case of the Old Age phase of the life cycle, the
archetype of the Self (master/mistress - cannibal/terrible mother) does not interest us. People in
this archetype no longer want to earn anything, their desire is to keep what they have, so we will
not consider them either. Therefore, it is necessary to consider the features of the archetypes
Wisdom and Strength.
The Wisdom archetype (trickster / priestess - black magician/witch) is the phase of intellectual
development of both men and women. It is in this archetype that young people study science,
master new professions and look for ways to make money (but they easily abandon some in favor
of others, as they are "looking for themselves"). When moving to the dark side of the archetype
(black magician/witch), these people learn to manipulate people and build various schemes. It is
in this phase that economic agents entering the market gain experience and become powerful
players.
The Power archetype (warrior hunter - assassin/amazon) is a phase of strong material interest.
People in this archetype have already "played enough" with intellectual growth, settled on
a certain profession and now they are only improving their skills and acquiring new abilities that
will help them acquire status, position and money.
The last criterion we are considering in the psychological profile of a market participant is
a metaprogram, that is, a feature of a person's way of thinking and actions, which will determine
his behavior. In general, there are more than fifty metaprograms, but it is for financial market
participants that two should be considered: referencing and "proactivity / self-reflection".
Referencing can be internal and external. Traders with internal referencing tend to be overly
stubborn as they rely solely on their own opinions. Traders with external referencing have two
directions: they listen to other people (that is, they can become a victim of manipulation) or rely
on facts and indicators (the most advantageous option).
The "Proactivity/Self-reflection" metaprogram will determine whether a trader is a person of
action, aimed at achieving, or he is the one who, before making a deal, collects the maximum
amount of information, but who needs to be pushed into action.
There is an opinion that traders in the financial market must have positive qualities, which in
a certain way will correlate with the success of their career. For example, a trader should not
strive to conquer the entire market and establish control over it, he should know his ability to
48
take risks, should not be tied to the financial instruments already known to him, have the ability
to foresee several scenarios for the development of events, focus on the long term perspectives,
etc. These qualities form a trader's "trader optimism" capable of ensuring successful activities,
but practice shows that not all market participants have these abilities. For this, it is necessary to
use the theories of behavioral economics and behavioral finance in the financial market, since
they are the ones who explain the actions of investors (traders) in the market and help predict
their behavior in the future.
In addition, in practice, it is impossible to say unequivocally which psychological profile is ideal
for participating in operations in the financial market. A l l temperaments, psychotypes and
metaprograms are needed for certain phases of the financial process: some must be able to collect
information, others to analyze it, and still others to make decisions. Therefore, it is not possible
to say unequivocally who "can be allowed" to the financial market and who cannot. But it is
precisely the understanding of the characteristics of the behavior of investors (traders) in the
market that will help to largely explain their committed actions and predict the future.
Sumarizing what has been said above, we propose a scheme that is designed to show who is the
most effective in the market, based on the criteria considered. However, it should be noted right
away that the given model of "ideal participants" can be an object of discussion, since we have
already talked about the possible applicability of people with any psychological profiles in this
area of the economy.
Figure 1 - Correlation of psychological profile criteria for financial market participants
Psychotype.'
schizoid, hypertim, hysteroid
temperament:
choleric, melancholic
archetype:
wisdom
Psychotype:
paranoid, epileptoid
Temperament:
sanguine, phlegmatic
Archetype:
power
Childhood Adolescence Adulthood Old age
Recent studies also show the need to consider the characteristics of the manifestation of
behavioral finance at the collective level, since collective assessments, for example, volatility
are usually more accurate than individual ones.
So, the collective decision-making process by investors (traders) in the financial market is
influenced by such factors as:
• presence and level of risk;
• access to the information;
• completeness of the information received;
• collusion between buyers and sellers.
These factors will shape rational or irrational behavior among market participants.
Rational behavior is characteristic of those spheres where industrial or production capital
functions (dominates). This behavior is characterized by the assessment of the probabilities of
the distribution of returns on investments and the determination of the fair value of the asset.
49
Irrational behavior is typical for the spheres of the post-industrial economy, where cognitive
processes push participants to perceive and make subjective judgments. But the irrational
behavior of the collective is due precisely to the behavioral reactions of the members of this
collective. Individual behavioral response leads to a change in behavior in the group, and this, in
turn, determines the vector of collective behavior. These individual cognitive processes leading
to a change in perception include the following:
• heuristics (availability and representativeness);
• overconfidence;
• conservatism;
• the desire to avoid loss;
• the desire to avoid disappointment and responsibility for the decisions made;
• framing;
• fixation.
These cognitive distortions lead to the formation of a certain style of behavior among investors
(traders) and ultimately contribute to the development of the market or the emergence of a crisis
in it.
Note that the functioning of the financial market and the pricing process on it are influenced by
supply and demand, which, in turn, are influenced by economic and psychological factors that
determine the behavior of participants. It looks schematically as follows.
Figure 2 - Influence of factors on the process of the financial market functioning
4 Conclusion
Today, we can say with confidence that behavioral economics and behavioral finance are the
leading trend in modern scientific research. This confirms the fact that the Nobel Prizes in
economics over the past two decades have been awarded specifically to studies of various aspects
of behavioral economics.
The theory of behavioral economics and behavioral finance has a great influence on the process
of functioning of the financial market, since they allow us to identify what caused this or that
behavior of investors (traders) in the market and what to expect from them in the future.
50
The process of making economic decisions, regardless of which of the market participants makes
it, is subject to certain behavioral characteristics that lead to making mistakes. Among them are
the following:
• errors in the perception and processing of information;
• participants are exposed to information cascades;
• the probability of occurrence of familiar (or already occurring) events is estimated
higher than the probability of occurrence of an unfamiliar (hardly probable) event;
• often, status is more important than the actual ratio of profit and loss;
• overestimation of their own intellectual abilities and capabilities;
• formation of incorrect conclusions for various subjective reasons;
• belief in the ability to control random processes;
• the belief that a certain mechanism of behavior will lead to an accurately predictable
result;
• exposure to the influence of the group.
These and other features were identified as a result of research in the framework of behavioral
economics and behavioral finance, which made it possible to understand the past behavior of
financial market subjects and make predictions of their future behavior. The practical
significance of these theories as a modern approach lies in the fact that their application makes
it possible not only to evaluate, but also to predict the investment preferences of investors
(traders), it allows you to control the budget and form the optimal structure of the organization's
capital and determine promising directions for the development of the public economy. This
approach explains many events in the market, predicts the behavior of participants in various
situations, and helps to develop effective strategies. Thus, the departure from rational behavior
and the acceptance of the irrationality of investors (traders) makes it possible to form effective
strategies in the market and improve the efficiency of the public economy management system.
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Contact information
Hanna Bazetska
O. M . Beketov National University of Urban Economy, Faculty of Economics and Management,
Department of Economics
Marshal Bazhanov Str. 17, 61002, Kharkiv, Ukraine
E-mail: bazanal721@gmail.com
Daria Serogina
O. M . Beketov National University of Urban Economy, Faculty of Economics and Management,
Department of Economics
Marshal Bazhanov Str. 17, 61002, Kharkiv, Ukraine
E-mail: seroginado@gmail.com
Nataliia Obukhova
O. M . Beketov National University of Urban Economy, Faculty of Economics and Management,
Department of Economics
Marshal Bazhanov Str. 17, 61002, Kharkiv, Ukraine
E-mail: onvnatalija@gmail.com
53
The innovative tools to support the employment of people with mental
illness in the context of psychiatric care reform in the Czech Republic
Vojtěch Beck, Ivo Škrabal
Abstract: The aim of the paper is to draw attention to the problem of employing people with
mental illness, when there is still no systemic tool in the Czech Republic to register this group
and provide targeted support for their employment. The paper highlights the vulnerability of
persons with disabilities in the context of unequal access to employment in the EU. The Czech
Republic is currently undergoing a reform of psychiatric care, which addresses not only changes
in the medical part of services, but also in the field of social services, education and employment.
The aim of these changes is to enable people with mental illness to function in mainstream society
as much as possible. The main prerequisite is to get a suitable job. Existing tools to support the
employment of people with mental illness are not sufficient and it is therefore desirable to support
the development of innovative tools that suitably complement the current tools of state
employment policy. The paper presents a proven innovative tool to support employment in the
form of the BEC model, which is based on the principle of supporting the employment of people
in cooperatives that employ paid entrepreneurs.
Keywords: BEC model, employment, mental illness, psychiatric care, Social Impact Voucher
JEL Classification: H59,119, J14, 035
1 Introduction
The issue of employing people with mental illness is a very broad and urgent topic, which is
currently gaining in importance. The topicality of the topic results from the defined priorities of
strategic and development documents at the national level - National Action Plan for Mental
Health 2020 - 2030, National Strategy for Health Protection and Promotion and Disease
Prevention - Health 2020. The main goal is to draw attention to emphasis on the group of people
with mental illness, on existing barriers to employment in the European context, on emphasizing
new approaches in the context of psychiatric care reform and on the need to find new tools to
support employment. A partial goal is to present the BEC cooperative model as an innovative
tool for supporting employment in modern labour market conditions in the Czech Republic. To
achieve the goal, the method of descriptive analysis, deductive method and synthesis method are
used.
In the period after the COVID-19 pandemic, or in the meantime of individual waves of the
disease, many people are facing a difficult situation of losing their jobs. Unfortunately, this
situation is not avoided even by people with disabilities, who perceive the loss of employment
even worse. This situation has a very negative impact on people with mental illness, who
generally find it very difficult to get any job on the labour market, and the loss of a job often has
strong negative consequences for them, with an impact on their worsening illness and poor
mental condition. These people are at risk of falling, both health and social, as a result of losing
their jobs or long-term or repeated unemployment. In 2018, a total of 1,152 thousand were
registered in the Czech Republic, persons with disabilities, of which 172 thousand (15%) were
persons with mental illness or behaviour disorders. Most of these people end up at the labour
office, where there is no special register of people with mental illness, the labour office does not
monitor these characteristics and even the existing instruments of active employment policy are
not so purposefully and effectively used to support these people.
54
2 The psychiatric care in the Czech Republic
In 2019, more than 637 thousand patients were registered with outpatient psychiatric service
providers. Compared to 2018, there was an increase of 13,636 patients (around 2%). Most
patients were aged 40-49 and 50-59, with 61% of women. In the Czech Republic, there are 100
thousand population of 5,962 patients treated in psychiatric outpatient clinics, with the highest
number of patients registered in Prague and the Olomouc Region. On the contrary, the fewest
patients were registered in the Central Bohemian Region. Most providers of outpatient
psychiatric services occur in the Capital City of Prague and the South Moravian Region. The
highest number of providers, per 100 thousand citizens, is in the Capital City of Prague and the
Olomouc Region.
Inpatient psychiatric care is provided in psychiatric hospitals and medical centers, of which there
are 22 in the Czech Republic. Of these, 12 hospitals are for adult patients, 3 hospitals for pediatric
patients, 3 addiction hospitals and 4 other psychiatric facilities. A total of 8,618 beds were
registered in these facilities. The number of beds in psychiatric facilities has been declining every
year since 2010, by about 1% a year. The highest number of beds is registered in the Vysočina
Region (1,303 beds), Prague (1,275 beds) and the Pilsen Region (1,210 beds). The least beds are
reported by the Pardubický (36 beds) and Královéhradecký (56 beds) regions, no beds were
registered in the Liberec and Karlovy Vary regions.
In 2019, inpatient psychiatric care was provided in the psychiatric wards of 28 facilities. Most
beds are registered in Prague (320 beds), the South Moravian Region (174 beds) and the Hradec
Králové Region (167 beds). The number of beds in psychiatric wards makes up about 5% of the
total number of beds. In the years 2010-2013 there was a slight decrease in the number of beds,
since 2014 the number of beds has fluctuated. The average length of hospitalization in psychiatric
wards in 2019 was 17 days, of which 15.7 days for men and 18.3 days for women. Disability
pensions paid in 2019 for psychiatric diagnoses were registered in the 1st degree 26,434, in the
2nd degree 13,610, in the 3rd degree 63,439. [8,9]
2.1 The reform of psychiatric care in the Czech Republic
The strategy of psychiatric care reform was approved by the Ministry of Health in October 2013.
Real implementation began in 2017 with support for the implementation of projects financed
from the European Investment and Structural Funds. The reform of psychiatric care is a systemic
change in the provision of psychiatric care, where the main goal is to increase its quality and
effectiveness and especially to increase the quality of life and reduce the stigma of people with
mental illness. Reform of psychiatric care is a complex and long-term process that includes not
only changes in the medical field of psychiatry or in the field of health care, but its successful
implementation also requires significant changes in other areas, such as social systems,
education, employment or legal the status of people with mental illness. The aim is to ensure
a sufficient offer of quality community social and other related services. The aim is to build and
develop mental health centers that reinforce the principle of a multidisciplinary approach. [5]
The National Action Plan for Mental Health 2020 - 2030 declares that mental health is a state
that enables people to live meaningful lives, happiness and fulfilling relationships, realize and
realize their own potential, work productively and contribute to the well-being of society. Mental
health care includes not only health services and social rehabilitation, but also stress and
psychosocial stress prevention, education and other key areas for people's lives, such as housing
and employment.
The purpose of the reform is to enable people with mental illness to live a free and full life.
Achieving this goal is not possible without profound structural changes in the care system,
without effective efforts to reduce stigma and discrimination against people with mental illness,
55
and without the active involvement of people with mental illness in decision-making at all levels.
The global goal of the reform strategy is to improve the quality of life of people with mental
illness. The global goal is developed into seven strategic goals [6]:
• To increase the quality of psychiatric care by a systemic change in the organization of
its provision
• To reduce the stigma of the mentally ill and the field of psychiatry in general
• To increase user satisfaction with the psychiatric care provided
• To increase the effectiveness of psychiatric care by early diagnosis and identification of
hidden psychiatric illness
• To increase the success of the full integration of the mentally ill into society
(employment, housing, education, etc.)
• To improve the coherence of health, social and other related services
• To humanize psychiatric care
The main volume of care for the mentally ill takes place in institutions. People with severe mental
disorders use the largest number of hospitalization days. There are practically no capacities
(services, experts, competencies) to take care of the mentally ill effectively in a normal
community environment. In the more economically developed E U countries, a wide range of
multidisciplinary community care services are available to people with mental illness, with most
people being treated outside of psychiatric hospitals. Psychiatric hospitals in these countries are
relatively small and close to communities, psychiatric beds are usually located in acute wards of
general hospitals and the length of hospitalization is as short as possible. The system of
psychiatric care in the Czech Republic is most similar to the countries of the former Soviet Union
and the Balkans. The system is characterized by a low share of psychiatry in total health
expenditures and concentrations of care in psychiatric hospitals. [7]
3 The employment of people with disabilities in the EU
The European Disability Forum points out that being a person with a disability continues to be
synonymous with an increased risk of poverty, unemployment and social exclusion. In April
2020, the European Disability Forum issued the Poverty and Social Exclusion of Persons with
Disabilities report, European Human Rights Report Issue 4-2020, which examines the living
standards of people with disabilities from E U countries, in particular experiences of poverty and
inclusion into society. The report focuses on the living standards of people with disabilities from
various social groups, and addresses the issue of unemployment for people with disabilities.
The report points out that 100 million people with disabilities live in E U countries, almost 30%
of whom are at risk of poverty. According to EDF, this number is expected to increase due to the
effects of the COVID-19 pandemic. A l l E U countries have adopted the United Nations
Convention on the Rights of Persons with Disabilities, in which they have committed themselves
to guaranteeing their rights, but not all countries have taken effective action. The report states
that people with disabilities still face a number of obstacles that affect their standard of living.
These are in particular [11]:
• Unequal access to employment
• Lack of educational opportunities
• Absence of providing a personal assistance service
• Failure to ensure adequate adjustments in the workplace
• Incompatibility of paid employment with the receipt of benefits
However, paid employment does not yet guarantee protection against poverty. People with
disabilities have to pay additional costs related to their disability. However, paid employment
56
may not sufficiently cover these expenses and, in the end, their standard of living may be worse
because they have paid employment.
According to the EDF report, the following are most exposed to the risk of poverty:
• Young people with disabilities
• People with disabilities among ethnic minorities
• People with disabilities not born in the E U
• People with disabilities living in small towns and in the countryside
• Women are more at risk of poverty than men
The EDF calls on the E U and Member States' legislators to take the necessary measures and
address the situation of people with disabilities effectively. Legislation to protect people with
disabilities from discrimination, introduce special employment support programs, minimize
additional costs for people with disabilities, invest in adapting structures and services that are
commonly available to the majority society. [11]
Across the EU, persons with disabilities are far less likely to be employed than persons without
disabilities. On average, only 50,8 % of persons with disabilities are in employment, compared
to 74,8 % for persons without disabilities. Unemployment is of course only one of several factors
affecting the risk of poverty and social exclusion, and having a job is by no means a guarantee
of avoiding poverty. Nevertheless, inclusion in the labour market undoubtedly still has
a significant role to play in improving outcomes regarding poverty and social exclusion.
While the average E U employment rate for persons with disabilities is already low, in certain E U
Member States the situation appears worse than in others. E U figures show Ireland to be the
country with the lowest employment rate of persons with disabilities, at 32,3 %. By contrast
Estonia (62,15 %), Latvia (61,75 %) and Denmark (58,1 %) are among the countries with the
highest employment rate of persons with disabilities. The Czech Republic achieves at 50,2 %.
[3]
The interesting point of view is to compare member states of the E U with the biggest gaps
between persons with disabilities and the general population. The country with the largest
difference in percentage points is Ireland, where persons with disabilities are a staggering 42,1
pp less likely to be employed than persons without disabilities. The following countries are Malta
(36 pp), Bulgaria (34,2 pp) and Croatia (32,1 pp). By contrast Italy (13 pp), Luxembourg (15,3
pp) and Latvia (17,3 pp) are among the countries with the smallest difference in percentage
points. The Czech Republic achieves 30,4 pp.
On average only 48,3 % of women with disabilities are in employment in the EU, compared with
53,3 % of men. In Malta, 2017 E U figures show that women with disabilities were 20,5
percentage points less likely to be employed than men with disabilities. Other countries where
women with disabilities are far less likely than men to have jobs are Italy (17,1 pp), Luxembourg
(15 pp), Romania (14,6 pp), Denmark (12,4 pp). In only four countries are women with
disabilities more likely to be employed than men with disabilities. [3]
Significant is the impact of type of disability on employment rates. Statistics collected in Spain
suggest that the type of disability has a significant impact on employment levels. People with
psychosocial disabilities were shown to be the most affected by unemployment, with an
estimated employment rate of only 18 % in Spain.
There are a huge number of barriers to employment and here are some of the most frequent issues
persons with disabilities face:
57
• Incompatible benefits - the lack of flexibility in disability benefit entitlement affects
employment. Taking up paid work often results in the irreversible loss of benefits, and
thus the loss of a person's safety net. Persons with disabilities are particularly prone to
in-work poverty. In fact, figures from 2018 show that 11 % nof working persons with
disabilities in the E U were at risk of in-work poverty, compared to 9,1 % for those
without disabilities.
• Lack of assistance and/or support - a significant barrier is the provision of personal
assistance. In countries, even if personal assistance can sometimes be provided, there
are restrictive rules on how much time they can dedicate to assistance in the workplace.
• Lack of sign language interpretation
• Absence of reasonable accommodation
• Lack of opportunities in education - persons with disabilities in the E U are shown to be
on average 10,1 pp more likely to be early school leavers than the general population,
and 10,5 pp less likely to complete tertiary education. There is lack of support for
students with disabilities in most mainstream educational setings. Quality education is
naturally a prerequisite for entering most labour market sectors, meaning exclusion from
mainstream education puts persons with disabilities at a huge disadvantage. [3]
4 The employment of people with mental illness
As mentioned above, one of the strategic goals of the psychiatric care reform is also to strive for
the integration of people with mental illness into society and to create conditions for their
meaningful lives. For this to really happen, it is necessary to support the area of employment of
these people, who are stigmatized and neglected in the labour market for a long time as a result
of their illness.
The following graph provides an overview of the development of the structure of job seekers in
the records of the labour office, where it compares the total numbers of unemployed in individual
years with the numbers of unemployed people with disabilities. Unfortunately, the Labour Office
does not record statistics that would record the number of unemployed according to individual
types of disability.
58
Figure 1 - The structure of job seekers in the records of the labour office in the years 2010
- 2019 (in thousands)
Source: Statistická ročenka České republiky 2020, ČSÚ (2021)
700
600
500
400
300
200
100
0
561.5
596.8
545.3 ~. 541.9
508.5
^ 453.1
| L 381.3
280.6
69•5 6; .1 & .o 6: .8 61 .1 5Í .6 54.5 4ř .0 38.3 33.7
ii
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
< total % of which persons with disabilities
Work is an important factor in mental health and a socially integrating force. When people are
excluded from the labour market, they suffer from material deprivation, self-confidence, feelings
of isolation and marginalization, and these are key risk factors for people with mental illness.
Mental illness is difficult for the majority society to understand. It manifests itself differently
than physical disability. Stigmatization, which is significantly associated with mental illness, is
one of the reasons for the low success of people with mental health problems in the regular labour
market. People with mental illness are sometimes referred to as "problem workers" because they
temporarily or permanently demonstrate certain personality traits, unusualness, or atypicalities
in their behavior and actions.
Statistical data show that among the population of the Czech Republic, about 13% are people
with disabilities. These people are more likely to receive lower education. Two thirds of them do
not have a high school diploma. 19% of people with disabilities work. The majority (59%) of
people with disabilities receive a retirement pension and do not work. Almost a third of people
with disabilities are recipients of a disability pension, one in three of whom works. Most
importantly, people with disabilities are limited in their ability to pursue their hobbies and
hobbies and find and keep a job, which is increasingly troubling younger people in particular.
[2]
One of the organizations that help people with mental illness and creates an adequate job for
them is the non-profit organization MENS SANA based in Ostrava. It has been providing
professional services to people with mental illness for 25 years and to people with traumatic brain
damage for 10 years. The main field of activity of the organization is the provision of registered
social services - social rehabilitation and support of independent living in accordance with the
Act on Social Services. It also offers people with disabilities cognitive rehabilitation in the
Memory Training Center, sociotherapeutic and educational programs, leisure activities and
occupational rehabilitation. It deals with the prevention of negative phenomena in society and
public education in the field of mental health. The company is a responsible employer that
employs people with disabilities and disadvantages, especially people with mental illness. In
2017, MENS SANA founded the social enterprise BOTUMY.
59
Figure 2 - The number of employees in occupational rehabilitation and PEER consultants
of the company MENS SANA in the years 2016 - 2021
Source: Internal statistical data of the MENS SANA
18
16
1^
12
10
5
6
t-
2
0
13 13
\ l
\7 7 7
> < »
|of ^ > (
2015 2016 2017 2018 2019
—•—Occupational rehabilitation —i
2020 2021
•PEER consultants
2022
To employ this target group, the organization seeks to secure funding from a variety of sources
and grant titles. Thanks to participation in the implementation of E U projects, it was possible to
employ people with mental illness in 2018-2020, who were helped by the project called
"Breaking down Barriers" to return to work after a long time. Thanks to the project, it was
possible to employ people with mental illness as peer consultants, which are people who have
experienced with mental illness themselves, their health is compensated and can thus help other
people with mental illness. As Figure 2 illustrates, most people in the position of PEER
consultants were employed by the organization in 2018.
To support the employment of people with mental illness, MENS SANA also tries to use the
tools of active employment policy through the employment office. Unfortunately, objectively,
the volume of funds allocated to active employment policy instruments decreases over the years,
which directly affects the declining trend in the number of people that the organization can afford
to employ. While in 2017 it still employed 13 people with mental illness for community service,
in 2020 it was only one person. The same is true of another tool in the form of occupational
rehabilitation, where the number of jobs is constantly declining every year due to declining
financial support from the employment office.
Supporting the employment of people with mental illness is also a very strong element by which
MENS SANA has long contributed to social responsibility. All financial support that can be
obtained is limited in time, usually for one year and carries with it the risk that if it fails to obtain
financial support in the following year, then unfortunately the organization is forced to release
people with mental illness with all consequences.
Due to the complete inflexibility and rigidity of state administration and territorial selfgovernment,
the non-profit organization try to look for other alternative tools to support
employment and establish cooperation with innovative organizations and companies.
60
5 The innovative models of the employment of people with disabilities
BEC Družstvo is a Business and Employment Co-operative (BEC) that operates in the Olomouc
and Moravian-Silesian Region, which are the regions with one of the highest unemployment rate
in the Czech Republic. BEC Družstvo was formally established in January 2012 by three
founding members, even if the idea of founding a BEC dates back to 2004, thanks to the meeting
with similar cooperatives in France, Spain, and Sweden. Until 2012, the BEC operates as an
social business oriented entity because it took several years to clarify the procedure to establish
a cooperative in the Czech legislation because there was no specific legislation about social
enterpreneurship in the country (the legal act was still not announced).
The first BEC was created in Lyon, France, in 1994 (where it is called: Cooperative d'Activites
et d'Emploi, CAE), to answer the social need of isolated self-entrepreneurs and offer them a
valid alternative to the individual creation of an enterprise allowing testing a project within the
framework of a shared company, the cooperative. In France, at an operating level, the new
entrepreneur who enters a BEC benefits from a legal framework and social protection through
the acquisition of the status of "employee entrepreneur" (LOI n° 2014-856 du 31 juillet 2014
relative á 1'économie sociále et solidaire or Loi Hamon) signing a CESA (Contrat ďentrepreneur
salarié associé, Contract of employee entrepreneur member), a contract with essentially the same
characteristics as a permanent contract. [4]
Figure 3 - The model CAE
Source: Own processing
Model of the Cooperative d'Activites et d'Emploi, CAE
First Step
CAE - Cooperative
settlement
Startups
Second Step
coaching
Disgng sties
Mjlch rnjkiny
O w n e r s h i p a n d f o r m a l
establishment of BEC
cooperativeerative I
Financial, sustainability shared
c o m p a n y
entrepreneurs
Job saving
10 - 3 0 % of Gross profit
61
A B E C is then an entrepreneurial platform supporting entrepreneurs in many ways: legal,
administrative, and accounting management, entrepreneurial education (e.g. in communication,
marketing, sales, etc.), experiences sharing with other entrepreneurs, and participation in the
governance. The entrepreneur keeps his autonomy in the management of his business (brand
name, customer management, fare's definition, etc.), but at the same time becomes an employee
of the cooperative, where he can even practice "multi-activity", which means that he can put in
place different and various economic activities.
The main objective of BEC Družstvo is to support employment through the implementation of
the B E C methodology. It focuses on supporting the development of micro-businesses of
disadvantaged people, especially the unemployed people, with the disabilities but also people
without stable work and people that desire to legalize their activities coming out from undeclared
work.
People that are disadvantaged or has a disabilities usually face discouraging conditions to enter
in the labour market, which are isolation, lack of ambition, knowledge, and confidence needed
to develop a business career. In this context, BEC Družstvo has the purpose to set up a sustainable
model to support disadvantaged people in the transition from inactivity to employment in the
frame of a cooperative providing a safe environment to experiment with new business idea. The
cooperative acts as a non-traditional business incubator for new entrepreneurs where
disadvantaged people have the opportunity to test their business idea with the support of experts
and a group of peers who are dealing with similar problems while benefiting from appropriate
working conditions and a secure income both provided by the BEC. For this reason, B E C
participants are also called "paid entrepreneurs". Their economic model is based on 60-70% of
public resources (regional authorities offices, E U Minister of Social Affairs and Employment)
and 30-40% of own resources, of which 10-13% from the turnover of workers testing their
activity in the cooperative and the remaining is covered by the sale of services and products to
consumers. They are searching for new ways to fund them: social funds, establish a foundation
to support entrepreneurs' wages, public and private investors. The total net turnover they
achieved is about 130k euros. [10]
Following the French pathway, when disadvantaged or unemployed people enter the BEC they
have to go through three phases: preparation, testing a business, and independent business
activities. During Covid-19, BEC had problems with the incubation of new projects, and 2020
was affected by a decline of 20% of the revenue. In the preparation phase, BEC participants are
trained on how to become an entrepreneur via interactive educational programs and training
approaches that include business support (law, marketing, sales, identifying clients, ...),
counselling, exchange and dissemination of examples of good practice, and innovation in social
entrepreneur ship. In the second phase, they become employees of the cooperative and have from
6 to 12 months salaries so called "paid entrepreneurs" to verify whether their business is
competitive in the real market testing their business plan and selling their services or products.
During this testing phase, entrepreneurs receive a salary for 6 to 12 months even if their activity
is not making profits. In the end of this phase advisers from BEC Družstvo in cooperation with
the testing entrepreneurs analyse the results of their activity and if it is sustainable. If the business
activity is viable, entrepreneurs have two choices in the third phase of their incubation: become
self-employed and enter independently in the labour market to develop it; if they have produced
profit during the testing phase, they can choose to use this profit to prologue their permanence
in the cooperative, and develop their business activity within the cooperative as employees and
in meantime become full member participating in the cooperative development. Since the
beginning of their activity, B E C has employed 5-10 entrepreneurs each year. Most of their
participants come from one of the 14 Labour Office presented in each Czechia region.
62
Thanks to this structure, the cooperative is the combination of micro-enterprises that together
form one multi-activity enterprise whose members provide a mutually supportive environment
for each other. The primary BEC goal to support business activities in rural areas, regardless of
their legal form, and ensure the long-term sustainability of created jobs, developing and
expanding business skills, implies that BEC has to offer to the external national market a wide
range of business activities in many fields (accounting, manicure, massage, education, crafts,
...).
In Czech society, the B E C represents an innovative incubator for entrepreneurs. The B E C
method is a commonly and participatory approach where groups of entrepreneurs are trained
together in gaining entrepreneurial skills through training, coaching, and mentoring, supporting
a valuable knowledge transfer. Then, B E C enables entrepreneurs to experiment with their
business idea while benefiting from a secure income, unlike already existing business support
instruments that do not focus on stabilizing the incomes for start-up entrepreneurs in their early
days. And once the business is established the entrepreneur is not forced to leave and set up
independently but can stay and become a full member of the co-operative. [10]
This approach leads to long-term stabilization and development of entrepreneurial activities and
self-employment with a success rate of new business created around 40% (against the 16% of
unemployed people supported by Active employment policy implemented by government-based
Labour offices in the Czech Republic) based on a turnover of 5-10 entrepreneurs incubated each
year (for a total of 65 "paid entrepreneurs" in total till the end of 2020). In this way, the BEC
support system is an example of an active policy for disadvantaged workers because it reduces
the amount of undeclared work and helps people to stop being dependent on minimum social
benefits, with an actual save of money for the Government (saving more than 60% of
expenditures). Moreover, the choice to improve the business performance of disadvantaged
people especially in rural areas, where most of the people are unemployed, provides an increase
in economic activity and helps maintain a social life in rural areas.
In the present time is supporting this BEC model by implementing the Social Impact Vouchers
(SIV) programme in the Czech Republic which are set up as the employment vouchers that have
a social impact on the labour market. In the current time is the system of the Social impact
vouchers presenting and implementing on the website (https://pracuj-podnikej.cz). The
innovative voucher system brings together employee seeking companies as well B E C
cooperative providers and job seeking disadvantaged people in a very simple way. The free and
uncomplicated employment vouchers enable companies and applicants to get to know each other
and test each other with the aim of creation of the permanent employment. [10]
SIV is a new additional opportunity to test and hire exceptional and motivated employees and
self-employees/new entrepreneurs. A specific project related to undeclared work is SIV
(SOCIAL IMPACT VOUCHERS) financed by Interreg Central Europe programme, eight
countries in Central Europe are testing the innovative project simultaneously and jointly. In their
cooperation, they benefit from each other's country-specific innovations and special features.
The project aims to develop their entrepreneurship in Czech-Republic supporting their transition
from informal workers to formal workers. See more (https://www.interreg-
central.eu/Content.Node/SIV-.html).
For applicants with limitations (disadvantaged usually on the labour market), SIV offers an
authentic platform to introduce themselves to companies with their strengths and weaknesses
and to prove themselves in a test phase.
The innovative vouchers will be financed by a INNOFUND endowment fund which is set up as
a social impact fund, which is funded by private entities, crowdfunding and donations.
63
All applicants will be coached, prepare for integration on the labour market without the pressure
of state job brokers or job agencies. Based on free of charge support in a testing phase with the
help of a voucher. During this period, applicants will receive payment on a wage basis.
6 Conclusion
The position of people with disabilities, and especially people with mental illness, is unequal in
society. These people face considerable stigma due to their health restrictions and this has direct
consequences for their quality of life, difficult access to education, employment, etc. In terms of
the representation of these people in the majority society, it is a marginalized social group, there
are no specific tools to support them in the labour market, which would reflect their specific
personal needs and thus enable the systematic employment of these people with the necessary
sustainability. Fortunately, there are employers - organizations, companies that create job
opportunities for people with mental illness, despite the great annual uncertainty in terms of
supporting their activities from the usual instruments, which are financed from public budgets.
In the Czech Republic, there are people and non-profit organizations that are trying to come up
with new innovative methods and approaches to help support the employment of people and
groups that are on the margins of interest. One of the innovative tools, which draws on experience
from abroad, is the BEC model of the cooperative, which was pilot-tested on specific examples
of clients. So far, however, this tool is struggling for its recognition in the Czech Republic at the
level of state administration and self-government in order to become a full-fledged support tool,
complementary to existing resources.
The article shows a year-on-year increase in the number of people who are experiencing
manifestations of a mental illness and require the visit of an outpatient specialist in psychiatry.
Conclusions at European level also point to the urgency of tackling the problem of stigmatization
and social exclusion of people with disabilities, with an emphasis on unequal access to
employment. One of the strategic goals of the ongoing reform of psychiatric care in the Czech
Republic is to increase the success of the full integration of the mentally ill into society, including
support for the employment of these people. The BEC model of cooperatives was introduced as
a non-traditional business incubator, which offers a completely different and innovative approach
to employing people with disabilities. Because the philosophy of this new approach is shared in
the Czech Republic "only" by a relatively small team of people, organizations and companies, it
is a general effort to spread this concept across companies and seek systemic support from the
public and business sector, which is a way to effectively, socially and economically support this
project for the benefit of affected groups and society as a whole.
References
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https://www.cpkp.cz
[11] Veřejný ochránce práv (2020). Nová zpráva zkoumá zkušenosti s chudobou a
sociálním vyloučením u lidí s postižením v EU [online], [cit.2021-07-08]. Available
from
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diskriminace-2020/
Contact information
Ing. Vojtěch Beck
MENS SANA, z.ú.
Ukrajinská 1533/13, 708 00 Ostrava - Poruba, Czech Republic
E-mail: v.beck@menssana.cz
Mgr. Ivo Škrabal
Centrum pro komunitní práci Severní Morava
V Zátiší 810/1, 709 00 Ostrava - Mariánské Hory, Czech Republic
E-mail: ivo.skrabal@cpkp.cz
65
Real estate tax in the budgets of Czech municipalities
Jifi Becica, Marcela Vasatova
Abstract: The Czech Republic is characterized by a very fragmented settlement structure,
characterized by many small municipalities (up to a thousand inhabitants). One of the few ways
to increase the amount of funds in the municipal budget is the introduction of a local coefficient
according to § 12, Act No. 338/1992 Coll. on real estate tax. The paper evaluates the role of real
estate tax in 2013-2020 from three perspectives: 1) according to the role of real estate tax (DzNV)
in the budgets of municipalities in the Czech Republic; 2) according to the number of established
local coefficients according to the size structure of municipalities; 3) according to the number of
established local coefficients in municipalities within the territorial jurisdiction of the region of
the Czech Republic in which the municipality is located. The analysis show that the share of the
tax decreases in the observed period, although the collection of real estate tax itself increases
over time. The number of introduced local coefficients in municipalities in the monitored period
increased by 2.2% and the highest average growth rate in introduction was found in
municipalities with less than 1,000 inhabitants. The regional comparison showed that the most
frequently used local coefficient has the value "2", but the share of municipalities with the
established local coefficient is not comparable in the regions. The municipalities within the
Central Bohemian Region most often introduce a higher local coefficient, while the smallest
share is observed in municipalities in the Pardubice Region.
Keywords: Czech Republic, municipality, public budget, real estate tax, region,
JEL Classification: H71, J18, M48, D72
1 Introduction
Territorial self-government and its role have undergone several changes in the territory of today's
Czech Republic in the last hundred years. We can talk both about extremely centralizing
tendencies, which led to the reduction of self-government status and autonomy of individual
units (after 1948 and then in the 70s and 80s of the 20th century) to the opposite, strongly
decentralizing tendencies, which are characterized by significant autonomy (in the period the socalled
First Republic or since the 1990s). The growing role of decentralization in many Western
countries is supported by the development of the theory of fiscal federalism, which first appeared
in literature shortly after World War II (Musgrave, 1994) and gradually developed throughout
the second half of the 20th century. Most authors understand the theory of fiscal federalism as
a system of redistribution of public funds, the purpose of which is to allow different groups living
in different areas (states, regions, municipalities) to express their preferences regarding the
demand for public goods. In practice, there are geographical differences in the supply of public
services, which is closely related to securing their financing. One of the possibilities of financing
these services is through additional taxation in a defined area (Radvan, 2012), which is possible
in the current Czech Republic, for example, through the introduction of a local coefficient
according to § 12, Act No. 338/1992 Coll., On real estate tax ( DzNV), where the revenue from
this tax is 100% transferred (entrusted) to the budget of self-governing municipalities by the
financial administration (Act No. 243/2000 Coll.). Among Czech authors, for example, Pekova
states that fiscal federalism deals, among other things, with the theoretical justification of the
optimal allocation of public revenues and public expenditures to the budgets of individual
government levels, including optimizing financial relations between them in practical budget
policy to increase allocation efficiency (Pekova, 2008 , 390).
66
Given that the real estate tax and the revenue from this tax is fully allocated to the budget of the
municipality in which the taxed real estate is located, the aim of the paper is to assess the role of
real estate tax (DzNV): 1) in the context of total tax revenue in the Czech Republic, including
the role in municipal budgets in 2013-2019; 2) according to the number of established local
coefficients according to the size structure of municipalities; 3) according to the number of
established local coefficients in municipalities within the territorial jurisdiction of the region of
the Czech Republic in which the municipality is located.
These three views were formulated based on partial outputs of professional articles by various
authors within the subject area, which are listed in the literature review below. Within the
individual regions of the Czech Republic, a different approach of municipalities to the use of real
estate tax is not expected according to the size structure of municipalities and territorial
jurisdiction within the Czech regions, as the amount of real estate tax is generally not a
fundamental income for municipal budgets, confirm the results of the analysis within the first
formulated view. The selection of a longer monitoring period of 2013-2020 should show a
different approach of elected municipal bodies in the subject matter and at least partially show
different approaches of municipal councils operating in a total of three different election periods
(period 2010-2014; 2014-2018; 2018-2022). The municipality may, by its decision (elected
municipal council), introduce a coefficient of 2, 3, 4 or 5 by means of a generally binding decree
and thus directly partially influence the amount of income from real estate tax. The municipal
council will thus secure additional funds for its budget, as they are an interesting opportunity for
it. By using this option, the real estate tax can become not only a permanent but also a certain
income of the municipal budget, but also a fiscal instrument of municipal policy. Due to the
impossibility to influence other tax revenues of the municipal budget, it can be assumed that the
use of this legal option for real estate tax will grow in municipalities over time.
The real estate tax is an exclusive tax in the Czech Republic and, like shared taxes and fee
income, enters the budgets of municipalities as tax revenues, which represent one of the most
important sources of municipal income. The number of individual types of revenues in municipal
budgets is shown by Tománek (2017) and evaluates their stability in the size categories of
municipalities. Sedmihradská and Bakoš (2016) show the impact of increased tax autonomy in
the tax revenues of municipalities. Zdražil and Pernica (2018) look at the real estate tax in the
context of quality of life in municipalities. Janoušková and Sobotovičová (2016) view the tax as
a tool for fiscal decentralization. Pfeifer et al. (2020), resp. Kukalová et al. (2021) then evaluate
the use of coefficients for real estate tax on a sample of selected cities in the Czech Republic.
Sobotovičová and Janoušková (2017,2020) also reflect on the specifics and regional differences
of municipalities in the Czech Republic. Vavrek and Admisin (2018) not only put property taxes
in context within municipal budgets in Slovakia. The effectiveness of the use of tax coefficients
in Slovakia is then examined by Balážova, Bulla and Papcunová (2017). Vavrek (2018) also
works with property taxes in the context of the financial health of municipalities and in the
context of the economic potential of regions.
From the list of authors and their focus, it can be seen, that the role of real estate tax in municipal
budgets is a grateful topic that can be perceived from different angles. This is due to the
construction of the real estate tax, which is the only one for the municipalities to have a way to
influence the amount of the tax, and thus the amount of their revenues to the budget, through
their own decision. Due to the circumstances regarding the amount of other revenues in the
budgets of municipalities, an increasing number of municipalities and cities are considering
the possibility of increasing the revenue from real estate tax. This is done through a local
coefficient, mostly to cover expenses related to the need to ensure the renewal of infrastructure,
to maintain the development of tourism, restoration and reconstruction of facilities, improvement
of civic amenities, to cover increased costs of waste management or other reasons.
67
2 Material and Methods
The introduction of a local coefficient for real estate tax was made possible for the first time by
Act No. 261/2007 Coll., On the stabilization of public budgets only from 2009. Until the end of
2020, the municipality could set a local coefficient municipality of 2, 3,4 or 5, but excluding the
taxation of arable land, hop gardens, vineyards, gardens, orchards and permanent grassland. The
original Real Estate Tax Act has already undergone 39 amendments since its inception in 1992,
the latest amendment being Act No. 609/2020 Coll., Which amends some tax laws and some
other acts, and the sixth part of which an amendment to the Real Estate Tax Act is also included.
This concerns in particular the local coefficient in § 12, where it is stated that the municipality
may, on the basis of its decision and by means of a generally binding decree, set a coefficient of
2, 3, 4, 5 and thus increase the tax by multiples of whole numbers, only in one amount for all
real estate in the territory of the municipality, except for arable land, hop gardens, vineyards,
gardens, orchards and permanent grassland. From 1 January 2021, the authority of municipalities
is extended and the municipality is entitled (not obliged) to set a local coefficient not only for
the whole municipality but also for individual parts of the municipality and it is possible to
introduce a coefficient not only in whole numbers, but the coefficient can be set at one decimal
place, which may not be such a visible change for property owners at first sight, but which will
financially affect their overall taxation.
The period 2013-2020 was chosen for the practical part of the paper, due to the availability of
data from the General Finance Directorate on all municipalities that used the opportunity to
increase the value of real estate tax through a local coefficient in the legal range of 2, 3, 4 and 5.
It also works with data from the websites of the Czech Statistical Office (CSO) for the same
period, which contain data on the number of inhabitants of municipalities, numerical designation
of municipalities, their classification into LAU1 (districts) and NUTS3 (regions). The obtained
databases of both institutions were interconnected in the IDEA system according to the key value
(unique identifier), which is the numerical designation of municipalities from the Code of
Municipalities used by the CZSO. The codes of districts and regions on whose territory the
municipalities are located and the number of inhabitants of the municipalities were assigned to
individual municipalities that used the possibility to determine the local coefficient. The data
were processed so that some of them could be used in the QGIS system, the output of which is a
map showing the individual amounts (values) of local coefficients in the municipalities of the
Czech Republic. In 2013, the data of the financial administration also included the city districts
of Pardubice, Ústí and Labem and Liberec, the data of this year are included in the tables as
provided by the financial administration, so it is possible that the total number of municipalities
that have a local coefficient in 2013, they may differ from other sources, where these
municipalities would be counted only once. If the number of inhabitants in municipalities and
regions is stated, it is drawn as of 1 January 2020 from the Czech Statistical Office. When setting
hypotheses, a difference of five percent was chosen to determine a possible insignificant
deviation. The following three hypotheses are verified in the paper:
Hypothesis H I : In individual categories of municipalities according to the size of the population
in municipalities, no significant differences can be observed in the percentage of the number of
municipalities that have decided to introduce a higher local coefficient. The difference of + - 5%
compared to the observed average in the categories of municipalities according to the number of
inhabitants that introduced the local coefficient is a fundamental difference.
Hypothesis H2: In individual regions, no significant differences can be observed in the
percentage of the number of municipalities that have decided to introduce a higher local
coefficient. The difference of + - 5% compared to the observed average for all regions of the
Czech Republic is a fundamental difference.
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Hypothesis H3: The growth of the role of real estate tax through local coefficients is reflected in
the growth of the number of introduced local coefficients within the values of 2, 3, 4 and 5.
For the analysis of changes in the use of the local coefficient by individual municipalities in the
Czech Republic, two criteria of classification of municipalities are used, namely classification
according to regions in whose administrative district the municipality is located and classification
according to population in the municipality, broken down by the Real Estate Tax Act.
3 Results and Discussion
The results are divided into three parts. The first part deals with the role of real estate tax in the
context of the collection of all taxes in the Czech Republic and the role of real estate tax in the
tax and total revenues in the budgets of municipalities, of which it is the sole revenue. The second
part deals with the evaluation of the number of local coefficients according to § 12, the Real
Estate Tax Act in the budgets of municipalities according to the size structure of municipalities
in the Czech Republic, which is used by the Real Estate Tax Act. The third part shows the results
regarding the number of established local real estate tax coefficients in municipalities according
to geographical affiliation within individual regions of the Czech Republic.
3.1 The role of real estate tax in the budgets of Czech municipalities
The share of real estate tax collection in the total collection of taxes by tax authorities is shown
in Table one, which shows the collection of all taxes, real estate tax collection and the percentage
share of real estate tax collection in the total collection of all taxes in the period years 2013 -
2019.
Table 1 - The share of DzNV collection in the total tax collection in 2013 - 2019
In millions of
CZK
2013 2014 2015 2016 2017 2018 2019
All taxes
610 639 610 732 795 853 906
All taxes
603 007 603 202 573 728 948
Real estate tax
(DzNV)
9 847 9 910 10313 10 582 10 758 10 829 10 935
Share in %
(DzNV)
1,61 1,55 1,69 1,45 1,35 1,27 1,21
Source: Own processing. Reports on the activities of the financial and customs administration
The table shows that the share of real estate tax collection is marginal in relation to the collection
of all taxes and ranges from 1.69% to 1.21% in the total collection of taxes. The share has a
declining trend outside 2015, although the total revenue from real estate tax is growing over time.
However, the total revenue from the collection of real estate tax is slower than the growth of
other taxes (especially income tax and general excise duty) and the share of real estate tax in
public budgets is thus gradually degrading. This is also confirmed by the values of the shares of
real estate tax in the tax and total revenues of municipalities after consolidation in 2013-2019,
which is shown in table number two.
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Table 2 - The role of real estate tax on tax and total revenues of municipalities in 2013-2019
In millions of
CZK
2013 2014 2015 2016 2017 2018 2019
All tax revenues
161
726
170
087
175
394
190
751
206
316
226
220
245
199
Of which Real
estate tax (DzNV)
9 736 9 974 10 334 10 586 10 765 10 856 10 909
Total municipal 261 277 287 282 297 334 364
revenues 095 717 692 031 635 633 589
Share (DzNV/tax
revenues) in %
6,02 5,86 5,89 5,55 5,22 4,80 4,45
Share (DzNV/total
revenues) in %
3,73 3,59 3,59 3,75 3,62 3,24 2,99
Source: Own processing
From table number two, it is clear, that the share of real estate tax revenues in tax revenues in
the monitored period ranges from 6.02% in 2013 to 4.45% in 2019. The reason for the decrease
is the fact that although both revenues are growing (excluding total revenues in 2016), tax
revenues are growing more progressively than real estate tax revenues. The continuous growth
of tax revenues in the period under review confirms that the economy in the Czech Republic was
in the phase of the economic cycle, which is called the boom or expansion. Revenue from real
estate tax accounted for only 3.73% of the total revenues of municipalities in the period under
review and decreased to 2.99% in 2019. From the individual values, it is clear at first sight that
the revenue represented by collection Real estate tax is a rather marginal issue for municipalities
in terms of total and tax revenues.
3.2 Evaluation of the number of local coefficients according to the number of inhabitants
in municipalities
At the beginning of the observed period, a total of 508 municipalities (city districts) used the
possibility to influence the amount of real estate tax by setting different amounts of the local
coefficient, which is 8.1% of the total number of municipalities in the Czech Republic.
Table 3 - Number of municipalities with established local coefficient in the Czech Republic
according to the size category of municipalities in 2013 - 2020
velikost obcí
2013 2014 2015 2016 2017 2018 2019 2020
velikost obcí poěet obcí % poěet obcí % poěet obcí % poěet obcí % poěet obcí % poěet obcí % poěet obcí % poěet obcí %velikost obcí
všech sMK podíl všech sMK podíl všech sMK podíl všech sMK podíl všech MK podíl všech sMK podíl všech s MK podíl všech s MK podíl
do 1000 obyvatel 4829 242 5,0% 4825 259 5,4% 4819 263 5,5% 4824 282 5,8% 4814 305 6,3% 4803 310 6,5% 4786 313 6,5% 4775 350 7,3%
1001 do 6000 obyvatel 1200 184 15,3% 1204 186 15,4% 1210 186 15.4% 1210 203 16.8% 1219 208 17,1% 1230 212 17,2% 1246 212 17.0% 1257 222 17,7%
6001 do 10000 obyvatel 91 25 27,5% 91 25 27,5% 91 25 27,5% 91 27 29,7% 93 27 29,0% 92 27 29,3% 94 27 28.7% 95 29 30,5%
10001 do 25000 obyvatel 85 28 32,9% 85 29 34,1% 89 29 32,6% 88 29 33,0% 87 29 33,3% 88 28 31,8% 87 28 32,2% 86 30 34,9%
25001 do 50000 obyvatel 18 6 33.3% 18 6 33,3% 14 6 42,9% 15 7 46,7% 15 7 46,7% 15 7 46,7% 14 7 50,0% 14 7 50,0%
nad 50001 obyvatel
statutami města, Poděbrady,
Františkovy Lázně,
Luhaěovice,Mariánské Lázně
29 23 79,3% 29 9 31,0% 29 9 31,0% 29 10 34,5% 29 10 34,5% 29 9 31,0% 30 9 30,0% 30 9 30,0%
celkem obcí 6253 508 8,1% 6253 514 8,2% 6253 518 8,3% 6258 558 8,9% 6258 586 9,4% 6258 593 9,5% 6258 596 9,5% 6258 647 10,3%
Source: Own processing
Notes: Velikost obcí - The size of municipalities (inhabitants); počet obcí - number of
municipalities; všech - all municipalities; s MK - municipalities with local coefficient; nárůst increase;
podíl - share in %
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Although five new municipalities were established in the Czech Republic in 2016, the gradual
growth of the total percentage share of municipalities with an established local coefficient in the
total number of municipalities is not interrupted. At the beginning of 2020, a total of 647
municipalities used the local coefficient (an increase of 139 municipalities compared to 2013),
which represents 10.3 % of the total number of municipalities and is an average percentage
increase of 2.2% for the period 2013 to 2020, which is based on the values given in table number
four.
Table 4 - Percentage or increase of municipalities with local coefficient in 2013 and 2020
velikost obcí
2013 2020 Nárůst
velikost obcí počet obcí % počet obcí % obcí
s MK
%
podíl
velikost obcí
všech s M K podíl všech s M K podíl
obcí
s MK
%
podíl
do 1000 obyvatel 4 829 242 5,0 4 775 350 7,3 108 2,3
1001 do 6000 obyvatel 1 200 184 15,3 1 257 222 17,7 38 2,3
6001 do 10000 obyvatel 91 25 27,5 95 29 30,5 4 3,1
10001 do 25000 obyvatel 85 28 32,9 86 30 34,9 2 1,9
25001 do 50000 obyvatel 18 6 33,3 14 7 50,0 1 16,7
nad 50001 obyvatel, statutární
města, Poděbrady, Františkovy
Lázně, Luhačovice,Mariánské Lázně
29 12 41,4 30 9 30,0 - 3 - 11,4
Source: Own processing
Notes: Velikost obcí - The size of municipalities (inhabitants); počet obcí - number of
municipalities; všech - all municipalities; s MK - municipalities with local coefficient; nárůst increase;
podíl - share in %
From the values given in table number four for 2013 and 2020, the column "increase" calculates
the increase of municipalities with the introduced local coefficient in absolute terms and the
increase in percentage, which indicates the "interest" in realistically introducing a local
coefficient in individual groups of municipalities in the period. The increase in the introduction
of the local coefficient in the monitored period is evident in all size categories of municipalities,
except for the last one, ie statutory and statutory spa towns. As the number of established local
coefficients in municipalities grows over time, the average, which in 2019 was 27.4%, is also
growing. The decrease in the number of municipalities with the established local coefficient in
the highest category is caused by the abolition of local coefficients in the city districts of the
statutory cities of Pardubice, Liberec and Ústí nad Labem.
Municipalities with less than 1,000 inhabitants and municipalities with 1,001 to 6,000 inhabitants
recorded the highest absolute increase in the number of municipalities that introduced a local
coefficient in the observed period, because the number of municipalities in these groups is the
highest, only 2.3%, in both groups. The highest absolute increase of municipalities with the
established local coefficient is for municipalities with less than 1,000 inhabitants, which is 108
municipalities. From table number three both groups recorded the highest increase in the number
of municipalities with established local coefficients in 2020, the increase was by 37
and 10 municipalities, respectively. Municipalities with less than 1,000 inhabitants show the
highest average growth rate of the number of local coefficients of all size groups, namely 18%.
The average annual growth rate in the introduction of local coefficients in municipalities from
1,001 to 6,000 inhabitants is 2.76%.
From table number three and four it is evident that the group of municipalities from 6001 to
10,000 inhabitants did not make too many changes. In 2013, the local coefficient was introduced
71
by 25 municipalities, and subsequently only in 2016 and 2020, two municipalities were added in
each of the years. The average annual growth rate of the number of local coefficients is thus
2.20%. In the group of municipalities with a population of 10,001 to 25,000 inhabitants, a local
coefficient of 28 municipalities was introduced in 2013, to which the town of Kralupy nad
Vltavou was added in 2014 and another change did not occur until 2018, when the town of
Jeseník abolished the local coefficient. The average annual growth rate of the number of local
coefficients in this group is 1.04%.
The highest percentage increase in the number of local coefficients was recorded by
municipalities with a population of 25,001 to 50,000, but in absolute terms it was an increase in
only one municipality for the entire period under review. The decline of municipalities in this
size category from the original 18 to 14 municipalities in 2020 also plays a role here. In 2013,
they introduced a local coefficient to two and did not change the municipalities of Kolín, Cheb,
Znojmo, Tábor, Česká Lípa and Uherské Hradiště until 2020. In 2016, the city of Příbram joined
them. The average annual growth rate of the number of local coefficients in this category is
2.38%.
An interesting category consists of municipalities with more than 50,001 inhabitants, which
includes all statutory towns and the spa towns Poděbrady, Františkovy Lázně, Luhačovice and
Mariánské Lázně, which are listed by law. In this size category, there was a decrease in the
number of established local coefficients, when the introduction of the local coefficient was
"reconsidered" by the cities of Opava, Liberec, Pardubice and Ústí nad Labem, which have not
used this institute at all since 2014. In 2018, the local coefficient was last used by the town of
Frýdek Místek. The statutory city of Mladá Boleslav underwent the most changes, where they
originally introduced a local coefficient of two, raised it to a local coefficient of 4 for 2016 and
2017 and reduced it to a local coefficient of 3 in 2018. Since 2016, the introduction of the local
coefficient has been used by Karviná. According to the law of the mentioned spa towns, only the
town of Mariánské Lázně uses the local coefficient.
3.3 Evaluation of the number of local coefficients in municipalities by regions of the Czech
Republic
Another criterion according to which changes in local coefficients in individual municipalities
can be analyzed is the division of municipalities according to the regions in whose administrative
district the municipality is located. The division of the Czech Republic into 14 regions is
determined by Constitutional Act No. 347/1997 Coll., On the creation of higher territorial selfgoverning
units.
Table number five shows how much money the real estate tax brought in total to the budgets of
municipalities in individual regions in the observed period from 2013 to 2019. Real estate tax
revenue is incomparable in individual regions of the Czech Republic over time, just as individual
regions are incomparable in the Czech Republic, both in terms of their area, population, or
number of municipalities. Outputs regarding the growth of real estate tax revenue values across
the observed period 2013-2019 in the individual regions of the Czech Republic as a whole,
should serve to raise awareness of the issue in the context of the construction of real estate tax,
where the decision to introduce a higher coefficient does not affect all types of land and buildings
in individual municipalities, and therefore the tax revenue in the regions does not develop at the
same rate over time.
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Table 5 - Real estate tax in municipal budgets in aggregate for individual regions (in
thousands of CZK)
K R A J 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9
p r ů m ě r n ý
% p o d í l *
P R A H A 7 5 1 2 0 0 7 8 7 4 5 8 8 0 0 2 0 7 8 2 7 1 9 5 8 4 0 3 8 2 8 5 3 8 1 2 8 5 9 8 5 4 7 , 8
J i h o č e s k ý 6 7 5 3 2 9 6 7 5 6 3 6 7 0 4 5 7 9 7 1 4 9 2 6 7 1 9 3 7 6 7 2 7 3 6 0 7 1 0 8 3 4 6 , 7
J i h o m o r a v s k ý 9 8 3 9 1 6 9 9 9 7 9 4 1 0 4 9 7 4 2 1 0 6 6 0 2 7 1 0 8 3 4 4 7 1 0 9 2 9 6 3 1 0 9 4 8 0 6 1 0 , 1
K a r l o v a r s k ý 3 3 2 1 6 1 3 4 2 2 6 7 3 4 8 9 1 8 3 6 3 6 6 3 3 5 6 8 7 6 3 6 7 0 1 4 3 7 0 9 5 6 3 , 4
V y s o č i n a 5 1 6 4 0 9 5 2 2 6 5 3 5 4 1 7 2 0 5 4 3 5 9 5 5 5 1 2 7 4 5 5 7 6 9 6 5 6 3 4 7 5 5 . 2
K r á l o v e h o r a d e c k ý 6 1 4 0 8 6 6 1 8 1 7 6 6 3 9 3 2 3 6 4 8 9 6 5 6 6 2 4 0 5 6 6 9 6 0 4 6 7 7 8 5 5 6 , 2
L i b e r e c k ý 4 6 4 0 7 2 4 2 7 6 2 7 4 5 1 5 3 5 4 4 9 6 2 7 4 5 2 8 9 5 4 6 4 8 0 7 4 6 6 3 9 7 4 , 3
M o r a v s k o s l e z s k ý 9 6 4 0 8 7 9 9 8 9 9 1 1 0 0 1 1 7 0 1 0 3 1 3 2 1 1 0 4 3 8 3 5 1 0 6 3 1 0 5 1 0 5 7 9 0 9 9 , 8
O l o m o u c k ý 5 5 8 4 8 0 5 9 2 0 0 1 6 0 8 3 7 2 6 2 0 0 8 9 6 2 9 5 0 2 6 2 8 7 3 7 6 3 4 9 3 2 5 , 8
P a r d u b i c k ý 5 2 3 7 7 0 5 3 4 5 2 0 5 5 4 3 9 6 5 6 4 1 8 3 5 6 8 7 5 6 5 6 7 9 5 0 5 7 4 3 8 5 5 , 3
P l z e ň s k v 5 3 3 8 5 3 5 4 2 3 0 1 5 6 2 8 4 0 5 7 4 8 5 0 5 8 2 5 4 1 5 9 3 1 6 0 5 9 8 1 4 0 5 , 4
S t ř e d o č e s k ý 1 4 7 0 5 6 4 1 5 1 1 7 1 2 1 6 0 2 6 8 5 1 6 9 1 7 5 7 1 7 6 0 3 2 5 1 7 4 9 2 9 0 1 7 7 1 8 5 3 1 5 , 8
Ú s t e c k ý 9 1 5 2 8 5 9 4 2 2 8 7 9 7 1 4 1 8 9 8 7 7 1 0 9 9 8 6 1 5 9 9 9 9 7 3 1 0 0 9 5 6 0 9 , 3
Z l í n s k ý 4 7 5 5 7 1 4 7 8 1 4 0 4 9 6 9 1 4 5 0 1 7 4 7 5 1 4 8 2 1 5 2 0 2 0 0 5 1 7 8 1 0 4 , 8
C E L K E M 9 7 7 8 7 8 3 9 9 7 3 5 6 3 1 0 3 3 3 8 1 9 1 0 5 8 5 6 5 5 1 0 7 6 5 0 5 0 1 0 8 5 5 6 7 1 1 0 9 0 8 7 6 6 1 0 0
Source: Own processing, Monitor
Notes: Kraj - region; celkem - total; * average percentage of real estate tax in national
collection of real estate tax in the Czech republic
The last column in table number five shows the percentage share of individual regions in the
national real estate tax revenue. The average value of the percentage share for the region is
7.14%. The table shows that the smallest tax collection of real estate tax flows into the budget of
municipalities in the Karlovy Vary region, in whose district there are also the fewest
municipalities and the most in the Central Bohemian Region, which has the largest number of
municipalities in the Czech Republic and the third highest percentage, municipalities with an
established local coefficient. The agreement of the smallest and largest tax collection of real
estate tax with the smallest and largest number of municipalities in the region is accidental, it is
not a relationship of dependence. Table number six shows how many in the given year there were
municipalities (in 2013 also city districts) in the territory of the given region, which had
introduced any multiple of the local coefficient.
Table 6 - Number of local real estate tax coefficients in the regions of the Czech Republic
in 2013 - 2020
2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 2 0 2 0
p o č e t o b c í M K o b c e M K o b c e M K p o č e t o b c í M K o b c e M K o b c e M K o b c e M K o b c e M K
K R A J v š e c h s M K v % s M K v % s M K v % v š e c h s M K v % s M K v % s M K v % s M K v % s M K v %
P r a h a 1 1
J i h o č e s k ý 6 2 3 3 0 4 , 8 3 2 5,1 3 3 5 , 3 6 2 4 3 6 5,8 3 6 5,8 3 5 5 , 6 3 5 5 , 6 3 8 6,1
J i h o m o r a v s k ý 6 7 3 3 3 4 , 9 3 4 5,1 3 4 5,1 6 7 3 4 0 5 , 9 4 0 5 , 9 4 0 5 , 9 4 0 5 , 9 4 8 7,1
K a r l o v a r s k ý 1 3 2 3 1 2 3 , 5 3 3 2 5 , 0 3 4 2 5 , 8 1 3 4 3 6 2 6 , 9 3 5 2 6 , 1 3 5 2 6 , 1 3 5 2 6 , 1 3 8 2 8 , 4
V y s o č i n a 7 0 4 1 9 2 , 7 2 0 2,8 2 0 2 , 8 7 0 4 2 0 2 , 8 2 1 3 , 0 2 1 3 , 0 2 1 3 , 0 2 1 3 , 0
K r á l o v e h r a d e c k ý 4 4 8 3 0 6 , 7 3 1 6 , 9 3 2 7,1 4 4 8 3 5 7 , 8 3 6 8 , 0 3 8 8,5 3 8 8,5 3 9 8,7
L i b e r e c k ý 2 1 5 3 0 1 4 , 0 2 9 1 3 , 5 3 0 1 4 , 0 2 1 5 3 1 1 4 , 4 3 5 1 6 , 3 3 6 1 6 , 7 3 6 1 6 , 7 3 7 1 7 , 2
M o r a v s k o s l e z s k ý 3 0 0 4 1 1 3 , 7 4 0 1 3 , 3 4 0 1 3 , 3 3 0 0 4 2 1 4 , 0 4 4 1 4 , 7 4 4 1 4 , 7 4 5 1 5 , 0 4 5 1 5 , 0
O l o m o u c k ý 3 9 9 16 4 , 0 16 4 , 0 17 4 , 3 4 0 2 18 4 , 5 18 4 , 5 17 4 , 2 17 4 , 2 1 9 4 , 7
P a r d u b i c k ý 4 5 1 18 4 , 0 1 0 2 , 2 1 0 2 , 2 4 5 1 1 2 2 , 7 12 2 , 7 1 3 2 , 9 1 3 2 , 9 1 5 3 , 3
P l z e ň s k ý 5 0 1 2 0 4 , 0 2 1 4 , 2 2 1 4 , 2 5 0 1 2 3 4 , 6 2 3 4 , 6 2 4 4 , 8 2 4 4 , 8 2 4 4 , 8
S t ř e d o č e s k ý 1 1 4 5 1 6 1 1 4 , 1 1 7 1 1 4 , 9 1 7 0 1 4 , 8 1 1 4 4 1 7 9 1 5 , 6 1 9 4 1 7 , 0 195 1 7 , 0 198 1 7 , 3 2 2 1 1 9 , 3
Ú s t e c k ý 3 5 4 6 5 1 8 , 4 6 4 18,1 6 4 1 8 , 1 3 5 4 71 2 0 , 1 7 5 2 1 , 2 7 8 2 2 , 0 7 8 2 2 , 0 8 4 2 3 , 7
Z l í n s k ý 3 0 7 1 4 4 , 6 1 3 4 , 2 1 3 4 , 2 3 0 7 15 4 , 9 17 5,5 17 5,5 1 6 5 , 2 18 5 , 9
C E L K E M 6 2 5 3 5 0 8 8 , 1 5 1 4 8 , 2 5 1 8 8 , 3 6 2 5 8 5 5 8 8 , 9 5 8 6 9 , 4 5 9 3 9 , 5 5 9 6 9 , 5 6 4 7 1 0 , 3
73
Source: Own processing from data from the Financial Administration of the Czech Republic and
the Czech Statistical Office
Notes: MK local coefficient; počet obcí - number of municipalities; všech - all municipalities;
s MK - municipalities with local coefficient; kraj - region; celkem - total
From the total percentage captured in Table Six, the use of this economic instrument leading
to an increase in income of individual municipalities in the regions is growing. The analysis
according to the number of inhabitants in the municipalities showed that the municipalities not
only introduce and change, but also abolish the local coefficient. From the analysis by region,
this fact can be traced in year-on-year declines within individual regions. This table also reflected
the abolition of local coefficients in Pardubice, thanks to which the Pardubice Region is the only
one that recorded a decrease in local coefficients in the observed period. It is also clear
from the table that the highest number of municipalities with a local coefficient is in
municipalities in the Central Bohemian Region and the least in the Pardubice Region. The highest
percentage of established local coefficients in the total number of municipalities is in the Karlovy
Vary region and the lowest in the Vysočina region.
The map in Figure One shows very interesting results, where the frequency of established local
coefficients in individual regions of the Czech Republic in 2020 is graphically transferred. The
change in individual amounts of local coefficients in the period from 2013 to 2020 is as follows:
• Local coefficient 2, compared to 2013 (431), in 2020 an increase of 81 municipalities.
• Local coefficient 3, compared to 2013 (53), in 2020 an increase of 40 municipalities.
• Local coefficient 4, compared to 2013 (7) in 2020 an increase of 9 municipalities.
• Local coefficient 5, compared to 2013 (17) in 2020 an increase of 2 municipalities.
Figure 1 - Local real estate tax coefficients in Czech municipalities in 2020
Source: Own processing, QGIS
1:250000
74
From the map in figure number one it is evident that the most used by municipalities is the local
coefficient in the value "2". In the monitored period of 2013-2020, a smaller number of
municipalities introduced a local coefficient of "3" and even fewer municipalities introduced a
local coefficient of "4". This corresponds to the total number of local coefficients, when as of 1
January 2020 the local coefficient "2" was used by a total of 519 municipalities in the Czech
Republic, the local coefficient in value "3" was used by 93 Czech municipalities and the local
coefficient with value "4" was used by only 16 municipalities in CR. The highest local coefficient
with the value "5" was used by a total of 19 municipalities in the Czech Republic and the change
from 2013 did not occur until 2020, when it was introduced by the municipalities of Ledvice and
Dolní Morava.
Visualization of local coefficients in the map in figure number one brings a topographical view,
which is related to the borders of individual regions, or the borders of the Czech Republic with
other countries and certainly encourages several questions and reflections, which are the subject
of some of the other contributions on this topic.
4 Conclusion
The analysis of real estate tax revenues for municipalities in the czech republic shows that the
share of this tax in the total revenues of municipalities is 2.99 - 3.75% and in tax revenues of
4.45 - 6.02%. The share of real estate tax collection in the total tax collection in the czech republic
accounts for 1.21 - 1.69%, and this share is declining in the period under review, although the
real estate tax collection itself is growing over time.
The analysis of the introduction of the local coefficient according to the number of inhabitants
in municipalities showed that the number of local coefficients in the period from 2013 to 2020
increased by 2.2% and the highest average growth rate in the introduction of local coefficients
was found in municipalities up to 1,000 inhabitants, this is an 18% increase, while other groups
(excluding statutory cities) range from 1.04% to 2.76%. The percentage of municipalities with
an established local coefficient in all municipalities of a given size group is not balanced. The
highest, 50% share of municipalities with a local coefficient in the number of all municipalities
in the group is represented by a group of municipalities with a population of 25,001 to 50,000
inhabitants, which also has the largest percentage increase in the number of municipalities with
a newly introduced local coefficient. This increase is 16.7%. The agreement of the percentage
increase with the share is only accidental. The smallest, 7.3% share of municipalities with an
established local coefficient in the number of municipalities in each group is for municipalities
in the group of municipalities with less than 1,000 inhabitants. The increase in the number
of municipalities with a newly introduced local coefficient for the observed period is the same
as in the category of municipalities from 1,001 to 6,000 inhabitants and amounts to 2.3%. If we
omit the category of cities with the highest population, then it is true that the more municipalities
in each category, the smaller the percentage of municipalities with an established local
coefficient. The category of municipalities with more than 50,001 inhabitants and statutory cities,
although the share of municipalities with an established local coefficient in the total number of
municipalities in this category is 30%, is the only group in which there was a decrease in
municipalities with an established local coefficient. 11.4%. Not only is the percentage of
municipalities with the established local coefficient in all municipalities of a given size group
not balanced, but it also does not meet the conditions of the established hypothesis h i , ie that in
individual categories of municipalities according to population size in municipalities which have
decided to introduce a higher local coefficient. The observed average in 2020 is 28.4% and the
selected range of + - 5% is satisfied by only two of the six size categories of municipalities
(categories of statutory cities and categories of municipalities from 6,001 to 10,000 inhabitants).
Hypothesis hi set in the methodology must therefore be rejected based on the findings in the
practical part of the work.
75
For the analysis of local real estate tax coefficients by region, income overviews of individual
regions were prepared. It was found that the largest income from real estate tax has municipalities
in the central bohemian region (the average for the observed period is 15.8% of the total
collection of real estate tax in the czech republic) and the south moravian region (10.1%), the
lowest income is then in the zlin region (4.8%) and the liberec region (4.3%). The largest
percentage increase in revenues for the period from 2013 to 2019 was recorded by the central
bohemian region (increase by 20.5%) and the olomouc region (increase by 17.5%), the lowest
revenues increased in the observed period to the budgets of liberec region municipalities
(increase by 0.5 %). Not only the largest percentage increase in income, but also the most changes
in local coefficients in absolute terms took place in the municipalities of the central bohemian
region, in percentage terms it is the second highest increase in the observed period (increase by
5.3%), after the ústí region (increase by 5.4%). %). The highest percentage of municipalities with
an established local coefficient is in the karlovy vary region (28.4%), the lowest in the pardubice
region (3.3%). The range of 25.1% shows that hypothesis h2 that no fundamental differences in
the percentage of the number of municipalities that have decided to introduce a higher local
coefficient can be observed must be rejected. The ascertained average in 2020 is 11.32% and
only 6 regions meet the set range of + - 5%.
The analysis, which touched on the issue of different levels of local coefficients and was captured
in the map in Figure number one, can confirm hypothesis H3, ie that the growth of the role of
real estate tax through local coefficients is reflected in the growth of the number of introduced
local coefficients within 2, 3, 4 and 5.
All performed analysis have shown that in some regions or size groups of municipalities the
number of established local coefficients is growing slowly, but the income from real estate tax
is growing. Only the category of statutory cities goes beyond this statement. It can thus be
confirmed at the outset that the possibility for municipalities to introduce a higher coefficient for
§ 12 of the Real Estate Tax Act is an interesting matter and at the same time an opportunity to
influence the amount of the municipal budget based on a generally binding decree.
In all monitored municipalities, it was confirmed that in the period when there are no changes in
local coefficients, real estate tax is rising, but more slowly than tax revenues, which is
accompanied by the fact that the percentage of tax revenues is slightly decreasing. A great boom
in the introduction of local coefficients was shown in the municipalities of the Central Bohemian
Region. Based on the map output, it can be stated that the commuting distance to Prague and the
connection of municipalities to the motorway network play an important role here. The influx of
inhabitants into the Central Bohemian Region causes a higher increase in tax revenues in most
municipalities, and these municipalities not only introduce a local coefficient, but also increase
it quite often. The limit for them so far is the local coefficient 4, but in connection with the local
coefficient 2 chosen by the capital city of Prague, a further increase in the number of
municipalities that will introduce the local coefficient can be expected. The role of the local
coefficient in real estate tax in municipal budgets is very individual and is more important in
general for smaller municipalities and municipalities in the Central Bohemian Region.
As part of the real estate tax, it is important to realize that on the one hand it is income to the
municipal budget, but on the other hand there should be a specific expenditure from the
municipal budget, which will be appreciated by residents or property owners who pay tax from
their budget. . Municipalities should behave with the "care of a proper manager" in their
management, which expresses the abstract degree of expected behavior. As part of this "care",
municipalities should not leave any possible and legal sources of income or funding unnoticed.
Especially when there is the support of the Ministry of the Interior of the Czech Republic, which
on its website in Methodological Recommendation PI24 02 issued a model of a generally
76
binding decree for municipalities considering the introduction of a local coefficient in their
territory.
Acknowledgements
The paper was created within the financial support of the student grant project SGS
No. SP2021/18 on Faculty of Economics, VSB-Technical University of Ostrava.
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Contact information
Ing. Be. Jiří Bečka, Ph.D., Ing. Marcela Vašatová
VSB - Technical University of Ostrava, Faculty of Economics, Department of Public Economics
Sokolská třída 33, 702 00 Ostrava 1, Czech Republic
E-mail: jiri.becica@vsb.cz
78
Impacts of the COVID-19 pandemic on publicfinancesin EU countries
Lukáš Cíbik, Dušan Guťan
Abstract: The aim of our paper is to analyze long-term development trends and year-on-year
changes in public finances (revenues, expenditures, debt / indebtedness) in E U countries since
2009 and compare them with the year-on-year change brought by the pandemic year 2020. We
focus on relative values of revenue, expenditure and indebtedness general government expressed
as a percentage of GDP. Subsequently, we converted the relative indicators of revenue,
expenditure and debt into an absolute form in mil. €. The results of our contribution show a slight
year-on-year increase in relative indicators (expenditures, indebtedness). Absolute data indicate
a sharp, often more than 500%, year-on-year increase in expenditure and debt in 2020 compared
to the long-term average of the year-on-year change. The decrease in the absolute value of the
year-on-year change in revenue in 2020 compared to the long-term average is also significant.
In the case of absolute average values of year-on-year changes in revenue, expenditure and debt,
E U general governments show a reversal of long-term trends compared to 2020.
Keywords: Debt, E U countries, expenditure, general government, indebtedness, revenue
JEL Classification: H87, H60, H50
1 Introduction
The countries of the European Union have been (and still are) heavily affected by the COVID-
19 pandemic. The general government also had to react flexibly to the significant economic
downturn and related social changes. Several measures, we could call them global or basic, have
been copied within all E U member states (Botta, Caverzasi, Russo, 2020; Švikruha, Richvalský,
2020; Cantó et. Al. 2021). General governments in E U countries complemented these basic
measures with a mix of specifically designed procedures, designed for the specific situation in
specific countries. These were most often various forms of financial assistance to vulnerable
individuals, entrepreneurs and companies, tax breaks and, in part, contracting of public contracts
and building of infrastructure. The management, control and elimination of the effects of
a pandemic have automatically increased the pressure to increase spending at all levels of
government (Foremny, Sorribas-Navarro, Castelló, 2020; Conte et al. 2020).
The year 2020 acted as a significant catalyst for changes in the public finances of all E U countries
and often reversed the long-term development trend (Baldwin, Mauro, 2020; Mura et al. 2014;
Billio, Varotto, 2020). Our contribution focuses on these year-on-year changes and compares
them with the long-term development trend. The subsequently identified disparities in
government revenue, expenditure and debt / indebtedness are identified as the consequences of
combating the effects of the pandemic on both the private and public sectors. At the same time,
the efforts of member countries to manage the COVID-19 pandemic in 2020 at various levels
(local, regional, national) and in various public and private sectors (Heald, Hodges, 2020) are
reflected in this way.
2 Material and Methods
The aim of our paper is to analyze long-term development trends and year-on-year changes in
public finances (revenues, expenditures, debt) in E U countries since 2009 and compare them
with the year-on-year change brought by the pandemic year 2020. We focus first on relative
revenue, expenditure and indebtedness values general government expressed as a percentage of
79
GDP. Subsequently, we will convert the relative indicators of revenue, expenditure and debt into
an absolute form in mil. €.
To identify the impacts of the COVID-19 pandemic, we selected three basic indicators of public
finances in E U countries : revenue, expenditure and debt / indebtedness. These indicators
represent the most important categories of public finances of general government and have long
been the most frequent object of research, the core of policy debates or discussions between
experts in various fields.
The indicators are compiled on a national accounts (ESA 2010) basis. They comprise main
aggregates (total revenue and expenditure, main components) for the general government sector
and its subsectors (central, state, local government and social security funds).
The institutional units included to general government sector (S.13) according to ESA2010
(paragraph 2.112) are the following:
• general government units which exist through a legal process to have judicial authority
over other units in the economic territory, and administer and finance a group of
activities, principally providing non-market goods and services, intended for the benefit
of the community,
• a corporation or quasi-corporation which is a government unit, if its output is mainly
non-market and a government unit controls it,
• non-profit institutions recognized as independent legal entities which are non-market
producers and which are controlled by general government,
• autonomous pension funds, where there is a legal obligation to contribute, and where
general government manages the funds with respect to the settlement and approval of
contributions and benefits (Eurostat, 2020).
The first monitored area of public finances is general government revenues. In our article, they
represent total general government revenue and are based on the national accounts indicator
(ESA 2010). Total general government revenue is defined in ESA 2010 8.100 and chapter 20 by
reference to a list of categories: market output, output for own final use, payments for non-market
output, taxes on production and imports, other subsidies on production, receivable property
income, current taxes on income, wealth, etc., net social contributions, other current transfers
and capital transfers.
In the case of expenditures, we operate with total general government expenditure. Total
government expenditure comprises all transactions recorded under positive uses in the E S A
framework, and subsidies payable, in the current accounts as well as transactions in the capital
account of the government.
We will consider general government gross debt as public debt. The Treaty on the Functioning
of the European Union defines this indicator as the ratio of government debt outstanding at the
end of the year to gross domestic product at current market prices. For this calculation,
government debt is defined as the total consolidated gross debt at nominal value in the following
categories of government liabilities (as defined in ESA 2010): currency and deposits (AF.2), debt
securities (AF.3) and loans (AF.4).
We monitor the year-on-year change in the three monitored areas of public finances in relative
and absolute form. Revenues, expenditures and indebtedness are first expressed in relation to the
GDP of a particular country in a given year. The absolute values of revenues, expenditures and
debt of the general government of the E U countries are quantified in mil. €.
We decided to monitor, analyze and compare the year-on-year change for several reasons. In the
first place, this approach has the advantage of not focusing on the total amount of revenue,
80
expenditure and debt, which have been growing steadily for decades. It can therefore bring more
interesting and less obvious knowledge. At the same time, the advantage of our approach is that
we monitor year-on-year changes in relative and absolute form. Thanks to relative indicators, it
is also possible to compare heterogeneous groups of E U countries. Absolute indicators can
clearly quantify the increase or decrease in the single currency (€) and are not directly linked to
highly volatile variables such as GDP.
Our work is designed to monitor the long-term average of the year-on-year change during 2009-
2019 and the year-on-year change in 2020. The long-term average of the year-on-year change in
all monitored indicators represents the arithmetic average of the year-on-year change from 2009
to 2019 long-term development trend (decrease, stagnation, increase).
The paper focused on a time period of twelve years and monitors the development of year-onyear
changes from 2009 to 2020. The time series is divided into two stages - from 2009-2019,
when we analyzed and surveyed long-term average year-on-year change in revenue, expenditure
and debt. The second stage includes the year-on-year change of 2019-2020, which we consider
to be largely the result of the COVID-19 pandemic.
The object of our research is E U countries, without Great Britain. Together there are 27 countries:
Belgium, Bulgaria, Czechia, Denmark, Germany, Estonia, Ireland, Greece, Spain, France,
Croatia, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, Netherlands, Austria,
Poland, Portugal, Romania, Slovenia, Slovakia, Finland and Sweden.
The source of primary data was predominantly Eurostat. In this online database, we have found
data on general government revenue and expenditure in E U countries in the Annual government
finance statistic sections. Information on government debt and indebtedness can be found in
Theme: Economy and finance.
3 Results and Discussion
From a global perspective, E U countries in 2009-2019 show an average year-on-year increase in
general government revenue of + 0.15% of GDP. The relative average year-on-year change in
general government revenue during 2009-2019 divided E U countries into two groups. The larger
group (19) consists of Member States, which increased their general government revenue on
average from 0.02% to 1.01% of GDP each year from 2009 to 2019. The highest year-on-year
increase was recorded in Greece, Cyprus and Slovakia. The second group of E U countries
consists of countries that have seen an average year-on-year decrease in general government
revenue over the past ten years. This includes a total of seven E U countries (Denmark, Estonia,
Ireland, Lithuania, Luxembourg, Hungary, Malta and Sweden), which on average record an
average year-on-year decline in relative government revenue from -0.02% to -0.82% of GDP.
81
Table 1 - Relative year-on-year change in general government financial indicators in EU
countries 2009-2020 (% of GDP)
Revenue Expenditure Indebtedness
Average Change Average Change Average Change
2009-2019 2019/2020 2009-2019 2019/2020 2009-2019 2019/2020
European
Union (27)
0,15 0,4 -0,41 6,8 0,18 13,2
Belgium 0,10 0,4 -0,30 7,9 -0,21 16,0
Bulgaria 0,33 1,0 -0,32 6,6 0,65 4,8
Czechia 0,28 -0,4 -0,30 6,1 -0,31 7,8
Denmark -0,07 -0,2 -0,70 4,8 -0,69 8,9
Germany 0,17 0,2 -0,30 5,9 -1,35 10,1
Estonia -0,44 1,2 -0,67 6,2 0,12 9,8
Ireland -0,82 -1,7 -2,25 3,8 -0,43 2,1
Greece 1,01 2,0 -0,62 12,8 5,38 25,1
Spain 0,42 2,1 -0,41 10,2 4,22 24,5
France 0,23 0,6 -0,18 6,7 1,46 18,1
Croatia 0,44 0,5 -0,21 8,2 2,41 15,9
Italy 0,11 0,7 -0,25 8,7 1,80 21,2
Cyprus 0,45 -0,6 -0,24 6,6 3,97 24,2
Latvia 0,21 1,3 -0,68 5,2 0,02 6,5
Lithuania -0,07 1,0 -1,04 8,9 0,79 11,4
Luxembourg -0,02 -1,0 -0,28 5,5 0,59 2,9
Hungary -0,23 -0,1 -0,50 5,9 -1,27 14,9
Malta -0,08 -0,7 -0,43 9,8 -2,43 12,3
Netherlands 0,12 0,2 -0,57 6,1 -0,81 5,8
Austria 0,04 -0,2 -0,55 9,3 -0,94 13,4
Poland 0,33 0,6 -0,32 6,9 -0,42 11,9
Portugal 0,22 0,2 -0,77 5,9 2,90 16,8
Romania 0,15 1,3 -0,32 6,2 1,35 12,0
Slovenia 0,02 -0,1 -0,61 8,7 3,11 15,2
Slovakia 0,51 0,4 -0,20 5,3 1,18 12,4
Finland 0,06 -1,0 -0,09 3,5 1,80 9,7
Sweden -0,16 0,1 -0,30 3,6 -0,57 4,9
Source: own processing based on Eurostat (2021)
In the pandemic year 2020, the relative indicator of the year-on-year change in E U government
revenues increased (27 countries). The year-on-year aggregate change represents an average
increase in revenues of 0.4% of GDP compared to 2019 and is more than double the ten-year
average. Comparing the ten-year average of the year-on-year change in general government
revenue with 2020, we find that several countries show a higher year-on-year increase in 2020
than their ten-year average. We identified the highest year-on-year increase in general
government revenue in the pandemic year 2020 in the case of Spain (+ 2.1 % of GDP) and Greece
(+ 2.0% of GDP). The highest year-on-year decline in revenues in 2020 compared to the average
for 2009-2019 is recorded by general government revenues in Ireland (-1.7% of GDP), Finland
and Luxembourg (both -1% of GDP).
If we look at the difference between the ten-year year-on-year average and the year-on-year
change in 2019/2020, we find that most E U member states show a year-on-year increase in
general government revenue in 2020. This increase is particularly evident in Spain (+ 1.68% of
GDP) and Estonia (1.64% of GDP). A comparison of the ten-year average of year-on-year
changes in general government revenues with the change in this quantity in 2020 also gives us
82
information that a total of 11 E U countries have recorded a decline in revenues. This situation
was most pronounced in the decline in general government revenue in Finland (-1.06% of GDP)
and Cyprus (-1.05% of GDP).
Average general government expenditure in the E U countries during the years 2009-2019,
expressed in relation to GDP, usually decreases year-on-year. Across the EU, the average yearon-year
change in general government expenditure is declining by -0.4% of GDP. During 2009-
2019, general government in Ireland recorded the most progressive expenditure cuts, falling by
-2.25% of GDP on average year-on-year. Lithuania also shows a year-on-year average decline
in general government expenditure of more than 1%. We identified the lowest average year-onyear
decline in government expenditure in the case of France (-0.18% of GDP) and Finland (-
0.09% of GDP). Thus, these countries have the slowest average year-on-year decline in
government expenditure in the EU. As already mentioned, all E U countries are experiencing a
long-term average year-on-year decline in general government expenditure as a share of GDP.
The year-on-year change in the level of general government expenditure in E U countries between
2019 and 2020 completely reversed the long-term trend. In the pandemic year 2020, the year-onyear
change in general government expenditure of all E U member states was in positive numbers
and showed a sharp increase. The result is also an average year-on-year increase in general
government expenditure in the EU, which rose by 6.8% of GDP. The highest year-on-year
increases in general government expenditure in 2020 were 12.8% of GDP (Greece) and 10.2%
of GDP (Spain). On the other side were Ireland, Sweden and Finland, whose expenditure on the
report of the report increased by only 3.5% and 3.8% of GDP year-on-year in 2020.
The differences in the average long-term year-on-year level (trend) of general government
expenditure during 2009-2019 and the year-on-year change during 2020 are marked and
antagonistic. The long-term trend of year-on-year changes tended to decline gradually. The yearon-year
change in 2020 completely reversed this trend and general government expenditures in
E U countries increased year-on-year from 3.5% to 12.8% of GDP. When comparing the longterm
development of the year-on-year change in expenditure and the year-on-year change in
2020, we identified the highest increase in expenditure, expressed in the country's GDP, in the
case of Greece (+ 12.18% of GDP compared to the long-term average). More than eight percent
of the long-term year-on-year average and the year-on-year change in 2020 were achieved by
general government in Spain, Italy, Malta, Austria and Slovenia.
The last monitored relative indicator is indebtedness. During the years 2009-2019, the general
government of the E U Member States achieved on average a year-on-year increase in debt of
0.18% of GDP. The long-term development trends of year-on-year changes in indebtedness
divided E U countries into two camps. One group of E U countries (11) reduced its debt on average
between 2009 and 2019. In these countries, general government debt is declining year-on-year,
from -0.21% of GDP (Belgium) to -2.43% of GDP (Malta). For the rest of the E U countries (16),
public debt is increasing year-on-year in the long term 2009-2019. The average year-on-year
increase in government debt in these countries ranges from 0.18% of GDP to 5.38% of GDP.
The highest year-on-year increase in indebtedness was achieved by general government in
Greece, Spain, Cyprus and Slovenia.
In 2020, all E U member states recorded a sharp year-on-year increase in general government
debt. This increase for the whole of the E U represents an increase in general government debt by
13.2% of GDP year-on-year. The change in general government debt in 2020 represents a yearon-year
increase of 25.1% of GDP in Greece, 24.5% of GDP in Spain and 24.2% of GDP in
Cyprus. The lowest year-on-year increase in general government debt in 2020 was achieved by
Ireland and Luxembourg. General government in both countries achieved a year-on-year increase
in debt below 3% of GDP.
83
The long-term development trend of year-on-year changes in general government debt in E U
countries was in the range of <-2.43% in 2009-2019; 5.38%> GDP. The year 2020 brought a
significant year-on-year increase in debt to many general governments in E U countries, up to
25.1% of GDP. The highest year-on-year increase in indebtedness in 2020 compared to the longterm
average was achieved by general government in Spain in Cyprus (just above 20% of GDP)
and in Greece and Italy (above 19% of GDP).
We supplement the informative value of relative indicators of the year-on-year change in
revenue, expenditure and debt to their absolute amount. Thanks to this, we are able to complete
the mosaic of the effects of the pandemic on public finances in E U countries. In several areas,
they serve us better than a relative indicator because they are not linked to fluctuating GDP.
Absolute height of monitored areas in mil. € clearly captures the financial side of the observed
changes.
Table 2 - Absolute year-on-year change in general government financial indicators in EU
countries 2009-2020 (mil. €)
Revenue Expenditure Debt
Average Change Average Change Average Change
2009-2019 2019/2020 2009-2019 2019/2020 2009-2019 2019/2020
European
Union (27)
171 846,9 -248 985,5 115 561,65 600 470,1 282 112,7 1 239 949,8
Belgium 6 838,5 -10 770,8 5 864,74 22 468,0 11 994,8 47 792,9
Bulgaria 1 038,1 365,1 755,84 3 747,3 726,8 2 807,8
Czechia 3 505,5 -4 985,9 2 626,44 8 862,4 1 865,5 13 565,6
Denmark 4 207,1 -239,7 2 298,17 14 256,9 1 116,0 27 739,1
Germany 50 876,3 -47 604,0 37 924,0 144 482,0 26 841,4 267 835,8
Estonia 479,6 -37,8 446,49 1 315,5 134,9 2 580,7
Ireland 3 218,8 -3 604,1 759,94 16 227,7 9 953,8 13 934,2
Greece -262,4 -5 349,0 -4 070,4 12 880,0 3 001,1 9 950,0
Spain 11402,5 -24 487,0 2 908,6 62 948,0 61 928,5 156 750,0
France 30 680,3 -63 122,0 24 257,4 73 642,0 77 152,0 270 613,4
Croatia 632,1 -2 063,0 336,32 1 746,5 1 729,6 4 282,2
Italy 11 772,4 -53 743,0 6 485,3 75 216,0 57 070,9 163 444,0
Cyprus 232,9 -652,3 98,75 867,2 1 081,9 3 870,7
Latvia 478,9 -50,1 315,49 1 104,9 433,5 1 503,3
Lithuania 748,6 490,3 480,94 4 312,8 999,5 5 536,6
Luxembourg 1 179,2 -347,7 1 020,38 3 776,7 800,7 1 963,8
Hungary 2 040,9 -4 601,7 1 895,2 3 378,2 1 763,1 11 389,3
Malta 267,9 -378,1 243,09 972,1 155,0 1 257,2
Netherlands 8 999,9 -4 548,0 4 371,9 42 863,0 3 971,8 40 261,0
Austria 5 487,4 -11 316,6 3 709,8 24 351,5 5 032,6 34 819,3
Poland 9 950,1 -1 062,7 8 018,43 31 621,2 7 910,3 47 265,9
Portugal 2 038,0 -4 574,8 288,5 7 103,3 9 596,4 20 514,2
Romania 3 304,0 1 286,0 3 143,94 11 720,1 5 079,3 24 442,9
Slovenia 537,2 -986,6 305,69 3 113,7 1 922,7 5 684,3
Slovakia 1 557,8 -707,7 1 160,29 3 652,4 2 196,9 9 905,5
Finland 3 172,5 -3 844,0 2 948,9 6 801,0 6 739,2 21 392,0
Sweden 7 462,9 -1 114,6 6 967,51 15 714,9 3 581,5 28 170,7
Source: own processing based on Eurostat (2021)
The absolute average year-on-year change in the revenue of all E U countries during the years
2009-2019 represented an increase of 171.8 billion. € per year. It is therefore not surprising that,
84
with one objective exception (Greece), all Member States increased their government revenues
year-on-year. The highest long-term average year-on-year increase in revenue is clearly recorded
in general government in Germany. During the years 2019-2019, the general government in
Germany increased its revenues by an average of 50.8 billion year-on-year. €. The general
government in France follows with a significant gap, with an average year-on-year increase in
revenues of more than 30 billion. € and the Italian general government with a year-on-year
increase in revenues of 11.7 billion. €. In the long run, the average year-on-year increase in
general government revenue is lowest in Malta (€ 267 million) and Cyprus (€ 232). The only E U
country that did not record an increase in the average year-on-year increase in general
government revenue in 2009-2019 was Greece. The Greek government reported the only decline
in the average year-on-year change in revenue during this period. Over the period under review,
general government revenue in Greece decreased by 262 mil. €.
The long-term trend of increasing general government revenues in E U countries was
significantly weakened in 2020. The initial signal can be seen in the E U aggregate data, when
general government revenues in the E U fell by more than 248 billion year-on-year. €. A more
detailed analysis of the year-on-year changes is found in the finding that general government in
only three E U countries (Bulgaria, Lithuania and Romania) maintained a positive revenue growth
in 2020 as well. However, all three countries saw a significant decline in average long-term yearon-year
growth, which was 65% lower in Bulgaria, 35% lower in Lithuania and 61% lower in
Romania. In contrast to these three countries, which also recorded a positive year-on-year
increase in general government revenue in 2020, are other E U countries, which recorded a yearon-year
decline in general government revenue in 2020. France has the strongest year-on-year
decline in general government revenue (€ -63 billion). Italy (€ -53 billion) and Germany (€ -47
billion). Logically, smaller E U countries, including Estonia, Latvia and Malta, achieved the
smallest absolute year-on-year decline in government revenue.
The year-on-year change in the level of government revenue in E U countries in 2020 was indeed
dramatic and reversed the long-term trend of year-on-year revenue growth. The year-on-year
decline in revenue in 2020 compared with the long-term average was most pronounced for
general government in Germany (€ -98 billion), France (€ -93 billion) and Italy (€ -65 billion).
Year-on-year decrease in general government revenues in 2020 compared to the long-term value
of the year-on-year change by less than one billion € was recorded by general government mainly
of smaller E U countries: Malta, Cyprus, Latvia, Lithuania, Bulgaria and Estonia.
Aggregate general government expenditures in the E U show a year-on-year increase of 115
billion € in the time horizon 2009-2019. €. General government of all E U member states increase
their expenditures year-on-year on average in the long run, with the exception of Greece. Clearly,
the highest average year-on-year increase in general government expenditure was achieved in
Germany, where expenditure increased by an average of 37 billion € year-on-year. €. France is
also a very progressive long-term average year-on-year increase in expenditure (€ 24 billion). By
far the smallest average year-on-year increase in general government expenditure is in the case
of Cyprus (€ 98 million), Malta (€ 243 million) and Portugal (€ 288 million).
The year 2020 also had a significant impact on the absolute value of general government
expenditure in all E U countries. The aggregate data for the whole E U also told us about it, where
general government expenditures increased by more than 600 billion year-on-year. €. This means
a more than fivefold increase in the average values of the year-on-year change during the years
2009-2019. In absolute terms, general government expenditure increased the most in 2020 in
Germany (€ 144 billion), Italy (€ 75 billion) and France (€ 73 billion). Malta and Cyprus achieved
the lowest year-on-year increase in general government expenditure in 2020.
The year-on-year change in general government expenditure in 2020 in all E U countries meant
a sharp increase in expenditure, which is many times higher than the gradual long-term rate of
85
increase in expenditure. By comparing the year-on-year change in the amount of absolute
expenditure in 2020 with the long-term average, we find that the highest difference is shown by
general government in the largest European countries (Germany, Italy, Spain and France). The
lowest year-on-year increase in 2020 compared to the long-term average year-on-year growth of
general government expenditure was achieved by general government in Latvia, Cyprus and
Malta, where the difference was in the range of 729 mil. € - 789 mil. €.
The last monitored indicator of absolute values was general government debt. E U government
aggregate debt tended to grow during 2009-2019. Year-on-year, aggregate debt increased by 282
€ billion on average. €. None of the E U countries showed an average year-on-year decline in
general government debt in the long run. In 2009-2019, general government debt grew the most
year-on-year in France (€ 77 billion), Spain (€ 61 billion) and Italy (€ 57 billion). The average
year-on-year increase in general government debt in the case of Malta was 155 mil. € and Estonia
134 mil. € and is the lowest among all E U countries.
During 2020, these long-term averages increased several times in all E U countries. Aggregate
general government debt in the E U in 2020 increased by € 1.2 trillion year-on-year. The largest
contributors to this marked year-on-year increase are government debt increases in France (€ 270
billion), Germany (€ 267 billion), Italy (€ 163 billion) and Spain (€ 156 billion). These four
countries account for almost 70% of the year-on-year increase in government debt in the EU.
The year-on-year increase in debt in 2020 was kept below € 2 billion by general government in
Latvia, Luxembourg and Malta.
Public finances in E U countries went through a difficult test during 2020. The year-on-year
change in revenues, expenditures and indebtedness in relation to GDP indicates a deteriorating
situation. On the one hand, we see, with few exceptions, a general slight increase in revenue. On
the other hand, there has been a significant increase in general government expenditure in E U
countries and a marked increase in indebtedness. However, in the case of relative indicators
expressed in relation to GDP, the variable of GDP itself should not be forgotten. The volatility
of GDP and the related fluctuations in the economies of individual countries must be perceived
very sensitively and cautiously. A more significant drop in GDP than we experienced in 2020
may distort the real year-on-year changes in general government revenue, expenditure and
indebtedness expressed in relation to the GDP ratio. At the same time, however, we add that it is
these relative indicators that are used quite extensively for comparative analyzes between
heterogeneous groups of countries, as is the case in the EU.
Absolute indicators help us to better and more accurately identify the development trends of
general government revenues, expenditures and debt in E U countries. The capture of absolute
values abstractes from possible distortions due to the dynamic development of GDP. Thanks to
this, we were able to clearly confirm and specify the long-term year-on-year development trends
of general government revenues, expenditures and debt.
In the area of general government revenues in E U countries during 2020, we recorded a
significant year-on-year decline and a decrease in financial resources compared to the long-term
average. The exceptions are three countries (Bulgaria, Latvia and Romania), which were able to
increase the revenues of their general government even during the COVID-19 pandemic. The
general decline in government revenues in 2020 is largely linked to the effects of the COVID-19
pandemic on the economies of individual E U countries. During the pandemic, there was a decline
in GDP, an increase in unemployment, a deferral and reduction of tax liability, the granting of
exemptions and deferrals in levies and fees, and other measures, which were reflected in
declining government revenues.
The economic situation deteriorated in 2020, which is why E U governments have gradually
increased public spending in order to stabilize and revitalize national economies. This
86
corresponds to the sharp year-on-year increase in expenditure in 2020 compared to the previous
long-term trend of only a gradual increase in expenditure. If we understand the long-term average
of the year-on-year change in expenditures and debt as a constant by which expenditures and
debt are to increase each year, we will find several significant results by comparing it with the
real year-on-year change in 2020. The first logical result is that the largest E U countries have
pumped the most funds into their economies through absolute public spending. Another very
important finding is the identification of countries that have exceeded the long-term rate of yearon-year
growth in general government expenditure to the greatest extent. Portugal, Spain and
Ireland have emerged as the countries that have most increased their long-term year-on-year
increase in expenditure and increased it by more than 2 000% year-on-year in 2020. On the other
side are the Nordic countries (Finland, Sweden) and Hungary, where the year-on-year increase
in general government expenditure was only about 211% higher than the long-term average
change. This is not an increase in total general government expenditure, but an increase in the
year-on-year growth rate of expenditure compared to the 2009-2019 average.
During the years 2009-2019, we recorded an average positive increase in general government
debt in all E U countries, the amount of which varies. The year 2020 also brought a change in the
amount of public debt of E U general government. In the observed period, general government
debt in E U countries never grew as progressively year-on-year as in 2020. A comparison of the
long-term value of the year-on-year change in debt and the year-on-year change in 2020 shows
a sharp increase in debt in all countries. The countries that, in the long run, are among the more
responsible members of the E U in terms of indebtedness, debt and both year-on-year debt growth
exceeded the average year-on-year growth of general government debt the most. Compared to
the long-term average rate of debt growth, in 2020 the general government of Denmark shows
a year-on-year increase of 2485% and the general government of Estonia an increase of 1912%.
During 2020, year-on-year general government debt recorded the lowest increase in Ireland (+
40%) compared to the long-term average.
General governments in Spain, Portugal and Ireland, on the other hand, are characterized by the
highest year-on-year percentage increase in spending among E U countries in 2020 compared to
the long-term development trend. This group of countries shows a more than 20-fold increase in
the year-on-year increase in general government expenditure in 2020 compared to the average
during 2009-2019. However, this sharp increase does not concern the increase in the year-onyear
value of debt, which is rather among the lower ones within the E U countries. For most E U
countries, they recorded a year-on-year increase in government debt of 520% and government
expenditure of 440% in 2020 compared to the long-term average for 2009-2019. At the same
time, a situation is created where countries with a higher difference in the year-on-year change
(difference between 2020 and the long-term average) of general government expenditure show,
in principle, a lower difference between similar values in the case of debt. The causality of these
variables indicates a weaker indirect relationship.
The relative average indicator of the year-on-year change in general government revenue in E U
countries indicates a slight increase in revenue in most countries (20) over the long term. The
year-on-year change in revenue, expressed in relation to GDP, in the pandemic year 2020, did
not automatically mean a general and frontal decline in general government revenue in E U
countries. Although the number of countries (10) where general government revenue fell yearon-year
compared to the long-term average increased, paradoxically, in most countries (17),
general government revenue increased year-on-year. We could look for an answer to such a
paradoxical development of revenues, especially with regard to the significant decline in GDP,
from which the relative level of all the relative indicators we have chosen is subsequently
derived.
87
The long-term development of the year-on-year relative change in expenditure shows a
permanent decline in all countries. On average, general government expenditure in E U member
states decreased by 0.4% of GDP year-on-year between 2009 and 2019. The year-on-year change
in expenditures in 2020 had the opposite direction, when all 27 E U countries sharply increased
their general government expenditures from 3.5% to 12.8% of GDP.
During 2009-2019, E U general government recorded a positive year-on-year increase in debt of
0.18% of GDP. A total of 11 countries were able to reduce their indebtedness year-on-year in
this period, and in the case of the other 16 we recorded a slight year-on-year increase in general
government debt to a maximum of 5.38% of GDP. In 2020, general governments in all E U
countries showed a significant and leap year-on-year increase in their indebtedness. The
maximum value of the year-on-year change in 2020 was approximately 5 times higher than the
long-term average.
The year-on-year average change in the level of general government revenue in the E U countries
from 2009 to 2019 showed a permanent increase in absolute terms. The only exception was
Greece, which implemented a comprehensive reform program of its public finances during this
period. In 2020, the entire general government in the E U recorded a year-on-year decrease in
revenues of up to almost C Z K 250 billion. €. A significant year-on-year decline in government
revenues affected all E U countries, without exception. Only three countries (Bulgaria, Lithuania
and Romania) continued to show a positive year-on-year increase in government revenue in
2020.
The absolute indicator of the long-term year-on-year change in expenditure indicates a growth
trend in all E U countries, with the exception of Greece. The average long-term year-on-year
increase in expenditures is from 305 mil. € up to 37.9 billion €. This gradual development trend
increased markedly in 2020. All E U countries showed a markedly increased year-on-year change
in general government expenditure. On average, it increased year-on-year by more than 5 times
the long-term year-on-year average.
The level of the average year-on-year change in general government debt indicates to us that no
E U country has managed to reduce its absolute debt in the long run. In the period 2009-2019, all
E U countries achieved a positive increase in the debt of their general government. General
government in the E U borrowed at a rate of 282 billion. € year-on-year. The year 2020
significantly increased this pace. Compared to the long-term average of the year-on-year change
in debt and the year-on-year change in debt in 2020, it appears that in 2020 the year-on-year
increase in debt increased several times. The highest year-on-year increase compared to the
average was at the level of 24 times (Denmark).
4 Conclusion
The aim of our paper was to analyze long-term development trends and year-on-year changes in
public finances (revenues, expenditures, debt) in E U countries since 2009 and compare them
with the year-on-year change brought by the pandemic year 2020. We focused first on relative
indicators (% GDP) and then to absolute indicators (million €). In the case of the relative
indicator of the year-on-year change in general government expenditure, we found that the
general long-term year-on-year development trend (decline) reversed in 2020. In 2020, there was
a sharp year-on-year increase in spending in all countries and growth. Also in the case of
indebtedness, we can state that in 2020 there is a year-on-year increase in all E U countries.
We obtained clearer results by analyzing absolute indicators. In all E U general governments,
except Greece, we recorded an absolute average long-term year-on-year increase in revenue in
2009-2019. However, the year 2020 brought with it the neglect of this development trend. Yearon-year,
general government revenues fell sharply in all E U countries, except Bulgaria, Lithuania
88
and Romania. In the long term, general governments in the E U countries, with the exception of
Greece, are increasing their expenditures every year and gaining a growth trend in 2009-2019.
This gradual increase was inflated in 2020. Year-on-year, general governments across the E U
achieved a jump (on average 5 times higher) increase in the volume of their general government
expenditures compared to the amount of the long-term average year-on-year increase. In the
period 2009-2019, all E U countries achieved a positive increase in the debt of their general
government. This trend was further intensified in 2020 and is again jumping sharply from the
long-term average.
Acknowledgements
This paper is based on the K E G A project: K E G A 001 UCM-4/2019 - Dynamics of Public
Administration Transformation in the Slovak Republic.
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Contact information
PhDr. Lukáš Cíbik, PhD.
University of St. Cyril and Methodius in Trnava, Faculty of Social Studies, Department of Public
Administration
Bučianska 4/A, 917 01 Trnava, Slovak Republic
E-mail: lukas.cibik@ucm.sk
doc. Ing. Dušan Guťan, PhD.
University of St. Cyril and Methodius in Trnava, Faculty of Social Studies, Department of Public
Administration
Bučianska 4/A, 917 01 Trnava, Slovak Republic
E-mail: dusan.gutan@ucm.sk
90
Gender and Expenditure Structure of Slovak Local Governments
Tomáš Černěnko
Abstract: Women represent more than half of the population of Slovakia. We are therefore
interested in the extent to which their needs are reflected in the public space in the production of
public services. As a large part of public everyday consumption services is produced locally, we
will focus our paper on the local government units. The aim of our paper is to find out whether
the structure of expenditures is changing together with the level of representation of women in
the local council or in the position of mayor. To do so, we use a regression analysis of selected
groups of local government expenditures (expressed through the COFOG classification). At the
same time, we wanted to find out whether the level of representation of women in local councils
differs across Slovakia and, if so, in what way. The results show that the representation of women
in local councils is not the same across Slovakia. Likewise, we were not able to prove the
influence of the number of women in elected positions on the structure of local government
expenditures in Slovakia. One of main reasons could be the fragmented administrative structure
of the Slovak Republic.
Keywords: COFOG, gender, local government expenditures, sensitive budgeting
JEL Classification: H l l , H72, H75
1 Introduction
Women represent more than half of the population of Slovakia, but their representation in politics
is significantly lower. According to the U N (2019), the representation of women in the National
Council of the Slovak Republic (Parliament) is 20% (30 seats out of 150) and in the case of
ministerial positions 35.7% (5 seats out of 14).
The aim of our paper is not to analyse the reasons why do women actively participate in public
space to a lesser extent than men and to propose solutions to increase this participation. The aim
of our paper is to find out whether the higher representation of women in public space (elected
positions in local governments) leads to a change in the structure of public services offered. At
the same time, we will examine whether there are differences in the representation of women at
the local level across Slovakia.
Since most of daily consumption public services are produced locally, we will focus on services
produced by local governments. The volume of services produced will be measured by the size
of expenditure per capita to areas specified through the Classification of Functional Expenditure
(COFOG). For our research, we choose services that affect women the most - safety, care for
children and other family members, health, environment, and social affairs. The investigated
areas were chosen based on following research.
Sátre (2014), on the example of Russia, shows the contribution of women politicians at the local
level in addressing local development issues, especially in areas focused on social welfare. In the
case of Russia (and post-communist countries), we can also see the historical involvement of
women in politics, especially in the areas of family (social policy), education, culture, tourism.
Specific in the case of Russia is the strengthening of women's entrepreneurial skills (in politics)
caused by insufficient state support for the sectors they manage. To be able to ensure the
functioning of the authorities and policies entrusted to them, they had to learn to turn any income
into useful necessities. A study by Baskaran and Hessami (2019) on the example of Bavarian
municipalities shows that if there were more women in the local council, the supply of places in
91
kindergartens (child spots) grew faster than in local governments with a lower representation of
women. The share of the topic of "child care" in council meetings has also increased. The study
of the influence of women on decisions about the provision of public services through budgets
was carried out by Cuadrado-Ballesteros, Guillamon and Rios (2021) on a sample of 140 local
governments in the period 2008-2018. They found that "municipalities with women mayors and
morefemale members tend to overestimate revenues and underestimate expenditures; but these
effects turn contrary when the number of female councillors increases, resulting in a better
financial situation. Then, we may conclude that women could contribute to the financial health
of local governments once they have enough representation". As Hessami and Lopes da Fonseca
(2020) states in their review article on women and their impact on policymaking, the higher
participation of women in politics is reflected in greater support for redistributive policies and
thus the provision of more public services and goods. These focus on industries such as health,
the environment, defence spending, and welfare policy. Drage (2001) comes to similar
conclusions, adding education and social implications of policies. In the context of the
expenditure structure, the influence of women Baltrunaite, Casarico, Profeta and Savio (2019)
was examined in Italy. However, they found that increasing the proportion of women in the
council does not change the structure of expenditure. Jung (2021) worked on similar results,
examining the influence of the mayor's gender on the expenditure structure using the example of
South Korea. He also concluded that the gender of the mayor does not affect the structure of
expenditures. However, he sees the reasons mainly (1) in other demands of the median voter to
contribute to the re-election of the mayor, (2) the adoption of male attitudes is "more successful"
and more politically effective, and (3) the topics are determined by the needs of the local
government unit or party. Another explanation could be the findings of the already mentioned
Baskaran & Hessami (2019), who rather talk about the influence of women on the content of
politics.
Elomaki and Ylostalo (2021) show in the example of Finland that gender budgeting itself,
without the necessary broader concept - feminist economic expertise - reduces it to a purely
technical process, without higher added value. Said with their own words: „such an approach
leaves very little room for feminist economic knowledge to raise awareness of the gendered
impacts of economic policies and challenge the gender biases of macroeconomic policy ".
2 Material and Methods
As mentioned above, the aim of our paper is to find out whether the structure of local government
expenditures is changing along with the level of representation of women in the municipal
council or in the position of mayor or mayor. At the same time, we want to find out whether the
level of representation of women in local councils differs across Slovakia and, if so, in what way.
2.1 Methods and Model
To answer the question of how the level of representation of women in local parliaments changes
across Slovakia, we decided on regression analysis and the use of a standard regression model:
y =P0+P1x1 + p2 x2+(33 x3+ e (1)
Where:
• y was represented by the share of women in local council
• /?0 represented the constant value,
• represented the gender of the mayor
• x 2 represented the region of the local government
• x 3 represented the size category of the local government
92
As in the previous case, we decided to use a standard regression model to determine the influence
of women on the structure of local government expenditures:
y = ß0+ßix1 + ß2 x2+ß3 x3 + ß4x4+ e (2)
Where:
y was represented by the expenditure category1
(see chapter Data)
/?0 represented the constant value,
xt represented the gender of the mayor
x2 represented the share of women in local council
x3 represented the region of the local government
x 4 represented the size category of the local government
The identification of women in local councils and as mayors took place as follows. The female
gender was assigned to elected candidates whose first name ends in "a" and the last name to "a".
The chosen method of identifying the candidate's gender has shortcomings in the fact that more
and more often women after marriage keep their male surname in a form (suffix "-ova"), nor
does it recognize women with foreign names, or foreigners or members of national minorities.
Table 1 - Indexes of local government size groups and regions
Indexes of local government size
categories
Index No. population
1 up to 250
2 251-500
3 501-1000
4 1001-2000
5 2001-3000
6 3001-4000
7 4001-5000
8 5001-10000
9 10001-20000
10 20001-50000
11 50001-100000
12 more than 100001
Indexes of regions
Index No. region
1 Bratislava (Bratislavský)
2 Trnava (Trnavský)
3 Trenčín (Trenčiansky)
4 Nitra (Nitriansky)
5 Žilina (Žilinský)
6 Banská Bystrica (Banskobystrický)
7 Prešov (Prešovský)
8 Košice (Košický)
Source: author
2.2 Data
Data on mayors as well as representatives elected in the 2018 municipal elections come from the
website of the Statistical Office of the Slovak Republic. In the case of election of mayors and
mayors, results are available for 2906 cities, communes, or city districts. In the case of elected
deputies, candidate lists are available for 2929 municipalities and city districts. The difference is
due to the absence of candidates for mayor in several municipalities. Due to the design of the
model, the election of the mayor is a necessary condition. As a result, the final sample after the
1
For our research, we choose services that affect women the most - safety, care for children and
other family members, health, environment, and social affairs. The investigated areas were
chosen based on research mentioned in Chapter 1.
93
clean-up of the city districts of Bratislava and Kosice and municipalities that did not have an
elected mayor in the regular municipal elections in 2018 represents 2862 cities and communes.
Expenditures used for the analysis: (according to COFOG classification)
• 0111 Executive and legislative organs, 0310 Police services, 05 Environmental
protection, 06 Housing and community amenities, 07 Health, 08 Recreation, culture,
and religion, 0911 Pre-primary education, 0912 Primary education, 09 Education, 1020
Old age, 1040 Family and children, 1070 Social exclusion and 10 Social protection.
Data on expenditures of local governments for the year 2019 come from the Budget Information
System of Ministry of Finance of the Slovak Republic.
3 Results
Our first goal was to find out how the representation of women in local councils is changing
across Slovakia. Based on the results of the regression analysis presented in the table below, we
can see that the level of representation of women in local councils varies with the region and the
size of the municipality.
Table 2 - Women in local councils - Model 1 regression results
Source SS df MS Number of obs = 2,862
F(19,2842) = 9.60
Model 62247.1936 19 3276.16808 Prob > F = 0.0000
Residual 970315.255 2,842 341.419864 R-squared = 0.0603
Adj R-squared = 0.0540
Total 1032562.45 2,861 360.909629 Root MSE = 18.478
zast_100 Coef. Std. Err. t P>|t| [95% Conf. Interval]
mayor_g
M -5.762176 .8214417 -7.01 0.000 -7.372858 -4.151494
regio_codes
Trnavský -1.923399 2.498881 -0.77 0.442 -6.823203 2.976404
Nitriansky -1.161185 2.425962 -0.48 0.632 -5.91801 3.595639
Trenčiansky .1839176 2.485553 0.07 0.941 -4.689752 5.057587
Žilinský -1.827276 2.445587 -0.75 0.455 -6.622581 2.968028
Banskobystrický .293322 2.389299 0.12 0.902 -4.391613 4.978257
Prešovský -7.923244 2.355492 -3.36 0.001 -12.54189 -3.304598
Košický -2.949025 2.397433 -1.23 0.219 -7.64991 1.751859
size_cat
2 -5.636138 1.128785 -4.99 0.000 -7.849459 -3.422817
3 -6.052335 1.087361 -5.57 0.000 -8.18443 -3.920239
4 -6.79242 1.178465 -5.76 0.000 -9.103154 -4.481687
5 -5.681247 1.619883 -3.51 0.000 -8.857511 -2.504982
6 -8.438721 2.312847 -3.65 0.000 -12.97375 -3.903692
7 -5.875465 3.100885 -1.89 0.058 -11.95568 .204747
8 -7.184856 2.505736 -2.87 0.004 -12.0981 -2.27161
9 -9.70192 3.291821 -2.95 0.003 -16.15652 -3.247321
10 -11.04246 3.608192 -3.06 0.002 -18.1174 -3.967524
11 -8.377654 6.594327 -1.27 0.204 -21.3078 4.552497
12 -10.59192 13.15086 -0.81 0.421 -36.37812 15.19428
_cons 37.25951 2.467791 15.10 0.000 32.42066 42.09835
Source: author
94
The influence of the region is statistically significant only in the case of the Prešov region. In
this region, compared to the local governments of the Bratislava Region, the representation of
women in the council is 7.9% lower than in a comparatively large local government in the
Bratislava Region. It is surprising that the influence of the size of the local government has an
opposite direction as assumed and thus that the level of representation of women in councils
decreases with the size of the local government. In the case of our model, this happens at a
statistically significant level in local governments in the size categories from 0 to 50,000
inhabitants, except for local governments in the size category from 4,000 to 5,000 inhabitants.
The R 2
value of the model thus conceived was 6.03%.
The second question we were looking for was whether the structure of local government
spending was influenced by women in the form of a female mayor or a higher level of
representation in the local council. The results of the regression (Model 2) presented in Table 3
(below) show that the influence of women on the structure of local government expenditures did
not prove to be statistically significant in any of the 13 categories examined. Compared to the
previous model, the significance value measured by R 2
increased significantly in this case in
almost all cases (12 out of 13 cases).
COFOG 0111 Executive and legislative organs
In the case of expenditures on Executive and legislative bodies, we can imagine expenditures on
the operation of local government offices and thus the costs of ensuring the existence of the office
in general. The results of the regression showed a significant impact of size as well as regional
affiliation on the final amount of expenditure. The expected impact of the "female factor" on the
redirection of expenditure to areas (policies) other than the operation of the office has not been
confirmed.
COFOG 0310 Police services
The police services were chosen because of the higher perception of the threat by women. As in
the previous case, the influence of size and space proved to be significant.
COFOG 05 Environmental protection
Expenditures registered in the Environmental Protection category depend, similarly to the
previous two groups, primarily on the size of the local government that provides this service and
the region where these services are provided.
COFOG 06 Housing and community amenities
Compared to the previous categories, the influence of the region in the category of housing
expenditures weakened. From the point of view of the size of the local government, statistical
significance manifests itself from the size of 501 inhabitants.
95
Table 3 - The influence of women on the structure of local government spending (Model 2
regression results)
COFOG_ COFOG_ COFO COFO COFO COFO COFOG_ COFOG_ COFO COFOG_ COFOG_ COFOG_ COFO
0111 0310 G_05 G_06 G_07 G_08 0911 0912 G_09 1020 1040 1070 G J O
b/se b/se b/se b/se b/se b/se b/se b/se b/se b/se b/se b/se b/se
F 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
(.) (•) (.) (.) (.) (.) (.) (.) (.) (.) (.) (.) (.)
M 0.218 -0.035 0.100 -0.131 0.009 0.080 -0.074 -0.018 -0.372 0.004 -0.003 -0.004 -0.017
(0.58) (0.03) (0.19) (0.24) (0.02) (0.24) (0.17) (0.16) (0.55) (0.13) (0.01) (0.02) (0.31)
size_cat=l 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
(.) (.) (.) (.) (.) (.) (.) (.) (.) (.) (.) (.) (.)
size_cat=2 0.674 -0.004 0.071 0.305 -0.000 0.21 1 0.349 0.200 1.020 0.01 1 0.015 0.046 0.754
(0.79) (0.04) (0.25) (0.33) (0.03) (0.32) (0.24) (0.22) (0.75) (0.18) (0.02) (0.03) (0.42)
size_cat=3 1.375 -0.004 0.265 0.699* 0.000 0.328 0.829*** 0.955***
3.082**
0.080 0.031 0.102*** 0.693
(0.76) (0.03) (0.24) (0.32) (0.03) (0.31) (0.23) (0.21) (0.72) (0.17) (0.02) (0.03) (0.41)
size_cat=4 2.641** -0.012
0.889** 1.300**
0.026 0.556 1.629*** 2.614***
8.445**
0.145 0.058** 0.192*** 0.721
(0.82) (0.04) (0.26) (0.35) (0.03) (0.34) (0.25) (0.23) (0.79) (0.18) (0.02) (0.03) (0.44)
size_cat=5 3.468** 0.044
2.112** 2.043**
0.052 1.259** 2.672*** 4.374***
14.447*
0.435 0.117*** 0.352*** 0.936
(1.13) (0.05) (0.36) (0.48) (0.04) (0.46) (0.34) (0.32) (1.08) (0.25) (0.03) (0.04) (0.60)
4.861** 0.206**
2.299** 3.227**
0.097 2.063** 6.310***
20.946*
0.755*
3.029**
size_cat=6 4.861** 0.206** 0.097 2.063** 4.227*** 6.310*** 0.755* 0.258*** 0.559+++
(1.61) (0.07) (0.52) (0.68) (0.06) (0.66) (0.49) (0.45) (1.54) (0.36) (0.04) (0.06) (0.86)
size_cat=7 6.990** 0.581***
4.490** 5.097**
0.080 2.500** 4.524*** 6.262***
24.515*
1.250** 0.200*** 0.500***
4.563**
(2.15) (0.10) (0.69) (0.91) (0.08) (0.88) (0.65) (0.60) (2.06) (0.48) (0.05) (0.08) (1.15)
size_cat=8
11.044**
1.363***
5.951** 8.907** 0.625** 5.268**
8.106*** 9.246***
41.804*
3.417*** 0.283*** 0.562***
4.856**
(1.74) (0.08) (0.56) (0.73) (0.07) (0.71) (0.53) (0.49) (1.66) (0.39) (0.04) (0.06) (0.93)
size_cat=9
21.076**
4.808***
12.296* 13.453*
0.281**
17.040* 19.147** 18.024** 87.010*
8.530*** 0.576*** 1.455***
11.359*
(2.29) (0.11) (0.74) (0.96) (0.09) (0.94) (0.69) (0.64) (2.18) (0.51) (0.05) (0.08) (1.22)
size_cat=l
0
36.331**
9.210***
23.298* 31.794*
0.306**
33.739* 33.335** 32.819** 156.708 16.260**
1.667*** 2.299***
21.150*
(2.51) (0.12) (0.81) (1.06) (0.10) (1.03) (0.76) (0.70) (2.39) (0.56) (0.06) (0.09) (1.34)
size cat=l
1
99.245** 24.382** 55.881-
**
53.134*
**
0.293
50.998* 85.864** 69.801** 358.678 46.494**
4.708*** 5.076***
60.873*
(4.58) (0.21) (1.47) (1.93) (0.18) (1.88) (1.39) (1.28) (4.37) (1.02) (0.1 1) (0.17) (2.44)
size_cat=l 678.712* 106.624* 370.183 228.653
0.038
323.951 183.632* 109.735* 719.356 129.027*
1.432***
27.351** 169.018
2 ** ** *** ***
0.038
*** ** ** *** **
1.432***
* ***
Bratislavsk
ý
(9.13) (0.42) (2.94) (3.85) (0.35) (3.75) (2.76) (2.56) (8.71) (2.04) (0.22) (0.33) (4.87)
Bratislavsk
ý
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Bratislavsk
ý
(.) (.) (0 (.) (.) (.) (0 (0 (.) (.) (.) (.) (0
Trnavský
7.706***
-0.207**
1.702**
-1.135 0.068
2.324**
0.868 0.818 3.425* -0.883* 0.058 0.168** -0.151
(1.74) (0.08) (0.56) (0.73) (0.07) (0.71) (0.53) (0.49) (1.66) (0.39) (0.04) (0.06) (0.93)
Nitriansky
7.392***
-0.117 -1.376* -0.567 0.132* 2.378** 0.810 1.008* 4.414** -1.034** 0.104** 0.245*** -0.836
(1.68) (0.08) (0.54) (0.71) (0.07) (0.69) (0.51) (0.47) (1.61) (0.38) (0.04) (0.06) (0.90)
Trcnčiansk
y 7.568***
-0.249**
1.697**
-1.268 0.062 2.649** 0.936 0.870 4.409** -1.118** 0.122** 0.206** -0.556
(1.73) (0.08) (0.56) (0.73) (0.07) (0.71) (0.52) (0.48) (1.65) (0.39) (0.04) (0.06) (0.92)
Žilinský
7.870***
-0.203**
1.785**
-1.495* 0.032 2.333** 1.181* 1.012*
5.427**
1.309***
0.116** 0.205*** -1.119
(1.70) (0.08) (0.55) (0.72) (0.07) (0.70) (0.51) (0.48) (1.62) (0.38) (0.04) (0.06) (0.91)
Banskobys
trický 7.723***
-0.227** 1.794** -1.409* 0.052 2.792** 0.870 1.357**
5.534**
1.244***
0.148*** 0.357*** -0.603
(1.66) (0.08) (0.53) (0.70) (0.06) (0.68) (0.50) (0.46) (1.58) (0.37) (0.04) (0.06) (0.89)
Prešovský'
7 477***
-0.221** 1.909** -1.007 0.075 2.680** 0.992* 1.699***
6.303**
1.219***
0.156*** 0.437*** -0.891
(1.64) (0.08) (0.53) (0.69) (0.06) (0.67) (0.50) (0.46) (1.56) (0.37) (0.04) (0.06) (0.87)
Košický'
8.382***
-0.211** 2.076** -1.726* 0.050 3.154** 1.173* 2.140***
6.917**
1.405***
0.160*** 0.411*** -1.219
(1.67) (0.08) (0.54) (0.70) (0.06) (0.68) (0.50) (0.47) (1.59) (0.37) (0.04) (0.06) (0.89)
zastJOO 0.006 0.000 -0.001 0.003 0.000 0.002 -0.001 -0.002 0.000 0.002 0.000 -0.000 -0.004
(0.01) (0.00) (0.00) (0.01) (0.00) (0.01) (0.00) (0.00) (0.01) (0.00) (0.00) (0.00) (0.01)
constant 8.190*** 0.230** 1.868** 1.366 -0.076
2.733**
-0.873 -1.423**
5.534**
1.163** Q 145, 0.344***
1.570
(1.78) (0.08) (0.57) (0.75) (0.07) (0.73) (0.54) (0.50) (1.70) (0.40) (0.04) (0.07) (0.95)
R-sqr 0.694 0.969 0.869 0.662 0.042 0.776 0.796 0.741 0.875 0.722 0.502 0.751 0.436
llti'CS 2841 2841 2841 2841 2841 2841 2841 2841 2841 2841 2841 2841 2841
BIC 22875.8 5252.7 16380.8 17930.0 4257.9 17772.6 16035.0 15589.7 22605.0 14301.8 1466.8 3952.3 19279.8
* p<0.05, ** p<0.01, *** p<0.001
Source: Author
COFOG 07 Health
Healthcare in our model (model 2) turned out the worst of all monitored expenditures. In almost
all examined categories, the size of the local government and the region appear to be statistically
significant factors, but in the case of health care expenditures it is not possible to identify any
significant formula that would help clarify the behaviour of municipalities in this area.
96
COOFOG 08 Recreation, culture, and religion
Like most of the monitored categories of expenditure, in the case of expenditure on Recreation,
culture and religion, the size of the local government and the region proved to be statistically
significant.
COFOG 0911 Pre-primary education, 0912 Primary education and 09 Education
Neither in the case of expenditure on education in general nor in the monitored sub-categories of
pre-primary and primary education there is no deviation from the already presented formula - the
size of the local government and region is statistically significant, but its importance weakens in
the direction from education in general to the pre-primary education.
COFOG 1020 Old age, 1040 Family and children, 1070 Social exclusion and 10 Social
protection
Even in the case of social services, we were unable to find a statistically significant effect of
female mayor on the size of expenditures. Expenditures on social protection are only beginning
to be statistically significant from size category 6, which represents municipalities with more
than 3,000 inhabitants. In this case, the influence of the region, as the only one of the monitored
categories of expenditures, did not prove to be statistically significant. A more detailed look at
the individual expenditures from class 10 social protection shows a different "onset" of the
statistical significance of the size of the municipality. The influence of the regions is statistically
significant in the remaining categories (1020, 1040 and 1070) except for one case.
4 Discussion and Conclusion
Despite the large sample of municipalities, we could not find evidence that the structure of
expenditures changes with a higher proportion of women in the council or female mayor (or that
the level of representation of women affects the amount of expenditures). This brings our results
closer to the findings of Baltrunaite, Casarico, Profeta & Savio (2019), which also failed to
demonstrate the impact of the increase in the proportion of women in the council on the land
structure of expenditures.
Unfortunately, due to the design of the research, we cannot confirm or refute whether the content
of individual policies has changed.
The significant influence of the size of the local government is thus partly surprising. In
combination with the statistically insignificant influence of the parameter for the composition of
the council or the attribute of the mayor, it shows that the determining indicator for the structure
(amount) of expenditures is the size and spatial attributes of the local government. This adds to
the claim (and the conclusion of Baskaran & Zohal (2019)) that increasing women's influence
on spending will be through a change in policy rather than the number of services offered.
Although in the case of Slovak local governments we have not been able to prove the influence
of women in local councils or female mayors on the structure of their expenditures, we cannot
say (due to the research design) that this is due to their (in) activity. It turns out that the influence
of the size of local government in the case of Slovakia is currently the most significant factor
that affects the structure of expenditures. The fragmented structure thus limits the policy's ability
to direct funds to the necessary areas.
A factor that deserves closer attention is the presence (or absence) of specific topics of local
politics, which most affect women or other parts of the population disproportionately represented
in local councils today.
97
If the Slovak local governments are to be a place that allows its inhabitants to realize their ideas
about the functioning of local relations, it must first have sufficient capacity and flexibility.
Without a significant change in the organization of local government and regulations affecting
public services (at the local level), it will not be possible to increase their impact on what is
happening in their environment.
Further research on gender (women) and local government budget could be focused on the
qualitative research already mentioned above - on the impact of women on policy content.
Another topic that should be addressed is the participation of women in (local) politics. In this
case, we are talking about the success of women in running for local councils or the factors that
affect their success (e.g., education, age, profession, size of the local government unit or the
socio-economic situation in the region).
Acknowledgements
This paper is supported by the grant APVV-19-0108 Innovations in the budgeting of local
governments in Slovakia from the Slovak Agency for Support of Science and Research.
References
[1] BALTRUNAITE, A., A. CASARICO, P. PROFETA and G. SAVIO (2019). Let the
voters choose women. Journal of Public Economics, 180.
[2] B A S K A R A N , T. and HESSAMI, Z. (2019) Competitively Elected Women as Policy
Makers. CESifo Working Paper Series 8005, CESifo. [online], [cit.2021-08-06].
Available: https://ideas.repec.Org/p/ces/ceswps/_8005.html
[3] CUADRADO-BALLESTEROS, B., GUILLAMÓN, M.D. and RÍOS, A. M . (2021).
Does gender matter in budget deviations? A n empirical assessment of Spanish local
governments. Public Management Review. DOI: 10.1080/14719037.2021.1912816
[4] MINISTRY OF FINANCE OF THE S L O V A K REPUBLIC (2021) Výdavky
miestnej samosprávy 2019. RISsam.
[5] DRAGE, J. (2001) Women in local government in Asia and the Pacific: a comparative
analysis of thirteen countries. UN. Economic and social commission for Asia and the
Pacific (UN. ESCAP)
[6] ELOMÁKI, A . and YLÓSTALO, H . (2021). Gender budgeting in the crossroad of
gender policy and public financial management: The Finnish case, Public Money &
Management, vol. 41(7), pp. 516-526, DOI: 10.1080/09540962.2021.1927528
[7] HESSAMI, Z. and LOPES D A FONSECA, M . (2020) Female Political
Representation and Substantive Effects on Policies: A Literature Review. IZA DP
No. 13125, Bonn, ISSN 2365-9793
[8] JUNG, H. (2021). The Effect of Mayoral Gender on Gendered Budget: Evidence from
South Korea. Political Studies Review, https://doi.org/10.1177/14789299211021517
[online], [cit.2021-10-14].
[9] SÁTRE, A. (2014). Women in Local Politics in Russia: Coping with Poverty and
Strategies for Development. Eastern European Countryside, vol. 20 (1) pp.27-53.
https://doi.org/10.2478/eec-2014-0002
[10] STATISTICAL OFFICE OF THE S L O V A K REPUBLIC (2018) Vol'by do orgánov
samosprávy obcí 2018 [online]. [cit.2018-11-16]. Available:
https://volby.statistics.sk/oso/oso2018/sk/download.html
98
[11] U N (2019) Women in Politics: 2019. U N Women Headquarters [online], [cit.2021-
08-06]. Available: https://www.unwomen.org/en/digital-
library/publications/2019/03/women-in-politics-2019-map
Contact information
Mgr. Ing. Tomáš Černěnko, PhD.
University of Economics in Bratislava, Faculty of National Economy, Department of Public
Administration and Regional Development
Dolnozemská cesta 1, 852 35 Bratislava, Slovak Republic
E-mail: tomas.cernenko@euba.sk
99
Assessment and forecasting of human resources potential in Ukraine
Olena Dymchenko, Olha Rudachenko, Valeriya Yesina, Iurii Tararuiev
Abstract: The experience of economically developed countries shows that one of the most
important factors of economic growth is the creation of conditions for increasing and
implementing human resources. The implementation of this task in the realities of Ukraine is
complicated by low motivation and migration of qualified personnel. The key condition for
solving these problems is the use of tools for assessing and forecasting the human resources
potential of Ukraine to determine promising areas of development in this area. A n integral
assessment of the human resources potential of Ukraine was carried out based on the use of trend
analysis and quantitative forecasting methods. Based on the results of the integrated assessment,
a rating is constructed that reflects the personnel potential of Ukraine by types of economic
activity of business entities. Applying the results of this paper allows to identify the most
promising industries in Ukraine and those that need to increase human resources to ensure their
accelerated development.
Keywords: Human resources potential, human resources potential forecasting integrated
assessment, trend analysis
JEL classification: C53, J21, 031, RIO
1 Introduction
In modern economic conditions, the relevance of problems related to the assessment of the
personnel potential of economic entities at different levels of the economy is growing. This is
due to the fact that in a broad sense, potential is a complex of opportunities of the economic
system, the implementation of which depends on the complex of knowledge, skills and abilities
of employees, which is known in the scientific literature as intellectual capital. The key feature
of human resources potential is that the capabilities of personnel are likely to be realized in the
future, which will ensure the gradual development of business entities.
Since human resources are used to refer to the opportunities of enterprises, industries, regions,
or the economy as a whole, these opportunities are usually quantified (which is why potential is
often associated with the most effective use of human resources in the strategic perspective).
This feature of human resources potential leads to the justification in the scientific literature of
scientific recommendations on ways to calculate the value of potential
Thus, on the one hand, the problems of assessing human resources potential are quite relevant,
and on the other hand, scientists have not developed yet a single coordinated approach to the
methods of such assessment. The problems of assessing and forecasting human resources are
particularly acute at the level of the national economy, since ensuring economic growth involves
improving the quality of management, but at the same time, there are not enough qualified
specialists in Ukraine due to their lack of motivation.
It should also be noted that the obtained indicators of integrated human resources assessment can
be used as a tool of public administration, as the evaluation results allow not only to identify
fields with low human resources, but also to develop effective measures for staff training,
working conditions and employee incentives which is extremely important for enterprises
belonging to the public sector of the economy.
In addition, the assessment of human resources makes it possible to identify the most perspective
sectors of the economy, which in turn creates a basis for their accelerated development with the
100
active participation of the state as a key investor. Using of the proposed methodology for
assessing human resources provides increased efficiency of resource utilization at the macro
level, which has a positive impact on the development of society and the functioning of state
institutions. The foregoing, in our opinion, determines the relevance of the topic of this
publication.
The relevance of problems related to the formation, assessment and forecasting of human
resources is confirmed in the publications of Ukrainian and foreign scientists. At the same time,
the term "human resources potential" is used precisely in the papers of Ukrainian researchers,
while their foreign colleagues use various analogues of this concept.
For example, Kwee Keong Choong's paper is devoted to the theoretical issues of defining and
classifying intellectual capital and summarizing experience in this field and does not contain
recommendations for estimating or predicting the value of intellectual capital. But the author
also systematizes the definition of related concepts (such as "goodwill" and "intangible assets")
and instead of his own definition of intellectual capital, he provides a list of its elements [1, p.
616]. V. Obedgiu considers Human Resource Management in a historical context, analyzing the
evolution of approaches to personnel management since the beginning of the twentieth century.
The author notes the growing role of employees in strategic management with the simultaneous
strengthening of control in large companies [2]. G. Martin-de Castro and co-authors conducted
a large-scale study [3], which is also devoted to the analysis of the evolution of scientists' views
on the essence of intellectual capital (the authors analyzed a significant number of publications
from 1990 to 2016, so according to the methods used, this paper is considered bibliometric and
does not aim to formulate their own scientific positions). Unlike the other authors mentioned by
N. Brennan, and B. Connell, consider in [4] the practical problem of evaluating intellectual
capital and its reflection in reporting. The advantage of the paper is also the justification of
indicators for assessing the cost of intellectual capital.
C. Nielsen and M . Montemari considers in the paper [5] the problems of attracting human
resources to the activities of companies specializing in e-business. The authors pay significant
attention to identify the sources of added value formation in the process of employee interaction.
Yang, L. and Gan, C. based on the use of expert methods show a positive impact of human
resources on strategic flexibility and the achievement of cooperative goals in Chinese companies
[6]. Considering the papers of domestic scientists devoted to the study of the problems of
personnel potential formation, it is worth noting the works of such scientists as: O.V. Arzamasov,
I. Yu. Lebedev, V . V . Smachilo, O.V. Skoruk, etc., one should note their theoretical orientation
and the lack of recommendations for predicting the personnel potential of the state or other object
of research [7-10]. One can see, that foreign authors study intellectual capital or human
resources, since they are interested in the existing, and not the potential opportunities of business
entities.
Thus, the assessment and forecasting of human resources is an urgent task to ensure the strategic
development of Ukraine. At the same time, research does not pay due attention to the problems
of assessment and forecasting of human resources. In view of the fact the purpose of this paper
should be considered to substantiate the method of assessing and forecasting the human potential
of the Ukrainian economy.
2 Methods
The selection of research methods is related to the main stages of its implementation. Therefore,
we will characterize the methods used taking into account the sequence of their application.
Selection of indicators that reflect the human resources potential of Ukraine.
101
Based on the analysis of the available information of Ukraine's statistics service that relates to
the personnel of business entities by type of economic activity, the following indicators were
selected to assess the personnel potential of Ukraine (Table 1).
Table 1 - Characteristics of indicators for assessing human potential
Indicators Unit Economic sense
Personnel costs of business
entities
mln. U A H
Indicators characterizing the ability of
business entities to maintain labor
resources. These indicators can also be
characterized as the ability of business
entities to stimulate the activities of
personnel.
Average monthly wages of
full-time employees
U A H
Indicators characterizing the ability of
business entities to maintain labor
resources. These indicators can also be
characterized as the ability of business
entities to stimulate the activities of
personnel.
The number of employees in
business entities
thousands
of people
Indicators characterizing staffing of
business entities by type of economic
activity
Number of vacancies by types
of economic activity
thousands
of units
Indicators characterizing staffing of
business entities by type of economic
activity
labor productivity
U A H per
person
Indicators characterizing the efficiency of
labor resources by business entities.
2 Forecasting indicators
The content of potential reflects the promising, unrealized opportunities of enterprises, so it is
the long-term assessment of human resources that is of the high importance. Therefore, the use
of quantitative forecasting methods, in our case, is totally justified.
Among the most common methods of quantitative forecasting, trend analysis is most suitable for
the purposes of this paper, it involves taking into account the dynamics of each indicator by using
trend equations (while the sequence number of the actual or forecast period of the data array acts
as a variable) [11-12]. Typical trend equations used to calculate prospective values of human
resources indicators are presented below (1-4):
y = k x In x + b, (1)
y = kxxb
, (2)
y = kxxb
, (3)
y = kxxb
, (4)
Where:
• y is the prospective indicator value;
• x is the variable value of the trend equation, represented by the ordinal number of the
period;
• k is the coefficient at x;
• b is a quantitative parameter of the trend equation.
The use of trend analysis involves taking into account the degree of approximation of the trend
line to the actual changes in a particular indicator, which is achieved through the use of a
coefficient of determination (which increases the validity of calculation results). Trend equations
are defined for each indicator and type of activity and there are quite a significant number of
them, so one gives only those that characterize industry, agriculture, forestry and fishing, as well
as construction (Table 2).
102
Table 2 - Trend equations for certain types of economic activity
Indicator name
Trend equation
Indicator name Agriculture, forestry
and fisheries
Industry Construction
Personnel costs of business
entities
y= 19850e°-1 9 8 6 x
y=129242e°-1 5 1 x
y = 2546x + 9083,4
Average monthly wages of
full-time employees
y= 1909e°-2 7 7 3 x
y = 3113,5e°-2 2 2 9 x
y = 2601,9x°-6 2 3 2
The number of employees in
business entities
y = 726,14ea 0 3 3 x
y = 2578,lx-°-0 7 3
y = 297,88e7 E
-0 5 x
Number of vacancies by types
of economic activity
y = 0,28x + 0,96 y = 2,56x + 3,94 y = 0,34x + 0,72
Labor productivity y = 229566x0
-5 5 5 3
y = 438847x +
1E+06
y = 103698e0 2 3 2 7 x
The advantage of using trend analysis in comparison with other methods is also the ability to
determine the prospective values of indicators for any period, but in our case, the array of actual
data is limited to 2015-2019, and integral assessment and forecasting of human resources is
proposed to be carried out as of 2022.
3 Normalization of indicators
The normalization procedure is necessary in order to compare absolute and relative indicators
that have different units of measurement and economic content. To normalize indicators, the
maximum and minimum values of the dynamics series are traditionally used, which makes it
possible to convert absolute indicators to relative ones so that the maximum value of the indicator
is 1, and the minimum value is 0. To calculate the normalized values of indicators, one uses the
formula (5):
x
n~x
min (Z\
Xj = , P )x
max x
min
Where:
• x; - normalized value of the i-th indicator;
• xf - actual value of the statistical indicator for the direction of economic activity;
• xm i n , x m a x - the minimum and maximum value of the indicator
4. Integral assessment of economic potential.
The results of preliminary calculations allow to calculate the integral indicator of the human
resources potential of Ukraine. In this paper, it is proposed to define it as an arithmetic mean
without using weighting factors, since: a) the arithmetic mean avoids zero result of calculations
(which can occur in case of too low normalized values reflecting human resources); b) the
definition of weighting factors for individual indicators is too subjective and requires careful
justification, so it is better to abandon. To determine the integral indicator of human resources
potential, one uses the formula (6):
. H1+H2 + -+Hm ( f \
103
Where:
• Ih p - integral indicator for assessing human resource potential, unit share;
• Hi, H2 ... H m - normalized indicators used to assess human resources, unit share;
• m - number of indicators.
3. Results and Discussion
As already mentioned, the integrated assessment of human resources involves the analysis and
generalization of a significant array of data, so there is a need for abbreviated notation of
economic activities (Al... An) and human resources indicators (HI... Hn). The designations for
economic activities and indicators are presented below (see Table 3).
Table 3 - Indicators and types of economic activity designations
Types of economic activity
Name Designation
Agriculture, forestry and fish industry Ai
Industry A 2
Construction A 3
Wholesale and retail trade; repair of motor vehicles and A4
motorcycles
Transport, warehousing, postal and courier services A 5
Temporary accommodation and catering services A 6
Information and telecommunications A 7
Financial and insurance activities A 8
Real estate transactions A 9
Professional, scientific and technical activities Aw
Administrative and support services activities An
Education A12
Healthcare and social assistance A13
Arts, sports, entertainment and recreation A14
Other types of activities and unclassified ones A15
Personnel costs of business entities Hi
Average monthly wages of full-time employees H 2
The number of employees in business entities H 3
Number of vacancies by types of economic activity H 4
labor productivity H 5
Source: Own processing
Furthermore, it is expedient to present the absolute indicators (primary data) and coefficients
used for the integrated assessment of human resources of Ukraine. Below is the data for 2019
(Table 4), as this period is the last in the array of factual information (while forecasting indicators
used information for a period of five years).
104
Table 4 - Information for integrated assessment of human resources, 2019
A n
H n
A n
Hi H 2 H 3 H 4 H 5
A i 55621,1 7556,9 626,1 2,5 863,3
A 2 292647,7 9633,3 2317,6 17,5 1425,0
A 3
24826,6 7844,8 312,3 2,4 1031,5
A 4
136151,3 9404,4 2355,6 9,2 1744,8
A 5 108696,6 9859,8 900,6 6,3 617,4
A 6
10517,1 5874,9 269,7 1,7 235,8
A 7 27150,2 14276,1 331,7 0,6 825,4
A 8 39603,5 16161,0 208,7 0,6 1358,5
A 9 14630,1 7328,8 241,8 0,8 600,5
Aio 33073,1 12144,0 309,5 1,2 1226,1
An 21038,9 7227,7 272,0 1,9 366,4
A12 1722,0 7041,4 34,4 3,7 201,0
A13 17547,1 5852,6 271,6 4,6 116,0
A M
5156,8 7611,6 49,4 0,6 265,5
Ais 2312,5 8132,4 155,9 0,6 133,3
Source: Own processing
According to the results of calculations, it is worth noting such negative trends as:
1. Fairly low average wages and slow growth of it compared to more developed countries (which
is typical for the health sector and due to the unsatisfactory level of wages in public health
facilities).
2. A relatively small number of vacancies (which may indicate a slowdown in economic growth
in Ukraine due to reduced business activity of economic entities). The lowest number of
vacancies is observed in the financial and insurance spheres, sports, art, etc. At the same time,
a significant number of vacancies may indicate not only the development of a particular industry,
but also unfavorable working conditions.
3. Disproportionate distribution of workers by type of activity and low productivity (among
industries with low productivity should be distinguished education and health).
Based on the application of primary information for 2015-2019 and the use of forecast models,
which are partially given in table. 2, promising indicators for integrated assessment of human
resources were identified (Table 5).
105
Table 5 - Perspective indicators of integrated assessment of human resources, 2022
A n
H n
A n
Hi H 2 H 3 H 4 H 5
Ai 97222,7 17548,7 945,5 3,2 770,4
A 2 432545,1 18521,8 3000,7 24,4 1503,2
A 3
29451,4 9508,2 298 3,4 2238,6
A 4
238520,6 20320,6 2445,4 12,9 2390,2
A 5 194093,4 21347,5 1019,7 8,2 846,9
A 6 18267,6 12681,8 293,1 3,3 598,4
A 7 42232,5 21175,4 339,2 0,7 2083,5
A 8 27061,8 29594,4 458,1 0,6 731,2
A 9 22852,4 14304,2 229,6 1 526,4
A10 49910,2 22720,5 375,6 1,6 1512,2
An 33960,5 15617,5 369,2 2,5 631,4
A12 3016,4 14798,5 36 7,2 634,8
A13 49623,2 12650,9 394,7 5,3 390,7
A14 6500,1 13688,7 48,7 0,7 194,4
A15 3324,6 16086,5 163,9 0,8 320,2
Source: Own processing
As a result of the application of the procedure of normalization of perspective values of
indicators, which generally characterize the human resources of Ukraine by types of economic
activity of economic entities, normalized values of indicators are calculated (Table 6).
Table 6 - The results of the normalization of indicators for integrated assessment of human
resources
A n
H n
A n
Hi H 2 H 3 H 4 H 5
Al 0,219 0,4 0,307 0,109 0,262
A 2 1 0,449 1 1 0,596
A 3
0,062 0 0,088 0,118 0,931
A 4
0,548 0,538 0,813 0,517 1
A 5 0,445 0,589 0,332 0,319 0,297
A 6 0,036 0,158 0,087 0,113 0,184
A 7 0,091 0,581 0,102 0,004 0,86
A 8 0,056 1 0,142 0 0,244
A 9 0,046 0,239 0,065 0,017 0,151
A10 0,109 0,658 0,115 0,042 0,6
An 0,072 0,304 0,112 0,08 0,199
A12 0 0,263 0 0,277 0,201
A13 0,109 0,156 0,121 0,197 0,089
A14 0,008 0,208 0,004 0,004 0
A15 0,001 0,328 0,043 0,008 0,057
Source: Own processing
Considering that the maximum indicators of a number of normalized values have a single value,
the results of normalization allow to get an idea of the factors that affect the human resources of
the state by type of economic activity. For example, industry (A2) is characterized by three
106
maximum and two average values of normalized indicators, while education (A12) is
characterized by two minimum values. To obtain more accurate results, it is necessary to
calculate the integrated indicator of human resources using formula (6). It is recommended to
use the results of the integrated assessment of human resources to rank the types of economic
activity depending on the value of the integrated indicator, as shown below (Figure 1).
Figure 1 - The results of a perspective integrated assessment of human resources in
Ukraine, 2022
Source: Own processing
0,809Industry
Wholesale and retail trade; repair of motor vehicles and motorcycles
Transport, warehousing, postal and cornier services
Information and telecommunications
Professional, scientific and technical activities
Financial and insurance activities
Agriculture, forestry7
and fish industry7
Construction
Administrative and support services activities
Education
Healthcare and social assistance
Temporary7
accommodation and catering services
Real estate transactions
Other types of activities and unclassified ones
Arts, sports, entertainment and recreation
0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,S 0,9
Thus, according to the results of determining the integrated indicator of human resources, it
should be noted that the best results are demonstrated by the industry (which is associated with
the need to constantly involve qualified professionals to implement complex technological
processes). Also noteworthy are the results of the trade sector (where a significant number of
employees are involved). The human resources of the transport sector, as well as such industries
as: information and telecommunications, professional, scientific and technical activities,
financial and insurance, as well as construction and agriculture, can be considered average. These
results are explained by the fact that the first three of these economic activities play a supporting
role and their development depends on the functioning of the economy as a whole, while
construction and agriculture are characterized by significant potential, the implementation of
which requires significant investment. Other types of economic activity can be classified as
conditional "outsiders" - funding for their development is not given due attention at the state
level (although the qualifications of education and health professionals largely depend on the
well-being and quality of life of people).
The results of this article can be used in the process of substantiation of state programs to finance
the development of the most promising sectors of the national economy, improving working
conditions and employee motivation, staff training and others. The most promising areas of
research include an integrated assessment of other components of the potential of economic
entities and the addition of a list of criteria for assessing human resources, provided that the
necessary information is available.
107
Conclusions
1. For the integrated assessment of the personnel potential of Ukraine, the choice of indicators
that generally characterize such potential in terms of types of economic activity of economic
entities is substantiated.
2. The main methods of consistent using of which allow to conduct an integrated assessment of
human resources are given. Considerable attention is paid to the using of trend analysis to
calculate the long-term values of indicators that reflect the human potential of Ukraine.
3. Based on the results of the using of trend models, the normalization of perspective values of
indicators characterizing the personnel potential is carried out. By generalizing the normalized
values of indicators, an integrated assessment of the integrated indicator of human resources for
2022 was conducted.
4. The results of calculations show that the most promising areas of economic activity for
Ukraine are industry and trade, while such socially oriented industries as education and medicine
have a low level of human resources and need to improve working conditions and increase public
funding to increase staff motivation.
Acknowledgements
This paper was created within the project: Methodological aspects of innovative development of
the state. This is the joint project of the Ministry of Education and Science of Ukraine and
O. M . Beketov National University of Urban Economy in Kharkiv.
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[12] D Y M C H E N K O O., TARARUIEV Y U . , YESLNA V., R U D A C H E N K O O. (2020).
Methodology for assessing the potential of national economy sectors (on the example
of Ukraine). Strategies, models and technologies of economic systems management
in the context of international economic integration: scientific monograph / edited by
Dr.oec. Prof. Maksym Bezpartochnyi, Dr.oec. Prof. Viktoriia Riashchenko, Dr.paed.
Nina Linde, 2nd edition. Riga: Institute of Economics of the Latvian Academy of
Sciences, 413 p.
Contact information
prof. Olena Dymchenko, D.Sc.
O. M . Beketov National University of Urban Economy in Kharkiv, Faculty of Economics and
Management, Department of Entrepreneurship & Business Administration
17, Marshala Bazhanova St., 61002, Kharkiv, Ukraine
E-mail: dymchenkoov@gmail.com
Olha Rudachenko, PhD.
O. M . Beketov National University of Urban Economy in Kharkiv, Faculty of Economics and
Management, Department of Economics
17, Marshala Bazhanova St., 61002, Kharkiv, Ukraine
E-mail: polkin87@ukr.net
Valeriya Yesina, PhD.
O. M . Beketov National University of Urban Economy in Kharkiv, Faculty of Economics and
Management, Department of Economics
17, Marshala Bazhanova St., 61002, Kharkiv, Ukraine
E-mail: vayesina@gmail.com
Tararuiev Iurii, PhD.
O. M . Beketov National University of Urban Economy in Kharkiv, Faculty of Economics and
Management, Department of Economics
17, Marshala Bazhanova St., 61002, Kharkiv, Ukraine
E-mail: artyur@gmail.com
109
Rhetoric of users satisfaction with public services new public
management
Said Edaich, Roman Smietahski
Abstract: Public management,when decision ma king, easily overlook the value of examining
users satisfaction with services provided by public administration. Users satisfaction, a decisive
element which should guide administrative action, remains dominated by managerial techniques
setting the methods, tools and the impact of public services. This research is an approach that
highlights the rhetoric of public satisfaction as an instrument evaluating the effectiveness of
public administration in a management model where econometric standards abuse political
decisions and user rights.
Keywords: Administration, user rights, public service, satisfaction, management
JEL classification: H10, H83
Introduction
The relationship between public administration and administered is one of the foundations of the
legitimacy and continuity of States and of their organizational model. The success of public
institutions in managing this tie-in, meeting the needs of users, is considered among the main
indicators of regimes democracy level and a perfect tool for economic and social development.
Public administration, simultaneously expression of the power and manager of public services,
in view of the multiplicity of its functions offers a fertile subject of controversy that stirs
politicians, lawyers, economists, individuals and organizations. Beside this formal aspect of
analysis approaching the framework of the relationship between the administration and the users,
there is also the evaluation of the user, as the main financier of public administrative institutions
actions. An assessment established on the basis of the direct link between the challenge of
meeting the needs and making life easier for the population and the sums that the state collects
in the form of taxes, stamps and sometimes even amounts of money determined in return for the
service rendered. Article 16 of the Lisbon Treaty revealed that services of general interest, which
act for social and territorial cohesion as well as for a competitive economy, are a major element
in making the model of society advocated by Europe a reality. On the one hand, the public
administration formally remains a governance tool organizing and managing common life and
ensuring its continuity, on the other, it is considered to be an assistance for individuals who
cann't meet basic needs to live in dignity. To fulfill these two complex functions, the various
institutions of public administration are endowed with exceptional competences and privileges
to carry out their missions, satisfying users, within the framework of legitimacy and the general
interest concepts. However, experience shows a choppy relationship between the administration
and the citizen. Subject to disagreements, this relationsp is experienced by the citizen as a favor
rather than a right, it is the administration that directs this relationship, sometimes even through
instruments of coercion, like the use of public forces (EL Fakid, 2020).
New Public Management: Legitimacy, legality and appropriateness
New public management, a term introduced into the vocabulary of public administration in the
late 1980s, concerning the management and production engineering in public service delivery,
and often linked to doctrines of economic rationalism, intending to denote public service reform
programs. During the 1990s, New Public Management has become a major academic industry
across the World, and supporters of this new organizational process focuses on the quality and
efficiency of public service linking corporate management to public one (Hood, 1995).
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Nevertheless, public administrative structures still possess characteristics that oppose the
dominance of marketing and speculative concepts of public services. Some specialists in
administrative law do not manage to fully accept the radical change imposed by this new
management technique. In fact the legal status of the public administration and organization, its
objectives, its missions (functions) and its environment (domain) obstruct the conversion of the
relationship between governance and governed (administered), to customer relationship. The
arguments presented in the following chapter clearly show the compactness of jurists and citizens
who support this attitude.
1 Legal consideration on new public management
This specificity is reflected in the fact that the managerial autonomy of these structures is subject
to the provisions of public law which recognizes for these institutions extraordinary powers and
competences, such as the use of public force, not recognized to civil law bodies. However, the
same provisions subjected them to political, judicial and even user control to avoid situations of
abuse against citizens.
1.1 Objectives
According to the provisions of constitutions and laws around the world, the public administration
manages the public service to meet the needs of users. The provision of these services:
• must be free of charge,
• cannot be for profit,
• must be of quality and continiuty,
• without discrimination or exclusion,
• cannot be subject to competition or preferential measures.
The only constraints come first from the provisions of the law which must authorize the service
and recognize the organ that has to provide it, secondly, constraints may result from the public
budget recognized for this administration and the way it should be spent. These constitutional
principles, which supports the unity of the state and the solidarity of citizens, cannot be
speculated as to private companies. Considering this attitude, a more than logical question arises,
even if it remains at the theoretical level: If governance decisions inflicting such change on
citizens (users) can lead to a revision of the citizen-state report ?
Obviously such question has not to prevent rationalizing the instruments and the way of
managing the public services avoiding the risk of legality and legitimacy conflicts.
1.2 Tasks (missions)
The public administration acts at the base of the duties and rights determined by the law to avoid
doubts and suspects about the opportunity and utility of the administration acts. The public bodies
do not sell products but provide services hence the relativity of the question of output. The
citizens finance the administration in a solidary and continuous way and claim from this structure
a service on the basis of equality and common interest. The state or the representatives of the
collectives are civil servents who have to serve users, for this they receive their salary
(compensation) and other privileges stated by law (they do not volunteer work). The situation is
completely different for companies and corporations that sell products or services according to
the market principles (competition, speculation, proces, ...). The main goal to achieve, for these
institutions, is to make maximum profit with minimum time and investment costs. The concepts
of common interest and public service do not come within the interest and reasoning of private
corporation and companies.
I l l
1.3 The field of action (environment)
Public administration acts delivering services but not in a deregulated market that offers services
and products to clients. Public structures activities is directed to masses of citizens who cannot
be selected according to criteria deriving from the usefulness, quality and the cost of the product
or the service. Unlike for corporations that can choose their partners, suppliers and customers
and even specialize in the provision of a service or a product according to the principe of
profitability. Furthermore, the rules governing the activities of companies and corporation,
generálny, belong to civil law and depend on the will of the parties (contracts) and not on the
state policy (common interest). Consequently, the use of marketing concepts must be restricted
so as not to damage the concept of the common life in a given society and not to provoke the
question of legitimacy both for the administrative organ and of the decider. To dodge the
previous embarrassing remarks, the new proposal in public management strived to put together
the Weberian managing model and the new methods of public management under principles such
as:
• accountability and transparency,
• network governance,
• co-production of public policies (from definition to delivery),
• implementation and superposition of different managerial approaches (Pasquier, 2018).
2 The strategic choices of new management
New public management in its evolutive strategy used concrete and convincing instruments to
raise awareness of the social environment. Information and communication technology, space
and the attention given to citizens seem to be its main arguments to convince masses of users to
the introduced changes. Our approach, presenting these arguments, attemps to highlight the
effectiveness of these choices based on the evaluation of the competent institutions.
2.1 User-centric approach
In the user-centric approach in administrative management, the user is supposed to be the
principal beneficiary of the administrative action " The administration exists by and for the user
", an orientation, in someway, assimilated to "customer" orientation widely described and
analyzed in the the private sector. Governance, in its openness to citizens, involves them in
a process of participation and consultation on the decisions that should meet the needs of the
community. The conclusions reached by this process should be used in the formulation of
policies governing public services. For the success of such approach it is required that
interactions between public administration (governance) and users should take place in an
environment that primarily promotes the principle of responsibilizing the partners in the action
(decision-makers and citizens), then guaranteeing transparency (the access to information for all
and equally), and finally integrate the outcomes of this consultative process into the management
of public services and more generally into state policy.
Obviously, the users are constantly confronted with the institutional complexity reinforced by
successive reforms imposed by the orientation of a system often more global in which the
principles of management are evaluated and chosen according to the output. A challenge that
condamns the user of the public service to loss the expected support and to face the lack of precise
information. Such factors generate confusion among users related to the subject-matter and
territorial competencies recognized to the public organs. Therefore arises a certain confusion that
may exclude users preventing them benefiting from services and rights granted to them.
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2.2 Representative democracy and participatory process
In the framework of representative democracy the participatory process, complex and limited in
its scope, offers a resolution based on a real listening to citizens expectations. Apparently this
should lead to a reconciliation between administration and users, it also carries the risk of
deviation which could lead to an unfair redistribution of responsibility between partners in this
action. The participatory process involves parties with different knowledge, skills and abilities.
Their dialogue is essential to reduce the dissymmetry between the different choices and visions.
The citizens themselves propose and disseminate knowledge that affects society and public
services. However, the role of public authorities in this phase must be limited to arbitrating the
debate and to be more attentive to the conclusions and resolutions that emerge from the debate
(Bauby, 2016).
The participation of the private sector (originally users and citizens), as a new, unconventional
approach to public service delivery takes the form of a contract and sometimes takes the form of
an institutional partnership. It assumes that citizen participation, as an instrument of cohesion,
can generate effective results regarding the management of public services in a democratic and
civic Framework. However it should be noted that the introduction of the principle of
participatory governance requires the adaptation of the administration, its agents and its practices
to the needs of the citizens in order to strengthen the proximity of the administration to the users
(Bauby, 2014).
Even so such actions do not go beyond political exhibition that charge on the administration new
expenses that could be avoided if the elected politician acted from his office and that he puts at
the center of his interests the satisfaction of the needs of the voters who chosed him. The
exhibition of the politicians in the deprived districts of the cities testifies to the negligence of the
political and administrative action of the precedents elected who allowed the degradation of
certain districts or allowed, during their mandate, the creation of devolved districts.
2.3 The co-production of public action
As long as this participation of citizens "users" remains within the framework of proposals which
reflect the vision according to which the public administration has to serve the "user" that, in
return, has to finance the administration action (taxes, ...), this traditional relationship does not
pose any challenges to be understood and accepted (Tranchant, 2005). Nonetheless, when the
participation of the private " supposed to be also user and citizen " extends to the provision of
the service substituting the public administrative in its duties, the participation becomes distinct
and subjected to questions of legitimacy, constitutionality and other public policy issues. We
clearly note a change in the status of the user who becomes a partner in an action reserved for
the public sector, on the time his interests become of a speculative and competitive nature for a
profit-making purpose. The participatory process managing a "public service" is markedly
different from the traditionally known process where the state assumes the function of meeting
the basic needs of citizens. It is hardly convincing that a private person who fights for his interests
can satisfy needs determined on the basis of solidarity and or can facilitate the life of the social
group. Co-production, as a management process, presents a wide conceptual field, which refers
to a several arrangements and possibilities managing public services and that may involve
different entities and individuals to perform activities which fall within the competence of public
administrative bodies (Howlett, 2017). The evolution of the principle of co-production has led to
the use of nonparallel way of interaction based on information and communication technologies.
In fact, since the 1990s, new public management has caused public structures to adopt
Information and Communication Technology (Pollitt, 2016).
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2.4 E-government
The development of e-govemment as an instrument of public management is essential even in
countries with limited resources. The global average total of the E-government (EGDI)
development index increased from 0.55 in 2018 to 0.60 in 2020. Financial resources, low level
of human capital development and lack of adequate infrastructure and widespread broadband
connectivity, are not the only drawbacks to the development of e-government. Disadvantaged
countries are confronted with factors such as the absence of a strategic vision of leadership for
an effective commitment to the development of digital services. Considering official Data in
2020, Europe detains the higher. E-government development index (EGDI) with (58 %), and a
93 % among countries offering online services to vulnerable populations. It is followed by the
Americas (84 %), Asia (80 %), Oceania (65 %) and Africa (55 %), (DESA, 2020). We can elasy
understand the logic of a such ranking when we know about the raisons that stay behind it:
• the ubiquity of high-speed Internet and mobile telephony, enabling increased network
functionality and capacity;
• the availability of data sets that are too large or complex for traditional analysis
applications which require the development of technologies capable of processing and
analyzing them (Big Data);
• Cloud computing, increasing the capacity to store and share information;
• developments in artificial intelligence, robots and machine learning;
• additive manufacturing and 3D printing;
• advances in simulation methods and systems integration.
• the introduction of digital currencies (blockchains) (Pena, 2018).
United Nations in the E-Government Survey for 2020 defined the e-participation as "the process
of engaging citizens through ICT in policy, decision-making, and service design and delivery in
order to make it participatory, inclusive, and deliberative". Citizen participation has been fostered
by digital platforms and Internet that have made it possible to involve civil society on a large
scale and to involve audiences hitherto far from this type of process, (young people). Globally,
we are witnessing a high growth in online consultations and awareness raising programs to
encourage civil society to take part in the the debates concerning public management and the
improvement of its instruments. Users expectations for digital integration remain unfulfilled, as
they consider that the lack of understanding of programs and administrative processes, the
interaction and the quality of consultation neutralize the efforts of public services to meet their
needs (Weller, 2018).
At the local level, the Survey carried out in 2020 by the United Nations Department of Economy
and Social Affairs, evidenced the sustained progress of e-government. For the 100 cities selected
for the survey, the level of development of e-government is evaluated at more than 50%; a total
of 86 instead of the 40 cities assessed in the 2018 study (DESA, 2020). E-administration, through
digital consultation ensured, a new method of citizen participation, platforms contribute
positively to the dissemination of knowledge, to the opening up of possibilities at the individual
and collective levels, but at the same time they gain an ascendancy over individuals and
traditional institutions (Zaza, 2016).
The introduction of information technologies, as a new organizational practice, in public
administration, is supposed to improve the skills and the quality of public services simplifying
the procedures and the handling of files and cases. This online management offers the possibility
of reshaping its internal relations, first between the different offices and then between the
administration and the employee as well as its external relations between the administration and
the citizen, then the administration and other entities of different nature (economic, ...).
According to the Digital Economy and Society Index published in 2020 despite the increase in
114
Internet users (85% of citizens in 2019), different types of barriers still oppose the expansion of
the net in the life of Europeans. 46% of households remained without Internet access in 2019 for
reasons such as : Equipment costs (26%), insufficient skills (44%) depending on age, activity
and financial situation and the high cost of the internet (24%), (DESI, 2020). However, it is
difficult to assess the success of public administration in providing high quality services to
citizens using digitalisation in absence of conditions that should allow its functioning adequately
to the goals stated by the digital evolution (EC, 2017).
3 Covid 19: examination and implementation instrument for e-administration
The pandemic has introduced sudden and deep changes to many aspects of individuals daily life,
businesses and public administrations. In response to this unusual situation, the administration
has shouldered extraordinary burdens and tasks to reduce the impact of this crisis. Consequently,
digital public services delivery has improved due to restrictions on physical contact with civil
servants and public offices. The impact of such challenge still depends on the geographical
location of the country and on the region location in the same country ( geographical barriers,
isolated land,...). Many states and regions remained, at least partially, excluded from
interventions and services delivery realized by public bodies. Experts estimate that the impact of
this digital managing instrument dipends also on individuals predispositions to accept this new
form of relation (vertual) with the administration, and on the preparation of the administration
(staff and infrastructure) to fully invest in this new framework delivering services.
In E U countries, the delivery of public services in its classic form (face-to-face) has undergone
serious alteration due to the COVID-19 crisis. Many members states have shown a great
weakness on preparation, infrastructure and even personnel capable of managing the on-line
services. The sectors that have been able to partially adapt to the circumstance are the sectors of
public health and education. These two sectors, already concerned by digitization, have been
obliged to conduct various new experiments to guarantee a certain level of quality and the
continuity of services for users (EC, 2021).
Despite the efforts undertaken by the governance to print digital tools in the relation between
administration and citizens, the problem of users dissatisfaction persists in a worrying way. Main
subject of digital public management process concerns the accessibility to services, support and
communication with users, a system where the user status has been fraudulently replaced by the
client status. Consultation and participation are meaningless and do not allow the rational
evaluation of public administration action and the political representative. Regrettably digital
instruments and programs are no longer convincing, they disarm citizens of their power and their
acquired rights against the administration. They are limited to modest objectives that fall within
the sphere of public relations so as reception, opening hours, simplified forms, and accessible
telephone service (Bouchard, 1996).
4 Conclusion
The reforms initiated by new management and which introduced electronic administration
present a redefinition of the relationship between user and administration and a new concept of
public services functioning. According to the rehetoric of the supporters of this change, the main
objectives are first and foremost, to reduce the operating costs of public services, to simplify
access to information for users, but above all to offer services that meet the needs of the
community (Défenseur 2017).
Digital administration, new forms of citizen participation, marketing practices and market
management rules should not reinforce already existing factors of inequality, nor should they
institutionalize exclusion due to social and economic precariousness. Some of the users
115
worldwide are unable to download or complete an online form or obtain information from the
Internet due to applications which still require more practice, operational systems which are in
an experimental phase, but above all, the technical lexicon which is misunderstood and
interpreted.
Supporters of legitimacy and ligality pay particular attention to the principles that apply to the
action of public services and that guarantee equal rights between men and women, freedoms,
access to information held by the public administration, the right to appeal against legal acts of
a regulatory or individual nature. These principles are those that establish the good governance
and the good administration which can be managed in an evolutionary way.
References
[I] E L Fakid I. , E L Moujaddidi N., (2020). Gestion de la relation administration citoyen
: Vers une approche prospective ä 1'ere de la numerisation et proposition d'un
modele conceptuel, Revue A M E Vol 2, No 3 pp, 203.
[2] Hood C., Accounting, (1995). Organizations and Society, Volume 20, Issues 2-3, pp
93-109.
[3] Pasquier M., Villeneuve J., P., (2018). Marketing management and Communications
in The public sector, II Ed. Pp 3-15.
[4] Bauby P., Similie M., (2016). Seance 3, Consolider une gouvernance participative
de Taction publique et des services publics, CITEGO pp2 - 4.
[5] Bauby P., Similie m., (2014). Les nouvelles pratiques administratives dans un
contexte participatif, L'experience d'Amsterdam West (Pays-Bas), CITEGO .
[6] Tranchant J.P., (2005). Sur le service public comme notion juridique, CITEGO.
[7] Howlett M., Ramesh M . , (2017). The achilles heels of collaboration: Overcoming
critical capacity deficits in collaborative governance arrangements? Paper presented
at the NUS-FPZG UNESCO Chair Workshop on The Governance of Collaboration :
Co-Production, Contracting, Commissioning and Certification, Dubrovnik, Croatia.
[8] Pollitt C , (2016). Managerialism redux? Financial Accountability & Management,
32(4), 429-447 .
[9] UN. Department of economic and social affairs, (2020). Digital Government in the
Decade of Action for Sustainable Development With addendum on COVID-19
Response E-Government Survey, pp 1 - 37.
[10] Pena-Casas R., Ghailani D., Coster S., (2018). Transition digitale dans l'Union
europeenne : quels impacts sur la qualite de l'emploi ?, Bilan social de l'Union
europeenne pp, 125 - 127.
[II] Weller, J., M., (2018). Les figures de l'usager dans les reformes de modernisation des
services publics, Informations sociales, 3 n° 198 | pp, 48 - 56.
[12] Zaza O., (2016). L'E-gouvernance pour la participation citoyenne : imaginaires du
futur, nouvelles competences et impacts territoriaux, Pyramides, pp 163 - 190.
[13] European Commision, (2020). Digital Economy and Society Index (DES1), pp 17 -
23.
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[14] European commission, (2017). A comparative overview of public administration
characteristics and performance in EU28, pp 46 - November .
[15] European Commission, (2021). Report on Public Administrations' Digital Response
to COVID-19 in the EU.
[16] Bouchard G., (1996). De citoyen ä client : plus qu'un changement de vocabulaire.
Politique et Societes, (29), pp 139-159.
[17] Defenseur des droits, (2017). Enquete sur l'acces aux droits Vol . 2 - Relations des
usagers et usagers avec les services publics : le risque du non-recours, pp 13 - 17.
Contact information
Dr. Said Edaich
Opole University of Technology, Faculty of Economics and Management, Department of
Regional Policy and Labour Market
ul. Luboszycka 7, 45-036, Opole, Poland
E-mail: s.edaich@po.edu.pl
Dr. Roman Smietanski
Opole University of Technology, Faculty of Economics and Management, Department of
Enterprise Management, E-business and Electronic Economy
ul. Luboszycka 7, 45-036, Opole, Poland
E-mail: romanopole@centrum.cz
117
Spatial accessibility of selected ambulatory social services for the
elderly in the Moravian-Silesian Region
Izabela Ertingerová
Abstract: The subject of this research deals with one of the key prerequisites for providing
necessary and quality social care to people who, due to old age or unfavorable health, suffer from
reduced self-sufficiency and require regular assistance from another natural person. Specifically,
it is the spatial accessibility of selected ambulatory social services, which are mostly used by the
elderly, i.e. people over 65 years of age. The aim of this paper is to identify and evaluate the gaps
in the accessibility of selected ambulatory social services at the level of districts of the MoravianSilesian
Region from 2011 to 2020. The research is supplemented by an analysis of time
accessibility of services according to specified time intervals for 2020. The evaluated types of
ambulatory social services include day services centres and day care centers. A two-phase
analysis was performed, including time series dynamics and ArcGIS network analysis. The
results show the inaccessibility of the day service centres in Opava and Bruntál districts, on the
contrary, the very good accessibility of this service can be seen in Ostrava-město district. The
supply of this service has not changed significantly in the districts since 2011, while in the case
of day care centres there is a slight increase in this service in terms of spatial accessibility, which
had a positive effect on time accessibility.
Keywords: Ambulatory social services, ArcGIS network analysis, elderly people, MoravianSilesian
region, social care
JEL Classification: 110, J l l , J14
1 Introduction
The Czech Republic, which is a member state of the European Union and acts as a signatory to
several international human rights treaties, is committed to ensuring that all the rights of its
population are respected and protected without distinction. Ensuring the exercise of their rights
is all the more important for a group of people - the elderly, especially for the purpose of
prevention of an unfavourable situation or social exclusion. In the case of national action plans,
the Czech Republic, the relevant public policy in the field of care for the elderly, is currently part
of the National Strategy for the Development of Social Services for the period 2016-2025. It is
a strategic document prepared by the Ministry of Labor and Social Affairs (2015) and follows
up on the National Action Plan Supporting Positive Aging for 2013-2017 and the National
Program for Preparation for Aging for 2003-2007 and 2008-2012. For the currently valid period
2016-2025, ten preparations for the aging of society are defined, which includes, among other
things, the provision of a wide range of interconnected social services for people with reduced
self-sufficiency (the elderly) and the provision of social and health care services considering
space and time accessibility. The accessibility of social services is based on the number of social
services facilities in individual areas (districts, regions), their capacity (immediate, number of
bed) and transport accessibility. According to Guagliardo (2004), the use of services and the
overall health of people are affected by the spatial and temporal accessibility of service providers.
This statement is also confirmed by Penchansky and Thomas (1981), who defined five barriers
that affect the use of social and health services. Specifically, these are availability, accessibility
(in the form of distance or time), affordability, acceptability and accommodation.
The social services market includes a relatively large network of services, consisting of stay-in,
ambulatory and field social services. At the level of the European Union, the prevailing effort is
to provide social services to people aged 65+, especially in ambulatory and field forms (for
118
example in Norway or France) in order to keep service users in their natural social environment.
Ambulatory social services represent a set of activities that help people to solve their
unfavourable social situation (Sirovatka, Valkova, 2017; Le Bihan, Martin, 2014). As stated by
Mobley et al. (2006), in the case of affordable and quality social care, the risk in the form of the
need for all-day care in stay-in social facilities is significantly eliminated, which would result in
a possible deterioration of the mental state of seniors. At the same time, Průša (2007) states that
social services represent an important pillar in the field of prevention of social exclusion and the
occurrence of adverse events, and it is therefore essential to ensure their high level of quality and
the necessary accessibility at the level of the entire spatial area.
Self-governing regions play an important role in providing social services, because they are
closest to the citizens and are able to respond more effectively to their needs. According to the
Act on Social Services No. 108/2006 Coll., as amended, the regions are obliged to create
a network of social services, which provides a comprehensive set of available social services,
capable of sufficient capacity, appropriate quality and adequate local accessibility to address the
unfavorable social situation in level of each region, in accordance with the identified current
needs and available resources. Social services are provided by registered providers (public,
private), whose goal is to develop their facilities, to provide social services of the highest quality,
in accordance with the defined mission and development plan (Zatloukal, 2008).
The aim of this paper is to identify and evaluate the gaps in the accessibility of selected
ambulatory social services at the level of districts of the Moravian-Silesian Region from 2011 to
2020. The research is supplemented by an analysis of time accessibility of services according to
specified time intervals for 2020. The evaluated types of ambulatory social services include day
services centres and day care centers.
Analysis of accessibility is performed using time series dynamics indicators (average absolute
increment, average growth coefficient, average relative increment) and ArcGIS network
analysis.
1.1 Accessibility of social services
The accessibility of social services is an important attribute in the planning of social services.
Thanks to the implementation of community planning and ensuring the availability of social
services, an increase in the quality of life of local people in need of social care is achieved, as
well as their families and close relatives who are unable to take care of the persons. The key tool
for the planning and accessibility of social services is the Medium-Term Plan for the
Development of Social Services, the elaboration of which is mandatory at the level of all regions
of the Czech Republic. A number of municipalities, or voluntary associations of municipalities,
are also preparing their medium-term plans, due to the fact that this tool appears to be the most
effective for determining the needs of local residents (Pilát, 2015). The accessibility of social
services, or their planning is determined not only by the current needs of the population and the
specifics of the area, but also by factors that support or hinder the possible development of social
services (especially for the target group of elderly). The authors Lehmann and Havlíková (2015)
state that the accessibility of social services and their structure is influenced mainly by economic
parameters, the age structure of the population and the unemployment rate. It is therefore
recommended to take these factors into account when planning social services. Authors Průša
(2015) or Langhamrová, Šimková and Sixta (2018) also refer to the need to monitor economic
parameters.
The analysis of the accessibility of social services is a very current professional topic, not only
in the Czech Republic. According to Cornea (2017), the sole responsibility for providing social
services for the elderly lies with public authorities. The author draws attention to the need to
119
create such conditions that would lead to manifestations of real and current needs of elderly.
Gavurová, Štefko and Bačík (2014) point out that the supply of social services is influenced
primarily by the decisions of territorial self-governing bodies rather than just the demographic
aging of the population. Due to the aging of the population, the planning of social services should
solve the problems associated with it, both in the economic, personnel area and in the quality of
the care provided. Gavurová and Šoltés (2016) point out that demographic aging of the
population leads to increased demand for social services. The authors' research was focused on
the analysis of the supply of social services (structure of services, capacity) in Slovakia, in order
to capture their accessibility and interregional differences. The achieved results indicate that the
supply of services is significantly affected by the aging of the population, however, it is not able
to sufficiently cover all the demand.
Kriisk and Minas (2017) compared the accessibility of social services in urban and rural areas in
Estonia. According to the authors, the difference in the accessibility of some social services lies
in the difference in the structure of social services and in the target group of service clients.
Especially for the most vulnerable groups of people (immobile people, elderly), the accessibility
and proximity of social services is key. It is therefore necessary that these factors are also
considered in community planning of social services. Port (2004) adds to the statement by finding
that an important role is played not only by the accessibility of social services, but also by the
ability to commute to the service. Transport connections should also be adapted. According to
Dintrans (2018) and Gibson, Braun and Liu (2002), the accessibility of long-term social care
services is particularly evident in cities, while in rural areas and poor communities the
accessibility of services is significantly lower or non-existent. Cheng, Wang, Rosenberg and
Yang (2012) state in their study that sanitary facilities allocated in urban areas are accessible to
users within a maximum of 30 minutes, while in suburban areas the time accessibility of facilities
ranges from 30 to 120 minutes depending on built road network, transport connections of urban
and suburban lines and standard travel speeds.
2 Material and Methods
2.1 Data
The social services network consists of registered providers of social services in various legal
forms (legal and natural persons) who have met the basic requirements and conditions defined
in the Social Services Act (Title II, from § 78). The analysis of spatial and time accessibility of
selected ambulatory social services is focused on the Moravian-Silesian Region, respectively on
the area of individual districts of the region (Opava District, Ostrava-město, Karviná, FrýdekMístek,
Nový Jičín and Bruntál). The analysed ambulatory social services are defined as day
service centres and day care centers. The subject of the evaluation was those registered
ambulatory social services that were intended for the target group of the elderly, i.e. for persons
over 65 years of age.
For the needs of the analysis, a database was created, where the main source of data consists of:
• Public Register of Social Service Providers, which was established with effect from the
Act on Social Services on 1 January 2007. It is an information system that provides
information on the number of social service providers by district, including their legal
forms and addresses of social facilities where services are provided. Device addresses
are used to obtain GPS coordinates for their map display,
• Annual reports of providers of selected ambulatory social services for the purpose of
obtaining data on the capacity of social facilities,
• Basic statistical data of the Czech Statistical Office, from which data on the number of
persons aged 65+ by district were drawn,
120
• Information portal OKWork (OKPráce) and its information system with the Integrated
Portal of the Ministry of Labor and Social Affairs of the Czech Republic, which is
designed to search for available places in a defined time interval or at a specified
distance using public transport. Based on this, it is possible to define the connection
between the municipalities of the Czech Republic (from place A to place B) at a direct
distance of up to 150 km. The transport connection database is limited to records where
there is a commute time (public transport) and the maximum number of transfers is five.
The analysis of the transport connection was carried out only at the level of
municipalities (initial and destination municipalities and their stations).
2.2 Dynamics of time series
Budíková, Králová, Maroš (2010) and Art! (1999) state that simple measures of time series
dynamics are intended to characterize the basic features of time series behavior and to formulate
certain criteria for their subsequent modeling. The basic indicators of the rate of dynamics
include the average absolute increment, the growth coefficient, the average growth coefficient,
the relative increment and the average relative increment. Average absolute increment, which is
suitable for monitoring the development of the entire time series. It is used especially for longer
time series. The result is an average change in the value of the time series over the entire
monitored time period. In mathematical expression, the calculation has the form (1):
d =y
-^. (1)
n-l
Another indicator of the rate of dynamics is the growth rate, which is expressed by the growth
coefficient. The growth rate indicates the extent to which the value of the measured
characteristics has changed. The result is usually expressed as a percentage, or in decimal
numbers. If the growth coefficients of a time series are relatively constant, the characteristics of
the exponential trend can be deduced for a given time series. The average growth rate or average
growth coefficient is calculated as the geometric average of the individual growth coefficients in
mathematical form (2):
l = n-iK (2)
The resulting value expresses the average change in the time series over the observed time period.
Among other things, the growth coefficients can be used as one of the criteria for finding a
suitable trend function. Another indicator of the degree of dynamics is the relative increase, resp.
the increment coefficient, which indicates the increment of the value of the time series in the
period against the period . y ^ in the share calculation. The average coefficient is closely related
to the growth coefficient, it is equal to its value reduced by 1, see (3):
5 = k-l. (3)
2.3 Geographic information system
Geographic information system (GIS) is a framework for collecting, storing, managing,
processing and visualizing data associated with a particular place in the form of various maps
(topographic, geological, cadastral and other maps). The development of GIS dates back to the
early 1960s, when experts from various disciplines tried to use computer technology to integrate
data from various sources, for joint analysis and to present the results in a visual form. GIS is
commonly used in the areas of state administration and self-government, transport, defense,
121
geology, healthcare, retail or environmental protection and landscape administration
(Machalova, 2007).
In GIS, it is possible to work with a diverse database and with various visualization options. A
typical representative of the GIS system is the network analysis, which is used to assess transport
accessibility. In the case of the evaluation of the time accessibility of social facilities within
individual transport, a technical network analysis was used, which is based on algorithms whose
theoretical cores are based on graph theory. Based on this, it is possible to search for the best
routes, search for the nearest sanitary facilities, model access zones or perform other accessibility
analyzes (Tome, Santos, Carvalheira, 2019). The access zones defined in relation to the tent
destination include all parts of the roads that are currently publicly accessible. The accessibility
of social facilities via public transport was analyzed using a database of transport connections,
which is regularly updated and includes currently valid traffic timetables and transfers.
In the context of this article, commuting to social facilities for 7 am on a normal working day
was determined. Tuesday was chosen as the normal working day, as working days such as
Monday and Friday are often affected by weekend travel. Connections were sought in bus and
train timetables; urban public transport was excluded from the accessibility analysis. It is
necessary to emphasize that transport connections describe the real accessibility of the facility
(the nearest stop at the sanitary facility), but rather the accessibility of the municipalities (train
station, bus stops) where the sanitary facility operates. The accessibility of social services is
determined by the travel time by public transport, including the time needed to change and wait
for the next transport connection. Based on knowledge from the literature and on the part of
providers and users of ambulatory social services, time intervals were defined - the accessibility
of the service in the municipality, travel to the social facility within 30 minutes and up to 60
minutes.
3 Results
3.1 Accessibility of day services centres
The ambulatory service of the day services centers is provided on weekdays (Monday-Friday),
most often from morning to afternoon. In the Moravian-Silesian Region, the service is not
intended primarily for the target group 65+, however, elderly are the most frequent users of this
service. The service is provided for a fee. The development of the number of registered day
services centers at the level of districts of the Moravian-Silesian Region since 2011 is shown in
Table 1.
Table 1 Number of registered day service centres according to district competence for the
period 2011-2020
Type of
District 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
service
Opava 0 0 0 0 0 0 0 0 0 0
Ostrava-město 3 3 3 3 4 4 4 4 4 4
Day services Frýdek-Místek 1 1 1 1 1 1 1 1 1 1
centres Karviná 1 1 1 1 1 1 1 1 1 1
Nový Jičín 1 1 1 1 1 1 1 1 1 1
Bruntál 0 0 0 0 0 0 0 0 0 0
Source: Register of social service providers (2011-2020), own elaboration
It is evident that the ambulatory social service was available for the target group of elderly in the
region only in the districts of Ostrava-město, Frýdek-Místek, Nový Jičín and Karviná. In terms
122
of legal form, contributory organizations and registered associations predominated, as well as
charity and church organizations. In the Nový Jičín district and in one case in the Ostrava-město
district, the service was available only to persons under 80 years of age. Through a simple
measure of time series dynamics, the basic features of time series behavior were characterized ie
the development of the number of registered social services for elderly in the districts of the
region. The dynamics of time series were evaluated from the point of view of both border years,
ie 2011 and 2020, in order to capture developments within a 10-year time period. Based on the
results, it can be stated that the most significant in the Ostrava-město district was recorded
a positive average absolute increase ď = 0,11 and the related increasing average growth
coefficient k of 3 %. The average relative increas 8, which is closely related to the average
growth coefficient, reflects the average growth rate of the monitored district, ie 3 %. Due to the
constant number of registered social services in other districts, their development can be
described as stagnant (J = 0,00; k = 1,00; 8 = 0,00).
Accessibility was also evaluated in terms of capacity availability of the service. Based on data
on the development of the capacity of day services centers and the number of persons aged 65+
by district, the number of places per 1,000 persons aged 65+ was analyzed. Due to the overall
low capacity of day services centers, the differences between the individual districts were low,
see Table 2. The recalculation was carried out on the assumption that the given service would be
used only by elderly, i.e. persons aged 65+.
Table 2 Number of places in day services centers per 1,000 persons aged 65+ by district in
2011-2020
District 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Ostrava-město 0,7 0,7 0,7 0,7 1,1 1,1 1,0 1,0 1,0 1,0
Frýdek-Místek 0,5 0,5 0,5 0,5 0,5 0,5 0,4 0,4 0,4 0,4
Karviná 0,2 0,2 0,2 0,2 0,2 0,2 0,2 0,2 0,2 0,2
Nový Jičín 1,0 1,0 1,0 0,9 0,9 0,9 0,9 0,8 0,8 0,8
Source: Czech Statistical Office (2011-2020), Annual reports of providers of selected ambulatory
social services (2011-2020). Own elaboration and calculations
The accessibility of ambulatory social services was also monitored in terms of territorial location
and time accessibility, thanks to which it is possible to monitor the activities of social service
providers in the city or municipalities in individual districts. The accessibility of the service in
terms of time needs to be monitored due to the fact that the users of the services have to commute
to the ambulatory service, either by public transport or individual transport. Accessibility was
assessed for the year 2020, i.e. for the last monitored period of time, for the needs of capturing
the current according to valid timetables, built stops within public transport and according to
build roads and highways within capturing the accessibility of the service within individual
transport, see Figure 3. From the point of view of public transport, time accessibility was
monitored with time intervals within 30 minutes and within 60 minutes and over 60 minutes and
in the case of individual transport, accessibility was monitored within 30 minutes and within 60
minutes.
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Figure 3 Accessibility of day services centers via the means of public transport (a) and
individual transport (b) in year 2020
Source: Own elaboration
service over 60 min.
The very low accessibility of day services centers results in worsened time accessibility of social
facilities, especially within public transport in the Frýdek-Místek and Nový Jičín districts (partly
within individual transport). Territorial localities of social facilities in the district of Ostravaměsto
(as well as the district of Nový Jičín), which are located near the district of Opava, are able
to cover a large part of the territory of the district of Opava in terms of time accessibility.
3.2 Accessibility of day care centres
The day care centres are also provided for a fee, on weekdays from morning to afternoon. This
is not an ambulatory service provided primarily for people over 65, however, this group is a key
target group for the service. The accessibility of the given ambulatory social service was
monitored in the Moravian-Silesian Region for the period 2011-2020, according to the number
of registered social services, see Table 4.
The social service was provided by one provider in the Opava and Ostrava-město districts,
namely by a charity, hi the case of the Bruntál district, the service was offered by a charity until
2017, and from 2018 also by a newly registered contributory organization (but only for people
under 80). Until 2013, there were three contributory organizations and a registered institute in
the Karviná district. In the case of one contributory organization, the service was available to
persons under 70 years of age, and in the case of a registered institution, a maximum age limit
of 80 years was set. Since 2014, the supply of the service has been expanded by the existing
contributory organization, and only for persons under 70 years of age. A registered association
has been operating in the Frýdek-Místek district since 2012 (but only for persons under 70 years
of age), since 2014 the service has also been offered by a newly registered contributory
organization and since 2016 also by church organizations, but only to persons under 80 years of
age. In the Nový Jičín district, it was a provider in the legal form of a municipality and, since
2014, an established charity organization.
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Table 4 Number of registered day care centres according to district competence for the
period 2011-2020
Type of
District 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
service
Opava 1 1 1 1 1 1 1 1 1 1
Ostrava-město 1 1 1 1 1 1 1 1 1 1
Day care Frýdek-Místek 0 1 1 2 2 3 3 3 3 3
centres Karviná 4 4 4 5 5 5 5 5 5 5
Nový Jičín 1 1 1 2 2 2 2 2 2 2
Bruntál 1 1 1 1 1 1 1 2 2 2
Source: Register of social service providers (2011-2020), own elaboration
In order to map the development in the number of registered social services between 2011 and
2020, indicators of time series dynamics were used. In the districts of Opava and Ostrava-město,
stagnation of the main results was recorded, which was caused by the invariability of the number
of registered social services during the ten years in the given territories (d = 0,00; k = 1,00; Š =
0,00). The highest average absolute increase was detected in the Frýdek-Místek district (d =
0,33). In terms of the resulting values of the average growth rate, it can be stated that among the
monitored years, the most significant growth was recorded in the districts of Nový Jičín and
Bruntál, within 8%, which is confirmed by the values of the average relative increase (5 = 8 %).
In the Karviná district, the growth rate (k) between 2011 and 2020 was 3 % (ď = 0,11; 5 = 0,03).
Very low capacity of social facilities was recorded in the districts of Frýdek-Místek, Ostravaměsto
and Opava, see Table 5. In these districts unfavorable accessibility of the service was
found, when for 1,000 persons aged 65+ living in the given districts there were 0.1- 0.7 places;
since 2018, there have been approximately 1.6 places per 1,000 inhabitants of the Bruntál district.
The highest capacity of social facilities in the Karviná district resulted in 2.7-3.1 places per 1,000
persons.
Table 5 Number of places in day care centers per 1,000 persons aged 65+ by district in
2011-2020
District 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Opava 0,7 0,7 0,7 0,7 0,6 0,6 0,6 0,6 0,6 0,6
Ostrava-město 0,1 0,1 0,1 0,1 0,1 0,1 0,1 0,1 0,1 0,1
Frýdek-Místek 0,0 0,3 0,3 0,6 0,6 0,7 0,7 0,7 0,7 0,7
Karviná 2,8 2,8 2,7 3,1 3,0 2,9 2,8 2,8 2,7 2,7
Nový Jičín
Bruntál
0,4 0,4 0,4 1,0 0,9 0,9 0,9 0,9 0,8 0,8
1,5
Nový Jičín
Bruntál 1,1 1,0 0,9 0,9 0,9 0,8 0,8 1,6 1,5
0,8
1,5
Source: Czech Statistical Office (2011-2020), Annual reports of providers of selected ambulatory
social services (2011-2020). Own elaboration and calculations
The territorial location and time accessibility of day care centres from the point of view of public
transport and individual transport for 2020 is shown in Figure 6. It can be stated that social
facilities are spatially distributed mainly in district cities. In terms of time accessibility from the
point of view of public transport, the facilities are available mainly within 30 minutes, especially
in the districts of Ostrava-město and Karviná. In other districts, longer accessibility is evident,
especially in their peripheral parts. From the point of view of individual transport, the
accessibility of ambulatory services can be described as very good, with predominant
accessibility within 30 minutes.
125
Figure 6 Accessibility of day care centers via the means of public transport (a) and
individual transport (b) in year 2020
Source: Own elaboration
service up to 30 min.
service up to 60 min.
service in a
municipality
service up to 30 min.
service up to 60 min.
• Day services centres
service over 60 min.
4 Discussion and conclusion
The Moravian-Silesian Region is one of the regions that, in terms of concept, has long focused
on the support and development of social services in its territory. The third Medium-Term Plan
for the Development of Social Services for 2015-2020 (MSR, 2016) actively responded to the
resources, needs and requirements of local people, which change over time. Ongoing analysis of
these needs enabled the region to actively respond and thus ensure an accessible and high-quality
network of social services. The region defined several cross-cutting topics for the given period,
which concerned the quality of social services, identification of needs and care at the municipal
level and deinstitutionalisation of social services in order to prevent the institutionalization of
other persons, abolish institutions and provide social services in the natural social environment.
The region's priorities also included the target group of seniors, in connection with the
demographic aging of the population. The National Action Plan supporting positive aging for the
period 2013-2017 also addressed this issue. For this target group, the aim of the region was to
ensure the availability of field and ambulatory services in sufficient capacity to prevent the use
of residential services.
The research was focused on the analysis of the accessibility of selected ambulatory social
services, which are mostly used by people aged 65+ from 2011 to 2020. The supply of services
was also evaluated in terms of its time accessibility in individual and public transport. Based on
the results, it is clear that the current scope and pace of expanding the number of facilities or
capacities of selected ambulatory social services is not yet able to respond effectively to the
growing number of people in senior age. The offer of selected ambulatory social services did not
increase significantly in the monitored period 2011-2020. It was identified that the spatial
accessibility of day care centers is not sufficient in the districts of the region. The absence of this
service was detected in the districts of Opava and Bruntál. In the case of other districts, the supply
was also very low. The time accessibility of the service from the point of view of the used
transport (individual, public) can be marked only in the districts of Ostrava-město and Karviná
as very good (travel within 30 minutes). Slightly better results were achieved in the case of day
126
care centres, the accessibility of which was obvious in all districts of the region. Social facilities
are spatially distributed so that it is able to cover most of the district territory, which results in
better time accessibility (accessibility within 30 minutes predominates). The supply of selected
ambulatory social services was in some cases limited in terms of the age category of clients
(services were not accessible to all elderly, but only provided to persons under 70 or up to 80
years of age).
The achieved results are in accordance with the findings of Horečky, Průša (2019), who state
that the capacity of ambulatory social facilities is not sufficient in relation to the number of
persons aged 65+ (demand side). The network of ambulatory social services is expanding only
very slowly at the regional level, and at the same time the social facilities are not spatially
distributed evenly so that they are able to cover the entire territory, including remote areas.
Holczerová, Dvořáčková (2013) also draw attention to the insufficient supply of ambulatory
social services for seniors, which is caused not only by economic factories, but also due to
insufficient information on ways to meet the needs of the region and insufficient cooperation
between local authorities, social policy makers and social services providers. For ambulatory
social services, it is necessary to ensure affordable and quality social care. The services should
be accessible in several towns or municipalities in the districts of the Moravian-Silesian Region
with accessible transport accessibility (especially within public transport), flexible in time (not
limited to standard working hours only), with sufficient capacity and affordable. Although the
accessibility of ambulatory social services in the region has been detected in the region for
individual transport significantly better than for public transport, Lucas, Stokes, Bastiaanssen,
Burkinshaw (2019) state that elderly are more often dependent on public transport, which is not
in rural areas. The accessibility of ambulatory facilities is therefore longer than 30 minutes,
which has some effect on their health and mental well-being.
Through the GIS system and network analysis, it is possible to evaluate the scope of ambulatory
social facilities in the district and effectively use it as a decision support system, not only in terms
of planning and development of ambulatory social services, but also for urban planning,
transport, energy and resource analysis. According to Ngui, Apparicio (2011), GIS can be seen
as a suitable tool for social policy makers to identify the needs of the population, identify gaps
in the services market, or oversupply in a particular area. Based on this, it is possible to achieve
a balance between equal access to ambulatory social services and the health status of the
population across all districts.
Acknowledgements
This paper was created within the project TJ04000315 "Nové výzvy na trhu sociálních služeb
pro seniory v Moravskoslezském kraji". The project was supported by the Technology Agency
of the Czech Republic.
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Contact information
Ing. Izabela Ertingerová, Ph.D.
VSB - Technical University Ostrava, Faculty of Economics, Department of Public Economics
Sokolská třída 33, 702 00 Ostrava 1, Czech Republic
E-mail: izabela.ertingerova@vsb.cz
129
Civil Service Systems and Evaluation of Selected Indicators in
European Union Countries
Martina Halásková, Renata Halásková
Abstract: The paper deals with civil services, civil servants and their characteristic features in
the European dimension. The aim is to define the basic features of civil service and evaluate the
systems of civil service in E U countries on the basis of selected indicators. A hierarchical cluster
analysis is utilised to assess similarities and differences of indicators of civil service in E U
countries. This method allows a more specific look at the similarities and differences between
countries, thus identifying groups of countries with similar information. The results lead to
a division of the countries into seven clusters divided by internal similarity, including the
specificities of the individual indicators of civil service. Germany has a specific position, with
the highest expenditures on compensations of employees in general government and with
a relatively low number of national administrations. Similarities as well as significant differences
have been found between the clusters of E U countries with respect to the observed indicators of
civil service. The most marked differences have been seen in the countries in the fourth cluster
(Cyprus and Hungary) and the sixth cluster (Italy, the Netherlands, Portugal) in the number of
national civil servants in central public administration and proportion of seats held by women in
national parliaments. In spite of the differences in the systems of civil services, similar tendencies
can be observed, in particular towards increased flexibility, modern recruitment process,
efficiency of the services, higher demands for formal qualification, or assessment of civil
servants.
Keywords: Civil service, civil servants, E U countries, hierarchical cluster analysis, indicators of
civil service
JEL Classification: H83, M50, C38
1 Introduction
According to a host of authors, civil service is a classical institute of the European public
administrative law. Its key terms are professionalism, political impartiality, restraint, recruitment
and career. E U countries do not have a unified system of civil service. Civil service is moulded
by the same or highly similar principles as the European Economic Area and falls under the
sovereignty of the individual states, i.e. it falls under their exclusive competence (EUPAN, 2013;
Staronová, 2017; European Union, ESF, 2020). As a rule, "civil service" is interpreted as
a national service in a narrow sense, i.e. employees of ministries (part of the government); in
other countries also employees of other central administrative authorities with a similar position
in the administrative structure of the given country to ministries, except for the fact that such
authority is not governed by a government official. E U countries strive to implement systems of
civil service with a higher degree of flexibility, transparency, systems leaning upon work of
specialists, and accentuating qualification, competence and performance. These demands result
mainly from a new system of HR management that aims for a good quality of public services
(Demke and Moilanen, 2010, 2012; Kovářová, 2017; Meričková et a l , 2017; Meričková and
Muthová (2021). Civil service is mainly associated with the legal position of "civil servants"
(civilian employees of public administration). Employees in public administration represent part
of a wider category of public employees, i.e. employees in the public sector paid from public
resources. Such employees can be considered public who have an employment (or a similar)
relationship with the state or another public employer (European Commission, 2018). Public
employees are employed by either the state, or self-governing or other public institutions.
130
However, various categories of natural persons are involved in public administration, i.e.
professionals and laypeople, civilian employees and members of military corps, politicians,
officials and ancillary staff and employees in public services (Kuperus and Rode, 2016; Eurostat
Statistics Explained, 2018).
Currently, three basic systems of civil service are being distinguished on the European as well
as global scale usually (Staronová, 2017; Eurostat Statistics Explained, 2018; European
Commission, 2018), namely the career system, the position system, and the mixed (hybrid)
system. The career system only allows hiring employees on entry-level positions, requires
special legal requirements for special careers, entails a maximum age, and disregards any work
experience from outside the public sector. The employment is associated with a permanent
position. Seniority in the job is automatically associated with an increased salary, and promotion
is defined in the law. So are remunerations and the pension system. The position system is also
typically applied in hiring for higher positions. Special skills are required for special positions,
and no maximum age is applied. Previous work experience also outside the public sector is
recognised. Typically, the salary is specific and/or individual, and no automatic salary increase
exists, nor the system of progress and no guarantee of a permanent employment. The pension
system is not defined in the law. The mixed (hybrid) system is a combination of the two aforementioned
systems. This system of civil service includes structural elements when characteristic
features and elements of one system are gradually implemented in terms of the second system.
Differences in the individual countries, even if the same type of system of civil service is adopted,
consist mainly in the variety of categories of employees, in administrative levels or in functional
sectors of employments (European Commission, 2018; European Union, ESF, 2020). The aim
of the paper is to define the basic features of civil service and evaluate the systems of civil service
in E U countries based on the selected indicators. A cluster analysis is applied to render an indepth
analysis of similarities and differences in the indicators of civil service in E U countries.
1.1 Literature review
A number of authors, e.g. Manole (2009); Demmke and Moilanen (2010, 2012); Picka (2012);
Marcetic (2015); Kuperus and Rode (2016); Staronová and Adamicová (2016); Staronová
(2017); Xifre (2020) as well as research studies and analyses, e.g. EUPAN, 2013; European
Commission, 2018; Eurostat Statistics Explained, 2018; European Union, ESF, 2020) deal with
civil service, its concept, trends, HR management including current HR questions and position,
evaluation and remuneration of civil servants in the European dimension. Some authors, e.g.
Židonis and Raišiene (2020) examined the application of innovative management tools in
institutions of public administration in Central and Eastern Europe. Stare and Klun
(2008) evaluated investments in human resources in Slovenia which increase efficiency and
effectiveness of the public sector and are among the most important factors for an improved
performance. Fukuyama (2014) shows that hiring of civil servants is a result of their ability to
perform work rather than their political connections. Dahlstróm at al. (2012) found that
meritocratic recruitment of civil servants, unlike political appointment, curbs corruption.
Xifre (2020) examined civil service career development and modernizing civil servants' careers.
Marcetic (2015) compared the position of civil servants and reforms, in particular managing
employees and systems of remuneration in Anglo-Saxon, western European and post-socialist
European countries. The aim of the reforms are the protection of the professional, non-political,
and ethical civil service and the introduction of a greater degree of flexibility, openness, and costeffectiveness
in a personnel system. Also Staronová (2017) analyses civil service, system of HR
management and appraising of civil servants in the individual E U countries. Kuperus and Rode
(2016) evaluated top public managers in Europe and management and employment in central
public administrations. Staronová and Adamicová (2016) look into turnover data (both scope and
depth) among top civil service officials at the six Slovak ministries between 2004 and 2014 and
131
the connection between electoral cycles and top civil servants replacements. Picka (2012)
presents the system of remuneration of civil servants in Czechia that would ensure an adequate
supply of public human resources and prevent overpayment of some groups of employees. Some
researchers looked into reforms of HR processes, civil service and civil servants in Romania.
Androniceanu and Nastase (2009) present both legal as well as managerial aspects of the
Romanian civil service in order to identify its main strengths and weaknesses. Suciu et al (2011)
focus on presenting the aspects related to the promotion of civil servants in Romanian and
Belgian local public administrations. Ciobanu and Ristea (2015) examine whether a connection
could be established between performance appraisal and the factors that motivate civil servants
to achieve improved results in their professional activity. Other authors deal with civil service
also outside the EU. Veledar and Gadzo (2020) carried out a survey among public employees at
all levels of public administration in Bosnia and Herzegovina, evaluating the performance of
public administration, increased transparency of public budgets and accountability of public
employees. Radojicic and Rabrenovic (2018) assess the rules and practices of professional
development in civil service, which include civil servants training, performance appraisal and
promotion.
2 Material and Methods
An analytical approach has been adopted predominantly in this paper, with the use of literature
and other documents. In the empirical part, data pertaining to the selected indicators of civil
service in E U countries have been obtained from the Eurostat database (general government
expenditure by function (public services); expenditure on compensation of employees and
remuneration of civil servants - specific indicators), EIGE database (Public administration Senior
administrators at national level) and the World Bank -Inter-Parliamentary Union (EIGE,
2021; World Bank, 2021). The selected set of countries where civil service is evaluated
comprises 27 E U countries. On account of a high correlation of data, only 26 E U countries have
been selected in the end for the purposes of evaluating the system of civil service based on the
selected indicators using cluster analysis (i.e. E U countries, excluding France). The selected
indicators of civil service used for the purposes of cluster analysis are: 1) General government
expenditures on public services, % of GDP (GGEPA); 2) National administrations: top two tiers
of administrators by function of government, number of persons, headcount (NATAFG);3)
Remuneration of national civil servants in central public administration as index (RNCSCPA);
4) Number of national civil servants in central public administration, number of persons
(NNCSCPA); 5) Compensation of employees in general government, in million EUR (CEGG);
6) Proportion of seats held by women in national parliaments, in % (PSHWNP), (Eurostat, 2021).
The correlation matrix of the utilised variables (indicators of civil service) in E U countries is
seen in Table la; the correlation matrix of the used indicators in E U countries excluding France
is seen in Table 2.
Table 1 - Correlation matrix of original values in 27 EU countries
GGEPA N A T A F G RNCSCPA NNCSCPA CEGG
N A T A F G -0.021
RNCSCPA 0.422* 0.012
NNCSCPA 0.152 0.538** -0.270
CEGG 0.154 0.231 -0.282 0.642**
PSHWNP 0.201 0.012 -0.182 0.357 0.440*
Source: Authors
Note: * Correlation significant at the 0.05 level (2-tailed); ** Correlation significant at the 0.01
level (2-tailed)
132
Table 2 - Correlation matrix of original values - EU countries (excluding France)
GGEPA N A T A F G RNCSCPA NNCSCPA CEGG
N A T A F G -0.026
RNCSCPA -0.427* 0.105
NNCSCPA 0.242 0.268 -0.242
CEGG 0.196 -0.125 -0.240 0.310
PSHWNP 0.206 -0.116 -0.153 0.306 0.399*
Source: Authors
Note: * Correlation significant at the 0.05 level (2-tailed
The evaluation of the selected indicators of civil service in the European dimension and of
similarities and differences in the respective countries was performed by means of cluster
analysis. Cluster analysis is a multi-dimensional statistical method used to classify units into
groups (clusters) where units in the same group are more similar than units in the other groups.
Cluster analysis stems from the similarity (distance) of objects. In the present example, the
hierarchical cluster analysis applies Ward's method, based on dispersion analysis. At different
distances, different clusters will form, which can be represented using a dendrogram (Hennig et
al., 2015). The similarities and differences of indicators of civil service in E U countries are then
presented in a box-plot. The present analysis draws from data from 2019, which was the last year
when all the variables were available. Due to the variety of units of the variables used, the original
values have been converted to a standardised score (z-score), with the mean of 0 and deviation
of 1 (Meloun and Militky, 2001).
3 Results and Discussion
The following section of the paper deals with the evaluation of systems of civil service and civil
servants in E U countries, comparing selected indicators of civil service and evaluating
similarities and differences in civil service on the basis of selected indicators in the individual
countries by use of cluster analysis.
3.1 Systems of civil service and civil servants in European countries
Systems of civil service, in the E U and other European countries alike, have been developing
independently and reflect specific needs, cultures and traditions of each member state. The staff,
their knowledge, competencies, motivation, values and work ethics but also the way they are
selected and managed (the H R M system) are essential for the capacity and effectiveness of public
administration (Christensen and Gazley, 2008; Zarska, 2018). This is reflected in numerous
reforms of both the overall civil service system but also H R M functions (such as recruitment and
promotion, performance appraisal, motivation, compensation, training and development) and
capacity building interventions in order to make civil service systems more effective. At the same
time civil service systems continue to show substantial differences among the various E U
Member States due to different historical traditions, legal and institutional foundations but also
reform pressures and overall employment developments (European Commission, 2018).
Apart from the already mentioned systems of civil service (career, mixed, and position system),
E U countries can also be divided by traditions of civil service into several groups (Demmke and
Moilanen, 2010). Distinguished are the Anglo-Saxon tradition of civil service (Ireland, Malta,
Cyprus), the continental tradition of civil service (Austria, France, Germany, Belgium,
Luxembourg, Netherlands, Slovenia), the Mediterranean tradition of civil service (Greece, Italy,
Portugal, Spain), the Scandinavian tradition of civil service (Denmark, Finland, Sweden,
Estonia), the Eastern European tradition of civil service (Czechia, Hungary, Slovakia, Poland,
133
Lithuania, Latvia, Croatia), and the Balkan tradition of civil service (Bulgaria, Romania). The
tradition of civil service creates pre-conditions for the system of human resource management in
the individual countries.
Management of human resources at the level of central government is organised in various
manners. Most countries apply a combination of a government unit responsible for legislature in
the areas of public service and HR management policies (e.g. a designated ministry, body of an
administrative council, such as a chancellor, ministry of the interior or independent
bodies/agencies) and decentralised implementation of these policies. Also, several countries have
independent national agencies/institutes for training in public service. A considerable part of
employees in civil service must abide by a set of specific rules that differ from the ordinary work
relationships in contracts (European Commission, 2018). The E U Staff Regulations is the official
document describing the rules, principles and working conditions of the European civil service.
These rules are essential to guarantee the European civil service maintains the highest standards
(Eurostat, 2021). The representation of systems of civil service in E U countries and the division
of countries by the tradition of civil service is seen in Table 3.
Table 3 - Systems of civil service in EU countries and traditions of civil service
Type of Civil
service
Country Country by tradition civil service
Career system
Germany (DE), Austria (AT),
Belgium (BE), France (FR),
Luxembourg (LU), Cyprus (CY),
Spain (ES), Greece (EL),
Portugal (PT), Hungary (HU)
Continental tradition (DE, AT, BE,
FR, LU)
Eastern European tradition (HU)
Mediterranean tradition (ES, EL,
PT)
Anglo-Saxon tradition (CY)
Mixed (hybrid)
system
Slovenia (SI), Ireland (IE), Malta
(MT), Italy (IT), Slovakia (SK),
Poland (PT), Latvia (LV),
Lithuania (LT), Croatia (HR),
Bulgaria (BG), Romania (RO)
Continental tradition (SI)
Eastern European tradition (SK,
PL, LV, LT, HR)
Mediterranean tradition (IT)
Anglo-Saxon tradition (IE, MT)
Balkan tradition (BG, RO)
Position system
Sweden (SE), Denmark (DK),
Finland (FI), Estonia (EE),
Netherlands (NL), Czechia (CZ)
Continental tradition (NL)
Eastern European tradition (CZ)
Scandinavian tradition (SE, DK,
FI, EE)
Source: Authors according to Demmke andMoilanen (2010); European Commission (2018)
The main key feature of the management of systems of civil service are employees. Duality exists
in most countries between civil servants and non-civil service employees, with different legal
systems and a tendency to unify the contents and working conditions of both groups. Their nature
is a widespread phenomenon in both the public and private sectors. There are issues regarding
the differentiating functions to be carried out by civil servants, non-civil service employees and
by those recruited using trust criteria. In general, the following types exist in E U countries: Civil
Servants, Non-civil service employees, Interim/Transitory/Temporary Staff and Management
(Eurostat Statistics Explained, 2018). According to Demmke and Moilanen (2012) "the number
of public employees under labour law contract is increasing and in the majority ofEU countries
we also observe that the differences between (public law) civil servants and (labour law status)
public employees are decreasing. Some analysis but shows that for a large number of EU
Member States the differences are less profound than their legal status might imply. Only for
Bulgaria, Greece, Croatia and Italy experts observe high differences among these 2 types of
134
employment" (European Commission, 2018, p. 23). Differences between public employees and
civil servants in E U countries are shown in Table 4.
Table 4 - Differences between public employees and civil servants
High differences Medium differences Low differences
BG, EL, HR, IT
BE, CZ, FR, HU, LT, MT,
PL, PT, SI
AT, CY, DK, DE, EE, ES,
FT, IE, L U , L V , NL, RO,
SE, SK
Source: European Commission (2018)
When evaluating the turnover rate and leave rate of employees in civil service (excluding
retirements), it can be said that the majority of countries have a relatively high stability of civil
servants. Only five countries (BG, HU, RO, SE, SK) demonstrate a high turnover rate of civil
service employees, and in EE, DK, L V , SI, and FR a medium turnover rate of civil service can
be observed. France shows a low turnover rate of civil servants and a medium turnover of public
employees (European Commission, 2018). The shortage of competent employees for a particular
functional work position or leaving the state service is caused by a number of factors, such as a
lower level of remuneration or a reduction of salaries.
3.2 Evaluation of selected indicators of civil service in EU countries
Statistics on civil servants provides general background information about civil servants. Based
on available data from the Eurostat (2021), this study renders a comparison of the numbers of
national civil servants in central public administration, remunerations of national civil servants
in central public administration and expenditures on compensation of employees in general
government in E U countries in 2019 (see Table 5).
135
Table 5 - Civil servants, remuneration and expenditures on compensation of employees in
2019
Countries
Number of
national civil
servants in
central public
administration
Remuneration
of national
civil servants
in central
public
administration
(index)
Compensation of employees (Million euro)
Countries
Number of
national civil
servants in
central public
administration
Remuneration
of national
civil servants
in central
public
administration
(index)
General
government
Central
government
Local
government
Belgium 11 389 103.4 58 630.0 10 489.9 18 810.0
Bulgaria 37 010 106.7 6 140.9 3 929.7 2 155.1
Czechia 21 672 100.3 22 424.3 10 899.8 11 316.8
Denmark 11 493 101.0 46 691.8 12 589.2 33 790.9
Germany 18 383 102.8 271 535.0 35 385.0 69 856.0
Estonia 6 459 111.3 3 223.7 1 800.8 1 311.9
Ireland 29 393 101.0 23 073.1 21 140.8 1 932.3
Greece 75 112 100.3 21 902.0 19 031.0 2 494.0
Spain 36 981 102.9 134 463.0 25 076.0 24 822.0
France 263 849 100.5 297 320.0 146 940.0 83 038.0
Croatia 14 907 103.0 6 449.9 3 294.3 3 051.2
Italy 134 374 100,3 172 912.0 102 929.0 67 082.0
Cyprus 8 617 101,5 2 732.7 2 588.0 131.7
Latvia 13 606 103,8 3 311.9 1 797.2 1 499.6
Lithuania 13 933 116.3 4 961.7 2 679.5 2 217.8
Luxembourg 966 103.0 6 321.3 4 515.4 1 040.7
Hungary 15 042 100.7 14 955.5 11 640.1 3 299.4
Malta 27 852 102.7 1 481.2 1 468.0 13.2
Netherlands 121 291 103.5 66 740.0 25 093.0 40 127.0
Austria 16 863 102.5 41 857.5 16 712.4 10 357.9
Poland 22 719 100.8 54 983.9 24 600.9 29 369.2
Portugal 101 104 100.5 22 905,3 18 498.7 4 130.2
Romania 13 191 112.5 25 119.8 17 951.4 6 985.6
Slovenia 19 945 103.9 5 473.9 3 522.6 1 897.0
Slovakia 37 306 115.3 9 609.4 5 798.0 3 627.9
Finland 29 003 103.8 29 930.0 7 219.0 22 060.0
Sweden 66 409 103.8 60 006.4 13 942.6 45 954.0
Source: Authors according to Eurostat (2021)
Table 5 shows that the highest number of national civil servants in central public administration
is seen in France, followed by Italy and the Netherlands. Conversely, the lowest number of
national civil servants was found in Luxembourg. Lithuania and Slovakia reach the highest
remuneration of national civil servants in central public administration (expressed as an index)
in the EU. When evaluating the remuneration of employees in the general government sector, it
can be said that the remuneration in civil service is based upon professional expertise. It is quite
common in E U member states that employee rewards are bound to performance. The highest
expenditures on remuneration of employees in general government (in millions of euros) are seen
in France and Germany, whereas the lowest expenditures on remuneration of employees in
general government are seen in Malta and Cyprus.
The main reason for binding rewards to performance is to increase competitiveness of payments
in the public sector with regard to the employment rate in the private sector. A different trend is
apparent in E U countries regarding allocated expenditures on remuneration of employees,
136
resulting from specificities in the management of public administration, development trends and
priorities of the respective countries. Pay in the public sector is generally lower than in the private
sector, with a significant difference in the case of management and high level employees, and it
increases as careers progress (European Commission, 2018; Eurostat Statistics Explained, 2018).
3.3 Similarities and differences of indicators of civil service in EU countries using cluster
analysis
This section focuses on the evaluation of selected indicators of civil service in E U countries.
Indicators available in the year 2019 have been selected to assess civil service in E U countries
by use of cluster analysis. The results show a division of the countries (excluding France) into
seven clusters based on internal similarities of indicators of civil service (Table 6 and Figure 1).
Table 6 - Results of cluster analysis by similarities of indicators of civil service in EU
countries
Clusters by country Indicators of civil service-Transformed values (Z-score)
Country Cluster ZGGEPA ZNATAFG ZRNCSCPA ZNNCSCPA ZCEGG ZPSHWNP
Austria 1 0.13790 1.84564 -0.35948 -0.50527 -0.01832 1.10321
Croatia 1 0.07608 0.54755 -0.24978 -0.56034 -0.58915 -0.83445
Czechia 1 -0.66570 1.34162 -0.84217 -0.36987 -0.33162 -0.62831
Greece 1 1.49783 1.53182 -0.84217 1.13478 -0.34004 -0.81383
Malta 1 0.07608 0.76627 -0.31560 -0.19586 -0.66926 -1.41162
Poland 1 -0.78933 0.38588 -0.73247 -0.34039 0.19330 0.01070
Slovenia 1 -0.17118 0.55706 -0.05232 -0.41849 -0.60489 -0.08206
Belgium 2 0.87968 -1.08815 -0.16202 -0.65939 0.25209 1.38149
Finland 2 1.49783 0.26701 -0.07426 -0.16346 -0.21061 1.89683
Spain 2 0.01427 -0.54133 -0.27172 0.06117 1.47466 1.58763
Sweden 2 0.87968 -0.64594 -0.07426 0.88974 0.27428 1.92775
Bulgaria 3 -1.65474 0.12911 0.56201 0.06199 -0.59414 -0.28819
Denmark 3 0.32334 -1.03109 -0.68859 -0.65647 0.05962 -0.28819
Ireland 3 -1.71656 -0.85515 -0.68859 -0.15248 -0.32116 -0.65923
Latvia 3 -1.03659 -1.21177 -0.07426 -0.59697 -0.63975 0.14469
Luxembourg 3 -0.29481 -1.22128 -0.24978 -0.95286 -0.59123 -0.37064
Cyprus 4 1.25057 -1.25932 -0.57889 -0.73744 -0.64908 -1.10242
Hungary 4 1.68327 -0.71726 -0.75441 -0.55654 -0.45203 -1.64867
Estonia 5 -1.22204 -0.49378 1.57127 -0.79820 -0.64117 0.11377
Lithuania 5 -1.22204 -0.90270 2.66828 -0.58777 -0.61315 -0.75199
Romania 5 -0.78933 1.22275 1.83455 -0.60866 -0.28816 -0.69015
Slovakia 5 -0.04755 1.45574 2.44888 0.07032 -0.53822 -0.88598
Italy 6 1.25057 0.21946 -0.84217 2.80335 2.09453 0.73217
Netherlands 6 -0.85115 1.17995 -0.14008 2.43499 0.38283 0.27868
Portugal 6 0.75605 -0.57937 -0.79829 1.86660 -0.32386 1.04137
Germany 7 0.13790 -0.90270 -0.29366 -0.46247 3.68451 0.23745
Source: Authors' calculations according to Eurostat (2021)
Based on the results of the hierarchical cluster analysis (Table 6) and the graphic depiction
(Figure 1, see the dendrogram using the Ward method), it can be seen that the first cluster,
composed of seven countries, is the largest (AT, HR, CZ, EL, M T , PL, SI). This cluster is
characterised by a relatively high number of national administrations: top two tiers of
administration by function of government. According to the observed indicators, the most similar
countries are CZ, SI, PL, M T , and HR. E L is the outlier, with the highest government
expenditures on public administration and an extreme value associated with a significantly higher
137
number of national civil servants in central public administration in comparison to the other
countries in the first cluster. The second cluster comprises four countries (BE, FT, SE, ES) with
high general government expenditures on public administration and services and the highest
proportion of seats held by women in national parliaments. The highest similarity is seen between
BE, SE and FI. The third cluster is composed of five countries (BG, DK, IE, LV, LU) with low
general government expenditures on public administration and services seen in most countries,
but also a low number of national administrations: top two tiers of administration by function of
government. B G is the outlier due to the highest number of national administrations: top two
tiers of administration by function of government. Another outlier is L V with the highest
proportion of seats held by women in national parliaments, and IE with the lowest proportion of
seats held by women in national parliaments. The highest similarity is seen between LT, L U and
DK. The fourth cluster is composed of two countries (CY and HU), characterised by the highest
general government expenditures on public administration and services and the lowest
proportion of seats held by women in national parliaments. The fifth cluster comprises four
countries (EE, LT, RO, SK) with the highest remuneration of national civil servants in central
public administration. This similarity is particularly apparent in RO and SK, but also EE and LT.
The sixth cluster consists of three countries (NL, PT, FT) with the highest number of national
civil servants in central public administration. These countries demonstrate a weaker similarity
than the most similar countries in the other clusters. By contrast, Germany has a specific position,
being the only country in the seventh cluster. Germany is the country with the highest
expenditures on compensation of employees in general government and with a low number of
national administrations: top two tiers of administration by function of government.
Figure 1 - Dendrogram - similarities of EU countries according to indicators of civil service.
Source: Authors
The results of the cluster analysis (see appendix, Figure 2 - Box plot) show the major differences
in the observed indicators of civil service in E U countries, in particular in general government
expenditures on public administration in the fourth cluster in comparison to the third and fifth
clusters. Other significant differences are observed in the proportion of seats held by women in
national parliaments in the fourth cluster in comparison to the second cluster.
As regards the criterion national administrations: top two tiers of administrators by function of
government, the largest differences were observed in the first cluster against the countries in the
third and fourth clusters. Concerning the other indicators of civil service, the significant
differences were seen in the following clusters of E U countries:
• Remuneration of national civil servants in central public administration, in particular in
countries of the fifth cluster compared to the fourth and sixth clusters.
• Compensation of employees: general government in Germany (seventh cluster)
compared to the countries of the first, third, fourth and fifth clusters.
• Number of national civil servants in central public administration in the countries of the
sixth cluster compared to the countries of the first and fourth clusters.
Figure 2 - Box plot - similarities and differences of indicators of civil service by clusters of
EU countries.
Source: Authors
• Zscore(GGEPA)
HZscore(NATAPG)
g_ZscM-e(RNCSCPA)
|_Zscore(NNCSCPA)
_]Zscore(CEGG)
HZscorcCPSHWNF)
1 2 3 4 5 6 7
Cluster
Note: 1) GGEPA-General government expenditure on public Administration; 2) NATAFGNational
administrations: top two tiers of administrators by function of government; 3)
RNCSCPA- Remuneration of national civil servants in central public administration; 4)
NNCSCPA- Number of national civil servants in central public administration; 5) CEGGCompensation
of employees: general government; 6) PSHWNP- Proportion of seats held by
women in national parliaments.
4 Conclusion
Civil service falls under the sovereignty of the individual countries. E U countries do not have a
unified system, and public service pertains mainly to the legal position of "civilian employees of
public administration". Differences in the systems of civil service consist predominantly in the
categories of employees, in administrative levels or in functional sectors of employment. The
aim of the paper was to outline the basic features of civil service and evaluate the systems of
139
civil service in E U countries on the basis of the selected indicators. The analysis has shown the
application of a variety of systems of civil service, including the affiliation to traditions of civil
service. The outcome of the cluster-analysis-based evaluation of the selected indicators of civil
service was a division of E U countries into seven clusters divided by internal similarity.
Similarities as well as quite marked differences in the observed indicators of civil service were
found between the clusters of the E U countries. A separate cluster, Germany has a specific
position in the set, with the highest expenditures on compensation of employees in general
government and with a relatively high number of national administrations. The largest
differences have been found between the fourth cluster (Cyprus and Hungary) and the sixth
cluster (Italy, the Netherlands, Portugal) in the number of national civil servants in central public
administration and the proportion of seats held by women in national parliaments. Other
significant differences have been found in Germany when compared to the other clusters with
respect to expenditures on compensation of employees in general government. In spite of the
differences between the systems of civil service, similar trends can be observed, in particular
towards a higher flexibility, modernisation of the hiring process, performance, increased
requirements for professional qualification or the assessment of civil servants. This paper
presents only a basic analysis of civil service in E U countries with the use of selected indicators.
Due to the absence of a unified statistical database of civil-service indicators in E U countries,
the data were drawn from multiple databases (Eurostat, EIGE, World Bank). The authors strove
for choosing available indicators that reflect on the main features and characteristics of civil
service. However, civil service offers a vast area of topical questions and possibilities for
developing human resources which could be used as a topic for further research.
Acknowledgements
This paper was created within the SGS project SP2021/51 „Complex use of quantitative methods
in economic disciplines" and project V E G A 1/0683/21 "Generation Gap and Provision of Public
Services and Administration".
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Contact information
doc. Ing. Martina Halásková, Ph.D.
VSB - Technical University of Ostrava, Faculty of Economics, Department of Public Economics
Sokolská třída 33, 702 00 Ostrava 1, Czech Republic
E-mail: martina.halaskova@vsb.cz
doc. Ing. Renata Halásková, Ph.D.
University of Ostrava, Faculty of Education, Department of Technical and Vocational Education
Fráni Šrámka 3, 709 00 Ostrava, Czech Republic
E-mail: renata.halaskova@osu.cz
143
Workplace Health and Safety Promotion in Public Administration
Organizations
Petra Horváthova, Kateřina Mokrá, Lenka Kauerová
Abstract: For most people, health is at the top of the value scale. Some of the key factors that
influence whether people are healthy, which include income, social status, education, literacy
and so on, include working conditions. Health and safety promotion in the workplace is not
currently enshrined in legislation or tax benefits in the Czech Republic, it is a voluntary activity.
However, many Czech employers already recognise its importance and implement activities that
improve and protect the health and safety of their employees. The aim of this article is to create
a questionnaire that, based on clear questions and criteria (KPIs), will assess the level of
workplace health and safety promotion and help to define activities whose implementation will
lead to an improvement of the health and safety quality of employees in public administration
organizations in the Czech Republic. The review and analysis of the available, mostly foreign
literature provided the basis for the development of a questionnaire for the evaluation of the level
of health and safety promotion in the workplace of public administration organizations, using the
methods of analysis, synthesis, comparison, analogy, deduction and induction. The qualitative
research method of focus group was used as a verification method.
Keywords: Health, safety, promotion, questionnaire, public administration
JEL Classification: 112, J8, M l 2
1 Introduction
The most important resource for the successful functioning of any organization, even those
operating in public administration, is its employees, its human resources. It is not financial
resources, modern and efficient technology or a well-developed strategy, but people, effective
employees play a crucial role in achieving performance and maintaining the stability of any
company (Horváthova, 2011). Nowadays, more and more organizations realize benefits of taking
care of this most important resource they need to their functioning and consider taking care of
the health and safety of their employees as a key process (La Fata et al., 2021). Having a
motivated and healthy workforce can certainly be considered as a major competitive advantage
(WCHS, 2016). The existence of a culture of workplace health and safety promotion should be
one of the core values for the management of any organisation, company or enterprise (Gharib,
Martin and Neitzel, 2021). A way to achieve this, is to implement health and safety promotion
activities in the workplace, which lead to the promotion and maintenance of the physical and
mental health of employees.
Workplace health and safety promotion plays an important role in the management of any
organisation as it can protect employers from harm and employees from health risks caused by
their occupations (Liu et al., 2021). Creation of a healthy and safety workplace improves the
health and safety of employees, which leads to the reduction of short- and long-term sickness
absence, to increase of their well-being, to improvement of workplace relationships, atmosphere
and working environment, as well as to reduction of work-related illnesses and the number of
work-related accidents. All this contributes to improving individual performance of employees,
increasing productivity and thus the performance of the whole organization, and increasing the
attractiveness of the organization (EASHW, 2016; Lipšová and Šamánek and Vavřínová, 2005).
Workplace health and safety promotion in the Czech Republic is defined as a set of activities and
measures aimed not only at preventing illnesses and injuries, but also aimed at improving the
144
health and safety status of the individual and the whole company (SZÚ, 2018). Through these
coordinated and comprehensive activities, the employer complements the mandatory system of
preventive health and safety care at work (Lipšová et a l , 2016).
Workplace health and safety promotion is not currently enshrined in legislation or tax benefits
in the Czech Republic, it is a voluntary activity. However, many Czech employers already
recognise its importance and implement these activities or prepare to implement such activities
(Lipšová et a l , 2016). Moreover, the pandemic of the virus disease covid-19 has clearly shown
that health is the highest value of a human life and the value that influences the success of an
organization (Kazdová, 2021). The Quality Criteria of Workplace Health Promotion is used as a
material for the field of workplace health and safety promotion in the Czech Republic (Lipšová,
Šamánek, Vavřinová, 2005).
Based on the previous research done by the authors of the article, it is a known fact that the issue
of workplace health and safety is mainly addressed by larger companies in the business sector,
while in public administration organizations, specifically local government (municipalities), this
issue, beyond various obligations in the field of occupational health and safety given by law, is
not given as much attention. The health and safety of workers in the workplace should be based
on a health and safety promotion strategy that builds on the overall strategy of the organisation
through a human resource management strategy. However, according to the authors of the article
and the authors of available research done on this topic, although the representatives of public
administration organizations have a positive attitude to strategy and strategic management, there
are still some barriers in the development of both the overall strategy and strategies focused on
sub-areas of human resource management, such as the promotion of health and safety in the
workplace (Kerlinová and Tomášková, 2014). This situation may be the reason why the area of
occupational health and safety in local government organisations (municipalities) is not given as
much attention.
As already mentioned above, the Quality Criteria for Workplace Health Promotion are only a
framework material, which must always be adjusted to the specific conditions of the company
and, moreover, do not include a precise assessment of workplace health and safety promotion
based on clear questions and criteria. Therefore, on the basis of the above-mentioned facts, the
authors decided to focus on a different way of evaluating the level of workplace health and safety
promotion in public administration organizations in the Czech Republic, based on specific and
clear questions and criteria, e.g. KPIs.
The aim of the article is to create a tool (questionnaire) based on theoretical knowledge in this
field, which would be able to evaluate the level of health and safety promotion in public
administration workplaces in the Czech Republic on the basis of clear questions and criteria
(KPIs) and thus help to define activities whose implementation would lead to improving the
quality of health and safety of the employees of these organizations.
According to the authors and available facts, such a tool has not been developed in the Czech
Republic yet.
2 Theoretical background
Health is the most important value for most people. There have arisen a number of definitions of
health for different purposes. The authors tend to use the World Health Organization (hereafter
referred to as WHO) definition of health as full physical, mental and social well-being, where
145
only the absence of disease or infirmity is not enough.2
There are many ways to promote health
and safety, such as promoting health and safety-enhancing activities or encouraging the reduction
of unhealthy and unsafety activities. Among key factors that influence people's health and safety
can be ranked income, social status, education, social and physical environment and working
conditions (WHO, 2011).
One of the reasons why the health and safety promotion in the workplace is so important is the
fact, that approximately two million women and men die each year because of accidents at work
and occupational diseases and it can be assumed that 270 million occupational accidents and 160
million occupational diseases occur worldwide each year (WHO, 2010). Work-related illnesses
and injuries do not only put a strain on the health and safety system but are also reflected in
current health expenditure. In Figure 1, we can see the share of 2019 gross domestic product
accounted for health spending in selected countries around the world. In the Czech Republic,
health spending accounted for 7.8 % of gross domestic product (GDP) in 2019.
The cost of healthcare in the Czech Republic has been increasing every year, as we can see in
Table 1. In 2019, it reached C Z K 477.7 billion.
Figure 1 - Current health expenditure (% of GDP) in 2019 Source: OECD Health Statistic
(2021, p. 1)
18.0
16.0
14.0
12.0
10.0 I |I
8.0 —I-
6.0
4.0
2.0
2
The Preamble of the Constitution of the WHO, approved at the International Health Conference in New York on 19
June-22 July 1946; signed by the representatives of 61 States on 22 July 1946 (Official Records of WHO, No. 2, p.
100), entered into force on 7 April 1948. The definition has not been changed since 1948.
146
Table 1 - Healthcare costs in the Czech Republic between 2015 and 2019
Year
Overall - in current prices Basic ratio ind icators
Year Total in billion
C Z K
year-on-year changes GDP ratio
(in %)
Per capita
(in CZK)
Year Total in billion
C Z K in billion C Z K in %
GDP ratio
(in %)
Per capita
(in CZK)
2015 353,3 2,9 0,8 7,6 33 512
2016 363,4 10,1 2,9 7,6 34 394
2017 388,2 24,8 6,8 7,6 36 660
2018 434,1 45,9 11,8 7,7 40 853
2019 477,7 43,6 10,0 7,8 44 775
Source: CSÜ (2021c, p. 1)
For all countries, including the Czech Republic, it is very important but also demanding to solve
the consequences of diseases such as economic costs and long-term loss of human resources in
the organizations (WHO, 2010). Experience has shown that a preventative health and safety
culture is beneficial for workers, employers and governments alike. And this is also the reason
for searching effective prevention techniques that would help in preventing accidents at work
and occupational diseases and in improving the performance of enterprises (ILO, 2005).
Ensuring a healthy and safety workplace is therefore a very current topic. The authors of the
article identify with the WHO definition of a healthy and safety workplace. „A healthy and
safety workplace is one in which workers and managers collaborate to use a continual
improvement process to protect and promote the health, safety and well-being of workers and
the sustainability of the workplace by considering the following, based on identified needs:
health and safety concerns in the physical work environment; health, safety and well-being
concerns in the psychosocial work environment including organization of work and workplace
culture; personal health and safety resources in the workplace; and ways of participating in the
community to improve the health and safety of workers, their families and other members of the
community" (WHO, 2010, p. 12). Promoting the creation of a healthy and safety workplace, in
other words, promoting health and safety in the workplace, is one of the main tasks of employers.
So, what is involved in health and safety promotion in the workplace? There are many definitions
of health and safety promotion in the workplace (SZU, 2018). The authors of the article tend
towards the definition agreed by the members of European Network for Workplace Health
Promotion (hereafter referred to as ENWHP) in Luxembourg Declaration on Workplace Health
Promotion in the European Union: "Workplace health promotion is the combined efforts of
employers, employees and society to improve the health and safety and well-being of people at
work. This can be achieved through a combination of improving the work organization and the
working environment; promoting active participation; encouraging personal development"
(WHO, 2010, p. 12).
There have been evolution of objectives of the W H O and International Labour Organization
(hereafter referred to as ILO) as well as various trends how to improve health and safety of
employees. W H O and ILO started to cooperate in the Joint ILO/WHO Committee on
Occupational Health (1950), however, health and safety promotion has been specifically
associated with the workplace relatively recently. Globally, workplace health and safety
promotion is a priority for the WHO. In recent years, other associations and forms of awards for
companies promoting the health and safety of their workforce have emerged, such as the Global
Centre for Healthy Workplaces (Lipsova et a l , 2016). At the European level, the ENWHP
coordinates workplace health and safety promotion activities, and important information and
examples of good practice can also be found on the European Agency for Safety and Health at
Work website and in information materials (SZU, 2018). In the Czech Republic, the National
Institute of Public Health (hereafter referred to as NIPH) deals with the area of workplace health
and safety promotion. Since 1 January 2006, the NIPH has functioned as the National Contact
147
Office of the ENWHP and has been involved in the organization of the National Network for
Workplace Health Promotion of the Czech Republic. The NIPH serves as a scientific institution
that contributes to the prevention and control of diseases in the Czech population through
research, monitoring, intervention, and cooperation in the formulation of laws. The NIPH is also
involved in European and global projects that aim to improve the health and safety of populations
also in other parts of the world (SZÚ, 2021c).
No one would disagree that work, health and safety and organization are related. But how
exactly? How work affects the health and safety of workers? Firstly, work affects physical health
and safety. Among risks that endanger the physical safety of workers can be ranked for example
mechanical risks, electrical hazards, slips and falls from heights, ergonomic risks such as
repeated motion and uncomfortable posture, physical risks such as excessive noise or heat or the
possibility of work-related motor vehicle accident. If there is suitable health and safety
legislation, it usually covers safety hazards (WHO, 2010). Secondly, work affects mental health
and well-being. Research in the past years has revealed that various situations in the workplace
can be a threat to mental health of workers and there are ranked mainly the psychological and
social conditions of the workplace. Risks for the mental safety of workers can be following:
workload, work schedule, equipment, organizational culture and function, interpersonal
relationships at work or e.g. job content (Leka and Cox, 2008). Thirdly, there are
interrelationships between physical and mental health and safety. It is very important to know
that these aspects of health and safety are not separate but there is a strong link between them.
Mind is affected by damaged physical health and safety and on the contrary, the physical body
is affected by damaged mental health and well-being (WHO, 2010). Fourthly, there is the positive
impact of work on health.
How worker health affects the organization? Firstly, the enterprise is affected by accidents and
acute injuries which have personal effects and economic impacts. A case of an accident or acute
injury usually means unquantifiable personal costs and an injured employee also affects
emotionally an owner, a manager and co-worker (Andreoni, 1986). Secondly, the physical health
of the workers has an impact on the enterprise. The productivity of employees is decreased when
they feel unwell. When an ill employee comes to work despite being ill, it can be considered as
"presenteeism" which is a phenomenon that includes reduced productivity of a person who is
either physically or mentally ill and therefore their productivity is lower. If an employee cannot
come to work because of their illness, costs linked with absenteeism occur. These costs are
related to recruiting and hiring of a replacement employee, their training or reduced quality or
quantity of that replacement employee's work (WHO, 2010). Thirdly, the enterprise is affected
by the mental health of workers as well. In current highly competitive environment, employers
need engaged, innovative, creative and high-performing employees to keep ahead of the
competitors. The trend is to demand that the minds of workers perform at a very high standard
(WHO, 2010). Depression, anxiety disorders and burnout belong among three most frequent
mental illnesses or disorders and can lead to lower productivity or quality of work and therefore
have a strong influence on the enterprise. Poor mental health or job dissatisfaction can affect also
the degree of absence or intention to leave work. In addition to the already mentioned impact of
poor mental health on the enterprise, there are implications for the society as a whole (Duxbury
and Higgins, 2001).
How worker health and the community are interrelated? Employees' health and enterprise
success is influenced by the community or society in which the enterprise exists - and vice versa.
For example, although an enterprise may provide a healthy and safe workplace to its workers, if
workers do not have clean water to drink in the community, they cannot be in good health
condition. Or if there are factories in the community that contaminate the air or water with
pollutants, workers living in the community will suffer from various diseases (WHO, 2010). The
reverse is also true: the health of the community and society will be influenced by the physical
148
and mental health of employees. For example, facing anger, violence, or abuse at work will not
impact employees only in the workplace, but they will also carry negative feelings into their
homes and communities. Increased social costs for law enforcement, social services and basic
health and safety care may thus result from events in the workplace (Rautiainen, 2009).
In conclusion, it can be summarized that higher productivity and success of an enterprise will be
influenced by good health and safety of employees, which subsequently increases the economic
prosperity of a country and the individual well-being of employees (WHO, 2010).
There are a lot of approaches, information, frameworks and models on healthy and safety
workplaces that can be found in the literature and scientific articles. After studying these sources,
the authors of this article chose the globally known Healthy Workplace Model developed by
WHO as the basis for meeting the objective of the article. This model is founded on four domains,
based on which the employer influences the health and safety of their employees and the
organization as a whole. These four areas include the physical work environment, the
psychosocial work environment, personal health resources, and enterprise community
involvement. It is important to note that these four areas are not separate entities, but in practice
they are interrelated and overlap with each other. For this reason, they are presented as four
overlapping circles in Figure 2 (WHO, 2010).
Figure 2 - WHO Healthy Workplace Model Source: WHO (2010, p. 3)
Enterprise
Community Involvement
Not every organization deals with each of these four domains all the time. It is important to link
these four areas to the needs and preferences of individual organizations (WHO, 2010). Examples
of problems that can occur in each area and that can affect the physical and mental health of
employees are shown in Table 2.
149
Table 2 - Potential risks in individual areas
Physical Work Environment
chemical (e.g., solvents, pesticides, asbestos, carbon monoxide, silica, tobacco smoke);
physical (e.g., noise, radiation, vibration, excessive heat, nano particles); biological (e.g.,
hepatitis B, malaria, HIV, mould, pandemic threats, food or waterborne pathogens, lack of
clean water, toilets and hygiene facilities); ergonomic (e.g., excessive force, awkward
posture, repetition, heavy lifting, forced inactivity/static postures); mechanical (e.g.,
machine hazards related to nip points, cranes); energy (e.g., electrical hazards, falls from
heights); driving (e.g. driving in ice storms or rainstorms or in unfamiliar or poorly
maintained vehicles)
Psychosocial Work Environment
poor work organization; organizational culture; command & control management;
inconsistent application and protection of basic worker rights; shift work issues; lack of
support for work-life balance; lack of awareness of any competence in dealing with mental
health/illness issues; fear of job loss related to mergers, acquisitions, reorganizations, or the
labour market/economy
Personal Health Resources
Physical inactivity may result from work hours, cost of fitness facilities or equipment, lack
of flexibility in when and how long breaks can be taken. Poor diet may result from lack of
access to healthy snacks or meals at work, lack of time to take breaks for meals, lack of
refrigeration to store healthy lunches, lack of knowledge about healthy eating. Smoking
may be allowed or enabled by the workplace environment. Alcohol use or abuse may be
encouraged, tolerated or enabled by workplace practices. Poor quality or quantity of sleep
may result from workplace stress, workloads or shift work. Illnesses may remain
undiagnosed or untreated due to lack of accessible and/or affordable primary health care.
Lack of knowledge or resources for prevention of sexually transmitted diseases (STDs) may
result in high levels of HIV infection or other bloodborne STDs.
Enterprise Community Involvement
poor air quality in the community; polluted water sources in the community; lack of
expertise or knowledge about health or safety in the community; lack of access to primary
health care for workers and their families; lack of national or regional laws protecting the
rights of women or other vulnerable groups; lack of literacy among workers and their
families; community disasters such as floods, earthquakes; lack of funds for local non-profit
enterprises or causes; high levels of HIV infection in the community; lack of community
infrastructure or safety to encourage active transport to and from work and during leisure
time
Source: own processing based on WHO (2010, pp. 84-88)
3 Material and Methods
As a starting point, the sector on which the paper is focusing was chosen. The issue of public
administration is very important in terms of the fact that it solves the needs of society and works
on the basis of organizational structures, processes, roles, relationships, policies and
programmes. It creates sustainable economic prosperity, social cohesion and good living
conditions for people. It influences social trust and creates the conditions for public values
creation (Aart, Zoido-Lobaton and Kaufman, 2013).
The aim of the article is to create a questionnaire that would be able to assess the level of health
and safety promotion based on clear questions and criteria (KPIs) and thus to help defining
activities that would lead to the improvement of the quality of health and safety of public
administration, specifically of employees of local government (municipalities). The authors'
150
work on the questionnaire is based on the assumption that they identified on the basis of the
theoretical knowledge that existence of a healthy and safety workplace has a strong positive
impact on avoiding workplace accidents and illnesses and improving organizational
performance. Thus, there is a need for public administration organizations, specifically local
government (municipalities) to be able to provide a healthy and safety workplace for their
employees.
Within the creation of the questionnaire, the authors relied on theoretical assumptions, in
particular on the WHO Healthy Workplace Model and Table 1, considering that it is a
questionnaire for public administration organizations, specifically local government
(municipalities). The authors also relied on the conclusions of the meeting with 38
representatives (mayors and secretaries) of public administration organizations operating in the
Moravian-Silesian Region of the Czech Republic. This meeting was organised to better
understand the views of mayors and secretaries, who are responsible for health and safety issues
in local government workplaces (municipalities).
The formulation of individual questions and KPIs was then verified by the focus group
qualitative research method with the participation of 16 representatives of future respondents
(about half of them participated in a previous meeting, the other half were approached because
of a broader view of the issue and its comprehensibility). It was determined how focus group
participants responded to the questions of the questionnaire and selected KPIs, whether the
questions were well formulated, whether they understood the questions and KPIs and whether
the offered answering options were appropriate. Based on the outputs of the focus group, two
questions were slightly reformulated, one was deleted, one was added, and three KPIs were
removed. The result of the focus group meeting was the final questionnaire, which was later
validated by experts from practice — the experts also commented on the extent to which
individual questions and proposed answers and KPIs described individual areas. Out of the total
number of 5 questions and two groups of KPIs, only one question did not differ much in the
number of experts who considered it essential and those who considered it insignificant and
useless. The content validity was also evaluated using the Content Validity Ratio (CVR). C V R
= [(E=(N/2))/(N/2)], where N is the total number of experts and E is the number of those who
rated the object as essential. The final form of the questionnaire consists of 2 main topics and 7
items. The content validity ratio (CVR) ranged between 0.85 and 1.00 for each topic and from
0.75 to 1.00 for each item. Therefore, the questionnaire is considered valid from a quantitative
point of view in terms of content.
4 Results
As the result of the article's authors' work and thus fulfilling its objective, a final questionnaire
for public administration organizations (see Appendix) has been created.
The questionnaire includes one identification question (headquarters of the organization) and 5
questions and two groups of KPIs concerning the subject of the survey, where respondents
choose only one option from predefined answers. Issues covered by the first area relate to
leadership and participation in workplace health and safety promotion. The second area concern
KPIs of physical health and safety and mental health in the workplace. The questionnaire, which
contains the questions and KPIs recommended for assessing workplace health and safety
promotion in public administration organizations (see Chapter 4), can be used initially as a tool
for initial assessment of how the area of workplace health and safety promotion is addressed and
on the basis of which KPIs it is monitored; when used further, corresponding numerical values
can be assigned to individual KPIs, the tracking of which over time can then reveal areas for
improvement based on the application of certain measures.
151
Unlike the questionnaire for the business sector, which was previously developed by the authors
and whose content accuracy was verified by a survey made among 3895 Czech manufacturing
firms in May 2021, the questionnaire for local government organisations (municipalities) does
not include the criteria of workplace accidents, occupational diseases and occupational hazards
(in the area of physical health and safety) and the criterion of shift work (in the area of mental
health). This is a logical consequence of the activities in which business sector organisations and
local government organisations (municipalities) are involved. The probability of workplace
accidents, occupational diseases or hazardous work is very low in local government organisations
(municipalities), therefore, according to the authors and focus group participants, it is not
necessary to include these criteria in the questionnaire for local government organisations
(municipalities). Similarly, it is not necessary to include the criterion of shift work, as this is not
how work is organised in local government organisations (municipalities).
5 Conclusion
This article deals with the area of health and safety promotion in workplaces of public
administration organizations, specifically local government (municipalities), in the Czech
Republic. The theoretical basis of this study is based on the literature; foreign literature, in
particular, from the point of view of research in the Czech Republic, is very rich - Czech literature
dealing with this issue is very limited. Therefore, it was drawn mainly from foreign sources.
The aim of the article was to create a questionnaire that would be able to assess the level of health
and safety promotion on the basis of clear questions and criteria (KPIs) and thus to help defining
the activities whose implementation would lead to the improvement of the quality of health and
safety of employees of public administration organizations, specifically local government
(municipalities).
The research methodology was based on a positivist-objectivist approach, where knowledge was
obtained on the basis of a review and analysis of available, mostly foreign literature in the subject
area. On the basis of these findings, a questionnaire for the evaluation of health and safety
promotion in the workplaces of public administration organizations was created using the
methods of analysis, synthesis, comparison, analogy, deduction and induction. Also, the focus
group qualitative research method as the verification method was used.
Conclusions from this study cannot be generalized because the findings are based on a onesectional
sample in one country. These are limiting conditions of this study. The formulation of
individual questions and the choice of KPIs included in the questionnaire assessing the area of
health and safety promotion in the workplace depends very much on the activity in which the
organization, company or enterprise is engaged. Therefore, the authors see the future direction
of the research in targeting subjects from other sectors as well.
However, before proceeding to other sectors, the authors will conduct research based on the
developed questionnaire to determine whether the questionnaire has been designed correctly in
terms of content and how Czech public administration organizations approach the promotion of
health and safety in the workplace.
Acknowledgements
The paper was created within the project of the Student Grant Competition at the Faculty of
Economic, VSB-Technical University of Ostrava SP2020/33.
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Appendix - Questionnaire
A. Leadership and participation in health and safety promotion in the workplace
1. Does your organization have any written version of a health and safety promotion strategy?
Yes - No
2. Does your organization have a codex with principles which promote health and safety in the
workplace?
Yes - No
3. Does your organization have enough resources (financial, personal, resources of space and
further education etc.) for promotion of health and safety in the workplace?
Yes, we have all of them.
No, we lack resources of.
4. Are the measures of promotion of health and safety in the workplace integrated into existing
structures and procedures?
Yes - No
5. Are all employees informed about projects of promotion of health and safety?
Yes - No
B. KPIs of physical health and safety and mental health in the workplace
Fill in the value of undermentioned points of scale to given indicators of physical health and
safety and mental health in the workplace.
Scale: 1 2 3 4
1 - we do not follow this indicator
2 - we follow this indicator, but it is not significant for us
3 - we follow this indicator, the significance is average for us
4 - we follow this indicator, it is incredibly significant for us
Physical health and safety in the workplace
Indicator Points
Incapacity for work
Costs related to recruitment of an employee replacing the incapable employee
Costs related to training of an employee replacing the incapable employee
Costs related to ergonomie workplace
Health condition
Costs related to physical health of employees (healthcare, programs)
Mental health in the workplace
Indicator Points
Mental problems*
Overtime hours
Conflicts in the workplace
Work related well-being in the workplace
Trainings focused on mental health (e.g., stress management training,
prevention of burnout syndrome etc.)
Programs/benefits of healthy lifestyle
Costs related to mental health of employees
* mental distress (demoralisation, depressive mood, anxiety, burnout syndrome, stress) or
worsening of any present mental problems caused by pressure to perform with low level of
155
control or possibility of decision making, or disbalance between mental effort spent on work and
gained reward (recognition, appreciation, respect etc. or financial reward) or disbalance between
work and family life etc.
Contact information
doc. Ing. Petra Horváthova, Ph.D., MBA
VSB - Technical University of Ostrava, Faculty of Economics, Department of Management
Školská třída 33, 702 00 Ostrava 1, Czech Republic
E-mail: petra.horvathova@vsb.cz
Ing. Kateřina Mokrá, Ph.D.
VSB - Technical University of Ostrava, Faculty of Economics, Department of Management
Školská třída 33, 702 00 Ostrava 1, Czech Republic
E-mail: katerina.mokra@vsb.cz
doc. Ing. Lenka Kauerová, CSc.
VSB - Technical University of Ostrava, Faculty of Economics, Department of Marketing and
Business
Školská třída 33, 702 00 Ostrava 1, Czech Republic
E-mail: lenka.kauerova@vsb.cz
156
Comparison of e-Government in the Slovak Republic and the Czech
Republic
Martina Chrenová
Abstract: Services provided by the state to its citizens are bureaucratic, often considered
obsolete but also ineffective. Modern information technologies have been used in various areas
for different years, but the modernization of public administration began later and continues. The
aim of implementing e-Government is to provide public administration services to citizens more
efficiently, more reliably, faster and cheaper. E-Government was created in 1992 in the USA and
its founder was the vice president for the democrats A l Gore. It was not until six years later that
e-Government began to be applied in some European countries, such as Estonia, Sweden,
Denmark, Poland, the Czech Republic, Slovakia and others. Estonia has become a leader in
e-government not only in Europe but also worldwide. Slovakia and the Czech Republic began to
introduce elements of e-Government at the same time, so we decided to compare these two
countries. We will use the method compare two case studies. We will help with the contrast of
contexts, the purpose of which is to point out the specifics of individual cases in the comparison.
The content of the case studies is the implementation processes and tools used in the
implementation of e-Government. The aim of the paper is to find deficiency in the system of
e-Government of the selected countries on the basis of a comparison of two case studies and to
suggest possible solutions. One country can learn from another, either on the basis of positive or
negative results.
Keywords: Digitization, e-Government, electronization, informatisation, public administration
JEL Classification: 031, 032, 033, 052, 057, Z18
1 Introduction
Public administration provided by the state should help citizens and make it easier for them to
communicate with the authorities. However, the services provided by the state to citizens for
many years are inefficient because it happened that the citizen had to fill in documents or forms
more than once, visit several offices, all for one thing. In today's world, we are all used to paying
with a card, mobile phone, watch, solving things via the Internet and the like. Public
administration is relatively lagging behind compared to the age of information and
communication technology. The first modern elements that were introduced into public
administration were e.g. New Public Management, New Public Service, Good Governance.
These elements have moved to the current form of E-Government. According to the U N
definition, it is the duty of public administration to improve relations between citizens and the
public sector by providing cheaper and more efficient services, information and knowledge. It is
the best that public administration can offer its citizens. The European Union speaks of eGovernment
as a way to improve public services, democratic processes and strengthen support
for public policies through the use of information and communication technologies combined
with organizational change and new skills. In the 21st century, e-Government has become an
important tool for change, bringing higher quality to the overall process of providing services to
citizens, better results and performance in the public sector. The aim of e-Government is to
transform the processes of creating and providing public services to citizens and subsequently
transform the whole spectrum of relations between public authorities: G2C - Government to
Citizens, G2B - Government to Business, G2G - Government to Government. Proper
implementation of e-Government requires the involvement of several levels of government and
horizontal cooperation between agencies in order to strengthen the principles of the so-called
157
well-governed society, including democratization, efficiency, transparency, coherence and
public accountability.
E-Government is a new concept that starts with individual states gradually, thanks to its national
regulations in order to improve the quality of services provided to citizens. It is one of the
phenomena of 21st history in public administration. In this paper, we compare the functioning
of e-Government in two European countries, namely Slovakia and the Czech Republic. We dare
say that the two countries are similar geographically, historically and politically. Both countries
had relatively equal conditions for the introduction of e-Government. Nevertheless, the
digitization of public administration is developing differently in these countries. For a
comparative study, the two countries are recommended as examples for comparison.
1.1 e-Government
The term e-Government represents the electronic provision of services and is associated with the
processes that take place within the public administration and enable it to be carried out using
information and communication technologies (Štědroň, 2007). The concept of e-Governance is
based on the government's electronic consultation with citizens or other involvement of the
public in the decision-making process on public affairs (Špaček, 2012). The main goal of
electronization is for the public administration to serve the public with the help of the latest
technologies, not only externally towards the citizen or also within the internal system. We divide
e-Government services into two categories, namely e-services for the public and e-Government.
As part of e-services for the public, we are talking about citizen information services, transaction
services and e-Participation. E-Participation refers to services that expect inputs and outputs from
natural or legal persons. Such services include for example e-Consultations, e-Authorisation or
electronic voting of e-voting. We refer to e-Government services that use information and
communication technologies to improve the internal processes of a public administration
institution (Špaček, 2012). The transition from traditional administration to administration
through information and communication technologies requires preparation by the state and by
users. Within the electronic public administration, we can characterize two basic perspectives of
e-Government development: an internal perspective based on the state and an external
perspective based on the user (Nixon et., 2010). The term informatization refers to any
information that is provided through a website on the Internet. Digitization is a process in which
material things are digitized into electronic form, with the help of Internet portals and websites.
Electronization represents services that are provided electronically, the so-called online services.
The beginnings of e-Government date back to the 1990s. One of the new principles was
e-Government. In 1992, A l Gore drafted a document called the National Performance Revue,
which was approved a year later, and the United States was the first country to apply
e-Government. State administration employees were not enthusiastic about the idea of
introducing electronics into public administration, as the state reduced staff costs due to the
reorganization of state administration, which, however, meant massive redundancies for them.
The USA was followed by the introduction of elements of e-Government of the United Kingdom,
Australia, the Netherlands and others. The first European countries to follow were the
Netherlands, later Estonia, Austria and the Scandinavian countries. And to this day, we rank
these countries among the so-called e-Government leaders.
According to an analysis carried out with more than 28,000 respondents, together in 32 European
countries, citizens of countries with a high level of e-Government are satisfied with the new
system. The results show that they consider the provision of online services instead of electronic
information and the handling of official matters through office visits to be a great advantage (Ma
- Zheng, 2017). National governments should pay more attention to the development of
158
electronic services to meet the needs of citizens, thus saving time and money not only for citizens
but also for the state.
1.1.1 Pros and cons of e-Government
The introduction of e-Government elements into the public administration system has many
advantages but also disadvantages. The aim of electronic public administration is to provide
information, services and knowledge, to save money and time not only for the state but also for
citizens, especially when dealing with official matters. The motto of the electronic public
administration is: "we should not chase information, but information should circulate all around
us". The advantage is easier and faster availability of information for citizens. They do not have
to state their data for each time they arrive at the office, as the data will be collected from the
completed form at one contact point and recorded in a register of registers, which will be
displayed to individual offices due to the interconnectedness of the system. The introduction of
elements of e-Government into public administration needs to be carried out through extensive
reforms, which, however, is not cheap for the state, so even in Slovakia we can see only small
steps towards the electronic system of public administration. However, when e-Government
works in practice, the services and information provided will be much cheaper, more efficient
and faster for citizens.
The state will save money by electronic services, as it can reduce the number of civil servants,
which is a disadvantage for employees and therefore prevents the introduction of electronic
elements. Inefficient functioning of public administration can also lead to insufficient ability of
cooperation of information and communication technologies, or weak coordination between
individual levels of government - central, regional and local (e-Government Unit, 2006). Other
negatives include the conservative approach of people to electronics, especially the older
generations, who distrust modern technology and think that their personal data can be misused
through the internet. For this reason, they refuse to use electronic services and prefer to visit the
offices in person, which does not save them time or money. Another problem is the lack of
information about the provision of electronic services by the state and the requirements of
citizens, the lack of internet in households of older generations, or the weak marketing of eGovernment.
The role of our elected representatives is to eliminate these shortcomings and to
prove to citizens of all generations that the system of electronic public administration is the right
step forward for the state as a whole.
The success of e-Government depends on the actors involved in its implementation. As we have
already mentioned, the most important actors are service providers - officials and service users citizens.
Officials should receive professional training to learn how to work with the new system
and to approach it responsibly and willingly to provide technical assistance to citizens. Citizens
should accept, support and make full use of the new system. If these actors do not identify with
the system of electronic public administration, it may fail not only at the technical level but also
at the professional and user level. Therefore, it is necessary to pay attention to these risks and
monitor them throughout the process of creating a new policy.
The use and delivery of e-Services and the establishment of a comprehensive e-Government are
determined by objective and subjective factors. The primary objective criterion is the availability
of Internet connection. The following table summarizes the pros and cons of the state of affairs
of e-Government development, which the authors Vartašová and Červená present in their thesis.
159
Table 1 - Pros and cons of the state of affairs of e-Government development
Positives Negatives Measures to take
offices use the Internet as a
tool for providing their
citizens with various useful
information
the Internet access is still
not available within all the
area of the country
access to the Internet is
being improved, however,
needs to be completed
citizens have the ability to
communicate with offices
through electronic tools,
including submitting
completed forms
electronically
not every municipality
fulfils the statutory duties
within e-Government
performance
the need to unify the
possibilities of clients to
access the same scope of eservices
provided by the
offices
the qualitative and
quantitative scope of
agenda performed
electronically has increased
disparities among particular
offices the e-services
offered causing unequal
status of users
need to include the offices
in municipalities not
offering e-services into the
system of e-G
employees of offices prefer
the use of ICT to
manual/paper alternatives
low level of integration
within public administration
need to eliminate duplicity
in fulfilment of citizens'
duties
time-saving
need for trained staff
more targeted and quality
training needed
budget-saving
need for initial
investments/costs
need for technical
improvements of the
systems/software
e-services are more
welcome and advantageous
for larger cities
improper functioning of the
software experienced
need for elimination of
duplication of
electronic/paper "work"
absence of an adequate
complex long-term concept
of electronization of public
administration
need to improve the
interconnectivity of various
systems and databases of
public administration bodies
lack of financial support for
new information services
improve of the awareness of
the citizens
lack of interest of clients
also experienced
need to improve the
equipment of public
administration authorities
with modern ICT
high expenditures for
improvement of insufficient
technical equipment of
many municipalities
eventual outsourcing of e-
services/e-agenda
Source: Vartašová - Červená, 2017
2 Material and Methods
In this paper, we compare the development of e-Government by analyzing case studies in two
similar countries, namely Slovakia and the Czech Republic. For a comparative study, the two
countries are a good example for comparison. Comparative study is one form of qualitative
research that examines two or more cases and then compares them with each other on the basis
of certain criteria. It uses comparative analysis (Karlas, 2008). We will compare the functioning
160
of e-Government in the mentioned countries by means of empirical research of context contrast,
which will allow us to point out the specifics of both cases by analyzing the examined set of
cases. An important criterion is the selection of cases of a comparable nature that we will
compare. We chose two countries that are similar in terms of geographical area, political system
and historical development. Both countries started working on the implementation of elements
of e-Government at the same time, but nevertheless, they currently have different developments
in the electronic public administration. The Czech Republic and Slovakia are below the European
average in the successful implementation of e-Government. We chose the method of difference
so that we could point out the positives but also the negatives of the functioning of the eGovernment
system of both countries. To achieve this goal, we chose a research question: What
progress have the Czech Republic and Slovakia made in the field of e-government? We will
focus on two selected services, namely electronic identification and electronic dialing. The aim
of the paper is to evaluate the level of e-Government in both countries. Due to the scope of this
paper, we will focus on only two selected services, namely electronic identification and
electronic elections.
2.1 Comparison of Slovakia and the Czech Republic
The choice of two countries in Slovakia and the Czech Republic, in which we compare the
functioning of e-Government, has several reasons. The first reason is a similar geographical
distribution. The Czech Republic has an area of 78,866 km2 and a population of approximately
10,650,000 (Infoglobe, 2019). Slovakia has an area of 49,035 km2 and about 5,450,000
inhabitants (Government Office of the Slovak Republic, 2019). The second reason is a similar
history. Since their inception in 1918, they have had to face several changes in the political
regime or occupation. It was not until the 1990s that both states managed to become independent
and declare independence, specifically in 1992 (Skvarna, 2006). Like Czechoslovakia, in 1991 -
1992 both countries gained membership in the Council of Europe, in 1993 as independent
countries and in 2004 they became members of NATO and the European Union. The third reason
is a similar political system, the countries are parliamentary republics, but with the difference
that Slovakia has a unicameral parliament, to which the citizens elect its representatives, and the
Czech Republic has a bicameral parliament, which consists of the Chamber and the Senate. The
presidents in both countries have only a representative office and are elected directly by the
citizens. The administrations of both countries have needed many changes in the form of reforms
since the 1990s. We dare say that the two countries are similar geographically, historically and
politically. In 1998-1999, the governments of both countries began to address e-Government
issues. Nevertheless, the digitization of public administration is developing differently in these
countries. The Czech Republic adopted the e-Government Act in 2008, the Slovak Republic 4
years later. Slovakia started with four services and invested about 1 billion euros in the
implementation of the e-Government system, while the Czech Republic started with sixteen
services and it cost it about € 650,000, which is 1/3 less. Marketing promotion is an integral part
of the introduction of every new element or system, which our Czech neighbors realized, and
therefore used two characters Egon and Claudia to promote e-Government. We did not promote
e-Government in this way. The only advantage of e-Government in Slovakia was that citizens
save too much l
A if they use e-services such as buying stamps. In the Czech Republic, the prices
were the same. We have compiled these differences into a simple table 2 for better clarity.
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Table 2 - Basic differences in the implementation of e-Government in Slovakia and the
Czech Republic
Different properties Slovak Republic Czech Republic
Implementation of legislation e-G Act in 2013 e-G Act in 2008
Financial expenses 1 000 000€ 650 000€
Thefirst introduced e-
services
4 e-services 16 e-services
Promotion Nothing
Plush mascot characters Egon
and Claudia
The advantage of using eservicesfor
citizens
Saved fees for citizens in
case of using e-services,
e.g. e-stamps are much
cheaper
Almost the same prices
Source: own processing using notes from the subject e-Government (2018)
Since 2003, the United Nations Organization (UN) has been evaluating the level of digitization
of public administration in individual member states every two years on the basis of the E Government
Development Index (EGDI), which consists of three components (Soukupová,
2020):
1. Online Service Index (OSI) - evaluates e-Government, portals and public administration
websites;
2. Telecommunication Infrastructure Index (Til) - evaluates the availability and quality of
Internet connection;
3. Human Capital Index (HCI) - evaluates literacy, education and number of years of
schooling.
EGDI is supplemented by a second index, namely the E-Participation Index (EPI), which
assesses the sharing of information by public administration, the interaction and participation of
institutions and citizens. Index value - worst value 0 and best 1. EGDI points out that Slovakia
is far below the European average (United Nations, 2018). Since 2003, the Czech Republic has
been better than Slovakia in these two evaluation criteria almost every year. Slovakia overtook
the Czech Republic only twice, in 2014 and 2018.
Table 3 - comparison of EGDI and EPI indices between the Czech Republic and Slovakia
Index E-Government Development Index E-Participation Index
State Czech Republic Slovak Republic Czech Republic Slovak Republic
Year index order index order index order index order
2003 0,54 35 0,53 40 0,24 46 0,17 55
2004 0,62 28 0,56 37 0,21 46 0,15 58
2005 0,64 29 0,59 36 0,21 48 0,17 56
2008 0,67 25 0,59 38 0,20 69 0,07 134
2010 0,61 33 0,56 43 0,13 92 0,07 126
2012 0,65 46 0,63 53 0,26 57 0,13 100
2014 0,61 53 0,61 51 0,25 126 0,63 44
2016 0,65 50 0,59 68 0,56 81 0,54 83
2018 0,71 54 0,72 50 0,62 96 0,81 50
Source: Soukupová, 2020
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2.1.1 e-Government in the Slovak Republic
Despite the fact that the government started to address e-Government issues after the change of
government in 1998, the electronic public administration is still in the development phase. In
1999, the Strategy on Decentralization and Modernization of Public Administration mentioned
the need to computerize public administration (Salner - Mašina, 2007). It was only after 15 years
that a unified law on e-Government, which is to be followed by the state, was legally anchored
in Slovakia. Act no. 305/2013 on the electronic form of the exercise of powers by public
authorities has been amended several times. The National Council of the Slovak Republic
approved it on 4 September 2013 and it became effective on 1 November 2013. The eGovernment
Act aimed to establish general legal regulation of the manner of exercising public
power in electronic form, including related legal institutes, and thus to enable the implementation
of electronic services of public authorities in a uniform manner. The law monitors the
establishment of an electronic alternative to the current method of exercising public power and
defines new legal institutes that have not been enshrined in our legal system until then. These are
electronic mailboxes, identification and authentication of persons, authorization, guaranteed
conversion, payment of payments made to a public authority by law or on the basis of law. The
law provided for the introduction of a transitional period during which the public authority was
not obliged to exercise the exercise of public power electronically if technical reasons did not
allow it, as it was necessary to take into account the gradual harmonization and transition to the
procedure solely by law. Its purpose is to gradually introduce full electronization at all levels of
public administration.
In 2008, the Slovak government approved the Public Administration Informatization Strategy,
thanks to which it wanted to meet the goals set by the European Union in the Í2010 initiative,
which were to be met by the end of 2013. Slovakia had the idea that V4 countries (Ministry of
Finance of the Slovak Republic, 2008), which, however, failed. In 2016, the National Concept
of Public Administration Informatization was approved, the task of which was to determine the
direction of e-Government for five years. The central portal of public administration provides
citizens with the main access to information services. We know the portal under the name
slovensko.sk.
The development of e-Government was criticized by former President Andrej Kiska (2015) at
the ITAPA international congress in 2015. Slovakia had set goals of almost 900 million euros
within the Operational Program of Informatization of Society, which were used in a nontransparent
manner. The government has also failed to meet basic objectives, such as removing
the provision of the same citizens' data in the offices or creating a clear central portal. Kiska
outlined three basic principles that must be met for modernization and informatization to work.
Political responsibility and the interest of political leaders must be clearly defined, and then clear
and measurable results must be achieved, and the last principle is openness, transparency and the
involvement of innovative professionals and the private sector. Successful e-Government can be
measured by the time and money saved, the number of citizens who use electronic services and
the number of bureaucratic tasks.
There are several reasons why the implementation of elements of e-Government in Slovakia is
time and money consuming. The economic reasons for digital device can be seen, for example,
in backward regions, where the main problem is low employment, lack of funds, which lacks
internet connection and therefore not all households in Slovakia can use online services. We can
consider inappropriate software that has been available on the market for 8 years as technological
problems. It was not until 2006 that the law established uniform software for state administration.
The relatively new law on e-Government, which was adopted in 2013, has already undergone
several amendments, thanks to which we can see that the system is still not working properly, as
changes are constantly taking place. Another problem is the insufficient political responsibility
163
of central state administration bodies, as the agenda and competencies in the field of eGovernment
have been transferred to several central bodies from the beginning. Responsibility
was transferred from the Statistical Office to the Ministry of Transport, Posts and
Telecommunications, then transferred to the Ministry of Education and then again to the Ministry
of Transport. In 2007, responsibility passed to the Ministry of Finance in cooperation with the
Office of the Government (Salner-Masina, 2007). In 2016, a new central state administration
body was created, which is currently responsible for the electronic public administration - the
Office of the Deputy Prime Minister for Investment and Informatization. The Office has
strengthened competencies in the area of management, coordination and supervision of
Eurofunds and also covers the informatization of society (Office of the Government of the Slovak
Republic, 2016). The Office covers the entire agenda and at the same time this office issued a
new National Concept of Public Administration Informatization SR51 in 2016, which presented
the state and plans until 2020. The main objectives of the concept are:
• Objective 1: Move to quality of life services;
• Objective 2: Shift to services aimed at increasing competitiveness;
• Objective 3: Bring public administration closer to maximum use of data;
• Objective 4: To enable the modernization and rationalization of trusted ICT governance
by means;
• Objective 5: Optimize the use of information technology in public administration
through a shared services platform;
• Objective 6: Cybersecurity.
The development of e-Government is positively influenced by external pressure exerted on the
state by institutions outside state administration bodies, such as civic associations, foundations,
non-profit organizations or entrepreneurs.
The introduction of an electronic identity card was adopted by the Council of the European Union
in 2000 in order to increase the security of the document and extend its functionality. From July
2008, new identity cards began to be issued in Slovakia, which met the format of the European
Union. The card took the form of a polycarbonate card with the face and personal details of the
holder. The most important element of the electronic chip, however, has not yet been in this type
of card. It was therefore only a new format of the card, which still fulfilled only the function of
an identification card. The electronic citizenship card (elD), with which citizens can use
electronic services in Slovakia, has been issued since 2 December 2013 at the district directorates
of the Police Force. Unlike the previous ID card, it has an electronic chip that enables electronic
communication over the Internet and allows citizens to use a guaranteed electronic signature,
which is used to prove their identity to public or private institutions (National Agency for
Network and Electronic Services, 2013). The electronic chip must be activated. A citizen who
receives an identity card must enter his / her chosen security personal code for the first time when
logging into the system, thus activating the chip. When applying for a new identity card, the
citizen must state that he / she is interested in creating an electronic signature and a certificate
will be inserted on the chip, which allows him to create an electronic signature. As we can see,
a citizen of the Slovak Republic does not automatically receive all the benefits that an electronic
identity card offers him, but his activity is required, which represents only other obstacles for
citizens. Nevertheless, the electronic identity card project is widespread in Slovakia because it is
issued automatically. Upon receipt of the document, the citizen will receive an information leaflet
on which the possibilities of using the document and the principles of safe use are written.
An electronic signature is an advanced signature that is made using a qualified device and is
based on a qualified certificate for electronic signatures. It represents an online alternative, t. j .
compensation for a paper signature, thanks to which we can file electronically to perform legal
acts that require a written form in the paper world (Central Public Administration Portal, 2013).
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Among the benefits of the introduction of an electronic ID card, we consider, in addition to
expanding the use of electronic signatures, proving the identity of the citizen in electronic
communication, expanding the security features of the document, enabling the development of
e-Government services or simplifying business. The operation of the card is ensured by the online
e-ID function, which is operated by the Ministry of the Interior of the Slovak Republic. It allows
you to use your ED card to prove your identity when accessing e-Government services. The
citizen needs the appropriate software and smart card reader to use. At present, we can use a
reader, an identity card with a chip and an electronic signature to handle several issues through
the slovensko.sk portal, such as reporting changes, filing applications, complaints, lawsuits,
auctions, public procurement, cadastral services, tax office services, e-health and others. In
addition to the possibility of using electronic services, such as vehicle registration or booking an
appointment at the traffic inspectorate, citizens using electronic services have the advantage of
reducing certain fees. The amount of the fee for the electronic service is reduced compared to
personal equipment at the relevant offices by up to 50%, which motivates citizens to start actively
using their electronic ED cards in electronic communication as well.
Citizens of the Slovak Republic have been able to vote from abroad since 2006, until the
parliamentary elections by post. At a time when legislation enabling voting from abroad was
created, further future regulation of elections began to be considered, namely the possibility of
voting via the Internet (Skalsky, 2010). During Iveta Radicova's government in 2010, the SaS
government party pushed for a referendum in which one of the issues concerned e-elections.
According to the Statistical Office of the Slovak Republic (2010), 70.46% answered the question
"Do you agree that the National Council of the Slovak Republic should establish the possibility
to elect members of the National Council of the Slovak Republic and members of the European
Parliament via the Internet?" The referendum was invalid due to low citizen participation. This
method of voting would represent greater comfort for all, especially for Slovak citizens living
abroad. The interest of Slovaks living abroad in the possibility to vote electronically is also
confirmed by a petition launched by the civic initiative of Slovaks living abroad in 2014. After
the change of government in 2012, it stopped paying attention to e-elections in Slovakia.
Politicians consider the security risks and financial costs associated with their introduction to be
the negatives of e-elections. Electronic elections were also not paid attention to during the
following governments. Likewise, in the Czech Republic there are disputes over whether eelections
meet all legislative elements.
2.1.2 e-Government in the Czech Republic
In the Czech Republic, e-Government was introduced in 1999, when it became possible to submit
requests for information via e-mail. The first concept dealing with the electronic state
administration was the National Telecommunications Policy and the State Information Policy
(Stedron, 2007), which was in charge of the Office for Public Information Systems. No specific
e-Government projects can be found in this concept. In 2003, the Ministry of Informatics was
established, which takes over the agenda and creates a new concept called the State Information
and Communication Policy with the subtitle e-Czech Republic 2006 (Government of the Czech
Republic, 2006). The main points of the concept include the introduction of online services,
support for the expansion of electronic communications, education in the field of informatics and
expansion of e-Government services, broadband - the introduction of high-speed access
throughout the Czech Republic. The Ministry of Informatics was abolished in 2007 and the issue
of e-Government passed mainly under the administration of the Ministry of the Interior but also
under other Czech ministries.
The Digital Czech Republic concept is a project of the Ministry of Industry and Trade. Its goal
is to make the Czech Republic competitive in the international business area in the period 2010
- 2020 with the help of electronic public administration (Digital Economy Section, 2013). The
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Strategic Framework for the Development of Public Administration in the Czech Republic for
the period 2014 - 2020 is a strategic plan that is in line with the current action plan of the
European Union. As part of the strategic plan, the Government Council for the Information
Society was established, which is a permanent advisory body to the government for public
administration reform and its electronicization. The strategic framework has 4 strategic
objectives (Ministry of the Interior, 2016):
• Strategic objective 1: Modernization of public administration;
• Strategic objective 2: Revision and optimization of the performance of public
administration in the territory;
• Strategic objective 3: Increase the availability and transparency of public administration
through e-G tools;
• Strategic objective 4: Professionalization and development of human resources in public
administration.
Each of the goals has its specific goals, which are to help fulfill the main goal. The main activities
in meeting the goals include education in the field of information and communication
technologies and cyber security, completion of e-government, promotion of the Open Data
principle, expansion and consolidation of the data collection, implementation of electronic
identification system and electronic support processes (Ministry of the Interior, 2016). In its
strategies, the Czech Republic implements the goals set by the European Union, but not all of
them. Within the individual strategies, projects and proposals are transferred from one strategic
document to another. This may be due to non-compliance with the set targets in a specific period.
On the portal of the Ministry of the Interior of the Czech Republic (2018), they state that since
2012 a new type of ID card has been issued, which may or may not have an electronic chip.
Using the chip, citizens can handle matters via the Internet or applications. As in our country in
Slovakia, it is possible to sign documents with a guaranteed electronic signature using an ecitizen's
card. To work with an e-citizen's card, a citizen needs a reader, which is charged a fee
of C Z K 200 and an e-OP service application (Ministry of the Interior of the Czech Republic,
2017). Since 2018, an electronic card with a chip has been issued automatically and free of charge
(Tománek, 2018). If a citizen wants to use e-services, he must buy a reader and activate e-OP.
At present, an electronic identity card with a chip is not issued automatically and its acquisition
is associated with an administrative fee, many citizens do not have such a document and therefore
do not use electronic public administration services.
The topic of electronic elections has been discussed in the Czech Republic for several years. The
introduction of e-elections was already discussed in 2008. The Ministry of the Interior of the
Czech Republic stated that the first electronic elections could be those in 2014 (Pospíšil, 2008).
The cooperation of the Ministry of the Interior with the Czech Statistical Office on the e-election
project began, within which 3 phases were planned. A preparatory phase was to take place in
2009, which was to include the technological and legislative basis for the elections. In 2010, a
trial phase was to take place in one of the constituencies during the senate elections. In 2014, eelections
were to be introduced in the Czech Republic. This project was postponed in 2010 for
technical and financial reasons (Pospíšil, 2010). The test elections were to take place within two
projects in 2015 with the help of voting at universities and in 2016 during the election to the
Senate in two constituencies (Brunclík - Novák, 2014). None of these projects has been
implemented.
Electronic elections continued to be discussed in the following years. During the parliamentary
elections in 2017, citizens living outside the Czech Republic dealt with this topic (Kurbátová,
2018). Czechs living abroad must vote at the Czech embassy in the given state and it is not
possible to vote even by correspondence. The biggest problems in implementing e-elections are
concerns about manipulating the results, a problem with transparency or the possibility of hacker
166
attacks. The new type of elections does not even have significant support in any of the political
parties, as is the case with us within the SaS political party. Only the Pirate Party commented on
the support of e-elections. Another problem is the legislative entrenchment of elections, which,
while not prohibiting elections using an electronic device, require the maintenance of directness
and secrecy, which raises concerns that they will not be maintained. In addition to technical and
legislative threats, e-elections lack promotion and sufficient education of citizens in this area.
3 Results and Discussion
The similarity of the Czech Republic and Slovakia presented us with an advantageous position
for comparing these countries. Both countries began to address the topic of electronic public
administration in 1999. They paid more attention to the topic of e-Government in meeting the
conditions for accession to the European Union. Modernization efforts have been demonstrated
in the adoption of strategies and concepts based on European Union legislation. Both countries
had the same problem, namely the institutional anchoring of the e-Government agenda, as they
shifted this agenda within ministries or the creation of new offices: the Ministry of Informatics
in the Czech Republic (2003-2007), and the Office of the Deputy Prime Minister for Investment
and Informatization in Slovakia (it was established in 2016). This shift in the agenda has slowed
down the whole process. Both countries apply the goals set by the European Union in their
current strategies for the electronic public administration. Among the most presented projects of
the European Union we can include electronic identification, electronic signature, electronic
health care, security and promotion.
The availability of the Internet in households in both countries has been similar since 2007, and
in recent years the Internet has become a common part of daily lives of their households. In the
case of companies, according to Eurostat, an internet connection is almost a matter of course.
The basic condition for motivation, which is to support digitization and wide availability of the
Internet for citizens, is therefore fulfilled in both countries. The electronization of public
administration belongs to the internal perspective, which is mediated by the state. The objectives
of the project and its implementation are always in charge of the relevant ministry on the basis
of a strategic document. Only then is the citizen involved in the project. On the issue of
perspective, both countries are included in the model, which is based on the state as the main
actor in the implementation of e-Government. Both states use public administration portals to
inform citizens about public administration.
Electronic healthcare is a problematic area in both countries. In the Czech Republic, they have
launched the eZDRAV.cz portal, which brings together informatizations about e-Health and
informs about its projects. However, this is not a project of the Ministry of Health of the Czech
Republic, which may represent complications in the development of this service. The
information portal ezdravotnictvo.sk operates in Slovakia, which is established by the Ministry
of Health of the Slovak Republic. E-Health projects fall into other structures within the
organization, and this may cause difficulties in their implementation in the future.
In the Czech Republic, the Public Administration Portal was established in 2018, where a natural
or legal person can find information about public administration. The website is also available in
English, which meets the European Union standard. The portal is divided into categories of
citizen, entrepreneur, foreigner and official, within each category the citizen will see a guide to
life situations, with which the user then works. Under the possibility of the service is a list of
data boxes, forms, registers and the like. Some of the offered forms can be filled in online.
Since 2013, the central portal of Slovak public administration has been slovensko.sk. The portal
is available in English and from the user's point of view is divided into sections citizen and
entrepreneur. Subsequently, the citizen chooses a specific area from the options offered, e.g.
167
housing, finance or the citizen and the state. Citizens use e-IDs to log in to the portal. We dare
to say that the interest of citizens in this portal has gradually increased. In Slovakia, the use of
the information portal is more used than in the Czech Republic. The services on the portals are
only available to citizens in a limited form, so we are still forced to use the classic form of public
administration. In order for citizens to use e-Government services, they need an electronic
identity card with a secure electronic signature and a reader. In terms of the implementation of
European legislation, both countries implement the objectives set by the European Union in their
strategies, but both countries only in selected areas.
The electronic identification project is one of the main projects of electronic public
administration in the whole European Union, including Slovakia and the Czech Republic. When
comparing these two countries, we dare to say that the Slovak project is more used and developed
than the Czech one. e-EDs are issued automatically and free of charge in Slovakia. Czech citizens
may be discouraged by the fee for changing their identity card. We propose that the Czech
Republic reduce the fee, which would attract people. Both ED cards are similar: appearance,
technology, chip, which can be used with the help of a reader. Projects are set up in both countries
by the Ministry of the Interior. The applications are available in both native and English in both
countries. Both E-OP and e-ED offer the possibility to store a guaranteed electronic signature on
it, which can be used in communication with the state. Both cards protect the PEN and PUK code
entered by the user. In addition, the E-ED has a personal security code, which strengthens the
security of the card. Both cards serve to strengthen electronic administration in order to save time
and money for both the state and citizens. The services that citizens of both countries can use
through e-OP and e-ED are in most cases the same, but are considered insufficient within the
European Union.
Electronization of the electoral system is still unsuccessful in the Czech Republic and Slovakia.
In both countries, this issue is always addressed only in the pre-election period. After the
elections, no political party is trying to push for the introduction of e-elections in the territory. In
both countries, the same issue is the security issue of e-elections, the financial costs of
implementing them and the question of whether this step will increase turnout. In the Czech
Republic, a three-phase project of introducing e-elections was presented in 2008, which did not
take place. No project has been set up in Slovakia. During Iveta Radicova's government, the issue
of e-elections became a referendum. Citizens agreed with e-elections, but the referendum was
invalid due to low citizen participation. In both countries, the first e-elections for 2014 were
foreseen. States are not ready to introduce e-elections, despite the fact that many citizens would
welcome it. However, e-elections are not a key issue for current governments, as they try to use
the funds for problem areas. Citizens' digital literacy is also an important element before the
introduction of e-elections. Based on the DESI index in the field of Human Capital, both
countries are below the European Union average. In the area of Internet use, the Czech Republic
lags behind the average and Slovakia, on the other hand, is slightly above the European Union
average. Further digital skills are needed in both countries.
An interesting finding was presented by Bardovic and Gasparik (2021) recently. They focused,
inter alia, on a use of e-tools within participatory budgeting initiatives under circumstances of
the COVED-19 pandemic. Surprisingly, while many local governments use various e-tools in an
active way in the Czech Republic, there is a kind of resistance in this field in Slovakia and
majority of local governments still prefers conventional tools of communication and public
polling. Only several local governments in Slovakia use proper e-tools but this approach allowed
them to continue in a regular implementation of participatory budgeting also in times of
unexpected serious pandemic restrictions and social distancing. On contrary, there are many
Slovak local governments that had to postpone, suspend or even cancel participatory budgeting
processes due to their inability to face the mentioned pandemic restrictions and social distancing.
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4 Conclusion
The public administration reform concerning the introduction of elements of e-Government
represents changes in the system, which require the digitization of services and the adjustment
of the entire system to meet the requirements required in the context of modernization. Their
essence is to eliminate an inefficient bureaucratic system and bring its essence closer to private
sector services. Therefore, the whole system needs to be made more efficient, so that citizens as
well as officials are saved time, costs and administrative burdens are reduced, the involvement
of citizens in the decision-making process needs to be further developed and greater transparency
and control over public administration. Despite the fact that states' efforts to digitize services and
eliminate unnecessary bureaucracy were identified as early as the late 1990s, the development
of e-Government in the countries of the European Union varies greatly and is uneven. The two
European countries selected by us, the Czech Republic and Slovakia, are politically,
geographically and historically similar, they joined the European Union at the same time and are
committed to fulfilling and developing the e-Government agenda.
We have come to the conclusion that the slovensko.sk portal is very clear and, due to its simple
name and relatively long period of operation, even close to citizens. Electronic identification is
a key element of e-Government. The issuance of an electronic identification card containing a
chip is intended to facilitate communication with the state, for example through an application
or portal that can be used by a citizen. In Slovakia, the e-ID is issued automatically and free of
charge, which encourages citizens to use it. However, citizens of the Czech Republic must pay
extra for the e-OP and will not receive it automatically. We dare to say that the project is more
successful in Slovakia.
The aim of this paper was to evaluate and compare the current state of e-Government in selected
countries. The results of the research showed that the reform of public administration in the field
of e-Government is an important step, but it requires not only broad political support, which will
ensure the fulfilment of objectives but also the support of citizens. None of the countries surveyed
is ready to introduce e-elections. Both countries lack legislation, technological support and
readiness of citizens. In Slovakia, we see the efforts of some political parties to introduce eelections
in their programs. In the Czech Republic, we do not find any effort in the parties'
programs to introduce e-elections. Due to the rapid development of information and
communication technologies, the electronic public administration is a constantly evolving
industry. The complete transformation of public administration in both countries examined
requires political and legislative anchoring, sufficient security measures and the education of
citizens of all ages in the field of digital literacy. Although local governments can also play an
important and positive role in these efforts, the recent pandemic restrictions revealed their
different approaches. However, these restrictions and necessity to deal with various issues helped
to understand importance of e-tools not only for purpose of communication but, for instance,
also for polling (Bardovič - Gašparík, 2021).
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Contact information
Mgr. Martina Chrenová
University of St. Cyril and Methodius in Trnava, Faculty of Social Sciences, Depatrment of
Public Administration
Bučianska 4/A, 917 01 Trnava, Slovak Republic
E-mail: martinka.chrenova88@gmail.com
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EU Cohesion Policy Governance in the Covid-19 Era
Igor Jasurek
Abstract: The paper deals with the evolution of governance in E U cohesion policy. It is marked
by the shift from the soft towards the hard modes. The shift is examined through interinstitutional
dynamics at E U level during the bargaining and implementation phases among the
key institutional actors (Commission, Council, and Parliament). The paper employs a historical
institutionalism (HI) perspective to provide rational for the shift in 2013 and the continuation of
hard modes post 2020. Explanatory power of Hi's key categories, critical junctures and path
dependence are instrumental in understanding the evolving E U cohesion policy governance.
HI shows that crises, financial and economic and the pandemic COVID-19 are the major drivers
behind the shift and continuation/intensification of hard modes. The paper shows that building
of E U cohesion policy governance is shaped by the preferences of the key institutional actors
which are context dependent varying in bargaining and later in implementation. The principal
objective of the paper is to show evolving governance in cohesion policy, as a specific policy
making response to the crises. More broadly, the case study takes part in forming our
understanding of E U integration processes.
Keywords: Conditionalities, crises, governance, hard modes, thematic focus
JEL Classification: F02, N44, 018, RIO
Introduction
E U cohesion policy governance has dramatically shifted within more than a decade. Propelled
by the failure of the Lisbon strategy and aftermaths firstly of the financial and economic crisis
and then series of crises peaking in the recurrent coronavirus pandemic, hard governance
measures have invaded cohesion policy pushing aside soft alternatives. This trend supports the
overall Commission's strategy to reconnect cohesion policy with "the broader economic policy
framework of the European Union" (Berkowitz et al., 2015:2). On the other hand, cohesion
policy's mission has consequently diffused among different instruments, notably the novel
Recovery and Resilience Facility (RRF) in response to the COVID-19 pandemic. Thus, cohesion
policy's mission remains stretched while its allocation shrunk. Two components of cohesion
policy governance, thematic focus including earmarking and conditinalities, ex ante and
macroeconomic, are examined throughout the paper to demonstrate the evolution in governance
marked by the shift to and then continuation of the hard modes across the three cohesion reforms
(2006, 2013 and 2020). The last reform is particularly highlighted marking cohesion policy
governance in the covid-19 era. The paper adopts a historical institutionalist (HI) perspective to
provide rationale for the shift and continuation/intensification of hard modes. The analysis
employs the HI categories, critical junctures and path dependence. Their explanatory power
enables to interpret evolving governance in a temporal perspective to address a change and
continuation/intensification in governance. The paper studies bargaining and implementation of
governance. First, this approach shows that governance is the result of dynamics of interinstitutional
relations among the key E U actors (Commission, Council and Parliament) and their
preferences. Second, such analysis demonstrates causality of the two phases (bargaining
outcomes shape implementation), evident notably in the 2013 reform package.
The paper proceeds as follows. It begins with theorizing governance approaches focusing on the
hard vs soft law dichotomy (for the purpose of our paper the term 'law' is taken as equal to the
term 'mode' and after the theoretical part only 'mode' is used). This part then continues with
presenting open method of coordination (OMC) as the primary soft mode of governance under
173
the Lisbon agenda. The third part devotes to evolution of governance in cohesion policy
demonstrating the shift from the soft modes to hard modes of governance as of 2013. The fourth
part depicts continuation and intensification of hard modes in response to the COViD-19
pandemic. Lastly, before concluding, the methodological part interprets a settling of the shift
towards hard governance and its intensification by means of HI and its key explanatory
categories, path dependency and critical junctures. The paper contributes to ever-growing
literature on shaping E U governance in response to COVID-19. At the same time, focusing
specifically on cohesion policy, the case study brings momentum to this research area. More
broadly, the paper joins literature aiming at increasing our understanding of evolving E U
integration.
Governance approaches
Governance approaches typically perceive the E U 'not as a traditional international organization
or as a domestic political system, but rather as a new and emerging system of "governance
without government'" (Pollack, 2005: 380). At the same time, they are largely normative,
showing the right directions and derails in the course of fostering economic and political
integration (Peterson and Pierre, 2009: 91). Such a broad interpretation inevitably encompasses
a wide range of issues. In our context those most relevant are collective mechanisms or
architectures to frame policy making through collective decisions and actions (Majone, 2001),
such asgovernance. Our discussion on the governance approaches is narrowed down the split
between hard and soft governance.
In terms of 'intensity' of governing mechanisms by which E U policies are controlled and carried
out, it is possible to distinguish the two basic modes of governance, hard and soft, labelled also
as experimentalist (Sabel and Zeitlin, 2008; Mendez, 2011). Perhaps needless to say, the
dichotomy is not so sharp. In reality, we have rather hybrid versions (Trurbek et al., 2005). Still,
for the purpose of the paper, it is necessary to make a clear distinction between hard and soft
modes of governance. Trubek et al. (2005) explain that hard law stems e. g. from treaties or
regulations while soft law 'lack features such as obligation, uniformity, justifiability, sanctions,
and/or an enforcement staff. As the authors further explain, both types pose some practical
challenges. Thus hard law suffers e. g. of uniformity of treatment, difficulties to change it or it
demands for fixed conditions while reality under uncertainty dictates experimentation and
adjustment (Trubek et al., 2005:4). On the other hand, typical objections against soft law include
e. g. its lacking clarity and precision, inability to offset hard provisions or bypassing
accountability (Trubek et al., 2005: 2).
Open method of coordination
It goes without question that national and E U policies are governed by legislative rules that is to
say by hard modes of governance. Why then would any policy run a potential risk of relying on
experimental processes subject to uncertainty and questionable accountability? The next related
question is what is the experience in cohesion policy with such experimentalist governance?
Scholarship on experimentalist governance presented underlying features shaping the soft
approach. Sabel and Zetlin (2008) pointed at framework goals, measurement of achievements
agreed mutually by member states and the Commission. These are largely alike to 'governance
architectures' as outlined by Borras and Radaelli (2011).
From the operational perspective, the most prominent practical example of experimentalist
governance to answer both earlier questions bearing the characteristics outlined above in the
scholarship is the open method of coordination (OMC). It is closely related to the Lisbon strategy,
the E U level midterm development master plan launched in 2000. Its strategic goal for the E U
174
was "to become the most competitive and dynamic knowledge-based economy in the world
capable of sustainable economic growth with more and better jobs and greater social cohesion'
(European Council, 2010). O M C was devised as the means of spreading best practice and
achieving greater convergence towards the main E U goals. Its main advantages were (European
Council, 2010):
• fixing guidelines for the Union combined with specific timetables for achieving the
goals which they set in the short, medium and long terms;
• establishing, where appropriate, quantitative and qualitative indicators and benchmarks
against the best in the world and tailored to the needs of different Member States and
sectors as a means of comparing best practice;
• translating these European guidelines into national and regional policies by setting
specific targets and adopting measures, taking into account national and regional
differences;
• periodic monitoring, evaluation and peer review organised as mutual learning processes.
In implementation, the OMC as a soft mode of governance however showed ambiguous results
with regard to its operational effectiveness (Radulova, 2007) and an arguable reform stimulating
potential (de la Porte and Pochet, 2012).
1 Evolving governance in cohesion policy. Shifting towards hard modes
Inevitably, cohesion policy with its substantial allocation, historically representing at least the
third of the E U budget, was well equipped to become a primary investment vehicle for meeting
objectives of both strategic E U level development masterplans, the Lisbon strategy and its
successor, the Europe 2020 strategy. Thus, cohesion policy is a promising testing field for major
reform endeavours in E U governance architectures.
1.1 The 2006 Cohesion reform package
Aligning cohesion policy with the Lisbon agenda and its governance vehicle, the OMC, the
process called 'Lisbonisation' (Mendez, 2011), on one hand marks one of the 'turning points'
(Manzella and Mendez, 2009) in the evolution of cohesion policy as the 2006 cohesion package
represented at that time the major cohesion reform. On the other hand, policy's wavering
performance revealed major shortcomings in its governance as much as failing operationalisation
of the Lisbon agenda. Lisbonisation in cohesion policy introduced the three key innovations selecting
the E U level shared objectives implemented by means of national strategies approved
by the Commission along with earmarking (requirement on a fixed percentage pre-allocated on
selected thematic objectives), and political ownership of implementation exercised through
reporting to the Council of Ministers. All of them have reported shortcomings when implemented
due to loose coordination. To begin with the thematic focus, that is the E U level shared
objectives, the Commission introduced Community Strategic Guideline for Cohesion to
safeguard translation of the Lisbon's strategic objective to the cohesion policy's mission however
without EU-level enforced deadlines and targets (Mendez, 2011:523). What remained was a
loose thematic scope lacking formal operational drivers justifying the cohesion mission.
Furthermore, interpretation of earmarking stretched already during the bargaining relative to the
initial Commission's proposal showing that in implementation, some of priorities additionally
included by member states were inconsistent with the Lisbon agenda (Bachtler and Ferry, 2013:
1267). However, in some policy fields such as research and development, earmarking contributed
to a focus on limited number of priorities and thus at least partially restricted scattering of funds
(Bachtler and Ferry, 2013: 1267). Nevertheless, shortcomings in the thematic focus and
earmarking consequently led to freestyle prioritization of the implementation objectives. This
compelled the Commission to admit that the outcome was rather 'a shopping list of actions'
175
(Mendez, 2011). Additionally and despite political ownership of implementation exercised
through reporting, member states could act discretionary in assessing implementation as the
Commission made the use of its indicators only voluntary. Unsurprisingly, literature on cohesion
policy unequivocally derives failures to meet policy's objectives from the governance
architecture, then embodied in the O M C (Mendez, 2011; Telle, 2017). Admittedly, the O M C
showed also promises in promoting territorial cohesion policy on the eve of implementing the
2006 reform (Faludi, 2007). For details on the 2006 reform see also Bachtler et al., 2013; Baun
and Marek, 2014; Brunazzo, 2016; Jasurek a Sipikal, 2021.
1.2 The 2013 Cohesion reform package
Failure to meet the objectives from the Lisbon strategy at E U level markedly aligned with
ambiguous performance towards the cohesion goals. Hence, a future thematic focus in cohesion
policy required a stronger alignment and better articulation of development needs at European
level. Such change was promised by the Europe 2020 strategy introducing the five policy areas
(employment, education, research and development, climate change and energy and poverty and
social inclusion) identified as crucial for stimulating growth in the E U along with measurable
quantitative targets (European Commission, 2010:3). This shift in designing the E U strategy set
the course also for the subsequent cohesion policy reform.
The reform aimed to address the most critical existing shortcomings in the mission and
governance of cohesion policy as depicted in the Barca Report (2009) e. g. insufficient strategic
focus notably clear-cut policy objectives along with their strategic planning rationalising their
selection and a binding implementation mandate. This led to the top-down articulation of the
thematic focus. The five Europe 2020 policy areas were translated into the 11 thematic cohesion
policy objectives broken down into the more detailed investment priorities under individual
cohesion policy funds. Thematic objectives and investment priorities represented only one
complex layer under the thematic focus. The other was earmarking which has also undergone a
substantial modification relative to the 2006 package. In the European Regional and
Development Fund, the two tier earmarking was introduced. The first tier required a specific
allocation percentage to be reserved for the selected thematic objectives. The second tier then
picked one of those selected thematic objectives for extra allocation. European social fund's
earmarking was less complex however, the first tier earmarking was established also here.
Furthermore, to ensure that the E U architecture would not be diluted into the member states'
freestyle selection from shopping lists as in the 2006 reform, the Commission compiled so called
'position paper' for every member state which depicted national implementation priorities
through the E U lenses. The document ensured that the 'Europe 2020 spirit' would sustain
bilateral bargaining between member states and the Commission on national implementation
priorities. At the same time, the document was an orchestration mechanism providing the
Commission with significant leverage over bargaining.
The Barca Report called also for improving the control over policy planning and conduct by
means of conditionalities. Even though the conditionalities have constituted an inherent part of
cohesion policy as of its inception in 1988, the 2013 reform brought new momentum by
introducing new conditionalities, ex ante and macroeconomic conditionalities. However
admittedly, the latter were not a novelty by definition as they applied to the Cohesion Fund
between 2007-20013. For different types of cohesion conditionalities see Bachtler and Mendez,
2020a; Jasurek, 2020; Jasurek a Sipikal, 2021). What distinguished the two from other cohesion
conditionalites was that they exceeded cohesion policy reaching broader E U level governance.
They were 'a part of wider E U endeavours to rebuild economic governance after 2009 as
a response to aftermaths of the financial and economic crisis... built notably on the two pillars'
(Jasurek and Sipikal, 2021: 5). The first was growth stimulating by means of the formal E U level
recommendations under the European Semester, 'a framework to improve E U economic policy
176
coordination' (Hallerberg et a l , 2012: 2) aimed at listing reform policy priorities aligning
national policies with E U level requirements. The second pillar pointed at fixing economic
imbalances through the E U level macroeconomic surveillance mechanisms. The mission of the
new cohesion policy conditionalities fell under both pillars, ex ante (first pillar) and
macroeconomic (second pillar).
Bargaining the 2013 package with regard to future governance arrangements showed to be a
particularly demanding exercise. While the thematic focus along with earmarking perhaps
surprisingly achieved inter-institutional consensus relatively easy, conditionalities posed a bigger
obstacle for striking a compromise. Ex-ante conditionalities were received with positive
anticipations also among scholars (McCann, 2015; Bachtler et al., 2017; Huguenot-Noel et al.,
2017). On the contrary, macroeconomic conditionalities spurred controversy. Many scholars
condemned them instantly (Jouen, 2015; Huguenot-Noel et al., 2017) and others at least
recognized their research merit (Coman, 2018; Sacher, 2019). An intriguing effort to offer a more
balanced perspective on the role of conditionalities per se in cohesion policy provide Bachtler
and Mendez (2020a). In case of ex-ante conditionalities, dissolving the Council and Parliament's
concerns over introducing this novel governance instrument required concessions towards
limiting the Commission's authority over suspensions. However, this was achieved at the
expense of e. g. setting in detail ex-ante conditionalities' mission or a better articulated link to
the European Semester as we see below. Macroeconomic conditionalities were not agreed until
the very late bargaining phase due to the Parliament's severe opposition underpinned by the
commissioned study (Begg et al., 2014) and fuelled by fears of negative impacts of their
suspension mechanism on E U regions. The Parliament, for the first time as a full-fledged colegislator
alongside the Council, conceded only upon the insertion of rather ambiguous
provisions on structured dialogue. This was meant to be a communication platform initiated by
the Parliament and obliged the Commissioin to inform the legislators on the course of launched
sanctioning process (for more details on bargaining see Mendez at al., 2013; European Court of
Auditors, 2017a; Coman, 2018; Jasurek, 2020; Jasurek and Sipikal, 2021).
Implementation of both conditionalities brought ambiguous results. It is assumed that due to
intra-institutional disputes, notably inside the Commission and perceived reputational risks
associated with imposing punitive means in the atmosphere of rising Eurocepticism peaking in
the Brexit, the Commission took rather a passive role enabling arbitrary interpretation of
conditionalities' rules. Thus, member states reached for self-suspensions, contradicting the rules
on ex-ante conditionalities, just to avoid a harsher impact of the Commission's suspensions while
the Parliament's assertiveness and interpretative capacity of the rules enabled to transform the
structured dialogue 'from an enforcement assistance tool into a suspension avoidance tool' in
case of macroecnomic conditionalities (Jasurek and Sipikal, 2021: 18). Furthermore, due to
ambiguous reading of rules and an insufficient and merely a rhetorical link to the European
Semester, there was inconsistent member states' self-assessment as well as Commission's
assessment of ex-ante conditionalities fulfilment, (for more details on implementation see
European Commission. 2016 and 2017c; European Court of Auditors, 2017b; Coman, 2018;
Sacher, 2019; Jasurek and Sipikal, 2021).
In nutshell, the presented examples of the thematic focus and novel conditionalities showed
increasing prevalence of hard modes of governance as of 2013 introducing complex rules backed
by punitive means. Moreover, bargaining showed that soft modes of governance built notably on
mobilising non-state actors in policy making processes as a core soft governance feature did not
win a support already inside the Commission (to see this argument in greater detail see Mendez,
2013). This was then reflected in the Commission's legislative proposal on the cohesion reform.
Indeed, soft modes were not altogether excluded, just not unequivocally underpinned in the legal
rules and only left upon the member states' discretion. This was an example of territorial
translation of ex-ante conditionalities fulfilment where involvement of territorial policy makers
177
was just optional. Thus, perhaps the most representative example of soft governance modes after
2013 was the partnership principle, which however lacked urgency to propel dynamics of the
post crises E U governance. Implementation however revealed that inconsistent and arbitrary
application of rules along with internal (differing views inside the Commission) and external
(rising Euroscepticism) political pressures contributed to ambiguous implementation results.
Therefore, it is fair to conclude that thus far an incomplete lesson from implementing the 2013
reform teaches that E U cohesion policy governance based on hard modes demonstrates promises
on delivery. Hence, due to the evidenced shortcomings, it is still in the making (Jasurek and
Sipikal, 2021: 19).
2 Impacts of Covid-19 on cohesion policy governance. The 2020 cohesion reform
Before the Covid-19 pandemic hit the E U , it faced several other crises, namely Euro and
immigration crises and Brexit as part of a wider rise of Euroscepticism. Their impact was felt on
uneasy contemplations over EU development, notably in the Commission's White Paper on the
Future of Europe presenting five development scenarios for the EU-27 by 2025 (for more details
see European Commission, 2017; Bachtler, Mendez and Wishlade, 2020; Jasurek a Sipikal,
2021). White paper's message for cohesion policy was rather negative questioning the result
delivery capacity in regional development under the E U level coordination (European
Commission, 2017a: 22). Nevertheless, the Commission's Seventh Cohesion Report (2017b) in
that time showed a continuous growth in GDP per capita positively affecting a decrease in
regional disparities and unemployment rate in the entire E U while disparities between the capitals
and peripheral regions persisted. Importantly, the Seventh Cohesion Report posited that after
2020 the policy's mission would be shaped against the Paris Agreement on climate change and
the U N Sustainable Development Goals for 2030 (European Commission, 2017b: X X V ) as the
new E U level strategic frameworks (rather significantly alike to Europe 2020).
These trends paved the way to continue and enhance hard modes of E U cohesion policy
governance. Thematic focus was narrowed from the 11 thematic objectives down to the five
condensed now called policy objectives broken down to also more condensed specific objectives
(relative to investment priorities in the 2013 reform package) under individual funds.
Commission's ad hoc entrepreneurial position paper was replaced by the established format of
Commission's annual Country reports directly informing Council's country specific
recommendations. Country reports were in 2019 for the first time dedicated to cohesion policy
assessment, specifically in the annex D. This enabled the Commission to increase legitimacy of
its bargaining position as directly backed by the European Semester. Ex-ante conditionalities
were transformed into so-called enabling conditions and reduced in overall number while
maintaining their substance relative to the former. This primarily means that their fulfilment is
reported not only ex-ante but throughout the implementation and their link to the E U Semester
is now clearly articulated. This means that country specific recommendations, as the E U level
reform triggering instrument under the E U semester, will be considered for fulfilment of enabling
conditions at the beginning of the programming and during the mid-term implementation review.
Macroeconomic conditionalities maintain their original substance from the 2013 reform,
however with prioritizing commitments for suspensions over payments. Continuation shows that
a drive towards a sound economic environment remains a rule-based requirement constituting
governance in E U cohesion policy.
Under the scope of this paper, it is fair to say that inter-institutional bargaining over the 2020
reform (Council of the European Union, 2021) mirrored discussions on the 2013 reform.
Transformation of ex-ante conditionalities into enabling conditions was supported by all three
bargaining institutions. Council inevitably drew its attention on the conditions of postponing
reimbursements as the punitive mechanism. It achieved some clarifying amendments simplifying
the process. Nevertheless, postponing reimbursements is milder than the suspension instrument
178
from the 2013 reform. In case of macroeconomic conditionalities, the Parliament commissioned
a study, which advocated their deletion (Pucher, Martinos, Pazos-Vidal & Haider 2019: 50). In
the end, the Parliament however stuck to the compromise amendments proposed largely by the
Council. They related to the specifying deadlines and timeframes such as the Commission's
request for programme amendments or its proposal of suspensions to the Council as well as
setting the date for a review of the application of macroeconomic conditionalities or other rather
technical modifications without changing the substance. Again, substance of the thematic focus
was also not challenged during the bargaining. Inter-institutional consensus brought only minor
modification on further shaping the mission of the five policy objectives.
After the outbreak of the COVID-19 pandemic, the immediate response to declining E U
economies was to loosen the rules for the ongoing 2014-2020 programming period (for more
details see Jasurek a Sipikal, 2021). At the same time, amendments in drafting the post 2020
period in the similar direction recognizedforce majeure of unexpected adverse economic events
and introduced temporary measures to relax provisions e. g. on interim payments, support of
projects already conducted prior funds implementation or member states 'reporting to the
Commission. Salience of these amendments was unquestionably recognized by all key E U
institutional actors. On the other hand, the upcoming perspective as of 2021 witnessed rather a
continuation, notably with regard to thematic focus and conditionalities.
Intensification of the hard modes in response to COVID-19 is most tellingly reflected in
introducing new funding instruments, notably the RRF. First of all, unlike the shared
management under cohesion policy, the RRF is directly managed by the Commission combining
loans and grants thematically focusing on the top E U level priorities (see Table 1), shared also
with cohesion policy. RRF is coordinated by the European Semester and, as in cohesion policy,
its implementation is subject to macroeconomic conditionalities. Thus, cohesion policy
governance principles are exported into the RRF while this instrument is time-limited and
constrains also cohesion budget as it shares the thematic focus with cohesion policy (Bachtler
and Mendez, 2020b: 250). On the other hand, outside cohesion policy, the RRF is perceived as
a promised treatment against the coronavirus pandemic (Ladi and Tsarouhas, 2020; Wolff and
Ladi, 2020, Schmidt, 2020). Clearly, the hard modes of governance are intensified as a
consequence of the enduring coronavirus pandemic. Evidently, they continue to be the major
response to demands for governing cohesion policy at E U level.
A word of caution is at place here with regard to future implementation of cohesion policy and
the RRF as it is only in the very early stage. The E U legislative framework on cohesion policy
was adopted only later in 2021 and bilateral bargaining between the Commission and member
states on future implementation is far from being finalized (with exemption of the RRF where
the national plans were already approved by the Commission).
3 Historical institutionalism and reforming the EU cohesion policy governance
The shift from the soft towards hard modes of governance and their continuation and
intensification in cohesion policy and beyond (RRF) after 2020 is explained primarily by the
crises, namely those economic and financial, Euro and rising Euroscepticism peaking thus far in
Brexit. The shift stirred by the crises is now to be interpreted in detail by means of HI. A crisis
as a catalyst of reforms, notably in E U governance is well recognized in the literature outside
cohesion policy. Most notoriously, the Euro crisis triggered reforms in the Eurozone (Schwarzer,
2012; Dawson, 2015; Schimmelfennig, 2014; Verdun, 2015). Likewise, there is fast growing
scholarship linking E U governance building to the recurrent pandemic (Ladi and Tsarouhas,
2020; Wolff and Ladi, 2020, Schmidt, 2020; Wolff et al., 2020). In this respect, HI has a fitting
design as it seeks to interpret changes in governance set in temporal perspective. First of all, HI
embraces a wide open understanding of 'institutions' as 'formal or informal procedures, routines,
179
norms and conventions embedded in the organizational structure of the polity' (Hall and Taylor,
1996: 938) opens almost countless options to choose for research. Furthermore, HI is equipped
to understand institutions' evolutionary changes by means of explanatory categories of critical
junctures and path dependence. They address the two different poles of evolving governance, a
change (shift towards hard modes) interpreted by critical junctures and
continuation/intensification (settling the shift) constructed by path dependence. Both poles
address the same issue, which is the nature of evolving governance and the rationale behind the
evolution. Likewise, they signal adaptability to the crises as exogenous shocks. The paper
employs HI even though the E U Funds are seen by some (Pollack, 2009) as not a fitting case for
their default conditions, notably seven years programming cycle and corresponding revisions.
However, most of the E U policies operate in the same cycle as this is the function of the E U
budget. Moreover, merely the fact that the policy responses to the crises in our case study align
with the policy cycle does not undermine the HI explanatory power as being instrumental for
depicting the change and continuity. In fact, cohesion policy shows to be a fitting case study to
adopt HI as its responses to crises are consistent in time and show a distinguished pattern of the
shift and continuation. There is an evident learning process behind the pattern.
Critical junctures denotes temporary possibilities, also perceived as windows of opportunity
(Ladi and Tsarouhas, 2020), for policy-making to come up with innovative change (Wolff and
Ladi, 2020: 1034) resulting in enduring effects (Verdun, 2015). Such is the case of crises, namely
financial and economic crisis and the COVED-19 pandemic. In our context, these exogenous
shocks are behind the shift towards governance hard modes through the introduction of the new
conditionalities and the top-down architecture of the thematic focus in the 2013 cohesion reform
as well as the RRF in the 2020 reform. Adaptability to exogenous shocks could be measured
against the authority and the bureaucratic capacity on the part of the E U to 'free up funds, use
flexibility rules to reallocate funds across policies, or set up new funding instruments' (Debre
and Dijkstra, 2021). On one hand, the E U managed to employee all of these options. On the
other, distribution of funding between cohesion policy and the RRF, while sharing the mission
and governance elements (macroeconomic conditionalities) but differ in ownership (the RRF is
the Commission's sole responsibility), undermines inner alia the role of subnational actors
(Bachtler and Mendez, 2020b). Consequently, such duality potentially questions endeavour
towards territorial cohesion as the E U Treaty-based objective. Interestingly enough, the shift in
governance in cohesion policy as of 2013 is alike with emerging governance under the RRF post
2020. Exporting cohesion policy's hard modes in spite of the reported shortcomings is thus more
viable option for building governance under centrally managed RRF than opting for more
experimentalist modes. This is even more apparent when employing the path dependence concept
Path dependence signals that 'preceding steps in a particular direction induce further movement
in the same direction' (Pierson, 2000: 251). The steps could be also understood as incentives
(Pollack, 2009:127). The concept explains continuation, notably as a consequence of exogenous
shocks. In our case it is continuation of the key elements of the 2013 reform, notably the
conditionalities and the thematic focus also post 2020, though with some modifications. This is
so in spite of the reported shortcomings in the implementation of the 2013 reform, notably the
case of the conditionalities and in the face of existential threat of the COVED-19 pandemic (Ladi
and Tsarouhas, 2020; Wolff and Ladi, 2020). The outcome of bargaining mirroring the preceding
one from 2013 shows that a change in governance is perceived more costly than its continuation
and intensification. Furthermore, the continuing governance with the option for exceptional
relaxation of the rules represents single loop learning (Ladi and Tsarouhas, 2020). It shows that
temporary rules relaxation is more acceptable than softer modes and without diverging from the
policy's mission. Importantly, provided the conditionalities' punitive means successfully
function as a detergent without being triggered (Epstein and O' Halloran 1999), reputational risks
associated with the Commission's authority over punitive means may not be challenged as was
180
the case of implementing conditionalities after 2013. This cohesion policy's experience is to
some extend also behind building governance in the novel RRF as shown in Table 1.
4 Conclusion
Governance in cohesion policy demonstrates the case of the shift from the soft to hard modes as
of 2013 and their continuation and intensification post 2020. It is examined through interinstitutional
dynamics at E U level during the programing and implementation phases. HI shows
that major drive in evolving governance were crises, financial and economic and the pandemic
COVID-19. Key institutional players opted for hard modes as way of adaptation to these
exogenous shocks, which also required their intensification by means of establishing new
funding instruments, notably the RRF. Despite the reported shortcomings in bargaining and
implementation of the 2013 reform package, continuation and intensification of the hard modes
is perceived as a more viable option than soft alternatives. This cohesion policy's learning
experience from building governance on hard modes translated into designing governance under
the RRF post 2020. Experience with building governance in cohesion policy shows that is the
result of context dependent preferences of the key institutional actors in response to the global
crises. Therefore, the results are rather ambiguous. On one hand, the key institutional actors
converge their preferences and bargain the shift towards hard modes and its continuation. On the
other hand, in implementation, their initial preferences are subject to adjustments. It is suggested
that this is the reason of internal (e. g. contentious vies inside the Commission, arbitrary reading
of rules on the part of member states and the Parliament) and external political pressures (rising
Euroscepticism). It is yet to be seen what results will implementation bring post 2020 and how
preferences will evolve in the COVID-19 era.
Table 1 Evolution of governance in cohesion policy
Reform
package
Governance
mode
Characteristics
2006
OMC (soft
mode) -
Lisbonisation
Thematic focus - aligning with the Lisbon strategy leading
to random identification of priorities, earmarking yet
lacking quantifiable targets, weak Commission's
coordination in bargaining and implemenation
2013 hard modes
Thematic focus aligning with the Europe 2020 strategy with
the quantifiable targets translated top-down into on cohesion
policy priorities (11 thematic objectives and multiple
investment priorities) backed by Commission's
entrepreneurial position papers framing the EU level
perspective on national priorities during bargaining, ex ante
and macroeconomic conditionlities, vague coordination with
the EU Semester
2020 hard modes
Thematic focus on top-down priorities (5 policy objectives
representing top EU level priorities) and multiple specific
objectives backed by country reports as part of the the EU
Semester cycle, better articulated link between cohesion
policy and the European Semester
2021 RRF
(outside the
cohesion
budget)
hard modes
Commission's direct management, thematic focus on the top
EU level priorities (green transition; digital transformation;
smart, sustainable and inclusive growth; social and
territorial cohesion; health, and economic, social and
institutional resilience, children and youth's education and
skills), macroeconomic conditionalities
Source: Authors' own elaboration
181
Acknowledgement
This contribution was supported by V E G A grant no. 1/0605/19.
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Contact information
Mgr. Igor Jašurek, MA.
University of Economics in Bratislava, Faculty of National Economy, Department of Public
Administration and Regional Development
Dolnozemská cesta 1, 852 35 Bratislava, Slovak Republic
E-mail: igor.jasurek@euba.sk
186
The Position of Public Administration in the Manifestos of Czech
Parliamentary Political Parties: 2017 Elections to the House of Deputies
of the Parliament of the Czech Republic
Jifi Kohoutek
Abstract: The research sought to show the position of public administration in the election
manifestos of Czech parliamentary political parties that were successful in getting their seats in
the Chamber of Deputies of Czech Parliament. There were three sub-questions asked and
answered using the method of textual content analysis: a) how did the parties view public
administration of the Czech Republic before the elections (status quo), b) what changes and
policies they proposed in their manifestos, and c) what measures they wanted to put into practice
to achieve such changes. Generally, the parties did not conceptualize public administration, their
main focus was on digital administration and eGovernment and they did not offer detailed
implementation measures.
Keywords: Elections, manifestos, public administration
JEL Classification: D70, H l l , H83
1 Introduction
There is probably little doubt that elections are one of the cornerstones of contemporary
democratic government, providing citizens with the opportunity to actively participate in the
political life of society and in the decision-making processes of their polity. Political party
manifestos, or election programmes, are generally believed to play an important role in the
election process. As the competition in elections is usually programmatic, the general idea is that
parties (among other things) compete on manifestos and the winner or winners promise to
implement the policies put forward in their programmes. This applies both to majoritarian as
well as proportional electoral systems.
As Eder, Jenny and Muller (2017) sum up, three basic functions of political manifestos can be
distinguished. Manifestos provide information on party positions, help streamline each
individual party's campaign as a form of a party-voter contract, and serve as a printed campaign
material. However, as Kavanagh (1981) noted, there are also drawbacks, such as the frequent
lack of party/governmental capacity to meet the expectations or the influence of bureaucracy on
the political process. As a result, it is often difficult to predict if, how, and to what extent party
manifestos will be reflected in future government policies (Thomson, 2020).
Nevertheless, the importance of manifestos is seen as quite important, especially in the field of
political science, leading to a plethora of available data and stemming a methodological debate
in the field (Laver, 2003; Budge et al, 2012; Gemenis, 2013; McDonald and Budge, 2014; Eder,
Jenny and Muller, 2017).
The role of public administration, lies in providing public services, such as municipal, health
care, school, transport services etc. as well some "classical" administration activities, e. g. issuing
licences, permits, documents, certificates, providing information etc. It also advises politicians,
supports the formulation and execution or implementation of policies. Though it is often seen as
"carrying out the business of government", it is much more than that - it is the execution of the
law, where efficiency, economy and effectiveness must be sought, while being accountable, open
to the public, procedurally fair. It is the area of promoting justice nad providing protection as
well as equal opportunity to the citizens - all of that within the framework of contemporary
187
democratic government, and, as we have recently seen, with the need to face unexpected and
turbulent situatiations, such as the outbreak of the COVID-19 virus (Bovens, 2010; Bertot, Jaeger
and Grimes, 2012; Christensen and Perry, 2015; Ansell and Trondal, 2018; Androniceanu, 2021;
Ansell, Sorensen and Torfing, 2021).
The public administration focus of contemporary political science has been mostly on the preeminently
important topic of political control over the bureaucracy stemming from the idea that
public administration, if not held in check by politics, will lose its anticipated democratic nature
and evolve into a non-democratic, arbitrary, if not malevolent entity. Speaking of democracy,
political science recognizes the paradox of public service in democracy: democracy itself is in
need of strong, competent, effective, efficient, responsive and responsible public administration,
or public service, while at the same time such need stands in sharp contrast to the general idea of
the government of the people. Political control of the public service as well as giving the
bureaucracy a vision and a mission thus should become a necessary part of party positions
declared in their electoral manifestos. On the other hand, it is essential not only for the public
administration officials (or bureaucrats) but also for the citizens and general public to know, what
possible future scenarios may appear after any following elections, especially in the countries,
where the independence and professionalization of public administration have been
compromised by an undemocratic regime and only recently restored, such as the Czech Republic.
Also, with the rise of populistm and populists, we have seen them capture, dismantle, sabotage
and/or reform public service aiming at structures, resources, personnel, norms, and
accountability relationships and having impact on both policymaking and democracy (Meier, Jr
and O'Toole, 2006; Hamilton, 2015; Baldini, 2017; Goodsell, 2019; Bauer and Becker, 2020).
According to Spicer (2010), such practice of politics might even be necessary to the moral
conduct of government and public administration, as it may protect the value pluralism as an
integral part of our moral experience as human beings.
The aim of this paper is to analyse the manifestos of political parties that were successful in the
2017 elections to the Chamber of Deputies - the lower House of the Parliament of the Czech
Republic. The general research question on the position of public administration in the
manifestos of parliamentary political parties can be subdivided into three sub-questions: a) how
did the parties view public administration of the Czech Republic before the elections (status quo),
b) what changes and policies they proposed in their manifestos, and c) what measures they
wanted to put into practice to achieve such changes.
2 Material and Methods
The position of public administration is based on ex-post content analysis of political manifestos
of parliamentary political parties - i. e. such parties that succeeded in getting their seats in the
Chamber of Deputies of Czech Parliament in 2017. In the abovementioned elections, 31 political
parties competed for the total number of 200 seats, however, only 9 were successful and got their
seats in the lower chamber of Czech Parliament.
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Table 1 - Electoral results - Chamber of Deputies, Parliament of the Czech Republic
Party Votes Seats
number name total in % total
1 Občanská demokratická strana 572 948 11,32 25
2 Rad národa - Vlastenecká unie 8 735 0,17 -
3 CESTA ODPOVĚDNÉ SPOLEČNOSTI 3 758 0,07 -
4 Česka str.sociálne demokrat. 368 347 7,27 15
5 Volte Pr.Blok www.cibulka.net 491 0,00 -
6 Radostne Česko 3 852 0,07 -
7 STAROSTOVE A NEZÁVISLÍ 262 157 5,18 6
8 Komunistická str.Cech a Moravy 393 100 7,76 15
9 Strana zelených 74 335 1,46 -
10 ROZUMNI-stop migraci,diktat.EU 36 528 0,72 -
11 Spolec.proti vyst.v Prok.udoli 438 0,00 -
12 Strana svobodných občanu 79 229 1,56 -
13 Blok proti islam.-Obran.domova 5 077 0,10 -
14 Občanská demokratická aliance 8 030 0,15 -
15 Česka pirátska strana 546 393 10,79 22
16 OBČANE 2011-SPRAVEDL. PRO LIDI 359 0,00 -
17 Unie H.A.V.E.L. 436 0,00 -
18 Česka narodni fronta 117 0,00 -
19 Referendum o Evropské unii 4 276 0,08 -
20 TOP 09 268 811 5,31 7
21 ANO 2011 1 500 113 29,64 78
22 Dobra volba 2016 3 722 0,07 -
23 SPR-Republ.str.Csl. M.Sladka 9 857 0,19 -
24 Krest.demokr.unie-Cs.str.lid. 293 643 5,80 10
25 Česka strana národne sociálni 1 573 0,03 -
26 REALISTÉ 35 995 0,71 -
27 SPORTOVCI 10 593 0,20 -
28 Dělnic.str.sociálni spravedl. 10 402 0,20 -
29 Svob.a pr.dem.-T.Okamura (SPD) 538 574 10,64 22
30 Strana Prav Občanu 18 556 0,36 -
31 Národ Sobe 300 0,00 Source:
Czech Statistical Office, http://www.volby.cz
To achieve that, manifestos (sometimes with other significant documents) of the individual
successful parties were analysed to see, whether public administration is mentioned at all - the
keywords searched for in the manifestos are "public", "administration", "bureaucracy" and
"agenda", and if yes, how it was conceptualized, what policies were proposed and how they were
to be implemented.
3 Results
3.1 Freedom and Direct Democracy (Svoboda a prima demokracie - SPD)
SPD is a hard Euro-sceptic party, named after "Europe of Freedom and Direct Democracy" and
linked with National Front of Marine LePen. Its general rhetoric and program are antiimmigration,
"patriotic /nationalist" and pro-direct democracy. The party is led by Tomio
189
Okamura. In the election of 2017, the party received 10.64 percent of the popular vote resulting
in 22 seats in the Chamber of Deputies.
In their 2017 manifesto, SPD (2017) conceptualized public administration as "arrogant" in
connection with tax redistribution. Other than that, no conceptualization was to be found. In
terms of policy proposals, SPD declared that they wanted to propose reforms and changes in
public administration with the emphasis on the state being "functional, economic and democratic,
granting citizens their rights and asking them to fulfill their duties". This allows to deduce the
same qualities of public administration. Nevertheless, there were no specific measures offered to
implement any changes.
3.2 ANO 2011
A N O 2011 started as an anti-corruption political movement and turned out to be a populist,
centrist party, with center-to-left oriented policies. It is led by the 2nd richest person in the Czech
Republic, the multi-millionaire entrepreneur Andrej Babiš, an alleged former communist secret
state police agent, who was a Minister of Finance at the time of the elections and currently is the
Prime Minister of the Czech Republic. The party was the winner of the 2017 elections. It received
29.64 per cent of the popular vote and 78 seats in the Chamber of Deputies.
A N O 2011 (2017) did not conceptualize public administration directly in any way, stating
however, that they want the state to be effective and economical. From that we can deduce that
public administration should have the same qualities, together with seeing administration as a
service. Anti-corruption rhetoric was kept. Measures proposed by the party included simplifying
administration, creation and development of eGovernment services in connection to a personal
ID card, using Czech Post to provide access to several agendas of the government/state, a virtual
phone operator for the public administration, joint purchasing/procurement, eGovernment cloud
in IT etc.
3.3 Czech Pirate Party (Česká pirátská strana)
Czech Pirate Party is a centrist or center-to-left positioned party (though they refuse the general
left-to-right spectrum), putting emphasis on liberal, ecological and information technology
connected topics. The party leader is Ivan Bartoš, known for his unorthodox look. In the election
of 2017, the party received 10.79 per cent of the popular vote and 22 seats in the Chamber of
Deputies.
Czech Pirates (Pirátská strana, 2017) did not conceptualize public administration in its
contemporary status quo. Instead, they offered a simple vision of an open government
responsible to its citizens for the quality of public services provided. Government transparency
should lead to less corruption. Proposed measures included de-politization of public
administration via a novel law on state service, transparent and public selection procedures for
all public posts, reduction of duplicities in agendas, processes simplification, increased quality
of services, introduction of process audits and quality standards with regular evaluation.
Remuneration of public servants should be adapted to the private sector and it should be able to
attract top professionals.
3.4 Civic Democratic Party (Občanská demokratická strana - ODS)
ODS is a conservative-liberal party: while conservative with the social issues, it is liberal in terms
of the economy. It is also moderately Eurosceptic, not very keen on accepting the Euro as the
common E U currency for the Czech Republic. The party is quite heterogenous with a nationalconservative
faction, a national-liberal faction and a Christian-conservative faction. The party is
190
led by professor Petr Fiala, a former rector of the second largest university in the country, the
Masaryk University, In the 2017 elections, the party was able to get 11.32 per cent of the popular
vote resulting in 25 seats in the Chamber of Deputies.
Civic democrats (ODS s podporou Soukromníků, 2017), like the Pirates, did not conceptualize
public administration but offered a vision of a friendly public administration together with digital
society. Digital technology should lead to simplification and reduction of agendas. Public
administration should be "user friendly", comprehensible, and should offer both digital services
and the possibility to do anything also without them, i . e. off-line. Civic democrats proposed
communication with public administration similar to an e-shop or an on-line banking application,
including paying fees by card, that should make life of citizens easier. The proposed measures,
however, seemed somehow like "cherry picking", showing individual assets for the citizens, but
without a complex general idea.
3.5 Czech Social Democratic Party (Česká strana sociálně demokratická - ČSSD)
As its name suggest, ČSSD is a traditional social-democratic party. In fact, with its roots going
back to 1878, it is the oldest political party in the Czech Republic. The party supports mixed
economy, welfare state and progressive taxation. It is also in favor of European integration
processes. After the resignation of Bohuslav Sobotka from the position of the chair of ČSSD, the
party was led by a "triumvirate" of B. Sobotka who kept only the position of the Prime Minister,
Milan Chovanec as the statutory chair of the party and Lubomír Zaorálek, the Minister of Foreign
Affairs, as the electoral leader. However, due to not very successful results - the party received
only 7.27 per cent of the popular vote and 15 seats in the Chamber of Deputies - Jan Hamáček
became the new chair of the party.
Czech social democrats were very concise concerning public administration in their manifesto
(ČSSD, 2017): No general conceptualization was present. As for proposed changes, the party
offered digitalization of public administration within the concept of network neutrality, free
software and open data, that should go hand in hand with decreasing bureaucracy and paperwork.
No specific measures for implementation, however, were present.
3.6 TOP 09
With the abbreviation in the name of the party emphasizing tradition, responsibility and
prosperity (in Czech language "tradice, odpovědnost, prosperita"), TOP 09 is an Euro-optimist,
conservative-liberal party, quite similar to ODS, with a stronger conservative and catholic
element, though it is also supported by so called "city-liberals". The party is led by Markéta
Pekařova Adamová nowadays, while at the time of the elections it was led by Miroslav Kalousek,
one of the "founding fathers" of the party in 2009. In the 2017 elections, the party barely passed
the necessary 5 per cent threshold needed for the Chamber of Deputies with 5.31 per cent of the
vote and 7 seats in the house.
TOP 09 (2017) offered a single conceptualization of public administration: when talking about
the slow rate of transport infrastructure construction, infectivity of public administration was put
forward as one of the reasons. As for the proposed measures, the party offered improvement of
eGovernment services, especially in the area of user experience. Public administration should be
effective and available to the citizens. If an unlawful fine were imposed, the state would have to
pay also a fine to the affected citizen. Nonetheless, no specific measures for implementation to
reach the goals was offered.
191
3.7 Christian Democratic Union - Czechoslovak People's Party (Křesťanskodemokratická
unie - Československá strana lidová - KDU-ČSL)
KDU-ČSL is a Christian-democratic (catholic) and conservative party, usually holding centrist
views and supporting center-to-right policies. Led by Pavel Bělobrádek at the time of the 2017
elections, the party is led by Marián Jurečka at this time. Like TOP 09, KDU-ČSL also barely
passed the threshold needed to get seats in the Chamber of Deputies, as it got only 5.8 per cent
of the popular vote and 10 seats.
In its manifesto, KDU-ČSL (2017) offered no conceptualization of public administration. For
the future, the party offered no increase of public administration officials, no increase in
operations budgets for public administration, on the other hand it wanted public administration
to offer flexible and part-time jobs. Other policy plans included prevention of centralization of
administration, and, of course, digitalization. The party proposed the end of the principle of
"territoriality" of administration - citizens should be able to solve their problems on any
individual public administration office. These plans, however, had no specific implementation
measures included.
3.8 Mayors and Independents (Starostové a nezávislí - STAN)
With its roots in municipal and regional politics, STAN is more difficult to position in the system.
Generally, the party is Eurooptimist, liberal and pro-environmental, resulting in its cooperation
with the Pirate party in 2021. In 2017, the party was led by Jan Farský, former mayor of the town
Semily, while the leader today is Vít Rakušan, mayor od the town Kolín. In the 2017 elections,
the party received 5.18 per cent of the popular vote and 6 seats in the Chamber of Deputies of
Czech Parliament.
The party of mayors and independents (2017) noted, that the reform of public administration
system in the Czech Republic has not been finished with only two stages finished - the restoration
of basic territorial self-government units - municipalities, and the establishment of higher
territorial self-government units - regions; the third stage was to be added - decentralization of
the competences of central state administration bodies (especially ministries) and their related
reform (streamlining), that has not yet happened. On the other hand, there are proposals to
gradually remove administrative agendas from local self-government units (e.g. building and
construction authorities). State ministries are already announcing major changes in the
competences of authorities together with efforts to build new administrative offices that will
belong directly to the organisational structure of individual ministries, thus significantly
strengthening the centralisation of state power. A new element is the effort to establish new
separate "super-offices" alongside the current ministries. STAN strongly disagrees and offers to
move decision making (back) as close to the citizens as possible, together with digitalization of
public administration, its transparency and openness. The implementation steps should include
total revision of public agendas and as a follow-up a reform of public administration, together
with a decrease of public administration officials, remote (online) access to the services of public
administration, eGovernment and electronic (on-line) elections, de-bureaucratization of public
administration with a decrease in paperwork. Public administration should be open, transparent
(e. g. in the area of publicization of contracts), while the people working in public administration
should be held responsible. In the long-term period, public administration should become very
stable, with no big changes.
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3.9 Communist Party of Bohemia and Moravia (Komunistická strana Čech a Moravy -
KSČM)
KSČM, a successor of the infamous Communist Party of Czechoslovakia (KSČ), is a nearly
orthodox communist party, even though with a more "liberal" wing within the party. Unlike other
communist parties of the former Soviet bloc, Czech communists did not change it party name or
orientation towards the social-democratic or labor varieties of the left and remained mostly
unchanged. The party is led by Vojtěch Filip. In the 2017 elections the party received 7.76 per
cent of the popular vote and 15 seats in the Chamber of Deputies.
Czech communist party (KSČM, 2017) did not offer any conceptualization of public
administration. In their policy positions, they proposed digitalization of public administration as
well development of infrastructure to allow citizens use public transport to get to the services of
public administration. They also wanted to lower the service fees for using the services of public
administration. They, however, did not offer any specific measures to reach such goals.
4 Conclusion
While theory and practice mostly agree that the best way is to start with conceptualization and
analysis, and then offer a solution, Czech political parties did not generally conceptualize public
administration before the 2017 elections to the Chamber of Deputies. The only exception - the
party of mayors and independents (STAN) - offered some form of conceptualization based on
the unfinished reform of Czech public administration. Other parties, if at all, offered only a
schematization or fragmentation (such as the concept of "arrogance" or inefectivity of public
administration). On the other hand, we could imply some of the concepts, as well as problems of
public administration, from the proposed changes - if there was no need to change it, parties
would not propose changes.
The policy goals generally offered development of eGovernment or digitalization of Czech
public administration, which would lead to sharing data between parts of administration (a
problem long-known, though already at least partially solved by the institute of public registries).
Another emphasis was seen on the simplification of administration and on "leaner" state, i. e.
decrease of the number of public administration officials, or people working for the government.
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Table 2 - Manifesto analysis
Party
Conceptualization
of PA
Proposals/ Measures /
Vision (what to
change)
Implementation steps
(how to change)
SPD arrogant
• functional, economic
and democratic
• granting citizens their
rights and asking
them to fulfill their
duties
N/A
ANO 2011 N/A
• effective and
economical
• anti-corruption
rhetoric
• simplifying
administration
• eGovernment
implementation
Pirate Party N/A
• open government
• responsible to citizens
• de-politization
• legislative changes
ODS N/A
• friendly public
administration, user-
friendly
• digitalization
N/A
ČSSD N/A
• Digitalization, open
data
• decrease of
paperwork
N/A
TOP 09 ineffective
• digitalization
• effective
• available to the
citizens
N/A
KDU-ČSL N/A
• prevent centralization
• no change in
personnel and budget
• digitalization
• end of territoriality
N/A
STAN
growing or
impending
centralization
• getting PA close to
the citizens
• digitalization
• open and transparent
PA
• agenda revision
• online service
• stabilization
KSČM N/A
• digitalization
• development of
infrastructure
• lower fees for
services
N/A
Source: own analysis
The parties, however, did not offer implementation steps, with the exception of the mayors and
independents (STAN), thought even this party was not offering much detail. Such results seem
to be in accord with the previous literature on the topic. Being not very specific about their goals,
especially with a large number of people working in the public sector, may be congruent with
194
the so called broad-appeal strategy aiming to maximize the electoral votes (Somer-Topcu, 2015;
Bergman and Flatt, 2021; Martin et al., 2021). Another explanation put forward recently may be
that parties try to blur their positions to reach the same electoral effect (Rovny, 2012; Koedam,
2021; Nasr, 2021).
As for future parts of the research, focus could be put on the changes of structures of manifestos
in general, as well as on other forms of campaign materials (such as books written by politicians
showing their ideas for the future or reflecting past).
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Contact information
Mgr. et Mgr. Jiří Kohoutek, Ph.D.
College of International and Public Relations Prague, Department of Politics and Social Sciences
U Santošky 17, 150 00 Praha 5, Czech Republic
E-mail: kohoutek@vsmvv.cz
197
Evaluation of Key Performance Parameters of Transport Companies in
the Czech Republic
Natálie Konečná, David Lenert
Abstract: Everyone knows transport and not many people can imagine life without it nowadays.
It has its importance in economics, culture, politics and security. The issue of transport security
and the related transport service is relevant in view of the growing trend in the number of private
cars, where the increasing number of cars in families is putting pressure on public transport. The
aim of this article is to evaluate the functioning of transport companies in selected cities of the
Czech Republic on the basis of selected performance and operational criteria. In this case, the
number of passengers carried in relation to the density of the transport network is chosen as the
operational criterion. The assessment is based on data from nineteen, respectively twenty
transport companies operating on the territory of the Czech Republic, which are also active
members of the Association of Transport Companies of the Czech Republic (Sdružení
dopravních podniků České republiky). The number of passengers carried by individual transport
companies in the public transport network was monitored over a nine-year period. It was found
on the basis of the analysis that the largest number of passengers per capita is attributed to the
Prague transport company, while the transport companies from Chomutov and Jirkov show the
lowest number. Within the analysis of the operational criterion - density of the transport network
- the cities are relatively balanced. The highest density of the transport network is shown by the
city of Teplice, where buses and trolleybuses serve the city, while the lowest density is shown
by the city of Děčín. The paper deals with the hypothesis whether at least 50% of the employees
of individual transport companies are drivers of transport companies.
Keywords: Urban public transport, number of passengers carried, density of transport network,
transport companies
JEL Classification: C21, C67, R48
1 Introduction
Transport and transport infrastructure
Many authors in their articles deal with the public transport system, its efficiency and quality.
Among the foreign authors, for example, a group of authors consisting of Stiglic Mitja, Agatz
Niels, Savelsbergh Martin and Mirko Gradisar deal with the issue of transport integration which
would increase the efficiency of public transport, with studies showing that bicycle sharing
combined with public transport can achieve higher usage of public transport. Ivan Igor in his
article also considers integration, but from the perspective of urban and suburban transport.
Pawlasová Pavlína, on the other hand, discusses the factors that influence satisfaction with public
transport. Passenger satisfaction with public transport is also addressed by Olivková Ivana in her
article.
Transport has been, is and always will be the driving force of development in the life of all
nations. Nowadays, people cannot imagine life without transportation, using various means of
transport and sufficient transport infrastructure. Transport is an activity that everyone is familiar
with. The oldest form of transport is walking. Even today, for people in less developed countries,
walking long distances is usually the only possible way of transport. People there still carry heavy
loads, e.g. as mountain Sherpas. In developed countries, walking as a way of moving from place
198
to place is used rather for shorter distances. Walking for longer distances in more developed
countries is mainly a way to spend leisure time e.g. hiking.
Rektořík (2012) states that transport is an activity providing intentional movement of people and
things. It has its strategic importance in the economic, political, cultural and also security sector.
In order to move people or things, there must be sufficient transport infrastructure that is suitable
for the movement of vehicles (Eisler, Kunst and Orava, 2011).
Eisler, Kunst and Orava (2011) classify transport as a sector of the national economy that forms
the overall infrastructure of the economy. Ochrana (2007) believes that there is no
straightforward definition of the term public service. Public service can be described as a concept
that has economic, social and legal content. In economic terms, a public service is an economic
or public estate. For this reason, a public service can be a pure public estate or a mixed public
estate. From the perspective of the theory of estates, according to Rektořík (2012), a pure market
estate has become a mixed estate over time. The form of state intervention varies from one
transport sector to another.
The aim of this article is to evaluate the functionality of transport companies on the basis of
operational and performance criteria, supported by a hypothesis: „the total number ofemployees
is made up of at least by 50% drivers of vehicles ".
Urban public transport
The term urban public transport has been used by the public, both professional and lay, for many
years. Although there is no doubt about the frequent occurrence of this term, the legislation
regulating the provision of public transport does not know this term (Association of Transport
Companies of the Czech Republic, online). According to Section 2(7) of Act No. 111/1994 Coll.,
concerning road transport, as amended, urban public transport, or bus transport, is a subset of
public line transport: "Line passenger transport is the regular provision of transport services on
a specified route, during which passengers alight and board at predetermined stops. Line
passenger transport may be operated in the form of a public line service or in the form of a
special line service, either national or international. By this is meant (a) public line transport,
where transport services are offered under pre-announced conditions and are provided to meet
transport needs; where the transport is provided for the needs of the city and its suburban areas,
it is referred to as urban bus transport... "
The Association of Transport Companies of the Czech Republic (online) further states that the
legislation regulating rail transport does not work with this concept at all. That is why Ing.
Macháček from the Association of Transport Companies sees the problem in the absence of a
unified law on urban public transport. In this context, public transport does not even have its own
department at the Ministry of Transport of the Czech Republic and issues related to public
transport fall under various departments.
Urban public transport in the Czech Republic is provided by rail, road and water transport. Each
kind of transport has its own specific means of transport. If we focus only on urban public
transport, buses are typical for road transport. For rail transport, the choice of means of transport
is slightly more varied. Rail transport includes metro, trains, trolleybuses, trams and also
funiculars. In the Czech Republic there are also types of funiculars that belong to public transport.
Examples include the city of Praha, where there is a funicular to Petřín and a funicular in the
Prague Zoo, which belongs to the transport company of the Capital City, as well as Karlovy Vary
and Ústí nad Labem. The characteristic feature of both Prague funiculars is being a tourist
attraction. Although the Prague transport comapny is the single operator of the funicular to Petřín
and the Prague Zoo funicular, it is not a typical means of public transport. The funicular to Petřín
is connected to tram transport with the final stop at Petřín near the popular observation tower.
199
For this reason in particular, the funicular is a popular tourist attraction with year-round operating
hours. The funicular in the Prague Zoo is also intended for its visitors, who can use it between
the end of March and the end of October (Prague City Portal, online). The Diana funicular in
Karlovy Vary is no exception; like in the capital, it is a popular tourist destination. This funicular
has been in service for more than 100 years and currently belongs to the Karlovy Vary transport
campany. Its route starts next to the Grandhotel Pupp and ends at the Diana Lookout Tower
(Diana Karlovy Vary, online). The youngest funicular in the public transport system is the
funicular to Větruše in Ústí nad Labem, which started its service in 2010. It connects the Forum
shopping centre and the Větruše Chateau (Transport Company of Ústí nad Labem, online).
The urban public transport system in the Czech Republic also includes water transport. Such
specific public transport is operated on the Brno dam and on the Vltava river. The boating season
on the Brno "Prygl" runs from April to October. The history of boat traffic on the Brno dam dates
back to 1946. The route of the boat traffic runs from Bystrc to Veverská Bítýška. It operates
mainly as a cruise transport and is divided into 10 stops and takes 70 minutes in one direction
(Prygl, online). The public transport system in Prague also includes ferries on the Vltava River,
which are a popular way of transport between the river banks, especially where bridges are not
available. For tourists in particular, they represent an interesting way of getting to know the
capital from a different perspective (Prague City Portal, online).
2 Material and Methods
The requirement of the public transport service customer is to provide transport within the city.
The individual transport companies can be characterised from several aspects, which can be
divided into operational and performance criteria. Operational criteria can be considered as those
related to the technical functioning of the transport companies, i.e. number of lines, number of
vehicles, length of lines and number of employees. These criteria can then be used to assess
individual transport companies. This article focuses on the evaluation based on the length of lines
or the density of the transport network. Table 1 shows the average number of inhabitants of the
area served and the size of that area.
Performance criteria can be characterised as criteria by which companies assess their mission,
i.e. whether their core business of land management is sufficient. Performance criteria reflect, in
essence, the requirements of customers. By this criterion it is possible to evaluate the
performance of the transport or the transport operator in a given city. Performance criteria
include, for example, the number of passengers carried, transport performance in seat kilometres
and vehicle kilometres. Richtár, Krivda and Olivková (2006) state that in order to evaluate
performance, criteria such as transport and carriage outputs and number of passengers carried
are collected.
200
Model and Data
Table 1 - Transport companies
Rank Transport company Region Area (km2
) Population
1. Dopravní podnik hl. města Prahy a. s. Capital city Praha 496 1 253 245
2. Dopravní podnik města Brna a.s. Jihomoravský 230 378 159
3. Dopravní podnik Ostrava a. s. Moravskoslezský 214 296 165
4. Plzenské městské dopravní podniky a. s. Plzeňský 138 168 556
5. Dopravní podnik měst Liberce a Jablonce nad Nisou a. s. Liberecký 137 147 933
6. Dopravní podnik města Olomouce a. s. Olomoucký 103 99 765
7. Dopravní podnik města Ústí nad Labem a.s. Ústecký 94 93 717
8. Dopravní společnost Zlín - Otrokovice s.r.o. Zlínský 122 93 671
9. Dopravní podnik města České Budějovice a.s. Jihočeský 56 93 464
10. Dopravní podnik města Hradce Králové a.s. Královehradecký 105 93 123
11. Dopravní podnik měst Mostu a Litvínova a.s. Ústecký 127 92 236
12. Dopravní podnik města Pardubice a.s. Pardubický 78 89 637
13. Dopravní podnik měst Chomutova a Jirkova a.s. Ústecký 46 69 195
14. Městský dopravní podnik Opava a.s. Moravskoslezský 91 57 969
15. Dopravní podnik města Jihlavy a.s. Vysočina 78 50 596
16. ARRIVA TEPLICE s.r.o. Ústecký 24 50 134
17. Dopravní podnik města Děčína a.s. Ústecký 118 50 059
18. Dopravní podnik Karlovy Vary a.s. Karlovarský 59 49 952
19. Městská doprava Mariánské Lázně s.r.o. Karlovarský 52 13 331
Source: Created by authors
Performance criteria
To determine the total number of passengers, individual carriers use the guidelines of the
Ministry of Transport of the Czech Republic. The number of passengers carried is determined
according to the following relationship:
• 1 ticket issued = 1 passenger carried
This relationship does not take any consideration on the type of fare or the price of the fare. The
total number of passengers using time tickets is determined by the number of vouchers sold in
the reference period according to the following formula (1):
/ = Z(K-L) (1)
J - number of passengers carried on prepaid season tickets,
the total number of passengers carried for each type of voucher,
K - number of vouchers of each type sold,
L - standard of passengers carried per individual voucher.
For an objective assessment and probably also one of the most important performance criteria is
the transport performance, or the number of passengers carried. It is therefore advisable to
calculate the number of passengers carried per inhabitants of a given city. This conversion can
be expressed according to the following formula (2):
average number of passengers carried
x = (2)
average number of inhabitants
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The result of this ratio is the average number of public transport passengers per capita. The
average number of passengers carried over the period under review is expressed in Table 2.
Table 2 - Average number of passengers carried in the period 2010-2019 (in thousands)
Rank Transport company Passengers carried
1. Dopravní podnik hl. města Prahy a.s. 1 431 859
2. Dopravní podnik města Brna a.s. 355 399
3. Dopravní podnik Ostrava a.s. 94 699
4. Plzeňské městské dopravní podniky a.s. 106 365
5. Dopravní podnik měst Liberce a Jablonce nad Nisou a.s. 38 804
6. Dopravní podnik města Olomouce a.s. 55 051
7. Dopravní podnik města Ustí nad Labem a.s. 43 650
8. Dopravní společnost Zlín - Otrokovice s.r.o. 32 710
9. Dopravní podnik města České Budějovice a.s. 42 493
10. Dopravní podnik města Hradce Králové a.s. 35 828
11. Dopravní podnik měst Mostu a Litvínova a.s. 24 233
12. Dopravní podnik města Pardubice a.s. 27 836
13. Dopravní podnik měst Chomutova a Jirkova a.s. 6 340
14. Městský dopravní podnik Opava a.s. 10 141
15. Dopravní podnik města Jihlavy a.s. 14 218
16. ARRIVA TEPLICE s.r.o. 11 206
17. Dopravní podnik města Děčína a.s. 7 445
18. Dopravní podnik Karlovy Vary a.s. 13 346
19. Městská doprava Mariánské Lázně s.r.o. 3 409
Source: Created by authors
3 Results and Discussion
It goes without saying that each company operates on the basis of its employees. This is not the
case with transport companies either. Next Tab. 3 shows the average number of employees and
drivers for the observed period. It also shows the percentage of drivers on the total number of
employees in a given transport company. It is not surprising that the largest number of people is
employed by Prague transit company, The number of drivers is also three times larger than the
second largest number in Brno. In this characteristic, without a doubt, the largest employer is
Prague transit company, which has over ten thousand employees. Brno and Ostrava can also be
assigned to the larger ones, where the total number of employees is still in thousands. In contrast,
other companies report the number of employees in hundreds, or Mariánské Lázné only in tens
of employees.
202
Table 3 - Share of drivers on the total number of employees
Rank Transport company Employees Drivers Share in %
1. Dopravní podnik hl. města Prahy a.s. 10719 4 189 39.08%
2. Dopravní podnik města Brna a.s. 2 706 1 384 51.17%
3. Dopravní podnik Ostrava a.s. 2 005 1 005 50.11%
4. Plzeňské městské dopravní podniky a.s. 904 561 62.09%
5. Dopravní podnik měst Liberce a Jablonce nad Nisou a.s. 409 195 47.59%
6. Dopravní podnik města Olomouce a.s. 433 247 57.06%
7. Dopravní podnik města Ustí nad Labem a.s. 482 248 51.44%
8. Dopravní společnost Zlín - Otrokovice s.r.o. 335 186 55.58%
9. Dopravní podnik města České Budějovice a.s. 398 192 48.37%
10. Dopravní podnik města Hradce Králové a.s. 398 213 53.35%
11. Dopravní podnik měst Mostu a Litvínova a.s. 454 209 46.10%
12. Dopravní podnik města Pardubice a.s. 407 191 46.89%
13. Dopravní podnik měst Chomutova a Jirkova a.s. 222 151 67.78%
14. Městský dopravní podnik Opava a.s. 183 116 63.69%
15. Dopravní podnik města Jihlavy a.s. 171 97 56.63%
16. ARRIVA TEPLICE s.r.o. 260 172 66.14%
17. Dopravní podnik města Děčína a.s. 188 117 62.30%
18. Dopravní podnik Karlovy Vary a.s. 258 125 48.31%
19. Městská doprava Mariánské Lázně s.r.o. 31 19 59.91%
Source: Created by authors
The number of employees and drivers also has an impact on other indicators. For example, each
employee requires to be paid for the work done, which is a wage cost for the company and thus
this burdens the financial situation of the company. Conversely, drivers by performing their
profession, provide the company with revenues that the company derives from passengers
transport.
In this monitored period (2010 - 2019), one driver annually transports the most of passengers in
Prague and also in Brno. Mariánské Lázně, which otherwise moves in the indicators at the
imaginary opposite end of the evaluation, will also break the limit of two hundred thousand of
passengers transported annually by one driver. In terms of indicators in passenger transport, the
Ostrava transport company is also not doing well. According to this indicator, 94 thousand of
passengers is transported by one driver.
203
Figuře 3 Number of passangers per 1 driver
Number of passangers per 1 driver
Mariánské Lázně
Karlovy Vary
Děčín
Teplice
Jihalava
Opava
Chomutov a Jirkov
Pardubice
Most a Litvínov
Hradec Králové
České Budějovice
Zlín - Otrokovice
Ústí nad Labem
Olomouc
Liberec a Jablonec nad Nisou ^ ^ ^ ^ 262
Plzeň ^ ^ ^ ^ ^ ^ ^ H 631
Ostrava ^^^^m 320
Brno ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ H 940
Praha ^^^^^^^^^^^^^^^m 1143
Source: Created by authors
According to the number of passengers transported by one driver, it looks the worst at the
Transport Company of Chomutov and Jirkov. Although the company provides public
transportation in the territory of two cities, in this comparison with the others, it turned out to be
the worst.
4 Conclusion
Urban public transport is an integral part of larger cities, not only in the Czech Republic. The
smallest city, in terms of population, in which the public transport system is operated is
Mariánské Lázně. Public transport is provided by buses, trolleybuses and trams. In addition to
these typical means of transport, the Prague metro is an integral part of public transport, and in
addition to these means of transport, funiculars and boats are also used. In 2018, the transport
company of the city of Mladá Boleslav was established, but it was not included in this evaluation
due to its short service.
In order for a company to function, it also needs an employees, without whom it would not be
able to fulfil its mission to provide public transport. Everyone will probably think that the most
of employees belong to the Prague transit company. Indeed the total number of employees is
undoubtedly the highest amongst of all transport companies, within the parameter of recalculated
number of drivers it is also the highest value, on the contrary, in the ratio of the Prague transit
company, the smallest number share of drivers may be - 39,08%. The largest share of drivers
204
falls on the transport company from Teplice. In absolute terms, Mariánské Lázně transport
company, has the least number of employees, this is related to the lenght and number of lines
and the number of inhabitants as well. In the case of Brno and Ostrava, the ratio of drivers to
employees is at the level of 50%.
The aim of the paper was to asses whether „the total number of employees is made up of at least
by 50% drivers of vehicles". This hypothesis cannot be confirmed as the largest number of
employees is reported by Prague transit company, however the share of drivers is 39.08%.
Transport companies from Liberec and Jablonec and Nisou, České Budějovice, Most, Litvínov,
Pardubice and Karlovy Vary are also below the 50% of drivers treshold.
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na úrovni municipalit. Praha: Ekopress, 2007. ISBN 978-80-86929-31-6.
[5] REKTORIK, Jaroslav a Jaroslav HLAVÁČ et al. Ekonomika a řízení odvětví
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Contact information
Ing. Natálie Konečná
VSB - Technical University of Ostrava, Faculty of Economics, Department of Public Economics
Sokolská třída 33, 702 00 Ostrava 1, Czech Republic
E-mail: natalie.konecna@vsb.cz
Ing. David Lenert, Ph.D., MBA
VSB - Technical University of Ostrava, Faculty of Economics, Department of Public Economics
Sokolská třída 33, 702 00 Ostrava 1, Czech Republic
E-mail: david.lenert@vsb.cz
206
Healthcare Payment-for-Performance in the Czech Republic
from Behavioral Economics and Nudge Theory Perspectives
Radek Kovacs
Abstract: The objective of this paper is to analyze positive and negative outcomes of financial
incentives within Payment for Performance (P4P) in health care in the Czech Republic from both
international and cross-sectorial comparative perspective. P4P policymaking processes will be
reviewed employing behavioral economics and nudge theory instruments as well as public policy
theories focused on stakeholders and historical institutionalism. On one hand there is a public
and political consensus for supporting healthy lifestyle but on the other there are barriers
stemming from the belief in why doctors should be rewarded for something that is their job and
duty. The paper aims to fill in this gap. P4P as a method of reimbursement in healthcare may
encourage other healthcare providers to raise healthcare quality, quality of life of patients and
bring savings, for instance in obesity. Given that diabetes belongs to the so-called diseases of
civilization and its development can be positively influenced by a suitable lifestyle and the
improvement of living conditions, it seems possible not only to reduce the number of new
patients but also achieve the remission of the disease and relieve public budgets. P4P with the
use of behavioral economics interventions seems to be one of the possible policy options to
mitigate the problem as it is based on fair and ethical care for patients, supporting the patientdoctor
relations, voluntary participation, using accurate and relevant data and providing fair
bonuses for positive outcomes. Hence, the aim of the discussion will be to apply a theoretical
lens of behavioral economics and the nudge theory in the analyses of P4P. The paper was based
on desk research which included processing secondary data, performing comparative analysis
(with the practice in the UK, the U S A and Germany) and the analysis of related documents.
Results show that Payment for Performance programs are associated with high administration
and commission costs. On the other hand, the programs enhanced the patient's health and
satisfaction with care in the western countries (Germany, the US, the UK) and may serve as an
inspiration for a similar investigation especially in the countries of Central and Eastern Europe.
Keywords: Diabetes, health nudges, payments for performance
JEL Classification: 112,118
1 Introduction
Financial incentives of payment for performance (P4P) as a relatively new payment system
that rewards healthcare providers for maximizing the impact of preventive care might help
increase quality of patients' care and curb rising healthcare costs in the Czech Republic.
In 2021, the provision of all health services will make up 346 billion crowns, which is almost
26 billion crowns more than in 2020. (46) The Czech Republic spends much less on health care
than the E U average, but the patients' participation in reimbursement is under 20 percent, which
is one of the lowest shares in the EU. (Kalnicka 2019) Among the E U member states, France,
Germany and Sweden had the highest healthcare expenditures relative to GDP in 2017 (between
11.0% and 11.3%), while the Czech Republic less than 8%. (Kalnicka 2019) P4P is not as
widespread in Czechia as it is in the US and western European countries. It operates as a reward
in increasing capitation payments for general practitioners, increasing the value of the pointsystem
in the laboratory sector and as particular incentive programs introduced by Czech health
insurance companies (Svobodova, 2016). The aim of the paper is to outline positive and negative
outcomes of financial incentives within P4P in health care in the Czech Republic from both
international and cross-sectorial comparative perspective and focus on P4P from perspective of
207
behavioral theory of economics and nudge theory in tacking obesity in conjunction with type 2
diabetes mellitus (DM2) as well as compare their power and validity with other public policy
theories.
Obesity poses both a serious medical and public health challenge. It can lead to several serious
and potentially life-threatening conditions such as type 2 diabetes (DM2), high blood pressure,
coronary heart disease, breast or bowel cancer, stroke. Obesity can also affect the quality of life
and result in social and psychological problems, such as social exclusion, isolation, depression,
and low self-esteem. The rate of adult obesity in the Czech Republic is one of the highest in the
E U and has increased by more than 30% in the last 15 years. Approximately 20% of adults are
obese, above the E U average (15%). (41) Around 61% of adults do at least light physical activity
each week, which is less than the E U average (72%). The rate of overweight and obesity with
children is increasing. Approximately 17.5% of 15-year-old persons are overweight or obese.
(39) In terms of diabetes mellitus, it is an incurable lifelong metabolic disease. It has afflicted
mankind of all social classes for over three thousand years. Depending on the type of diabetes,
it shortens the life expectancy by 30 - 50 %. (Rybka, 2007). In the Czech Republic, over 800
thousand people suffer from diabetes, of which 97% have diabetes mellitus of type II (DM2).
DM2 affects significantly more often overweight and obese people, those whose lifestyle follows
irregular and unhealthy diets. The risk of developing DM2 is more than 50% for the offspring of
one parent with DM2 and almost 100% for the offspring of two parents with DM2. (Svačina,
2010). Diabetes entails, among others, heart, and vascular diseases. Every year, 60,000 Czech
people become newly diagnosed with diabetes, and 22,000 patients die of incurred complication.
(11). The prevalence of patients with DM2 shows an increasing tendency from 804,987 patients
(78 per 1,000 persons) in 2007 to 936,124 (88 per 1,000 persons) in 2017. (42). By 2030, there
might be up to 1.3 million diabetics in the Czech Republic. (13) The cost of treatment for diabetes
takes up to 15% of the amount paid on public health insurance per year, i.e., over 50 billion
crowns. (11) Given that diabetes belongs to the so-called diseases of civilization and its
development can be positively influenced by a suitable lifestyle and the improvement of living
conditions, it seems possible not only to reduce the number of new patients but also achieve the
remission of the disease and relieve public budgets. Nudging (both physicians and patients in
this case) has been proposed as an effective way to change behavior in the desired way and
improve outcomes at lower cost than traditional tools. (Thaler, Sunstein 2009). Therefore, P4P
employing the theoretical-conceptual framework of behavioral theory of economics and health
nudges may enhance its effectiveness. This research is based on the theoretical foundations of
behavioral theory of economics and nudge theory stemming from the assumption that the use of
health nudges targeted at both physicians and patients (citizens) should ultimately lead to savings
in public health budgets. The aim of this paper is to fill the existing gap in empirical research of
behavioral economics and its nudge theory in the Czech Republic in the area of P4P. This will
open new opportunities for public health policies to "nudge" the individuals towards a socially
and personally desirable change in their behavior. The paper is an original view of the problem
of pay-for-performance in view of behavioral theory of economics and nudge theory. It is a
problem that has not yet been sufficiently solved.
Research questions were defined as follows:
RQ1: What is the economic benefit of Payment for Performance (P4P) in the Czech Republic
from international and cross-sectional perspective?
RQ2: What are the effects of Payment for Performance (P4P) on the quality of care in the Czech
Republic?
RQ3: How can the behavioral economics principals and its health nudges enhance Payment for
Performance (P4P) in the Czech Republic?
208
2 Material and Methods
2.1 Theoretical and conceptual framework
Since the foundation of the Czech Republic (1993), reimbursement mechanisms of healthcare
have gone through both retrospective and prospective forms of payment. Retrospective payment
based on the idea of "what is cured is also paid" was in use until 1997. It often led to
overtreatment because each additional performance brought a profit. Owing to its financial
unsustainability the aim is to transform this into the system of reimbursement according to
diagnosis related groups (DRG). In it, the market risk is transferred to the providers, because a
contract is agreed with the payer only up to a certain amount. Beyond this, care is paid at a lower
rate or is not paid at all. In 2008 efforts have been made to develop a case-by-case system which
depends on the average value of the treatment of the given disease, regardless of the number of
performed procedures in connection with one case. It should therefore create a natural motivation
to treat patients effectively. (Krejsta, 2017). However, payments to hospitals for services are
currently still non-transparent, vary from provider to provider and are biased. The Czech
Republic, as one of the last countries in Europe, has not yet fully implemented the DRG system.
The optimization and streamlining of the system of reimbursement of hospital care (DRG
Restart) has been in process since 2016. The subject of the project is the creation and
implementation of a management information system for inpatient care, the introduction of
which will increase the efficiency of state administration. In terms of management, controlling
and optimization of the distribution of financial flows in health care. (46). To achieve the goal,
quality health and economic data of real informative value reflecting the real price while
maintaining the best available quality of care are essential.
Primary care as the basis of functioning health care in developed countries is another challenge
the Czech Republic needs to resolve. Owing to the low competencies of primary care physicians,
the insufficient range of services provided and non-use of their coordination and organizational
role, the potential of primary care in the Czech Republic is not well employed compared to
developed E U countries. This results in unnecessary costs of tens of billions of crowns per year
and discomfort for the patient. (50) Since 2019, the reform of primary care (its gradual
transformation and strengthening so that it is able to provide care the widest possible, and at the
same time quality care easily accessible to the patient) and the program of gradual electronic
health care have been underway.
E-Prescription has been in place since 2019, e-Sick Note as of 2020, e-application and electronic
transmission of medical reports and exchange of information between health care providers as
of 2021. Proposals for preventive interventions of general practitioners and support for
gatekeeping will be subsequently developed. (50) To enhance the probability of cost-benefit
success of the Payment for Performance incentives and the impact on quality of care, behavioral
theory of economics and its nudge theory offer insight into human irrationality in decisionmaking
and suggest positive empowerment as a way to influence the behavior in the desired
direction. The prospect theory of Kahneman and Tversky (1999) experimentally refuted the
hypotheses of the rational choice models of expected utility in decision-making under conditions
of uncertainty and in choosing between the present and the future. The theory confirmed that the
perceived loss is more significant than the equivalent gain and that a certain gain is preferred to
a more likely gain. Our willingness to take risks depends on the context and is therefore
influenced by the way the options are formulated. Giving up something has a greater, "more
painful" emotional intensity than the pleasure of receiving things. The phenomenon of overchoice
is an example of people's limited rationality. Due to the excess of choice, we are paralyzed
in the ability to make decisions, in all areas of life, including health.
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The phenomenon leads to misfortune (Schwartz, 2004), fatigue from decision-making, taking
over the initial option, but also to postponement of choice, including decisions not to buy a
product or not to use a service. Chernev et al. (2015) identified four key factors (sample
complexity, decision task difficulty, preference uncertainty, and decision goal) that reliably and
significantly mitigate the impact of over-choice. The excess of choice can be mitigated by
simplifying selection attributes or the number of options available. Ariely (2008) showed the
effect of an asymmetrically dominant choice, known as the decoy effect. The inclusion of an
inferior option changes the decision-making process towards an optimal solution. Thus, the
choice is often made based on what the options provide rather than if based on absolute
preferences. The effect of the decoy as a health nudge is manifested when the preference of one
option over the other changes because of the addition of a third (similar but less attractive) drug
or vaccine option. Using this effect, Maltz & Sarid (2020) increased the rate of influenza
vaccination. People could choose to be vaccinated either at the beginning of winter, which
epidemiologists recommend, or at the end of winter. At the same time, it was stipulated that
vaccination at the beginning of winter would be free, unlike at the end of winter. This approach
(providing a financial advantage for pre-season vaccination) encouraged participants to be
vaccinated in early winter, which is optimal. Nudges may include ways in which people can be
prepared before thinking and deciding, for example, simplification of information and choices,
framing and priming of messages or default choice architecture. (Reisch, Sunstein and Gwozdz
2016).
2.2 Data and methods
With regard to the research subject, research goal and research questions, an appropriate research
design was chosen. A mix of non-normative and normative methodology was used (Ochrana,
2012) and appropriate research methods were chosen (Ochrana, 2019). The main research
methods cover desk research, content analysis of documents, secondary data analysis and
comparison. From a methodological point of view, the following steps were followed: In the first
step, desk research was performed. The output of this step was the identification of a "white
research space" (research subject) and an analysis of the scientific discourse on the issue of
Healthcare Payment-for-Performance in the Czech Republic. It has been confirmed that this
problem has not yet been addressed in terms of Behavioral Economics and Nudge Theory
Perspectives. In the second step, therefore, research efforts were focused on this direction. A
theoretical and conceptual framework for research has been developed (see point 2.1.). In the
third step, an empirical analysis of data extracted from the VZP database was performed. In the
final step, the method of comparison (based on best practice in the UK, the USA and Germany)
was used and the method of synthesis and generalization was used to formulate recommendations
and conclusions.
3 Results and Discussion
The following section of the paper contains the search for answers to the above established
research questions.
RQ1: What is the economic benefit of Payment for Performance (P4P) in the Czech Republic
from international and cross-sectional perspective?
In 2009, the incentive P4P program called the A K O R D care quality program was introduced by
the General Health Insurance Company (VZP CR). This program has been conceived to bring
time savings for patients, exchange information between physicians on the patients' health (to
avoid overtreatment or re-examinations). (Svobodova, 2016 according to 48). At present, if the
criterion of providing preventive examinations in the previous two years or electronic
communication with both VZP CR and patients, the doctor receives an increase in the
210
capitalization rate of C Z K 2-3 (EUR 0,08-0,12) depending on the distribution and length of
surgery hours. Furthermore, if the indicators of good practice (such as the provision of care for
patients with chronic diabetes mellitus, the provision of colorectal cancer screening, influenza
vaccination, adherence to the methodology of regular vaccination, or rational prescription) are
met, the general practitioner may receive an additional motivational bonus. (48).
By the end of 2009 (when the official inventory of the A K O R D program was made), a total
of 424 general practitioners, i.e., 27% of all, and 92 general practitioners for children and
adolescents, i.e., 13% of all, had joined the program. In terms of costs, there was no difference
between the behavior of physicians in A K O R D and beyond, but as part of the financial incentive,
the insurance company paid a total of C Z K 57 million (EUR 2,2 million) to doctors involved in
AKORD. (Svobodova, 2016 according to 48). From international perspective, the cost of these
programs in the USA, the UK and Germany in 2015 was more than hundreds of millions of
dollars ($65 million in the Hospital Quality Incentive Demonstration Project, HQID) or euros
(€ 920 million for the German Disease Management Program, DMP) per year, and there are
no exceptions, which have annual program costs as well as a billion dollars (Practice Incentive
Program, PIP). If there was any improvement or saving, it was only a slight improvement and
no savings of more than 15% were achieved. (Svobodova, 2016 according to Carroll 2014, Jha
et al. 2009, Cashin et al. 2014, Baker 2003). Also, Lidenauer at al. (2007) found out that the
improvement of the monitored parameters when comparing US hospitals involved
in the Medicare system and hospitals, which only publicly published data, was only modest,
ranging from 2.6% to 4.1% over a two-year period. With diabetic care, however, the Medicare
P4P program (USA) showed that the life expectancy at birth in diabetic patients has increased.
Recently, some programs have yielded much better results. German DMP program reduced the
incidence of some complications and reduced the overall cost of caring for diabetics by 13%.
Germany and other countries also perform well on coronary artery and chronic obstructive
pulmonary disease programs. (Svobodova, 2016 according to Cashin et al. 2014, Borowitz
2013, 63, Casalino et al. 2007). The incidence of complications associated with diabetes has
lowered, including the mortality. Patients' satisfaction with treatment has significantly increased.
As a result of the streamlining of outpatient care, the length of hospitalization was reduced and
thus the cost of inpatient care decreased by 25%. (Svobodova, 2016 according to 19, Cashin et
al. 2014, Borowitz 2013, Casalino et al. 2007).
As mentioned above, P4P programs (including those in the Czech Republic) bear great financial
burden with no significant savings. In the area of hospitalizations, it is still not achievable to
reduce the length of hospitalization and the number of hospitalized to such a level that the
reduction in costs for these measures would be reflected. (Svobodova, 2016). The costs include
both the reward for the provider based on the P4P criteria and the administrative support. Another
of the limitations may be (paradoxically) the good quality of healthcare that the Czech Republic
offers to its citizens. Most of the objectives and goals of the P4P program are generally provided
by physicians part of standard services. (Svobodova, 2016). On one hand there is a public and
political consensus for supporting prevention but on the other there are barriers stemming from
the belief in why doctors should be rewarded for something that is their job and duty. This stems
from historical intuitionalism. Czech public healthcare incomes are also highly sensitive to
changes in employment and aging. Besides, for more than 60% of Czechs, insurance fees are
paid from the state budget. Higher unemployment, for example, during the COVID-19 economic
crisis, as well as the aging of the population, will result in a higher number of state insured
persons and a higher burden of general tax revenues (40). To keep the healthcare system stable,
Krejsta (2017) suggests embedding P4P principles and allowance for raised patient participation
in healthcare reimbursement instead of deepening regulation, redistribution, and non-systemic
replenishment of state budget funds. The current payment system neglects the role that
preventive care can play in improving health and reducing healthcare costs: "Czech providers
nowadays receive more money to treat diabetic patients who suffer from kidney failure than
211
prevent kidney failure through better check-up of blood glucose levels" The greatest challenge
in broader implementing Payment for Performance is getting the key stakeholders to agree on
quality standards. (Krejsta, 2017). Quality standards are objective measures used to determine
whether providers offer high quality care. "One possible quality standard would be, for example,
for physicians to test A1C levels in patients with diabetes four times a year. Within the P4P
system, physicians who meet this standard would be remunerated accordingly. " (Krejsta, 2017).
RQ2: What are the effects of Payment for Performance (P4P) on the quality of care in the Czech
Republic?
According to Rosenthal et al. (2004), Payment for Performance (P4P) can be characterized by
five basic factors that affect success of the program. (1) the strength of the supporter, such as
health insurance companies (market share), (2) increasing turnover (incremental revenue), (3)
quality assessment, which includes the structure (staff, buildings and materials), process
(completion of specific procedures or administration of the drugs) and the outcome of care
(including the patient's health and satisfaction with care), (4) the presence of a competitive model
in which providers compete with each other and (5) the criterion of whether excellent results or
even improvements are rewarded. Considering these, P4P in the Czech Republic does not
comply with most of criteria. Health insurance companies do not have programs to differentiate
(except for very marginal ones such as prevention funds), healthcare providers do not have to
compete, the quality is not sufficiently measured. In practice it usually takes 3-6 years for the
program to get implemented, and after these years the savings amount up to only 20-25%.
After 80% of providers join the program, there is an improvement in the quality of care provided
by an average of 65% with a great positive response from patients in the frequency of checkups
and the doctor's interest in their health. (Svobodova, 2016, 48)
RQ3: How can the behavioral economics principals and its health nudges enhance Payment for
Performance (P4P) in the Czech Republic?
Employing behavioral economics and health nudge principles to the planning and arrangement
of financial incentives might enhance the probability of success and optimizes the impact. Health
nudges promote healthier choices of citizens (Kahneman, Tverskyl999, Gustafson & Zeballos
2020, Santos 2020) and reduce the health care costs. Yet, the use of a behavioral approach in
the Czech Republic is insufficient, unlike more developed Western countries. At the government
level, only a few projects have taken place so far, perhaps the most well-known of which has
addressed the question of how to better formulate letters inviting people to a preventive
examination of cancer. Health nudges generally enjoy high political viability in the Czech
Republic unlike the instruments recommended by WHO (49), i.e., several options to raise funds
for health such as giving higher priority to health in budget allocations, collecting taxes more
efficiently, higher insurance contributions, raising additional funds through taxes on harmful
products such as tobacco and alcohol. In contrast to traditional public policy tools, nudges have
been proposed as an effective way to change behavior and improve outcomes at lower cost.
(Thaler & Sunstein, 2009). Lubarsky et al. (2019, according to 4, 10, 12, 14, 17, 25, 37, 40, 47)
noticed that the early results of pay-for-performance have not been promising. The reasons
underlie in faulty assumptions of the incentive system based on "if/then" incentive systems (if
you do this, then you will get that) and variation in motivation to do what the organization wants.
Applying behavioral economics principles to the construction of financial incentives enhances
the probability of success and optimizes the impact. To maximize effectiveness and minimize
unintended consequences, Lubarsky et al. (2019) suggest introducing a variable part of the
reward to all physicians exceeding a desired threshold. Loss aversion shows that penalties are
more powerful compared to an opportunity for gain, but they should be used sparingly if at all.
"Paying only the top performers ("tournament incentives") incites negative noncooperative
212
behaviors. Designers of an incentive plan should consider the psychologic impact. Penalties are
morale busters." Lubarsky et al. (2019).
In terms of cognitive scarcity, the number of metrics being incentivized by Payment for
Performance financial incentives should be limited (three to five): "The presence of too many
options leads to a lack of action known as choice overload. For example, if one has to choose
among numerous metrics in a pay-for-performance plan, some may choose not to participate,
whereas they might have chosen to participate withfewer choices " (Ibid). The effectiveness of
P4P depends on the participation of physicians and the patients' cooperation in treatment
adherence. Reisch, Sustein and Gwozdz (2016) suggest nudging citizens by means of health
(food) interventions as follows: (1) Educational campaigns (to combat obesity and overeating);
(2) Information nudges (e.g., calorie labels, high salt level warnings, nutritional traffic lights);
(3) Defaults (sweet-free cashier zones; placement of healthy goods); (4) Meat-free days in public
cafeterias; 5) Advertising and commercials discouraging overeating.
Nevertheless, it is worth noting limitations of nudge-based interventions. The duration of their
effectiveness is one of them. Effects disappear when the nudge is removed and there is evidence
for reduced effectiveness of nudges in repeat instances (Ozturk et al. 2020). Arno and Thomas
(2016) argue that nudge strategies successfully raise healthy food choices by 15.3% on average.
Yet, they also point to the possibility that only positive results are published and insignificant
findings remain uncovered. Hausman and Welch (2010) argue that libertarian paternalistic
nudges are in many cases not paternalistic at all. They largely pose rational persuasion,
systematically exploit non-rational factors which influence human decision-making and thus
threaten liberty (regardless the fact that some nudges are justified). In reflection, Oliver (2011)
suggests that nudging should be considered as a nuanced approach involving no compulsion.
"People arefree to get engaged in the change if they wish to do so but are not required to alter
their behavior if they do not. Some policies prove effective yet may be judged politically or
ethically unacceptable. " (Oliver, 2011)
4 Conclusion
As the results show, Payment for Performance programs generate high administration and
commission costs with not very significant savings (if any). On the contrary, the programs
enhanced the patient's health and satisfaction with care in the western countries (Germany, the
US, the UK). Since no big data research of the influence on the quality of care with patients
within P4P in the Czech Republic has been conducted yet, this will require a more detailed
theoretical research and a practical solution. Behavioral economists point to cognitive biases
causing human irrationality in choice architecture. This experience has been successfully applied
in libertarian paternalism, based on the assumption that the appropriate setting of decisionmaking
options (nudging) can circumvent the shortcomings of mainstream economic theories
without restricting the freedom of decision-making. Both physicians and patients (citizens) can
be effectively nudged. Considering the Czech Republic, there is a wide scope particularly in the
combat against diseases of civilization affecting over 8% of population. Thus, detailed
knowledge of the problem of healthy nudging opens up new windows of opportunities for the
Czech public policy to "nudge" its citizens towards a socially and personally desirable change in
their behavior.
Finally, it may be generally concluded that the results of the analysis of secondary data
and the involvement of behavioral economics and its nudge theory in its solution have brought
some new pieces of knowledge which may contribute towards a deeper understanding of P4P
health policy issues, may serve as an inspiration for a similar investigation especially in the
countries of Central and Eastern Europe and could be possibly used for the purposes of a
comparative analysis.
213
Acknowledgements
This study was developed as an output from the Specific Higher Education Research (SVV)
project (supported by the grant SVV 260 596).
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péči a možnost jejího využití v ČR (diplomová práce), Pay-for-performance method
as payment for health care and the possibility of its use in the Czech Republic
(diploma thesis). Kladno.
[45] THALER, R., SUNSTEIN, C. 2009 Improving Decisions About Health, Wealth and
Happiness. Yale University Press. ISBN 978-0-14-311526-7
[46] The Institute of Health Information and Statistics of the Czech Republic, Overview
of national health registers. Available at https://www.uzis.cz/index-en.php?pg=nhis-
-national-health-registers
[47] Town, R., Wholey, D.R., Kralewski, J., Dowd, B. (2004). Assessing the influence of
incentives on physicians and medical groups. Med Care Res Rev; 61(3 suppl):80S-
118S
[48] Všeobecná zdravotní pojišťovna. AKORD - program kvality péče. GENERAL
H E A L T H INSURANCE C O M P A N Y . AKORD - quality of care program. (2021).
Prague, Available at: https://www.vzp.cz/poskytovatele/akord-program-kvality-pece
[49] WHO (2015). Health financing for universal coverage. Article available at
https://www.who.int/health_financing/strategy/revenue_collecton/en
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Contact information
Ing. Radek Kovács
Charles University, Faculty of Social Sciences, Department of Public and Social Policy
Smetanovo nábřeží 6, 110 00 Prague 1, Czech Republic
E-mail: radek.kovacs@fsv.cuni.cz
217
Financial Allocations to Bilateral Projects of the Czech Development
Cooperation Realized by Non-governmental Non-profit Organizations
Eva Kovářová
Abstract: Czechia as a member of the Development Assistance Committee belongs to donor
countries of Official Development Assistance (ODA). Czech development cooperation includes
bilateral as well as multilateral ODA flows and the bilateral flows are realized directly between
Czechia and ODA recipient countries. Bilateral projects of the Czech development cooperation
are realized by implementors from private as well as public sector, particularly under the
responsibility of the Czech Development Agency. Nowadays, non-governmental organizations
represent key actors in O D A provision and distribution and serve thus as contractors for the
governmental programmes and projects of development cooperation. Generally, they play many
roles within the development policies of donor countries or they act on their own. Their activities
are considered beneficial especially in provision of services related to the basic human needs and
well-being of poor people in ODA recipient countries. The aim of the paper is to assess financial
allocations to bilateral projects of Czech development cooperation implemented by Czech nongovernmental
non-profit organizations in the priority partner countries during the period of years
2011-2020. Assessment is done according to the territorial and thematic targeting of financial
allocations realised into these projects and with respect to the total volumes of finances allocated
to bilateral projects of the Czech development cooperation. Results presented in the paper show
that Czech non-governmental non-profit organizations were engaged in ODA recipient countries
in balanced way when the financial allocations to Least Developed Countries and other recipients
are compared and they implemented project with close link to basic human needs and thus human
well-being and development.
Keywords: Bilateral projects, development cooperation, Czechia, Czech Development Agency,
non-governmental non-profit organizations
JEL Classification: F35, H81, L31, L38
1 Introduction
Czechia has been a member of the Development Assistance Committee of the Organisation of
the Economic Co-operation and Development (OECD-DAC) since the year 2013, and belongs
thus among donors of the Official Development Assistance (ODA). O D A is defined by the
OECD-DAC as the flows to partner countries, listed on the D A C list of ODA recipients, and to
multilateral development institutions. These flows have to be provided by official agencies,
including state and local governments, or by their executive agencies, when flows have to be
concessional and administered with the aim to promote economic development and welfare in
recipient countries. Development assistance is provided bilaterally, from donor to recipient, or
channelled through a multilateral development agencies and institutions. Since the year 1969,
ODA has been considered the "gold standard" of foreign aid and it has been one of the main
sources of financing for development in ODA recipient countries (OECD, 2021a). Standardly,
two basic forms of ODA are recognized - grants and loans. ODA is allocated by donor countries
according to their territorial and sectoral priorities and programmes.
International development assistance is considered a critical component of the global public
policy (Dupuy and Prakash, 2017), and ODA is seen as a "public good supplied by (governments
of) donor countries" (Fuchs et al., 2014, p. 173) or "an essential public policy for meeting the
Sustainable Development Goals" (Focus2030, 2021). Civil society organizations (CSOs),
respectively non-governmental non-profit organizations (NGOs) represent one of the channels
218
used by donor countries for the realization of their governmental O D A programmes in their
partner countries. However, role of CSOs in the international development aid industry is broader
as they can operate also as O D A donors or recipients as well (Appe, 2018), or they serve as
advocates of development policies. All OECD-DAC members cooperate in their development
policies with CSOs and distribute their O D A to and through CSOs. Each donor country can
choose extent in which CSOs will participate in their development policies and distribution of
their ODA flows. Forms of cooperation with CSOs are specified at the national level, with the
use of national legislation and strategic documents defining development policies of ODA donor
countries.
Czechia introduced its policy of foreign development cooperation in the mid-1990s. Nowadays,
the Czech development cooperation creates an integral part of Czech foreign policy. Czechia
realizes development cooperation with the aim to promote eradication of poverty in the context
of sustainable development in partner countries. The Act on Development Cooperation and
Humanitarian Aid has been effective since the year 2010, but priorities of the Czech development
cooperation are specified with Development Cooperation Strategies adopted for certain periods
of time and supplemented with the annual Plans of Development Cooperation. Czech
development cooperation includes bilateral as well as multilateral forms of cooperation, when
the former one can be provided in the following forms: technical cooperation, cooperation in
the fields of economic and social infrastructure, financial cooperation and debt relief, assistance
for refugees in Czechia, governmental scholarships, development guidance, development
cooperation training and awareness, development research, or building of the capacities of nongovernmental
organizations active in development cooperation (Ministry of Foreign Affairs,
2021).
Civil society organizations are traditional partners for state and other public authorities of the
Czech development cooperation and they serve as implementers of Czech bilateral development
projects, as well as they promote public awareness and build public advocacy for the
development cooperation. Analysis presented in the paper has to be considered a part of the
broader research focused on fundamental patterns of Czech development cooperation which is
evaluated in comparison with other Central European Countries. Here, attention is given only to
Czech bilateral development projects implemented by Czech non-governmental non-profit in
priority partner countries. Therefore, the aim of the paper is to assess financial allocations to
bilateral development projects implemented by Czech non-governmental non-profit
organizations in priority partner countries during the period of years 2011-2020. Assessment
deals with the financial allocations to bilateral projects realized under the responsibility of the
Czech Development Agency. Data are taken from the annual reports of the Agency and are
analysed with the use of standard methods of descriptive statistics.
2 Theoretical background
Civil society is generally understood as the third sector of the economy, existing alongside the
government and business sector, and civil society organizations (CSOs) are characterized as
private, non-profit, self-governing, voluntarily constituted and supported organizations (Ott and
Valero, 2018). With respect to the E U terminology, CSOs are "independent actors, organised
on a not-for-profit and voluntary basis, and active in differentfields, such as poverty reduction,
emergency aid, human rights, environment etc." (European Commission, 2020). The OECDD
A C regards a non-governmental organization as "any non-profit entity in which people
organise themselves on a local, national or international level to pursue shared objectives and
ideals, without significant government-controlled participation or representation" (OECD,
2020, p. 28). Although terms civil society organizations and non-governmental organizations are
generally used as synonyms, they have to be differentiated in the academic research as non-
219
governmental organizations (NGOs) represent only one part of a wide group of civil society
organizations. Besides NGOs, term CSOs also covers trade unions, faith-based organisations,
foundations, research institutions, cooperatives, professional and business associations, or notfor-profit
media (Sanz Corella et al., 2020). The CSOs, respectively NGOs, operating in the field
of development cooperation are usually understood as organizations constituted and organized
in their home countries to work across national borders (Brown et al., 2000), or to operate outside
their home countries (Ott and Valero, 2018), and focusing on activities concerning socioeconomic
development in developing countries.
2.1 Non-governmental non-profit organizations as key actors of development cooperation
The non-governmental organizations became important actors of the development aid industry
in the 1990s through their partnerships with bilateral, multilateral and private donors (Appe,
2018). However, their participation in governmental development policies has been
internationally recognized since the late 1970s. The role and international influence of NGOs as
well as their numbers were increased particularly in the 2000s, inter alia as a consequence of the
emphasis placed on the principles of good governance, partnership, ownership, transparency and
accountability, as well as a consequence of their people-centred, rights-based, and grassrootsdriven
approaches to the solution of long-lasting development problems (Banks and Hulme,
2012; Lewis, 2001). NGOs' participation in O D A provision and distribution has been
strengthened in recent years with the adoption of the 2030 Agenda for Sustainable Development
and related international documents. Their involvement in development cooperation give
assurance to a promise that nobody will be left behind, which is a key promise declared in the
Preamble of the 2030 Agenda for Sustainable Development (United Nations, 2015).
Within the development aid industry, the most important roles of NGOs are seen in delivery of
services in many fields, from livelihood interventions, health and education services, to more
specific areas such as promotion and building of democracy, human rights or resolutions of
conflicts (Lewis and Kanji, 2009; Appe, 2018). However, NGOs are also organized as actors of
public advocacy and public campaigns for change (Lewis and Kanji, 2009), and they can
contribute to a public support for the official development policies in donor countries (Smillie,
1999). Generally, two distinct roles for NGOs are highlighted - provision of services and
advocacy for the poor (Banks and Hulme, 2012). Therefore, NGOs are seen by the international
community as entities having the ability to reach the most marginalized people living in poverty
or facing inequality because they often deliver services to people in need and they can be
innovative in this field (Lewis and Kanji, 2009). However, the perceived advantages of NGOs in
reaching the poor are increasingly disputed with the application of principal-agent model (Dreher
et al., 2010), when it is argued that NGOs are not engaged where they are needed the most
(Nunnenkamp and Ohler, 2010). Participation of NGOs in O D A provision is discussed
particularly in relation to their legitimacy, transparency and accountability (Tortajada, 2016;
Brown et al, 2020), or in relation to their possible contribution to O D A fragmentation and
proliferation (Appe, 2018). However, the OECD-DAC members "more frequently cite the
advantages rather than disadvantages of working with CSOs" (OECD, 2020, p. 11).
2.2 Participation of non-governmental non-profit organizations in the Czech development
cooperation
Czechia introduced its official foreign development cooperation in the mid-1990s. However, the
first Concept of Development Aid was adopted for the period 2002-2007. "Reduction ofpoverty
through the economic and social development" was stated as its main objective (Ministry of
Foreign Affairs, 2001, p. 3). In 2007, the OECD-DAC Special Peer Review of Czech
development cooperation was launched. This Review led to the transformation of Czech system
220
of development cooperation. The transformation was finished in 2010 with the adoption of the
Act on Development Cooperation and Humanitarian Aid. The Act defines development
cooperation as "the set of activities financed from the national state budget and contributing to
the eradication of poverty in the context of sustainable development, to economic and social
development, to environmental protection, and to the promotion of democracy, human rights and
good governance in developing countries" (Czechia, Act Nr. 151, 2010). New territorial and
thematic priorities of Czech development cooperation were introduced with the Development
Cooperation Strategy for the period of years 2010-2017. Both documents introduced new, more
efficient system of development cooperation. The main objective of development cooperation
was modified slightly in the Strategy, and was defined as the eradication of poverty, promotion
of security and prosperity through the effective partnership (Ministry of Foreign Affairs, 2010).
The main responsibility and powers in the Czech development cooperation are assigned by the
Act to the Ministry of Foreign Affairs and to the Czech Development Agency, which is a
government administrative unit with specified responsibilities. The Agency is, inter alia,
responsible for "identification, formulation and monitoring of bilateral projects of development
cooperation between Czechia and partner countries" (Czech Development Agency, 2021).
Subjects from public and private (profit as well as nonprofit) sectors can serve as projects'
implementers through the tenders or grants and run projects of bilateral development cooperation
in partner countries. Projects are realized according to the priorities of the Czech development
cooperation defined by the Ministry and the Agency. The NGOs participate in Czech
development cooperation and their involvement in ODA delivery has been strengthen in recent
years. Thus, NGOs operate as implementors of the official governmental programmes and
projects financed from national state budget, or they realize projects financed by various
multilateral development institutions or they realize their own development activities. Despite
this fact, in 2016, the OECD-DAC called Czechia to "adopt a vision and policy for its
partnership with civil society" and to develop a "mix offunding mechanisms to meet the vision"
(OECD, 2020, p. 29).
In 2016, Czechia received the second Peer Review prepared by OECD-DAC. The Review
recommended Czech officials, inter alia, to increase the quality and impact of ODA. One year
later, the new Development Cooperation Strategy was launched for the period of years 2018-
2030. This Strategy reflects the 2030 Agenda for Sustainable Development and introduced the
new core objective of the Czech development cooperation, which was defined as to "contribute
- using its capacities and experience and in line with international commitments to building a
stable, secure, inclusive, prosperous and sustainable world and to strengthen its position within
it" (Ministry of Foreign Affairs, 2017, p. 8). The main territorial priority is given to the Eastern
European countries, as well as to some African and Asian countries. The main thematic priorities
are defined with respect to the 2030 Agenda for Sustainable Development, and include good
democratic governance, sustainable management of natural resources, economic transformation
and growth, agriculture, rural development or inclusive social development.
3 Research objective, data and methods
An analysis, which results are presented below, investigates financial allocations to bilateral
development projects implemented by Czech non-governmental non-profit organizations under
the responsibility of Czech Development Agency. The aim is to assess financial allocations to
bilateral development projects implemented by Czech non-governmental non-profit
organizations in priority partner countries during the period of years 2011-2020. Assessment is
done according to the territorial and thematic targeting of financial allocations realised into these
projects and with respect to the total volumes of finances allocated to bilateral projects of the
Czech development cooperation.
221
Assessment deals with the financial allocations to bilateral projects implemented in priority
partner countries. However, Czechia also delivers ODA to other specified recipient countries, as
for example to Ukraine or Afghanistan, as well as Czechia uses other forms of development
cooperation to support socio-economic development in partner countries, as for example
tripartite projects or scholarships.
The Czech Development Agency realized bilateral projects in partnership with other public or
private subjects that is based on public proposals for grants and tenders announced by the
Agency. Every proposal specifies the territorial and sectoral targeting of projects and the eligible
projects' contractors or implementors from public or private (profit and non-profit) sector. Here,
an attention is given only to bilateral projects implemented by Czech non-governmental (further
referred shortly as Czech NGOs), which are defined as non-governmental organizations having
the status and legal form of non-profit organization and being established by Czech legal entities.
Methods of descriptive statistics are used to examine the volume and structure of financial
allocations to bilateral projects. The structure is examined according to the territorial and sectoral
targeting of implemented bilateral projects. As it was explained above, NGOs are generally
understood as actors of development cooperation having the ability to meet the most vulnerable
and marginalized people or poor people in developing countries. Their benefits are seen in
development activities related to eradication of poverty and improvement of human well-being
(development) in developing countries. Therefore, two research hypotheses are formulated to
support the aim of the paper:
• RH1: As four Czech priority partner countries are recognized as the Least Developed
countries (LDCs) - Afghanistan, Ethiopia, Cambodia, Zambia - it is expected that the
highest volumes of financial allocations to bilateral projects of Czech NGOs will be
identified for these four countries.
• RH2: As the priority themes of health care, education and social services have the close
link to eradication of poverty and improvement of human well-being, it is expected that
the highest volumes of financial allocations to bilateral projects of Czech NGOs will be
identified for these themes of Czech development cooperation.
Data on financial allocations were taken from annual reports of Czech Development Agency,
when the reports were downloaded in the spring 2020 and June 2021. The reports have presented
details necessary for the analysis since the year 2011. Reports assign every financial allocation
to a thematic (sectoral) priority, to a partner country and to an implementor of a project as well.
However, titles of the projects, their time schedules and forms of financing are not specified
there. Therefore, financial allocations are considered and assessed in the analysis separately on
annual basis.
During the period of years 2011-2020, territorial and sectoral priorities of the Czech
development policy were defined with two Development Cooperation Strategies, which affected
targeting of bilateral projects financed by the Czech Development Agency and implemented by
Czech NGOs (see Table 1).
222
Table 1 - Priorities of Czech development cooperation
Territorial priorities of Czech development cooperation (priority partner countries)
Years 2011-2017
Afghanistan, Bosnia and Hercegovina, Cambodia, Ethiopia, Georgia,
Kosovo, Moldova, Mongolia, Palestine, Serbia
Years 2018-2020
Bosnia and Hercegovina, Cambodia, Ethiopia, Georgia, Moldova,
Zambia
Note: Projects in Mongolia, Kosovo and Serbia had to be completed
by the year 2020, depending on their time schedules, therefore some
disbursements allocated to these countries were possible for years
2018 and 2019.
Thematic (sectoral^I priorities of Czech development cooperation
Years 2011-2018
Agriculture, forestry, fishing; Disaster prevention and preparedness;
Education; Energy, production and distribution; Environmental
protection; Health care; Humanitarian and food aid; Industry, mineral
mining, construction; Other social infrastructure and services;
Population policies, Reproductive health care
Public/State administration and civil society; Trade and other services
Water supplies and sanitation
Years 2019-2020
Agriculture; Education; Energy; Health; Multi-sector priorities;
Social sector; State administration and civil society; Water
Source: Annual reports of the Czech Development Agency (2011-2020), own data processing
4 Results
Czechia as an ODA donor country should spend on all forms of ODA at least 0,70% of its GNI
(the United Nations target declared in the year 1970), respectively at least 0,33% by the year
2030 (the European Union target defined for the countries accessing the E U after the year 2003).
However, Czechia did not meet these targets during the period of years 2011-2020. Between
years 2011 and 2017, when ODA was calculated by the OECD-DAC with the use of ODA flow
basis method, Czech ODA/GNI ratio (expressed in percent) reached the mean value of 0,126%.
Since the year 2018, a new method for the monitoring of ODA flows has been applied (ODA
grant equivalent), but improved methodology did not change the final value of Czech ODA/GNI
ratio. It oscillated around 0,130% between years 2018 and 2020 (see Table 1). The Czech
ODA/GNI ratio remained during the whole examined period below the national target, defined
at the level of 0,17%, as well, although Czechia aimed to reach this target by the end of the year
2020.
Table 2 - Czech ODA as a percentage of GNI
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
0,125 0,121 0,114 0,112 0,118 0,142 0,150 0,132 0,131 0,130
Source: OECD, Net ODA (2021b), own data processing
During the period of years 2011-2020, total volumes of financial allocations, which Czechia
spent on bilateral development projects implemented under the responsibility of the Czech
Development Agency in priority partner countries, reached the value of 3 103,7 mil. CZK.
Projects were implemented by the entities represented either private or public sector, but the
majority of implementors belonged to the private business sector. Although Czechia did not meet
the international and its national commitments concerning the volume of ODA, bilateral projects
did not contribute to the increase of overall ODA significantly as their financial volumes even
declined in recent years. The highest volume of financial allocations was released into the
223
bilateral projects in the year 2015. Next year, the volume started to decline and reached the lowest
value in the year 2018. However, between years 2019 and 2020, financial allocations to bilateral
projects were increased by more than 50 million C Z K and reached the value of 330,5 mil. C Z K
in the last year (see Figure 1).
Figure 1 - Total volumes of financial allocations on bilateral projects implemented under
the responsibility of the Czech Development Agency (in CZK)
Source: Annual reports of the Czech Development Agency (2011-2020), own data processing
100 000 000JM
350 00 0 000.00
300 000000.00 288 005 641.00
250 000000.00
200000000.00
150 000000.00
100 000000.00
C . C J
• Total volume offinancialallocations •Xtmibers of financial allocations
On average, 38,21% of financial allocations were reported for the projects implemented by Czech
NGOs during the period of years 2011-2020. The highest share was reached in the year 2018,
when 47,72% of all financial allocations were spent on the NGOs' projects. However, no
significant trend indicating declining or increasing participation of Czech NGOs in the
implementation of bilateral development project is observed (see Table 3 and details in Appendix
1).
Table 3 - Financial allocations to bilateral development projects of Czech NGOs realized
in priority partner countries (in % of the total volume of financial allocations)
Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Percentage
share of
Czech NGO
in total
volumes of
financial
allocations
29,75 31,51 42,71 37,06 35,83 38,13 39,24 47,72 34,77 45,42
Source: Annual reports of the Czech Development Agency (2011-2020), own data processing
Between years 2010 and 2017, three LDCs were recognized as priority partner countries for the
Czech development cooperation (Afghanistan, Cambodia, Ethiopia). Since the year 2018,
Afghanistan was excluded from the list of priority partner countries and another L D C was
included there (Zambia). During the years 2011-2020, nearly 1/3 of financial allocations were
assigned to projects implemented by Czech NGOs in Ethiopia, which is a traditional partner
country for the Czech development cooperation and a country with really low level of human
development and high level of poverty. According to the World Bank, 30% of Ethiopian
population have lived in extreme income poverty, defined with the 1,9 USD poverty line, in
224
recent years (World Bank, 2021). Czech NGOs implemented projects in other LDCs as well (see
Table 4), and 54% of financial allocations to NGOs' projects were spent in LDCs during the
period of years 2011-2020. The last Development Cooperation Strategy, adopted for the period
of years 2018-2030, speaks about balanced cooperation of Czechia with LDCs and other priority
partner countries. Results presented in Table 4 show that the balance was already reached during
the period of years 2011-2020 when the bilateral projects implemented by Czech NGOs are
considered. This finding rejects the RH1, because it cannot be confirmed that Czech NGOs are
mainly engaged in the development cooperation realized with LDCs. Other countries, where
Czech NGOs were active, are Moldova or Georgia, which are traditional priority partner
countries belonging to the region of Eastern European countries.
Table 4 - Financial allocations to bilateral development projects of Czech NGOs: overview
of territorial targeting
Country
Financial allocations in
CZK
Percentage of all financial
allocations
Afghanistan 123 830 840,00 10,47
Bosnia and Hercegovina 39 580 604,96 3,35
Cambodia 136 513 495,00 11,55
Ethiopia 337 117 276,00 28,51
Georgia 140 783 014,80 11,91
Kosovo 64 304 098,00 5,44
Moldova 244 974 035,41 20,72
Mongolia 32 883 104,00 2,78
Palestine 12 000 000,00 1,02
Serbia 7 201 500,00 0,61
Zambia 43 064 880,00 3,64
Total volume of financial
allocations
1 182 252 848,00 100,00
Source: Annual reports of the Czech Development Agency (2011-2020), own data processing
The highest priority assigned to the cooperation with Ethiopia and Moldova is also visible when
the financial allocations are examined on annual basis (see Figure 2). However, Czech NGOs
has become active in Bosna and Hercegovina in recent years too, when the results presented in
Figure 2 reveal increase of financial allocations spent by Czech NGOs in this country in the years
2018, 2019 and 2020. Details concerning the territorial targeting of the projects of Czech NGOs
are presented in Appendix 2.
225
Figure 2 - Financial allocations to bilateral development projects of Czech NGOs:
territorial targeting (in % of all financial allocations)
Source: Annual reports of the Czech Development Agency (2011-2020), own data processing
2019
2018
2017
2016
2015
2014
2013
2012
2011
0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00 100.00
• Afghanistan • Bosnia and Hercegovina • Cambodia
• Ethiopia • Georgia • Kosovo
• Moldova • Mongolia • Palestine
• Serbia • Zambia
During the period of years 2011-2018, 14 thematic priorities of Czech development cooperation
were recognized, and Czech NGOs implemented projects focused on ten thematic priorities. The
brief overview dealing with the sum of financial allocations (see Table 5) shows that the highest
volumes of financial allocations were spent on projects implemented by Czech NGOs in the
fields of other social infrastructure and services, followed by agriculture and forestry, education
and health care. Development cooperation in the fields of education and health care can have the
direct impact on the improvement of human welfbeing of the poor people in priority partner
countries, resp. on the human development of their populations, as the human development is
defined through the achievements in life expectancy, school attendance and gross national
income.
226
Table 5 - Financial allocations to bilateral development of the Czech NGOs: overview of
thematic targeting
Theme
Financial allocations in
CZK
Percentage of all financial
allocations
Agriculture and forestry 202 915 225,80 21,68
Education 192 553 590,00 20,57
Energy 38 978 600,00 4,16
Environmental protection 1 200 000,00 0,13
Health care 144 761 570,00 15,47
Humanitarian food aid 2 000 000,00 0,21
Other social infrastructure
and services
245 140 991,00 26,19
State administration and civil
society
34 194 398,00 3,65
Trade and services 12 225 000,00 1,31
Water and sanitation 62 074 527,00 6,63
Total volume of financial
allocations
936 043 901,80 100,00
Source: Annual reports of the Czech Development Agency (2011-2018), own data processing
Since the year 2019, the number of thematic priorities has been reduced to nine and more general
titles are assigned to them. These changes are related to the introduction of the last Development
Cooperation Strategy adopted for the period of years 2018-2030 with defined direct link to the
2030 Agenda for Sustainable Development, and thus to the fulfilment of the Sustainable
Development Goals. Between years 2019 and 2020, Czech NGOs implemented projects focused
on six priority themes (see Table 6), and their participation was mainly targeted to the
cooperation in a social sector, agriculture and forestry, education or state administration.
Table 6 - Financial allocations to bilateral development of the Czech NGOs: overview of
thematic targeting
Theme (sector)
Financial allocations in
CZK
Percentage of all financial
allocations
Agriculture and forestry 58 309 297,00 24,17
Education 48 014 720,00 19,91
Health care 26 120 000,00 10,83
Social sector 63 039 634,61 26,13
State administration 37 585 294,76 15,58
Water 8 140 000,00 3,37
Sum 241 208 946,37 100,00
Source: Annual reports of the Czech Development Agency (2019-2020), own data processing
The results presented in Tables 5 and 6 show that Czech NGOs implemented projects having the
close link to the human well-being of people living in priority partner countries. Therefore, their
thematic engagement does not differ from the general expectations. This finding confirms RH2.
227
Figure 3 - Financial allocations to bilateral development projects of the Czech NGOs:
thematic targeting in % of all financial allocations), years 2011-2018
Source: Annual reports of the Czech Development Agency (2011-2018), own data processing
2018 |
17 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
2016 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
15 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ • _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
2014 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ • _ _ _ _ •
2013 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ • _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ •
2012 _ ^ _ ^ _ ^ _ ^ _ ^ _ ^ _ ^ _ ^ _ ^ _ ^ _ ^ _ ^ _ | _ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ H
2011 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ • • _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ •
0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00 100.00
• Agriculture •Education
• En ergy • En vironniental prote cti on
• Health care • Humanitarian food aid
• Other social infrastructure and services • State administration and civil society
• Tradeandservices "Water and s anitation
However, the annual thematic structures of financial allocations show growing engagement of
Czech NGOs in the thematic priority called as a state administration and civil society, when this
increased engagement has been reported for the bilateral projects implemented particularly since
the year 2015 (see Figure 3). These results correspond to the increased importance of the Czech
development cooperation with the priority partner countries in this field. On the other hand, the
engagement of Czech NGOs in the field of water and sanitation declined, which is visible when
the years 2017 and 2018 are compared with the previous two years. Details concerning the
thematic structure of financial allocations for the period of years 2011-2020 are presented in
Appendix 3.
4 Conclusion
Czechia launched its first foreign development assistance in the mid-1990s as the first Central
European post-communist country and thus it has the status of emerging ODA donor. In the year
2013, Czechia joined the elite group of O D A donors cooperating within the Development
Assistance Committee of the OECD. As an O D A donor, Czechia is committed to several
international and European Union targets concerning the volumes of ODA. Despite the political
declarations, volumes of Czech ODA stayed during the period of years 2011-2020 below these
commitments, defined by the ratio ODA/GNI (expressed in %). Czechia did not meet even its
national target - to spend on ODA 0,20% of its GNI by the year 2020, when the mean value of
the ratio oscillated in examined period around the value of 0,13%, calculated for all forms of
ODA flows (bilateral as well as multilateral flows).
The main responsibility for the bilateral development projects is given to the Czech Development
Agency, which is a state unit cooperating closely with the main authority - the Ministry of
228
Foreign Affairs. Projects are realized with the aim to meet the thematic and territorial priorities
of the development policy, specified in Development Cooperation Strategies and related annual
plans. The Czech Development Agency fulfils its mandate in partnership with public as well as
private entities who serve as implementors of the bilateral projects in partner countries. The
private business subjects are the major partners of the Agency, but the Agency cooperates closely
with the Czech and foreign NGOs as well.
The aim of the paper was to assess financial allocations to bilateral development projects
implemented by Czech non-governmental non-profit organizations in priority partner countries
during the period of years 2011-2020. Two research hypotheses (RH1, RH2) where formulated
to support this aim.
The Czech NGOs implement projects based on grants and tenders proposed by the Agency.
During the period of years 2011-2020, 38,21% of all financial allocations to bilateral projects
were assigned to projects implemented by Czech NGOs. The total volume of these allocations
reached the value of 3 103,7 mil. CZK. These projects were focused mainly on cooperation with
some LDCs (mainly Ethiopia) as well as Eastern European countries (Moldova, Georgia). This
finding did not allow to confirm the RH1 as the Czech NGOs were engaged in balanced way in
LDCs and other ODA recipients.
The projects of Czech NGOs were implemented particularly in the fields closely related to human
well-being and thus human development in ODA recipient countries. This finding confirmed the
RH2 concerning the engagement of NGOs in the fields related to the basic human needs of poor
people in ODA recipient countries. However, in recent years, the cooperation of Czech NGOs in
the field of state administration and civil society has emerged. These findings partly comply with
the general expectations about the engagement of the CSOs, resp. NGOs, in the international
development aid industry.
Acknowledgement
This paper was published with a financial support of the project SGS SP2021/51 "Complex use
of quantitative methods in economic disciplines", realized at the Faculty of Economics, VSBTechnical
University of Ostrava, Czech Republic.
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231
Appendix 1
Bilateral development assistance allocated with the use of bilateral development projects realized
in priority partner countries under the responsibility of the Czech Development Agency
(financial allocations in CZK)
Sum
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
3103660687,57
330503320,79
276386148,82
265753478,39
321546538,33
339852012,86
364093912,15
288925538,23
287117966,00
341476131,00
288005641,00
Totalvolumeof
financial
allocations
920,00
ON
MS
Ul
o
MS
-J o
ON
o
4^
to
u>
o
4^
o
u>
MS
0 0
ON
ON
Numbersof
financial
allocations
1182252848,17
150119194,1
96089752,27
126816851,00
126165177,00
129597295,50
130470194,80
107065204,50
122635530,00
107616089,00
85677560,00
Financialallocations
toprojectsofCzech
NGOs
u>
Ui
u>
u>
to
to
o
to
MS MS
4^
O
4^
4^ 0 0
4^
0 0
u>
o
Numberof
allocationsto
projectsofCzech
NGOs
Source: Annual reports of the Czech Development Agency (2011-2020), own data processing
232
Appendix 2
Financial allocations to bilateral projects of Czech NGOs in priority partner countries: territorial
targeting (in CZK)
Country/Ye
ar
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Afghanistan
4 000
000,00
18 000
000,00
19 000
000,00
24 902
756,00
21 947
638,00
19 985
952,00
15 994
494,00
0,00 0,00 0,00
Bosnia and
Hercegovina
0,00 0,00 0,00
186
685,00
0,00
1 500
000,00
4 370
000,00
8 680
709,00
11 411
420,86
13 431
790,10
Cambodia
11 147
855,00
10 500
000,00
17 000
000,00
13 709
740,00
16 990
000,00
17 220
500,00
19 220
500,00
4 000
000,00
13 399
900,00
13 325
000,00
Ethiopia
27 212
596,00
22 037
547,00
30 900
000,00
37 097
430,00
37 825
420,00
38 319
436,00
33 375
518,00
43 798
092,00
29 553
297,00
36 997
940,00
Georgia
9 395
073,00
11 232
407,00
13 125
126,00
10 897
652,50
12 237
896,00
9 039
743,50
10 278
301,00
23 678
732,00
7 446
083,80
33 452
000,00
Kosovo
8 000
000,00
9 494
832,00
8 785
000,00
6 931
785,00
5 043
460,00
9 674
021,00
12 875
000,00
3 500
000,00
0,00 0,00
Moldova
12 921
751,00
16 456
750,00
26 635
638,00
13 339
156,00
32 425
780,80
29 857
643,00
26 051
364,00
23 194
318,00
25 879
050,61
38 212
584,00
Mongolia
9 351
721,00
16 341
617,00
7 189
766,00
0,00 0,00 0,00 0,00 0,00 0,00
Palestine 0,00 0,00 0,00 0,00
4 000
000,00
4 000
000,00
4 000
000,00
0,00 0,00 0,00
Serbia
3 648
564,00
3 552
936,00
0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00
Zambia 0,00 0,00 0,00 0,00 0,00 0,00 0,00
19 965
000,00
8 400
000,00
14 699
880,00
Sum
85 677
560,00
107 616
089,00
122 635
530,00
107 065
204,50
130 470
194,80
129 597
295,50
126 165
177,00
126 816
851,00
96 089
752,27
150 119
194,10
Source: Annual reports of the Czech Development Agency (2011-2020), own data processing
Appendix 3
Financial allocations to bilateral projects of Czech NGOs in priority partner countries: thematic
targeting, years 2011-2018 (in CZK)
Theme/Year 2011 2012 2013 2014 2015 2016 2017 2018
Agriculture and forestry
23 102
148,00
27 007
072,00
25 721
298,00
20 212
299,00
25 476
230,80
22 542
245,00
22 856
140,00
35 997
793,00
Education
14 321
751,00
27 844
314,00
29 368
744,00
23 683
824,00
19 498
303,00
24 990
447,00
26 996
207,00
25 850
000,00
Energy
6 000
000,00
4 000
000,00
5 000
000,00
3 978
600,00
6 000
000,00
6 000
000,00
8 000
000,00
0,00
Environmental
protection
0,00 0,00 0,00
1 200
000,00
0,00 0,00 0,00 0,00
Health care
17 535
845,00
13 423
127,00
17 101
058,00
26 890
978,50
24 418
816,00
14 911
811,50
12 446
495,00
18 033
439,00
Humanitarian food aid
2 000
000,00
0,00 0,00 0,00 0,00 0,00 0,00 0,00
Other social
infrastructure and
services
19 870
286,00
29 341
576,00
37 869
430,00
20 586
818,00
35 191
677,00
40 917
480,00
41 518
808,00
19 844
916,00
State administration and
civil society
0,00 0,00 0,00
186
685,00
852
500,00
3 500
000,00
11 198
004,00
18 457
209,00
Trade and services 0,00
4 000
000,00
4 425
000,00
3 800
000,00
0,00 0,00 0,00 0,00
Water and sanitation
2 847
530,00
2 000
000,00
3 150
000,00
6 526
000,00
19 032
668,00
16 735
312,00
3 149
523,00
8 633
494,00
Sum
85 677
560,00
107 616
089,00
122 635
530,00
107 065
204,50
130 470
194,80
129 597
295,50
126 165
177,00
126 816
851,00
Source: Annual reports of the Czech Development Agency (2011-2018), own data processing
233
Financial allocations to bilateral projects of Czech NGOs in priority partner countries: thematic
targeting, years 2019 and 2020 (in CZK)
Theme/Year 2019 2020
Agriculture and forestry 21 953 297,00 36 356 000,00
Education 23 556 900,00 24 457 820,00
Health care 6 843 000,00 19 277 000,00
Social 23 879 050,61 39 160 584,00
State administration 19 857 504,66 17 727 790,10
Water 0,00 8 140 000,00
Sum 96 089 752,27 145 119 194,10
Source: Annual reports of the Czech Development Agency (2019-2020), own data processing
Contact information
Ing. Eva Kovářová, Ph.D.
VSB - Technical University of Ostrava, Faculty of Economics, Department of Public Economics
Sokolská třída 33, 702 00 Ostrava 1, Czech Republic
E-mail: eva.kovarova@vsb.cz
234
The Rise of Populist Radical Right Party ESNS in Slovakia: The Role
of Education
Dana Kubénková
Abstract: In this article, we answer the following question - are lower educated people more
likely to vote for the populist radical right party Ľudová Strana Naše Slovensko than higher
educated people? The aim of our paper is to estimate, based on the data from the Statistical Office
of Slovakia and Population and Housing Census in 2011, the effect of different levels of
educational attainment on voter's support for the populist radical right party in Slovakia - ĽSNS.
For the electoral performance of ĽSNS in municipalities of Slovakia, we use vote share from
results of national parliamentary elections that took place in 2020. We have found out that lowereducated
people tend to support ĽSNS, and contrary population with higher education than
secondary education without school-leaving exam associate with lower voting support for ĽSNS.
These findings are in accordance with previous findings of research focused on Western Europe
and Central and Eastern Europe. We hope these results could be used as implications for public
policy.
Keywords: Educational attainment, LSNS, populist radical right parties
JEL Classification: D72, R l l , R58
1 Introduction
One of the most prevalent factors in models aiming to elicit support for populist radical right
parties (PRRP) is education. The relationship between education and electoral support has been
proposed already in 1960 by Lipset. Nowadays, the surge of populist radical right parties and
their electoral success (Eierman, Mounk, and Gultchin, 2017, Colantone and Staning, 2019) has
brought scholars to test the plausible effect of education as contextual factor on this phenomenon
repeatedly. Overall, the empirical findings of these studies on the relationship between education
and vote for PRRP indicate that people with lower education tend to vote for PRRP.
Therefore, this article attempts to show that people with a lower level of educational attainment
are more likely to vote for the PRRP in Slovakia than those with a higher level of education. We
strongly believe that Slovakia can offer a compelling image since the Slovak Republic is one of
the few countries, where the glory of PRRP had experienced numerous drops and resurrections
(Mudde, 2007). Nonetheless, the voter support for PRRP appears to have remained stable since
2016, when out of nowhere, Ľudová strana Naše Slovensko (ĽSNS) had been successfully
elected to national parliament. The ĽSNS, a neo-Nazi-affiliated party, was re-elected in 2020,
finishing fourth with 17 parliamentary seats. Another reason for choosing Slovakia is the fact,
that the literature on the topic of PRRP has grown rapidly, but mostly in the regions of WE (see
Arzheimer, 2015; Ivaldi, 2018; Goodwin, 2015), while the further analysis of the development
in C E E has been lagging. Given the surge of PRRP in addition to substantial democratic
backsliding in countries of CEE region, this absence in the literature is striking. This negligence
does not eliminate the possibility that concepts underlying populist voting in W E may be useful
in understanding political behaviour in CEE. Nonetheless, adapting these concepts to CEE can
still lead to potentially different implications as some of the authors (Howard, 2003; Pirro, 2014;
Stanley, 2017) specifically pointed out to dissimilarities of PRRP in W E and CEE. According to
Pirro (2013), the PRRP in CEE compared to W E do not represent a "silent counter-revolution",
rather they capitalize on a "post-communist syndrome" resulting from the disappointments of
the transformation process. The author suggests that this difference is most evident in the
ideology of CEE parties - the PRRP handles pre-communist concerns such as clericalism and
235
irredentism, ethnic minorities, corruption, and European integration. In another view, most of
these post-soviet countries had been part of the European integration, which was meant to be a
fundamental pillar for establishing democratic changes, and yet a few decades later we are
witnessing the surge of PRRP, which are defined by Mudde (2007) as a destructive threat to
liberal democracy. Considering the above, it appears important enough for focusing the research
on the phenomenon in CEE.
Therefore, in this article, we find it necessary to combine the regional dimension along with
socio-economic and demographic factors included as control variables, as it can lead to a better
understanding of voter's demand for PRRP while estimating the relationship between levels of
educational attainment and vote for PRRP. We estimate simple OLS regression models for
testing influence of different educational attainment levels, along with control variables, on
ESNS's electoral success in the L A U 2 regions of Slovakia.
1.1 The role of education in electorate performance of PRRP
In our work, we define populist radical right parties following definition of Mudde (2007), who
interpret PRRP as political parties with a core ideology that is a combination of nativism,
authoritarianism, and populism. While nativism is an ideology, which holds that states should be
inhabited exclusively by members of the native group and that nonnative elements are
fundamentally threatening to the homogenous group. Authoritarianism refers to the belief in
a strictly ordered society. Populism is understood as a thin-centered ideology that considers
society to be ultimately divided into two homogenous and antagonistic groups - the pure people
versus, the corrupted elite", arguing that politics should be the volonte generale of the people.
There have been many attempts in estimating potential factors of electoral success of PRRP.
Authors Ivarsflaten and Stubager (2013) point out in their work to contradict results of previous
studies examinaning social structure as factor relevant for electoral success of populist radical
right parties. According to these scholars electorates follows a definite pattern, although the main
pattern is not seen in the voter's occupational position but rather in their educational levels.
Therefore, the idea of education as a factor relevant for higher election outcomes for PRRP is
very common between scholars and voting behavior itself. As a result of several studies, the
plausible hypothesis is that lower educated people are overrepresented among the voter base of
PRRP (Ford and Goodwin, 2010; Ivarslaften and Stubager, 2013; Roodujin et al., 2017).
As various scholars found, there are more than two possible mechanisms, that could explain the
relationship between the education and electoral performance of PRRP. The first group of
authors and their relative works tend to imply that education provides cognitive tools that
encourage individuals to be more receptive and tolerant to different cultures (Lipset, 1960),
others pointed out to socialization of students into certain libertarian political principles and
norms, that might occur at the institution of higher education (Stubager, 2008). Thus, those
authors disagree over the nature of connection for a link between education and certain political
ideas, rather than it is formed during the education process. The second group of authors argue
that education has an influence on political preferences because it is linked to material position
of those individuals. These authors argue that education is one of many possible variables, that
maintain and regenerate socio-economic disparities within society and highlight the indirect
influence of education - educated individuals might have better social standing within the social
structure, thus those individuals with lower education can be more vulnerable to threats related
to globalization and economics crisis (Spruyt, Keppens, and Droogenbroeck, 2016; Inglehart and
Norris, 2016). In the meaning of pluralism as a part of populism, which stands for polarization
of society into two homogeneous groups - we, the people v. the corrupted elites, it seems
reasonable that educated people which politically and socially dominate (elites) might occur as
a source of frustration to less educated people (Bovens and Wille, 2010). As a result, these studies
236
present education's significant role in the majority of the justifications for PRRP voting,
including anti-immigration sentiments, authoritarianism, and anti-elitism.
The authors Ivarslaften and Stubager (2013) divided these potential effects of education on PRRP
into two connections. The first explanation implies, that the connection between education and
material positions, which indicates that PRRP will perform better in a difficult economic time
and incomparably deprived geographic locations. Contrary, the second one refers to the
connection between education and values - individuals with and without higher education react
differently to immigration, immigrant-origin minorities, and ethnic diversity.
Another interesting view on the link between educational attainment and electoral success PRRP
has been offered by Savelkoul and Scheepers (2017) who tested their hypotheses under the recent
explanations on the given relationship, that has been proposed more recently and innovatively
(interethnic contact, associational involvement, social trust, euroscepticism) next to previously
established explanations (perception of ethnic threat, nationalism, authoritarianism).
Although, some of the studies do not prove the significance of the relationship between education
and extreme right voting (Norris, 2005), while others found that the individuals with intermediate
education levels are more likely to vote for radical parties (Arzheimer and Carter, 2006; Rydgren,
2007). Overall, the studies generally offer adequate evidence for the influence of education on
the electoral success of PRRP.
1.1.1 Central and Eastern Europe: The case of Slovakia
According to Mudde (2007), Slovakia is one of the few countries, where PRRP experienced
persistent ups and downs in their electoral success. In this statement, he pointed out to Slovenská
Národná Strana (SNS), which lost the parliamentary representation in 2002, but came back with
the big victory in 2006 obtaining 11.7 percent of the vote. The electoral success of PRRP in
Slovakia is stable since 2016, after the unexpected election of ĽSNS to the national parliament
and further re-election in 2020. These unpredictable shifts in voter support for PRRP in Slovakia
brought the attention of few scholars and they attempt to estimate the potential effects for this
support. For instance, Řehák et al. (2021) based on their comparative analysis of electoral support
for a traditional extreme right party (SNS) and the new radical right in Slovakia (ĽSNS)
conclude, that while support for SNS is established on cultural and nationalistic factors, the
support for ĽSNS is based on the regional economic factors such as the unemployment rate and
wages. Similarly, Voda et al., (2021) referred in their work to the sudden electoral breakthrough
of ĽSNS in 2016, and by further examination they suggest, that ĽSNS was successful in
economically deprived regions with lower purchasing power. Both studies analysed the electoral
performance of ĽSNS in the national parliament elections that took place in 2016 and years
before.
Considering the research on the role of education on voter support for PRRP, along with the
research of factors boosting the electoral success of ĽSNS, we formulated our hypothesis:
HI: Lower educatedpeople are more likely to votefor the ĽSNS than higher educatedpeople.
2 Material and Methods
Firstly, to make estimation possible, we had to identify the populist radical right party. In our
work, we consider ĽSNS as a populist radical right party, even though in previous articles it was
considered as a radical right party (Řehák et al., 2021; Voda et al., 2021). We categorized this
party as PRRP based on the data of Expert Survey of Chapel Hill 2020, where all the given
attributes signify, that ĽSNS is not just the radical right party, bus also populist (high ranks in
anti-establishment salience, position on people vs elected representatives). These slight changes
237
in the party family are not special, as the rhetoric of the parties could shift very dynamically
which can cause that the same party could be labelled differently across various studies (Leeuwen
and Vega, 2021). Secondly, we had to gather data from various sources for our dependent and
independent variables. For our independent variable - education, we considered the three
different highest level of education attained - secondary education without school-leaving exam,
secondary education with school-leaving exam, and higher education. Lastly, we decided to run
a simple OLS regression model, which we consider as the most suitable for our empirical
analyses.
2.1 Model and Data
For the purpose of testing our hypothesis we use for our dependent variable (LSNS) data gathered
on the level L A U 2 - share of votes for LSNS gained in the parliamentary election in 2020. These
data were collected from the Statistical Office of the Slovak Republic (SUSR). Our independent
variables (lowedu, mhighedu, highedu, relig, minor) were gathered on the L A U 2 level and they
were collected from Population and Housing Census in 2011. The rest of independent variables
(unemployr, density, distreg_km, pop2029, vt2020) were collected from SUSR. Descriptive
statistic for used variables in our model, can be seen in Table 1. Variables referring to the share
of people with the different highest level of education attained are named lowedu (secondary
education without school-leaving exam), mhighedu (secondary education with school-leaving
exam) and highedu (higher education). We divided the remaining variables into two categories.
The variable minor represents the share of population belonging to the national minority, relig
represents the share of religious population, unemployr represents average unemployment rates
calculated between 2016 and 2020, density represents the density of municipality, distreg_km
represents the municipality distance from the capital city of the region, pop2029 is the share of
population with an age 20-29, vt2020 refers to turnout in the parliamentary elections in 2020.
Table 1 - Descriptive statistics
VARIABLE LEVEL OBS MIN MAX MEDIAN MEAN STD.
DEV.
LSNS LAU 2 2926 0 52.632 9.176 9.718 5.581
lowedu LAU 2 2926 26.087 98.055 63.414 63.394 9.384
mhighedu LAU 2 2926 1.361 73.913 34.103 33.936 9.560
highedu LAU 2 2926 0 35.937 7.825 8.466 4.377
relig LAU 2 2926 26.829 100 88,615 86,006 10,650
minor LAU 2 2926 0 99.052 1.887 16.461 27.168
unemployr LAU 1 2926 2.63 18,92 6.66 8.315 4.459
density LAU 2 2926 -0.347 4.132 1.770 1.762 0.443
distreg_km LAU 2 2926 0 93.986 35.792 38.704 20.927
pop2029 LAU 2 2926 0 44.444 13.667 13.852 2.748
vt2020 LAU 2 2926 8.977 98.544 67.038 65.310 10.086
Source: Author, based on data from SUSR and Population and Housing Census in 2011
3 Results and Discussion
The results of our OLS models for our hypothesis concerning voter incentives are presented in
Table 2. Looking at the results, we can see the clear effect of education on voter's support for
PRRP. We can accept our hypothesis (HI) on a statistically significant level - lower educated
people are more likely to vote for the LSNS than higher educated people. To be more precise
according to results (OLS 1) people with secondary education without school-leaving exams
positively coincidence with vote for PRRP. While looking at the results of (OLS 2, 3) people
238
with secondary education with school-leaving exam and with higher are less likely to vote for
ESNS, whereas the effect is while comparing the results strongest within people with higher
education. Therefore, we proved in our model, that people with lower education tend to vote
ESNS. Thus, our findings people coincident with the findings of other scholars (Ivarsflaten and
Stubager, 2013) who argue, that level of education should be considered while estimating the
effect of education. Accordingly, people with secondary education with school-leaving exam and
higher education levels of educational attainment do not support ESNS. The effect of education
is the strongest in the municipalities where is a higher share of individuals with a university
degree, which results in the decline of voter's support for ESNS about 0,34 percentage point.
Looking at the other socio-economic and demographic factors, the background is the same as
was found in the study by Řehák et. al (2021). Thus, the higher share of the religious population,
along with a higher share of minorities living in the regions and higher density of population
results in lower voter support for ESNS. On the other hand, the higher population between 20-
29, higher average unemployment rates, and long distance from the capital city of specific
municipalities result in higher voter support for ESNS. The turnout in parliamentary elections in
2020 is not significant.
Table 2 - Regression models (1) - (3)
OLS
(1)
OLS
(2)
OLS
(3)
lowedu
0,092***
(0,012)
mhighedu
-0,102***
(0,011)
highedu
-0,335***
(0,025)
relig
-0,047***
(0,009)
-0,046***
(0,009)
-0,066***
(0.009)
minor
-0,122***
(0,004)
-0,122***
(0,004)
-0,124***
(0,219)
unemployr
0,0599*
(0,024)
0,056*
(0,023)
0,065*
(0,023)
density
-2,065***
(0,221)
-1 989***
(0,221)
-1,620***
(0,219)
distreg_km
0,030***
(0,005)
0,030***
(0,005)
0,026***
(0,005)
pop2029
0,134***
(0,032)
0,130***
(0,032)
0,101*
(0,325)
vt2020
-0,0211
(0,012)
-0,012
(0,012)
-0,003
(0,011)
cons
[ I 47***
V,54)
19,954***
(1,214)
20,395***
(1,931)
N 2926 2926 2926
adj. R-sq 0,343 0,346 0,368
Source: Author, based on data from SUSR and Population and Housing Census in 2011
Our findings are in accordance with recent studies (Rehak et al. 2021; Voda et al. 2021) on the
PRRP in Slovakia and suggest that voter's support for ESNS is stronger in regions suffering from
higher unemployment rates. Nonetheless, these results are also pursuant to the findings of
research we present in section 1.1 The role of education in electorate performance of PRRP,
which results in - lower educated people are more likely to vote for the ESNS than higher
educated people. There still may arise the questions based on our literature review - what
additionally stimulates the effect of lower education on ESNS popularity? As the voting
239
campaign of ESNS referred both to the Roma issue and anti-elite establishment, we, therefore,
think that for this specific case are applicable both approaches in recent literature within the
relationship between education and vote for PRRP.
Slovak voters with lower education might have been less receptive and tolerant to minorities,
especially the Roma minority, as studies suggest (Lipset, 1960, Stubager; 2008) and therefore
they favor with ESNS, as ESNS actively stand up against the Roma minority. The second reason
might lay underneath the connection of education and material position, implying that lower
educated people are more vulnerable and unprepared to economic changes, such as globalization
and economic crisis. This argument suggests, that PRRP will gain higher popularity in the
regions that are economically deprived. Again, this analogy seems to be applicable to the
electoral success of ESNS and be the potential driver of education effect, as also our findings
proved, that ESNS did better in municipalities with a higher average unemployment rate.
4 Conclusion
Nowadays, the surging popularity of PRRP is common prevalence within democracies of
Europe, and Slovakia is not an exception (Hainsworth, 2008). Authors Ivarsflaten and Stubager
(2013) specifically pointed out in their work to contradict results of previous studies examining
social structure as a factor relevant for the electoral success of populist radical right parties.
According to these scholars, electorates follow a definite pattern, although the main pattern is
not seen in the voter's occupational position but rather in their educational levels. However,
emphasizing the importance of education, along with a social class in determining political
preferences and voting behaviour was already introduced in 1960 by Lipset. Given that the idea
of relationship and education is not the new one, and there is very well-developed research,
suggesting different approaches. Therefore, in our article, we rely on the case of Slovakia and its
populist radical right party - ESNS. We address this relationship by testing our hypothesis
stating, that lower educated people are more likely to vote for ESNS than higher educated people.
We included in our simple OLS model educational attainment levels, along with socio-economic
and demographic factors as control variables, that have been already empirically proved by other
researchers as significant for PRRP vote (Řehák et al., 2021; Voda et al., 2021). According to
results from our models, we could accept our hypothesis on the statical significant level and
answer our research question. Therefore, lower educated people are more likely to vote for the
ESNS than higher educated people. Our findings are in accordance with scholars focused on
analysing voting support for ESNS (Řehák et al., 2021; Voda et al., 2021), as well as with the
studies concentrating on the relationship between education and voter's support for PRRP.
However, our approach is limited, as we only hypothetically discussed what additionally drives
the effect of lower education on the electoral success of ESNS but did not provide any empirical
tests for these potential drivers, that have been proposed for instance by Ivarsflaten and Stubager
(2013) or Savelkoul and Scheepers (2017), e.g., interethnic contact, associational involvement,
social trust, Euroscepticism, perception of ethnic threat, nationalism, authoritarianism. This
leaves an open space for further research investigation.
Acknowledgements
The paper was supported by the project V E G A 1/0774/19 Accumulation of human capital in the
regions - economic and social consequences.
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Appendix
Figure 1: Spatial distribution of voter support for LSNS on the district level (share of valid
votes in %)
Source: author, based on data from SUSR
Contact information
Mgr. Dana Kubenková
University of Economics in Bratislava, Faculty of National Economy, Department of Public
Administration and Regional Development
Dolnozemská cesta 1, 852 35 Bratislava, Slovak Republic
E-mail: dana.kubenkova@euba.sk
243
Financial policy of sustainable development of the state: components
and evaluation of efficiency on the example of Ukraine
Raisa Kvasnytska, Inna Dotsenko, Lesia Matviichuk
Abstract: The most significant influence on the old development of the state has the state
financial policy, which is formed on the basis of various components. It is established that the
basis for the formation of the basic model of state financial policy of sustainable development is
the relationship of environmental, economic and social components. This assertion takes into
account the manageability of development and focuses on the three-component concept of
sustainable development. Methods such as dialectical, method of analysis and synthesis were
used for the study. Model of the financial policy of sustainable development of the state
generalized. Based on the theory of effective competition, the approach of an estimation of
efficiency of financial policy of sustainable development of the state on an example of Ukraine
is offered. The proposed approach involves the assessment of indicators that characterize the
components of financial policy of sustainable development, and, based on them, the derivation
of a generalized integrated indicator. The application of approach makes it possible to determine
of sustainable development of the country and forecast it taking into account the dynamic
conditions of her economy.
Keywords: sustainable development, state financial policy, model of state policy of sustainable
development, components of the state financial policy of sustainable development
JEL Classification: H 11, J l l , O i l
1 Introduction
As claims Dabbousa and Tarhinib (2021) or Ahmed, Kousar, Pervaiz, Shabbir (2021) sustainable
development of a country is the basis that determines the need to strike a balance between
meeting the needs of current generation and safeguarding the interests of future generations. In
modern socio-economic conditions, ensuring sustainable development becomes especially
important, especially for Ukraine, given its political, economic, social and environmental
problems. As noted by Doroguntsov and Ralchuk (2002), harmonization of its economic growth,
social integration and environmental protection are extremely important for achieving
sustainable development of the country. The central component in the overall state development
policy is the model of financial policy for country's sustainable development. It should promote
its comprehensive and equal economic growth; increase the basic standard of living in the
country, fair social development in the conditions of efficient use of natural resources. At the
same time, the issues of forming a basic model of state policy of sustainable development based
on the relationship of environmental, economic and social components, which takes into account
the balance of public interests, determine the relevance and essence of the study. Therefore, the
purpose of the study is to determine the essence and components of the financial policy of
sustainable development of the state, as well as to develop a methodology for assessing its
effectiveness on the example of Ukraine. The methodology provides for the assessment of
indicators by groups corresponding to the components of the state financial policy of sustainable
development of the country, and the derivation on its basis of an integrated index of the
effectiveness of the financial policy of sustainable development in the state. To achieve this goal,
the focus is on the priority components of sustainable development (economic, environmental
and social), which are integral parts of the country's sustainable development model, as well as
on the components of financial policy. Achieving this goal is possible due to solving the
following tasks: elaboration and systematization of indicators of country's sustainable
244
development according to their priority components; explanation of basic principles of forming
the model of financial policy for country's sustainable development; development of methods
for assessing the effectiveness of implementing the model of financial policy for country's
sustainable development based on the example of Ukraine.
2 Theoretical foundations of sustainable development of the state
In recent years, well-known scientists have reflected issues and problems of sustainable
development, in a number of scientific papers. It is worth noting that ideas about the need for
sustainable development emerged in the early twentieth century. Vernadsky (1978) was the first
to put forward the concept of the noosphere (the sphere of the mind), which is based on the idea
of harmonization of the interaction between society and nature. Such scholars, as Mayer Gerald,
Rauch James and Filipenko (2003) associate the emergence of the term "sustainable
development" with the name of the Prime Minister of Norway Gro Harlem Brundtland after the
publication of the report "Our Future" (1987) which was prepared for the U N by the International
Commission on Environment and Development. In which "sustainable development" is
interpreted as development that meets the needs of the present, but without compromising the
ability of future generations to meet their own needs. Modern researchers, such as, Rudenko and
Gorlenko (1996), when interpreting the concept of "sustainable development", emphasize the
specification of the object, that is, the state, ecosystem or its components (nature, population,
economy) or a territory taken as a particular ecosystem, thereby expanding the concept of
"sustainable development" in accordance with the object of study. According to Danilishin and
Shostak (1999), sustainable development is the system of relations of social production, in which
an optimal ratio between economic growth, normalization of the qualitative state of the natural
environment, growth of material and spiritual needs of the population is achieved. When
interpreting the concept of "sustainable development", Doroguntsov and Ralchuk (2002),
distinguish its components, namely: socio-economic and techno-environmental. The researchers
focus on increasing the common good of humanity by ensuring the security of these components.
Gossling-Goidsmiths (2019), interprets sustainable development as a concept that aims at
achieving social progress, environmental balance and economic growth of the country. Based on
the given definitions, it is appropriate to conclude that the common feature of sustainable
development is balancing, harmonization of the humanity's social needs with the environmental
and economic opportunities of territories. So, Bist (2018) examines the nexus between financial
development, economic growth, and social sustainability and found a positive relationship
between social progress, financial development, and economic growth. Therefore, the authors
define sustainable development as a balanced system of interaction and interconnection of
components of economic, social and environmental development of the country, which ensures
optimal use of available resources with potential needs of society, while maintaining the
possibility of using similar resources for future generations. The need to ensure the
implementation of the postulates of sustainable development of the state necessitates the
development of new approaches to the development and evaluation of public financial policy,
which determines the system of measures, forms, methods of mobilization, distribution and use
of financial resources by state institutions society for sustainable development (Vovk, 2020).
2.1 Theoretical foundations of financial policy of sustainable development of the state
An important component of the overall economic framework for country's sustainable
development is the state financial policy of sustainable development, which allows the state to
perform its various functions in accordance with strategic and tactical goals of sustainable
development through elaboration of certain methods and implementation of measures for state
financial resources mobilization, allocation and redistribution. The state financial policy of
sustainable development embodies financial relations, which are specified by national strategies,
245
programs, management decisions that arise in the process of formulating and implementing the
strategy of sustainable development of the country. Clark, Reed and Sunderland (2018),
Goldstein (2001) fragmentarily illustrate the essence of sustainable development fiscal policy.
Based on the study of this literature, the authors concluded that the main objectives of public
policy of sustainable development are:
• creating conditions for maximizing the amount of financial resources generated by the
state;
• implementation of mechanisms for rational allocation of the accumulated financial
resources in accordance with the policy of sustainable development;
• application of financial methods that provide effective regulation, stimulation and
control over economic, environmental and social processes in the country;
• elaboration of an effective financial mechanism for implementing the financial policy
of the state;
• establishing an effective financial management system in the state.
The Ukrainian model of state policy for sustainable development is being formed in the
conditions of a prolonged economic crisis, t is based on balancing the environmental, economic
and social components, with the appropriate application of the components of public financial
policy (Figure 1).
Of course, shaping state financial policy for sustainable development should be considered from
the standpoint of specifying approaches to the development of its main components, which
determine the indicators of public financial policy for sustainable development in general.
The authors believe that the main components of the state financial policy of sustainable
development include the following:
• state budget policy, which is an instrument of state regulation of social development
and a set of financial relations, institutional support for accumulation and allocation of
budget funds aimed at achieving financial and economic balance, the effectiveness of
economic transformation. Budget policy reflects public interests, and thanks to it the
functions and tasks of the state are realized, it is formed in the course of budgetary
process and provides definition of the purposes and tasks in the field of public finances
(Maksyuta, Chugunov, 2012);
246
Figure 1 - Model of public financial policy for sustainable development of the
country
Source: Authors' view
State financial policy for sustainable Principles of sustainable development
Components
State Budget policy
State Taxation Policy
State Monetary Policy
State Customs Policy
State Investment
Policy
I — Public Debt Policy
Ecological Component
Social Component
pi
H
Z
O
u
w
x
H
o
H
2
W
S
O
—1
w
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Q
w
-J
m
<
z
<
on
&n
L.
state taxation policy, whose essence is manifested in a set of organizational, legal and
financial and economic measures of the state to regulate tax relations, is aimed at
mobilizing and using financial resources in socio-economic development of the country.
Ukraine's state tax policy is in line with the priorities of tax policy recommended by
experts for E U countries: to stimulate investment and promote the solution of positive
and negative externalities; increase the efficiency of tax administration and tax
certainty; create jobs; reduce inequality and, finally, increase tax voluntariness (EU Tax
Policy Strategy, 2021);
state monetary policy, which is a set of measures in the field of money circulation and
credit, which are designed to ensure the stability of the currency of Ukraine through the
introduction of statutory means and methods, and includes systematic and coordinated
measures of the National Bank of Ukraine: continuing the implementation of a flexible
inflation targeting monetary regime based on a floating exchange rate, with an emphasis
on maintaining financial stability and ensuring sustainable economic growth;
continuation of compliance with the regime of floating exchange rate formation;
application of foreign exchange interventions in order to perform the following tasks:
accumulation of international reserves to achieve their adequacy according to the IMF
composite criterion, etc. (Decision Of The N B U Council, 2020);
state customs policy is a system of principles and activities of the state in the field of
protection of customs interests and customs security of Ukraine, regulation of foreign
trade, protection of the domestic market, development of Ukraine's economy and its
247
integration into the world economy. Priority areas for the implementation of the State
Customs Policy by the Ministry of Finance of Ukraine are: promotion of security and
international trade, providing simplification and harmonization of customs procedures;
promoting the effective collection of customs duties; development of infrastructure,
electronic technologies and services for international trade; protecting society, public
health and environmental safety and combating the illicit flow of drugs and weapons;
increasing the efficiency of international customs cooperation (Customs policy, 2021);
• state investment policy is the activity of the state to regulate investment activities to
implement economic, scientific, technical and social policy through the application of a
set of economic, organizational, legal and other measures of the state aimed at creating
a favourable investment climate, restructuring, improving efficiency of national
economy. The main objectives of investment policy are: increasing the fraction own
sources of investment into the national economy; decentralization of the investment
process (transfer the function of providing investments to business entities); attracting
investments on a competitive basis; financing of investment projects in accordance with
state programs (principle of targeting), etc.;
• public debt policy represents a system of actions to avoid and resolve possible debt
problems at the state level, ensuring or restoring solvency and obtaining the maximum
effect from the use of borrowed funds. To assess the current state and dynamics of public
debt of Ukraine and determine the goals, objectives and measures in the medium-term
in order to optimize the structure of public debt in terms of cost-risk ratio while
maintaining an acceptable level of debt burden, the Ministry of Finance developed the
tool known as "Medium-Term Public Debt Management Strategy for 2019-2022".
(Medium-term strategy for public debt management for 2019-2022, 2019).
3 Research methodology and Data
The study was conducted using methods that are determined by the purpose and objectives of
the study. Thus, the choice of research methods depended on the need to analyse the relationship
between the goals of sustainable development of the state and the individual components that
shape the public financial policy of sustainable development in general. First, such methods as
dialectical, method of analysis and synthesis were used for research. With their help, the
advantages and disadvantages of different methods of assessing the financial policy of
sustainable development of the state and its individual areas are identified. In particular, the
following were studied:
• the method of calculating the index of sustainable economic well-being proposed by
Cobb and Delhi (1989). This method is based on determining the amount of domestic
savings, which increase by the amount of education expenditures and decrease by the
amount of natural resources and damage from environmental pollution;
• decisions made by the Heads of State and Government at the International Conference
on Financing for Development (2002), which proposed the use of the following tools
for assessing sustainable development: tax levers, investment in economic and social
infrastructure, assessment of capital markets through banking systems, assessment of
budgetary and monetary policy;
• methodology for assessing the financial policy of sustainable development of the state,
based on indicators of the green economy, which was proposed by the United Nations
Environment Program (United Nations Environment Program, 2006). According to it,
such indicators are divided into three groups: indicators of economic transformation,
indicators of resource efficiency, indicators of progress and prosperity;
• methods of assessing the financial policy of sustainable development based on the rating
approach. This methodology is used by the Financial Monitoring Group of the Central
248
Office of Reforms at the Ministry of Community and Territorial Development of
Ukraine (supported by the U-LEAD with Europe Program and the SKL International
project) starting in 2019 (Assessment of financial management systems in integrated
territorial communities, 2019). The method allows obtaining statistical information on
the main indicators of financial support of the economy as a whole. It includes indicators
of budgetary capacity; an indicator that characterizes the activities of the management
staff of self-government bodies; an indicator that characterizes the financial capacity of
households; as well as an indicator of capital expenditures, which characterizes the
financing of investment and innovation activities.
To assess the financial policy of sustainable development of the state, the authors used a rapid
assessment, which is based on the calculation of an integrated indicator and provides an analysis
of the effectiveness of the main indicators of assessment of the above components. According to
the analysis of works According to the analysis of works Borodkin and Aivazyan (2006), Kelly
(1998), depending on the form of presentation of initial data and the purposes of integrated
estimation, the most universal and rather simple in algorithmization is the aggregate approach to
construction of an integrated indicator. This approach assumes that the source data are
quantifiable indicators that are generalized by an object-property matrix, and the generalized
indicator is calculated by aggregating the source indicators with an approximation of the structure
of relations between objects.
Thus, the integrated indicator of financial policy of sustainable development of the state is a
complex integrated assessment that takes into account all components of the financial policy of
sustainable development and thus reflects the relationship between the various inseparable areas
of its formation and implementation. It represents the importance of indicators that show the
effectiveness of the formation and implementation of financial policy of sustainable development
of Ukraine by its individual components. So they relate to: state budget policy (state budget
revenues; state budget expenditures; state budget deficit); state tax policy (taxes on income,
profits and increase in market value; rent and fees for the use of other natural resources; domestic
taxes on goods and services); government monetary policy (inflation index; hryvnia devaluation
index against the US dollar; total loans); state customs policy (receipt of import duties; foreign
trade balance of goods and services (exports); foreign trade balance of goods and services
(imports)); state investment policy (foreign direct investment in the economy of Ukraine; foreign
direct investment from Ukraine; capital investment); public debt policy (the total amount of
public and state-guaranteed debt; public debt service; repayment of public debt). In order to
ensure the information unidirectionality of these indicators, they are divided into the following
groups:
• explicit stimulators - indicators that under most conditions of use play a positive role,
i.e. have a gradually increasing quality dependence, and therefore, the greater the value
of the indicator the better quality of the object of evaluation;
• explicit disincentives - indicators that in most cases negatively affect the object of study,
i.e. have a gradually decreasing quality dependence, and therefore, it is preferable to
have a lower value of the indicator and, as a consequence a downward trend;
• stimulators-disincentives (nominators) - indicators that have an ambiguous quality
dependence, if there is some value in the period of indicator change, which corresponds
to the best quality of the object (Kvasnytska, 2016).
249
3.1 Algorithm for evaluating the effectiveness of public financial policy of sustainable
development of the state
The following algorithm, proposed by the authors, implements the construction of an integrated
indicator for assessing the effectiveness of public financial policy of sustainable development of
the state:
1. input information data collection, i.e. the formation of data arrays for the definition
and calculation of indicative indicators;
2. system of indicators determination which will become a part of the integral indicator.
In this case, this system will include only metrics:
X = {X1,X2,...,XH}, (1)
3. normalization of partial indicators with the establishment of compliance with larger
values of better quality, i.e. reduction of their values to the segment [0; 1], which
allows to obtain a generalized criterion in normal form. For further convenience, we
will assume that the normalized amount has the same values of indicators as the
initial;
4. correlation matrix calculation of R indicators. It is suggested to use pairwise
correlation coefficients or correlation relations, depending on the form of the
relationship between the indicators;
5. integrated indicator construction due to the certain steps. It should be mentioned that
in the context of large-scale globalization of economic processes, the method based
on the theory of effective competition is recommended as one of the most efficient to
calculate an integrated indicator to assess the effectiveness of public financial policy
of sustainable development of the state. After all, considering competitive processes
at the level of individual states, nowadays economists use the very concept of
"competitiveness", believing it to be a key attribute of such economic associations as
countries and regions. Thus, according to the theory of effective competition, the
algorithm for calculating the integrated indicator is carried out in according to the
following sequential stages:
Stage 1. Unit indicators calculation that result in the formation and implementation of financial
policy effectiveness of sustainable development of Ukraine for its individual components (Table
1) and the translation of indicators into relative values (points).
Stage 2. Criteria calculation of the formation and implementation of financial policy
effectiveness for sustainable development of Ukraine.
Stage 3. Partial integrated indicators calculation by components of financial policy of sustainable
development of Ukraine. Weighting factors are determined based on the weight of each indicator,
which is allocated to assess a particular component of financial policy.
Stage 4. Final generalized indicator of financial policy of sustainable development efficiency of
Ukraine calculation, which is determined as a linear convolution of partial integrated indicators.
Weighting factors are identified based on the weight of each group of indicators. The indicators
used in this work are taken for 2016-2020 according to official data of the Ministry of Finance
of Ukraine (Statistical information, 2021), the National Bank of Ukraine (Financial sector
statistics, 2021) and the State Statistics Service of Ukraine (Statistical information, 2021).
Therefore, it is recommended to use this algorithm to calculate the integrated indicator, which
summarizes the financial policy of sustainable development of the state.
250
Table 1 - Indicators of state financial policy for sustainable development of Ukraine (based
on its constituent components (2016-2020)
Indicators 2016 2017 2018 2019 2020
State Budget Policy
State Budget Income, mln
UAH
616274,8 793265,0 928108,3 998278,9
1076016,
7
State Budget Expenses,
mln UAH
684743,4 839243,7 985842,0
1072891,
5
1288016,
7
State Budget Deficit, mln
UAH
-70130,2 -47849,6 -59247,9 -78049,5 -217096,1
State Taxation Policy
Income Tax, VAT etc, mln
UAH
114154,6 141945,3 188624,1 217040,4 225976,3
Rent for Use of Natural
Resources, mln UAH
44092,2 48661,1 45265,7 46746,9 52475,7
Internal Taxes forGoods and
Services, mln UAH
325628,5 422274,1 493360,6 502048,1 538896,2
State Monetary Policy
Inflation Index, % 112,4 113,7 109,8 104,1 105,0
Devaluation Index UAH vs
USD, %
112,2 104,5 99,3 85,5 119,4
Overall Amount of
Credits, mln UAH
1005923 1042798 1118618 1033539 963664
State Customs Policy
Clearance Duty Income,
mln UAH
20001 24542 26560 29855 32125
Foreign Trade Balance of
Goods and Services
(export), mln UAH
1174625 1430230 1608890 1636416 1637399
Foreign Trade Balance of
Goods and Services
(import), mln UAH
-1323127 -1618749 -1914893 -1947599 -1681526
State Investment Policy
Direct Investment in
Ukrainian Economy, mln
USD
3810 3692 4455 5860 -868
Direct Investments from
Ukraine, mln USD
16 8 -5 648 82
Capital Investment, mln
UAH
359216,1 448461,5 578726,4 623978,9 508217,0
Public Debt Policy
Overall Amount of State
and State-Guaranteed Debt,
mln UAH
1929758,7
2141674,
4
2168627,
1
1998275,
4
2551935,
6
Public Debt Service, mln
UAH
95865,9 111338,4 115445,2 119205,3 141582,4
Public Debt Repayment,
mln UAH
111476,3 129559,0 234578,4 345247,1 585139,6
Source: Ministry of Finance of Ukraine (Statistical information, 2021), National Bank of Ukraine
(Financial sector statistics, 2021), State Statistics Service of Ukraine (Statistical information,
2021)
251
The analysis of the selected indicators according to the components of the state financial policy
of sustainable development of Ukraine, which are given in Table 1, allows us to draw the
following conclusions. The largest amount of the state budget deficit is in 2020. Compared to
2016, its growth was 109,6%. The growth rate of tax revenues in recent years is positive, and in
2020, compared to 2016 - 97,9%. The devaluation index of the hryvnia against the US dollar in
2020 exceeded the mark of 119,4%. Thus, there is a decrease in government intervention in the
redistributive processes of monetary policy. In Ukraine, there is a negative trend associated with
foreign direct investment. Thus, in 2020, an outflow of investments in the amount of almost 868
million dollars was recorded. U S A (222,8%). In the National Bank of Ukraine, the outflow is
associated with the withdrawal of reinvested earnings of enterprises and companies in the real
sector of the economy. In 2020, the total public and state-guaranteed debt of Ukraine increased,
compared to previous years. Compared to 2016, its growth was 32,3%. The growth of financial
indicators-disincentives of the state in recent years may pose a threat to the functioning of the
economy, namely to slow down the implementation of socio-economic strategy of sustainable
development. Therefore, it is important to forecast the dynamics of these indicators for the future.
This task is realized precisely through the calculation of the integrated indicator that characterizes
the state financial policy of sustainable development of Ukraine.
4 Results and Discussion
In accordance with the six components of the state financial policy of sustainable development
of Ukraine described above and individual indicators that characterize the effectiveness of each
component, the calculated indicators were translated into relative values using points, as follows:
• 5 points - if the indicator is the lowest in the analyzed period;
• 10 - if the indicators are equal to each other;
• 15 points - if the value of the indicator is the largest in the analyzed period.
On the basis of such translation of absolute indicators into relative, the point expression of
indicators of the state financial policy of sustainable development of Ukraine is received (Table
2).
252
Table 2 - Indicators (values) of state financial policy for sustainable development of
Ukraine by its constituent components (2016-2020)
Indicators
2016 2017 2018 2019 2020
Indicators
Points
State Budget Policy (SBP)
State Budget Income (SBI) 5 10 10 10 15
State Budget Expenses (SBE) 15 10 10 10 5
State Budget Deficit (SBDef) 10 15 10 10 5
State Taxation Policy (STP)
Income Tax, V A T etc (Tax) 5 10 10 10 15
Rent for Use of Natural Resources
(Rent)
5 10 10 10 15
Internal Taxes for Goods and Services
(IntTax)
5 10 10 10 15
State Monetary Policy (SMP)
Inflation Index (Inflnd) 10 5 10 15 10
Devaluation Index U A H vs USD
(Devlnd)
10 10 10 15 5
Overall Amount of Credits (AmCred) 10 10 15 10 5
State Customs Policy (SCP)
Clearance Duty Income (CIDuty) 5 10 10 10 15
Foreign Trade Balance of Goods and
Services (export) (FTB (exp))
5 10 10 10 15
Foreign Trade Balance of Goods and
Services (import) (FTB (imp))
15 10 10 5 10
State Investment Policy (SIP)
Direct Investment in Ukrainian Economy
(Dirfnvest in Ukr)
10 10 10 15 5
Direct Investments from Ukraine
(Dirlnvest from Ukr)
10 10 15 5 10
Capital Investment (Caplnvest) 5 10 10 15 10
Public Debt Policy (PDP)
Overall Amount of State and StateGuaranteed
Debt (StateDbt)
15 10 10 10 5
Public Debt Service (DebtServ) 15 10 10 10 10
Public Debt Repayment (Repay) 5 10 10 10 15
Source: authors' own processing
Calculation of criteria to measure effectiveness of public financial policy for sustainable
development of Ukraine was carried out according to formulas that take into account the value
of each criterion and indicator, due to the fact that they were calculated expertly, as each
component of public financial policy Ukraine and the indicators that characterize them have
different degrees of importance. Thus, the criteria have the following meanings: state budget
policy (SBP - 0.2); state taxation policy (STP - 0.18); state monetary policy (SMP - 0.17); state
customs policy (SCP - 0.14); state investment policy (SIP - 0.15); public debt policy (PDP -
0.16).
Thus, the effectiveness of state financial policy for sustainable development of Ukraine (SFPSD
(Ukraine)) can be determined by the method of weighted arithmetic mean:
253
SFPSD (Ukraine) = 0,2SBP + 0,18STP + 0,17SMP + 0,14SCP + 0.15SIP + 0,16PDP
Each criterion can be calculated as follows:
1. SBP = SBI*0,45 - SBE*0,35 - SBDef *0,2;
2. STP = Tax *0,4 + Rent *0,25 + IntTax *0,35 ;
3. SMP = M i n d *0,45 - Devlnd *0,3 + AmCred *0,25 ;
4. SCP = CIDuty *0,3 + FTB (exp)*0,45 - FTB (imp)*0,25 ;
5. SIP = Dirlnvest in Ukr *0,55 + Dirlnvest from Ukr *0,15 + Caplnvest *0,3 ;
6. PDP = StateDbt *0,45 - DebtServ *0,15 + Repay *0,4.
The dynamics of the effectiveness of the state financial policy for sustainable development of
Ukraine for 2016-2020 is presented in table 3.
Table 3 - Dynamics of the integrated indicator of the effectiveness of state financial policy
for sustainable development of Ukraine for years 2016-2020
Criterial components of
state financial policy for
sustainable development
YearsCriterial components of
state financial policy for
sustainable development
2016 2017 2018 2019 2020
State Budget Policy (SBP) 5,5 5 6 6 7,5
State Taxation Policy (STP) 5 10 10 10 15
State Monetary Policy
(SMP)
4 1,75 5,25 4,75 4,25
State Customs Policy (SCP) 0 5 5 6,25 8,75
State Investment Policy
(SIP)
5,5 7 6,25 12 4,25
Public Debt Policy (PDP) 6,5 7 7 7 6,75
Integrated indicator of the
effectiveness of state
financial policy for
sustainable development
4,545 5,9675 6,65 7,6025 7,865
Source: authors' own processing
The data in Table 3 represent the steady growth of the overall indicator of the effectiveness of
state financial policy for sustainable development of Ukraine for 2016-2020. Harmonization of
the determinants of the main components of state financial policy for sustainable development
make it possible to raise to a higher level of efficiency both the process of forming the state
financial policy for sustainable development and its implementation while taking into
consideration trends in various spheres of financial sector. Thus, sustainable development of
Ukraine can be ensured only through the implementation of state financial policy, as it is the
basis for creating prerequisites for balanced growth of financial resources of the state, and hence
the basis for socio-economic programs of sustainable development of the country and its regions.
5 Conclusion
The study shows that the problem of ensuring the sustainable development of the state must be
addressed by taking into account the condition of economic, environmental and social
components, as well as a set of factors influencing state financial policy. A n important
component of the economic dimension of sustainable development is the state financial policy
for its sustainable development, the effectiveness of which is an integrated assessment that takes
into account all components of financial policy for sustainable development and, thus, reflects
the relationship between different inseparable areas of its formation and implementation.
254
According to the authors, the integrated indicator embodies the value of indicators that result in
the effectiveness of the formation and implementation of financial policy for sustainable
development of Ukraine for its individual components, and thus are directly related to: state
budget policy; state taxation policy; state monetary policy; state customs policy; state investment
policy; public debt policy. In the context of large-scale globalization of economic processes, to
calculate the integrated indicator in order to assess the effectiveness of state financial policy for
sustainable development, it is advisable to use a method based on the theory of effective
competition. The analysis of the obtained results of the assessment of the effectiveness of the
state financial policy of Ukraine in 2016-2020 shows an annual increase in the value of the
integrated indicator, i.e. an increase in the effect of Ukraine's chosen state financial policy for its
sustainable development. The application of the methodology for assessing the effectiveness of
the financial policy for sustainable development of the state makes it possible to determine the
condition and potential for sustainable development of a country and forecast it taking into
account the dynamic conditions of the economy of a country. There has been no comparative
analysis according to other countries so far. However, such an analysis is a prospect to continue
the study, which will ensure comparative analysis of the effectiveness of management decisions
at the state level in different countries to see the vector prospects for sustainable development of
Ukraine.
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Contact information
Raisa Kvasnytska - Doctor of Economic Sciences, Professor
Khmelnytskyi National University, Faculty of Economics and Management, Department of
Finance, Banking and Insurance
Institutska St, Khmelnytskyi, Ukraine
E-mail: rstepanivna@gmail.com
Inna Dotsenko - PhD, Associated Professor
Khmelnytskyi National University, Faculty of Economics and Management, Department of
Finance, Banking and Insurance
Institutska St, Khmelnytskyi, Ukraine
E-mail: innochka.docenko@gmail.com
Lesia Matviichuk - PhD, Associated Professor
Khmelnytskyi National University, Faculty of Economics and Management, Department of
Finance, Banking and Insurance
Institutska St, Khmelnytskyi, Ukraine
E-mail: matvijchuk.lesya@gmail.com
257
E-Government in the Czech Republic:
Digital Constitution and Subsequent Legal Developments
Tomáš Lechner, Lenka Vaňková
Abstract: The paper deals with the legal analysis of the last two acts concerning eGovernment
in the Czech Republic. The article places these regulations in the context of the current use of
electronic public services and compares the new regulations with the theses of the strategic
document Information Concept of the Czech Republic. The results of the analysis are not
auspicious and call into question the spontaneous labelling of the first one of the discussed
regulations by the digital constitution. This regulation brings no new category of electronic
public service and has rather declaratory meaning. Our research shows that these new regulations
have unfortunately very little potential to increase the use of electronic public services by citizens
and they do not contribute to increasing the quality of legal regulation of eGovernment in the
Czech Republic.
Keywords: Digital Public Services, EGovernment development, EGovernment projects, Public
Services Regulations
JEL Classification: K23, K24, H l l , H43
1 Introduction
The electronization of public administration is a process which, from the principle of public
administration, has various limitations compared to the development of ICT in the private sector.
These limitations, which are discussed by various authors [7], [9], [17], include for example
digital divide, limited budgetary resources, conflict of interest, departmentalism, eGovernment
service marketing, and staffing issues. However, the limitation given by the legislative
framework is clearly the most significant, as it is already given by the Constitution of the Czech
Republic, the public administration may only do what the law explicitly requires it to do. Similar
legislation applies in other European countries as well. Therefore, the amendment of the relevant
regulations is an inseparable step in the process of electronization of public administration. The
importance of legal entrenchment of the specific rules for electronic public administration is
discussed by different authors, e.g. [13], [16], [18], [21], [22]. On the other hand, the results of
analyses of various eGovernment projects [7], [9], [13], [16], [17] show that this is only
a necessary condition, but not a sufficient one for eGovernment to actually develop and meet the
expectations associated with it.
In principle, the legal regulations, which regulate eGovernment in the European countries, can
be divided into two groups:
• special regulations that directly regulate new electronic tools and institutes, such as the
eEDAS regulation regulating, among other things, electronic signing, or the act on cyber
security;
• changes in general procedural codes, such as the Administrative Procedure Code or the
Tax Code, which open the possibilities for the application of electronic tools and
institutes by public authorities.
Both changes must be made simultaneously, because without process changes, new tools cannot
be used, and vice versa. Not only for public administration, but in general, it is valid that, if
information and communication technologies are to contribute to productivity growth, in case of
public administration it means to increase efficiency, their introduction must be associated with
258
restructuring of processes within the organizations [1], [7], [13]. The study [20] shows that most
of fundamental changes in legal regulations paving the way for the development of eGovernment
were approved in most European countries as early as the second half of the 1990s or at the turn
of the 20th and 21st centuries. Nevertheless, the electronization of public administration is not
developing too fast, as evidenced by studies from 2010 [5] and 2015 [6]. A certain lack of success
of eGovernment projects is a common problem, which crosses border of the European Union.
According to [10] the proportion of eGovernment projects failing (total or partial) in the first
decade of the 21st century was between 60 and 85 %.
Within the European Union, improving regulation of eGovernment is integrated into the strategy
of building a digital single market [6]. One of the applied methods is gradually replacing the
original directives in various ways implemented into national legal systems by new regulations
of the European Parliament and of the Council. In this context, we should mention following
regulations:
• the Regulation (EU) No 910/2014 of the European Parliament and of the Council on
electronic identification and trust services for electronic transactions in the internal
market and repealing Directive 1999/93/EC (the elDAS Regulation) (for details see for
example [3]) or
• the Regulation (EU) 2016/679 of the European Parliament and of the Council on the
protection of natural persons with regard to the processing of personal data and on the
free movement of such data, and repealing Directive 95/46/EC (General Data Protection
Regulation) (for details see for example [25]).
And in this situation, a completely new regulation, which has no equivalent in the European
Union, and which covers a relatively wide issues of eGovernment, has been approved in the
Czech Republic. We mean the Act No. 12/2020 Coll., On Rights of Digital Services, which is
sometimes called the Digital Constitution, and this may be due to the extent of regulation and
declaratory content, not thanks to the legal status, because it is not a constitutional act. Following
this regulation, another relatively comprehensive amendment act has currently been approved,
which amends some acts in connection with further electronization of public authority
procedures.
The aim of the paper is to evaluate the quality of these new legal regulations and their potential
impact on the further development of eGovernment in the Czech Republic in the context of the
current use of public digital services. Especially, we try to answer the following questions:
• What makes this regulation so special that it is spontaneously called the Digital
Constitution? What is really new within this act?
• Do these regulations fit into the concept of the current development of electronic public
administration, both within the Czech Republic and within the European Union?
• How do these regulations increase the potential for the use of electronic public services
and how could they contribute to increasing the efficiency of public administration in
the Czech Republic?
The answers to these questions will also confirm or refute the basic thesis of the paper, which is:
These regulations contribute to the quality of legal regulation of eGovernment in the Czech
Republic and have the potential to increase the use of electronic public services by citizens in the
Czech Republic.
2 Methods and analyses
The basic method used in this paper is a legal analysis of these two mentioned regulations:
259
• The Act No. 12/2020 Coll. On Rights of Digital Services (hereinafter only RDS A);
• The Act No. 261/2021 Coll., which amends certain acts in connection with further
electronic procedures of public authorities (hereinafter only FEPA).
For a deeper analysis of the context, methods of comparison of legal regulations and strategic
documents are used as well.
The current level of eGovernment development in the Czech Republic is investigated by
calculations based on the results of a survey by the Czech Statistical Office and on the basic
statistical analysis of open data on the use of Data Mailboxes provided by Ministry of the Interior,
which are presented in the survey "Information Society in Numbers 2021: the Czech Republic
and the European Union" [4] as well. The investigated data correspond to the usage of electronic
public services just before the approval of the analysed regulations, thus in 2019.
2.1 Digital Constitution
The history of the RDSA itself is already worth attention. The initiative for this act came from
the private sector. Specifically, the Information Technology and Telecommunication Association
(ICTU), which is a professional association of companies active in the field of information
technology and electronic communication, as well as other areas such as business and education
[11], in response to the slow development of electronic public administration in the Czech
Republic, it presented the basic ideas of this new legal regulation [23]. This fact correlates with
the opinion that development of eGovernment is more supply-driven than demand-driven [8],
[9], [10], [12], moreover there are studies, which show that demand for electronic communication
with the public administration could be lower than its supply [2].
Another specificity of the RDSA is that it has spread effectiveness over a relatively long period
of five years (see Table 1). It could be said that this is not only the act, but that it also plays the
role of a long-term plan for the development of electronic public administration, which is
otherwise supported in the Czech Republic by the strategic document "Information Concept of
the Czech Republic" [19]. This document sets out objectives of the Czech Republic in the field
of public administration information systems and the general principles of acquisition, creation,
administration, and operation of public administration information systems in the Czech
Republic for the period 2020 to 2025, which fully correlates with the spread effectiveness of the
RDSA. At the end of this period, according to § 14 of the RDSA, all acts contained in the
catalogue of services must also be provided as digital services or must be performed as digital
acts.
Table 1 - Spread effectiveness of the Act No. 12/2020 Coll. On Rights of Digital Services
Entrance into force The main change
1st
of February of 2020 General entrance into force
1st
of August of 2020
Introduction of register of public administration information systems and
change in the Act on Basic Registers
1st
January of 2021 Establishment of cloud computing catalogue
1st
February of 2022
New rights: the right to a digital act certificate, the right to replace an
officially verified signature, the right to use data, the right to register a
right, obligation or legal fact, and also the right to enter contact details
1st
January of 2025
Completion of the catalogue of services, full provision of digital public
services and the administrator of the agenda information system must
implement mechanism for correcting incorrect data kept in the agenda
information system and further provide notification service about data
changes kept in the agenda information system
Source: Own research of this Act
260
The RDSA defines the following terms:
• The service user is defined as a natural person or a legal entity, who is provided with a
digital service by a public authority or who performs a digital act towards a public
authority. As positive side of this definition can be seen a clear declaration of
communication partner of public administration as a service user, which follows the
basic theses of New Public Management [24], which, among other things introduces the
public administration orientation towards citizens as consumers. So far, this approach
has appeared in the strategic documents for the development of public administration
since 2007 (discussed in [18]), however this is the first case of using this approach in
legislation of the force of law.
• A digital service, which means an act performed by a public authority towards a user of
a service within the agenda and kept in the catalogue of services as an act in electronic
form. Unlike the first case, the evaluation of this definition is no longer positive. On the
one hand, it mixes the attributes electronic and digital, the distinction of which is
generally poor in legal regulations [22] and on the other hand there is a direct link only
to the catalogue of services, which is subsequently questioned in § 14 paragraph 5.
Furthermore, this definition is not compatible with the definition in Act No. 181/2014
Coll., on Cyber Security, which will cause application difficulties, as it will be always
necessary to specify exactly what the definition of digital service is.
• A digital act is defined as a specific form of a legal act in electronic form, however again
only with reference to the act kept in the catalogue of services. There is no duplicate
definition in another legal regulation, but the restriction only to the catalogue of services
again places significant demands on the quality of this catalogue and is questioned in
the same way as the previous term above in § 14 paragraph 5.
• A catalogue of services is a part of the data kept in the basic register of rights and
obligations, which is one of the basic registers of public administration. In particular,
the data relate to the actions of public authorities performed within the agenda towards
entities that do not have the status of public authorities and the actions of entities that
do not have the status of public authorities in their performance towards public
authorities. This means that the provision of digital services and the ability to perform
digital action is fully subject to the catalogue of services, which is now being built,
however it is based on the existing registration of agendas, the quality of which we have
thoroughly analysed already in previous articles [14] and [15]. We showed that this
registration including activities and roles was not kept in a very good quality, because
agendas were described in a heterogeneous and sometimes also in an inaccurate way,
and there occurred frequent changes, many of which are not supported by justifiable
reasons resulting from change in relevant legal regulations.
The RDSA regulates a total of 11 areas, the schedule and basic content of which are listed in the
Table 2.
261
Table 2 - Regulated areas by the Act No. 12/2020 Coll. On Rights of Digital Services
The Right Analyses
The right to a digital
service
The user of the service has the right to use the digital service, but
non-business natural persons cannot be forced to use digital
services or perform digital acts.
A public authority has an obligation to provide a digital service,
but this obligation does not apply to local authorities that have
"only" the right to provide this service.
The right to perform
a digital act
The law specifies five different communication channels, through
which a digital act can be performed. These are Data Mailboxes,
contact points of public administration (CzechPOINT), electronic
communication network (e-mail), public administration
information system allowing proving identity of the service user
by using electronic identification or another method according to
another legal regulation.
The right to a digital
act certificate
A digital act certificate is provided to increase the certainty of the
performed act. However, it has no other procedural influence.
The wording of this right is the most debatable and ambiguous.
The right to replace
an officially verified
signature or an
accredited electronic
signature
As the elDAS regulation stipulates that the highest level of an
electronic signature, a qualified signature, has the same legal
effects as a handwritten signature, this right is a solution for an
officially verified electronic signature that cannot otherwise be
implemented under the elDAS regulation. In addition, the new
procedures can replace also a recognized electronic signature.
Only this right can be considered as fundamentally new.
The right to use data
The provision of § 7, which states that a public authority does not
require data kept in the basic register or agenda information
system, which are made available for the performance of the
agenda or on the grounds of the service user's consent, is
basically duplicate to the provisions in the Act No.l 11/2009
Coll., on Basic Registers.
The right to register
a right, obligation or
legal fact
This is a completion of the original idea of a register of rights and
obligations, namely that a service user has the right to enter in
that register a right, obligation or legal fact, which concerns him
or her and which arises from an act of a public authority listed in
the catalogue of services.
The right to prove a
legal fact
The practical impact of this right is that the user of the service is
not obliged to submit a decision, document, identity card,
certificate or provide any other data to exercise his or her right,
fulfil an obligation or document a legal fact concerning him or
her if he or she has proved his or her identity and data about him
or her or about his or her rights, obligations or legal facts
concerning him or her are kept in the basic register or agenda
information system and are made available towards public
authority for the performance of the agenda. This, proof of
identity, for example by means of an identity card, can replace all
other documents, provided that the above mentioned conditions
are met.
262
The Right Analyses
The right to enter
contact details
The user of the service has the right to enter the contact details
about the electronic address or the telephone number in the basic
registers for sending information under this Act and for sending
another information related to the provision of digital services,
the scope of which he or she chooses.
The right to
information in
connection with the
provision of digital
services
The declaration that the user of the service is entitled to access
the data kept about him or her in the basic registers and agenda
information systems only repeats the same as already provided by
the GDPR. However, an extension is also given here, which could
be named the right to notifications of the expiry of documents.
The right to
electronic
identification and
authentication
The right to electronic identification and authentication already
follows from the elDAS regulation and Act No. 250/2017 Coll.,
on electronic identification. Here it is only defined how to
proceed in case of absence of a provision on the minimum level
of guarantee of electronic identification for the use of digital
services. It is stipulated that the minimum level must be
significant (For details about different assurance levels of
electronic identification schemes see [3]).
The right to
technological
neutrality
This right includes, on the one hand, the independence of the
provision of digital service on a specific platform or technology,
and, on the other hand, the strengthening of the provision of data
in and open machine-readable data form (About usage of open
data within eGovernment see for example [28]).
Source: Own research of this Act
2.2 Subsequent Legal Developments
From the analysis of the RDSA follows that this regulation covers all general approaches of the
eGovernment and builds on already established general tools such as information system of data
mailboxes [12], [18], and basic registers [15], [18] and basically only completes some minor
functionalities, which however may have essential meaning for the service users, such as
notification of the expiration of the document. However, there are also new approaches, which
will need to be both specified by implementing regulations (for which, however, there is still
total lack of authorization) and applied in procedural legislation (the second category of changes
according to the initial categorization). It can be expected that during the entire period of spread
effectiveness of this regulation, other regulations will be submitted and approved, which should
hopefully together create digitally friendly legislation, as discussed in the Information Concept
of the Czech Republic - see [19] chap. 4.2.
However, the subsequent legal development takes place in a very confusing and complicated
atmosphere, and it certainly does not contribute to the qualities of the legal basis of eGovernment.
Its current product is the FEPA, which came into force on July 10, 2021. As the RDSA amended
9 other acts and brought 11 specified rights, the exercise of which is spread over five acts of
effectiveness, then FEPA amends 169 acts and has 13 (really thirteen!) different spread acts of
effectiveness, the range of which correlates with the RDSA. It is therefore another regulation,
which is a combination of a legal norm and a long-term development plan, which could indicate
the conceptuality of the approach, however a deeper analysis of this regulation reveals some
internal discrepancies resulting from spread effectiveness as well as the conflict with the original
RDSA.
263
As an example of a conflict can be presented the provision of the Article CXLII that a natural
person's data box shall be set up free of charge and without delay by Ministry of the Interior for
a natural person, who is registered in the basic register of inhabitants and has full legal capacity
after the natural person has used for the first time a tool for an electronic identification issued
within a qualified system of electronic identification towards the entity that enables proving
identity in accordance with the law governing electronic identification. This is a clear
contradiction in connection with the provision of § 14 RDSA, which stipulates that nonbusiness
natural persons may not be forced to use digital services. If, at the time when a natural person
uses an electronic identification tool issued under a qualified electronic identification system to
prove his or her identity towards some online public service provided by a public authority (and
it does not have to be a digital service under the RDSA), he or she does not have a data box yet,
it is probably because he or she does not want to use it. Its automatic establishment, which results,
for example, in a change in the delivery of public authorities to this person, is therefore clearly
in conflict with the quoted provision of § 14 RDSA.
As mentioned, the scope of regulation included in the FEPA is huge and it has impact on many
processes. These impacts cannot be summarised simply, so we present here only illustrative
examples. The necessary amendment to the verification acts, in which the process of official
verification of the electronic signature is introduced, can be assessed positively. According to
[26], public authorities should create incentives to popularize electronic signatures. There is also
a positive regulation of access to the basic registers, which reflects the criticism of the principles
of personal data protection made in [15]. The last positive benefit is in the area of provided open
data. For example, official boards of all municipalities with extended authority will have to start
being provided in this form, i.e. in the form of open data, which is consistent with the concept of
open public administration [27].
In addition, the FEPA contains a number of more or fewer unrelated additions and changes that
in the overall context seem clearly inconsistent and will bring procedural complications. An
example is the provision of Article L X X X , which states: „An act that requires a signature of the
person performing it, made through a public information system, shall be deemed to be signed
if the public information system allows proof of the identity of the person performing the act,
using electronic identification, the authorization of the act by the performer and the retrospective
demonstration of the will of the performer." This is another creation of signature fiction, which
is similar to the signature fiction introduced in the Data Mailboxes, and which still suffers from
procedural problems [22].
264
Figure 1 - Usage of electronic public services by inhabitants of the Czech Republic in the
year 2019
Source: Own calculation based on data presented by Czech Statistical Office [4].
Number of operations in 2019 in thousands
USE OF THE INTERNET IN DEALINGS WITH PUBLIC
ADMINISTRATION
D O W N L O A D I N G / F I L L I N G IN FORMS ON PUBLIC
ADMINISTRATION WEBSITES
CERTIFICATE F R O M THE CRIMINAL REGISTER AT CZECHPOINT
APPLICATIONS VIA DATA MAILBOXES
0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000
2.3 Actual Use of Public Digital Services
Following the fact that the RDSA has spread effectiveness, within which the main application of
rights will take place from February 2022 to January 2025, the current state of use of
eGovernment services is a state, which from the point of view of this "plan", is actually a default
state. It will be possible to carry out an assessment of the actual impacts only after the end of this
period, and what we are now evaluating is the potential benefit of this legal regulation.
The current state of actual use of electronic public services, i.e. what the RDSA calls a digital
service, is shown in Figure 1. The two highest values are recalculated from the statistical survey
of the Czech Statistical Office [4] according to the current population in the age category 16+
also presented by this office and are thus burdened with a corresponding error. While the two
lower values are the actual number of transactions recorded by the operated public administration
information systems.
The current use of the key tool of Czech eGovernment used for trustworthy electronic
communication, i.e. Data Mailboxes, evident from Figure 2. This result clearly shows that the
interest of natural persons in using communication via ISDS is small, which can be related to the
above discussed FEPA provision on automatic establishment of Data Mailboxes for these
persons.
265
Figure 2 - Transactions performed via Data Mailboxes
Source: Czech Statistical Office and open data presented by Ministry of the Interior [4].
Transactions performed via Data mailboxes in
2019 as a percentage of all transactions
I Public Authorities
Legal bodies
Self-employed
Natural persons
3 Results and Discussion
The analysis of the RDSA clearly shows that this is a more declaratory standard than a real shift
in the possibilities of electronic public administration. All communication tools for the right to
perform a digital act have been already operating in the Czech Republic for many years (e-mail
registries were established in 2001 and Data Mailboxes in 2009 [18]). Also, in terms of
categorization of eGovernment projects carried out in [17], the RDSA does not bring any new
project category. The motivations for the approval of this standard actually are (even according
to the explanatory memorandum to the law) to influence the public administration so that it would
accept internally the development of its own electronization and not reject it. This approach can
also be noted in the European standards, e.g. Article 25(1) of the Regulation elDAS says that an
electronic signature shall not be denied legal effect and admissibility as evidence in legal
proceedings solely on the grounds that it is in an electronic form or that it does not meet the
requirements for qualified electronic signatures. It means that this approach of the RDSA is
consistent with the European one.
It means that it must be precisely the extent of regulation and the declaratory approach that lead
to the RDSA being spontaneously referred to as the Digital Constitution. However, it is not clear
that these approaches have the potential to increase the electronization of public administration,
as many formulations are insufficient, ambiguous and even sometimes associated with
disproportionate cost increases. E.g. the right to a digital act certificate includes provision that
this certificate must be supported by a qualified electronic seal and a qualified electronic time
stamp of a public authority. But in all other provisions concerning electronic records possibilities
of using both a qualified electronic signature and a qualified electronic seal are open, because
using of a qualified electronic signature is much cheaper than using of a qualified electronic seal.
The related provision of the amended § 9 of Act No. 634/2004 Coll., on Administrative Fees,
which states that the Administrative Office will reduce the fee by 20 %, but not by more than 1
000 CZK, if the application or another proposal to perform the act is submitted on an electronic
form published in accordance with the law governing the right to digital services, could have a
266
certain potential for increasing the interest of persons in using eGovernment services. This does
not apply if the application or another proposal cannot be submitted in another form than on this
electronic form. The fee discount is rounded up to the full crowns. However, a similar effort was
already being made at the beginning of the development of electronic registries and had no
demonstrable impact [13].
As the results of the current use of eGovernment services show, these services are clearly used
more by legal entities than by natural persons and among natural persons there is an interest in
simple services regardless of the costs involved, as shown in the analyses in [13]. Thus, it seems
that the motivations introduced in the RDSA, with one exception of the right to notification, are
not in line with what could contribute to increasing the use of electronic public services by
citizens in the Czech Republic. And this does not apply at all to the subsequent development in
the form of the FEPA, where, moreover, there is a conflict with the declarations in the RDSA.
Thus, we can summarize the answers to the research questions as follows:
• No new category of electronic public service is described in the RDSA. This regulation
has only a rather declaratory meaning.
• These regulations fit into the concept of the current development of eGovernment, both
within the Czech Republic and within the European Union, but there could be found
internal contradictions in these regulations.
• The RDSA brings some new motivations, but it seems they are not in line with what
could really contribute to increasing the use of electronic public services by citizens.
All this means, that the basic thesis of the paper was refuted.
4 Conclusion
The performed legal analysis of current new regulations concerning the development of
electronic public administration in the Czech Republic showed that these regulations do not meet
expectations, do not provide necessary motivations for the actual development of electronic
public services and increase the opacity of the resulting regulation. Although one of the goals of
the "Information Concept of the Czech Republic" for the period 2020 to 2025 is the creation of
digitally friendly legislation, the regulations analysed so far have met these goals insufficiently.
The analysed regulations contain a number of conflicting and ambiguous provisions and in some
cases even excessively and unjustifiably increase the costs of providing digital public
administration services. The results of our analysis call into question the spontaneous labelling
of the RDSA by the digital constitution and shows that analysed regulations do not contribute to
the quality of legal regulation of eGovernment in the Czech Republic and have very little
potential to increase the use of electronic public services by citizens in the Czech Republic.
Acknowledgements
This paper was supported by the project VŠE IGS F5/38/2021.
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Contact information
Mgr. Tomáš Lechner, Ph.D.
University of Economics, Prague, Faculty of Economics and Public Administration, Department
of Law
W. Churchill Sq. 4, 130 67 Prague 3, Czech Republic
E-mail: tomas.lechner@gmail.com
Ing. Lenka Vaňková
University of Economics, Prague, Faculty of Economics and Public Administration, Department
of Law
W. Churchill Sq. 4, 130 67 Prague 3, Czech Republic
E-mail: xsill00@vse.cz
269
Independent candidates in the European comparism
Ján Machyniak, Kristína Dzureková
Abstract: The present paper deals with the issue of the phenomenon of independent candidates
in the electoral system with an emphasis on European experience. The starting point for
processing the issue is empirical experience with the trend of ever-increasing success of
independent candidates at the level of municipal and regional elections in the conditions of the
Slovak Republic. Electoral legislation does not allow independent candidates to enter top
politics, despite the fact that in some countries of the European Union, independent candidates
are part of parliamentary elections (including those that use a proportional electoral system). In
this context, the present paper is mainly devoted to the analysis of the current situation based on
empirical data (election results) in relation to the success of independent candidates at those
levels where the legislator allows them to enter the electoral process. At the same time, the paper
draws attention to those European countries where independent candidates enter the electoral
process at the highest level and seeks to stimulate discussion about the possible future
development of the rising trend of success of independent candidates and their potential entry
into top politics.
Keywords: Local Democracy, independentcandidates, political representation
JEL Classification: H83, Z18, J18
1 Introduction
The era of representative democracy in modern political systems has required (and it should be
noted that rightfully) the existence of several types of ways in which elected candidates can be
elected in representative bodies at all levels of the state. The most widespread way is, of course,
the candidacy through a list of candidates for a specific political party. However, it should be
noted at the outset that there is a gradual shift away from traditional membership in a political
party, but the lists of candidates and the mechanism for drawing them up are still relatively well
maintained. The existence of political parties in the political system in the context of elections
and the electoral process is thus naturally complemented by the institute of independent
candidates. The degree of intensity and involvement of independent candidates in the electoral
processes is determined by the law's existing possibilities and limits on entering these processes.
Although the electoral legislation of the European Union countries is relatively different in each
type of election (with some exceptions), the fact remains that independent candidates represent
a relevant political force (for example, the Slovak Republic in municipal and regional elections
for the rest) and gradually become a phenomenon (due to the fact, that they cannot formally run
for election at parliamentary level).
The issue of the phenomenon of independent candidates came to the forefront of the attention of
not only the professional but also the general public at a time when the political system, as well
as the party system, was subject to dynamic changes. The changes that have taken place in society
over the last period are undoubtedly related to the institutional crisis of democracy in states with
a parliamentary form of government. Public distrust in relation to political parties also required
a pragmatic approach by political parties, resp. candidates in relation to the public. As the trend
of success of independent candidates increases, so does the number of scientific papers that deal
with this issue in a relatively short time, with different content and intensity. For more of among
them we can mention the monographic work of Matúš Sloboda (2017), the collective monograph
of the authors Natália Kováčova, Simona Kováčova, Dominika Cévarová, Kristina Kiššová
270
(2019), the scientific study of the team of authors Daniel Klimovský and Pavel Maškarinec
(2016).
Matúš Sloboda (2017) in one of the parts of his scientific monograph offers a summary of
selected researches carried out so far, which dealt with the issue of independent candidates in the
area of local self-government, resp. municipal policy. In this context, it is recommended that, at
local and regional level, the candidate's party affiliation must necessarily be conditional on
success, as is the case at national level in the case of parliamentary elections.This trend is
particularly visible in the case of smaller territorial units, where belonging to a political party
does not play a decisive role. Based on their own analysis, the pair of authors Daniel Klimovský
and Pavel Maškarinec (2016) argumentatively confirm this trend, as according to them, with the
growing number of inhabitants of the territorial unit, the number of successful independent
candidates decreases. However, the recent municipal elections, as well as regional elections, have
brought success to independent candidates in places where this was not expected. In general, it
can be stated that independent candidates are becoming a real phenomenon in local politics. In
this context, it can therefore be assumed that in the future the requirements to allow independent
candidates to enter top politics, following the example of several European countries, will
intensify in the future. The second part of this paper will be devoted to this issue.
1.1 Independent candidates in municipal and regional elections in the conditions of the
Slovak Republic
According to Slovak electoral legislation, not only candidates of political parties, but also
candidates without a party background, the so-called Independent candidates may participate in
elections to municipal self-government bodies as well as to self-governing bodies of selfgoverning
regions. The following table illustrates the development of the success of independent
candidates applying for positions in directly elected local government bodies in the conditions
of the Slovak Republic.
Table 1 - Independent candidates in Slovakia 2002-2018 - election of mayors
2002 2006 2010 2014 2018
Number of
independent
candidates
elected
mayors
Count
Share
%
Count
Share
%
Count
Share
%
Count
Share
%
Count
Share
%
Number of
independent
candidates
elected
mayors
951 32.66 895 30.83% 979 33.67 1104 37.95 1232 42.42
Source: Own processing based on data from the Statistical Office of the Slovak Republic
From the above statistics, it is clear that since the beginning of the years under review, the number
of elected or successful independent candidates for mayor has been increasing from a national
perspective (except for the municipal elections held in 2006). At this point it should be noted that
the elections to the municipal self-government bodies are held in the same year as the elections
to the National Council of the Slovak Republic (except for 2014 and 2018 and the following
ones, unless the situation of early parliamentary elections occurs again).Within the framework
of their results, elections can to a greater or lesser extent reflect the societal moods in the context
of top politics. However, the fact remains that the share of elected independent candidates for
the post of mayors in the conditions of the Slovak Republic has been continuously increasing
since 2010. Since the beginning of monitoring this phenomenon, this is an increase of 9.76%,
respectively 281 mayors of municipalities and cities elected in this way. Similar trends can be
271
identified in the case of the success of independent candidates in the search for a mandate in the
city or municipal council.
The continuous growth of independent candidates elected as members of municipal and city
councils is more pronounced than in the case of candidates for the post of mayors. It concerns
not only the number of successful candidates, but also those which the table above does not take
into account - that is, the absolute number of independent candidates seeking a mandate in a local
government collective body. Nevertheless, it is necessary to take into account the fact that the
mandate of a member of the municipal or city council is the place that is relatively attractive for
most individuals who have no or have minimal experience in politics. It is for this reason that
they prefer the path of "independence" rather than institutionalized cooperation within a political
party. Looking at the table above, it is clear that the success of independent candidates in directly
elected collective bodies of local governments is growing dynamically. While at the beginning
of the period under review, in 2002, 2,892 candidates were successful, in the last municipal
elections in 2017, this number increased more than 2.5 times.The average value of these statistics
is 5.9, which ultimately means that, while maintaining this trend, about 7,732 Members will hold
the seat from the position of independent candidate in the next election.
The relatively different political space is represented by the regional level of self-government.
This difference lies not only in its shorter historical existence, but also in the specific political
relations and, in particular, in the strategies that political actors and independent candidates seek
to use in order to gain a mandate in a monocratic and collective body of regional self-government.
Table 2 - Independent candidates in elections to the bodies of self-governing regions election
of the chairman
Year 2001 2005 2009 2013 2017
Bratislavský 3 1 2 1 9
Trnavský 2 2 1 1 2
Trenčiansky 1 3 1 2 2
Nitriansky 1 1 1 1 2
Žilinský 3 1 1 1 3
Bansko -
bystrický
2 X 3 1 7
Prešovský 3 2 3 1 4
Košický 5 X X 2 4
Total for SR 20 10 12 10 33
Source: Own processing based on data from the Statistical Office of the Slovak Republic
Table 2 reflects the historical development of the number of independent candidates seeking the
mandate of the chairman of the self-governing region. In two self-governing regions,
independent candidates did not appear in the chairmen election, in one even repeatedly. In the
last period, a total of 85 candidates applied for this position from the position of independent
candidate. Of these, four candidates were successful in absolute terms, one even twice with the
status of independent candidate. The first independent candidate elected to the position of
chairman of the self-governing region was the chairman of the Bratislava self-governing region
in 2005. The last in the area of Central Slovakia in 2017 was the chairman of the Banská Bystrica
self-governing region.
At this point, it should be noted that even in the case of successful independent candidates, they
were not illegible or unknown people, but people who had been moving in the field of politics at
various levels for some time.The first elected chairman of the Bratislava self-governing region
was a member of the National Council of the Slovak Republic (even within several election
272
periods, for various political groups), mayor of Bratislava - Petržalka, member of the selfgoverning
council (or vice-chairman of ZMOS).
It is also relatively interesting that while in the historically first elections of the chairman of the
self-governing region, twenty independent candidates stand for office, in the 2005 elections this
number fell by 50%. In the 2009 and 2013 elections, this number of candidates does not increase
significantly and does not decrease, but in the last elections to the bodies of self-governing
regions, a sharp increase can be identified. The elections of deputies of local councils also
represent a specific political arena.
2 Material and Methods
Independent candidates represent a phenomenon in the Slovak political system, which finds
application exclusively at levels lower than the state. Electoral legislation will allow independent
candidates to participate in the electoral process (in terms of passive suffrage) at the level of
municipal and regional policy. Top politics is thus unavailable for this type of candidate.
Nevertheless, in several countries of continental Europe, electoral legislation not only allows for
the entry of independent or non-partisan candidates, but also provides scope for their
implementation and political action. In this paper, we are based on empirically verified facts
about the success of independent candidates at the local and regional level in the Slovak Republic
and open a discussion on the possibility of allowing independent candidates to participate in the
process of selecting public policy actors at the national level. In the context of efforts to address
this issue, we use several scientific methods. Among them, we can mention the content analysis,
which is based on the study not only of election results, but also interpretations of selected
authors in the context of European experience. In this way, we pay particular attention to those
countries which, in their electoral codes, also allow non-party candidates to run for national
parliaments.
Table 3 -Elected independent candidates in elections to the bodies of self-governing regions
- election of deputies
Year 2001 2005 2009 2013 2017
Name of
region
Count
Share%
Count
Share%
Count
in
# |
a>
Count
m
# |
a>
Count
m
# |
a>
Bratislava 1 2.17 2 4.00 1 2.27 6 13.63 25 50.0
Trnava X 5 12.50 6 15.00 6 15.00 14 35.0
Trenčín X 3 6.66 10 22.22 11 24.44 22 46.80
Nitra X X 3 5.55 4 7.40 15 27.77
Žilina 3 5.76 5 8.77 11 19.29 16 28.07 25 43.85
Banská
Bystrica
1 2.04 5 10.20 5 10.20 13 26.53 22 44.89
Prešov 5 8.33 12 19.35 6 9.67 6 9.67 22 35.48
Košice 8 14.03 7 12.28 13 22.80 11 19.29 16 28.07
Total for SR 18 4.48 39 9.46 55 13.48 73 17.89 161 38.70
Source: Own processing based on data from the Statistical Office of the Slovak Republic
From the above-mentioned statistical data, it is clear that in the first election period of directly
elected collective bodies of self-governing regions, only a minimum of independent candidates
sat on parliamentary benches. This fact can be caused mainly by the fact that it is a relatively
new body, but also by the political situation in the sphere of great politics. In this context, it can
be argued that each of the political actors was looking for a stable place in the political arena,
respectively background. Obviously, we can say that this stability in the initial period was offered
273
mainly by the institutions of political parties, after all, the model of organizing regional selfgovernment
in the conditions of the Slovak Republic was the result of their political decision and
party interests.
In the cases of the Trnava, Trenčín and even in the case of the Nitra self-governing region in two
consecutive election periods, no independent candidate was elected to the position of a member
of the regional council. This was probably due to the fact that in the first two parliamentary terms
in 2001 and 2005, the regions were relatively well organized at lower levels than the state. Also,
two of these three self-governing regions included another significant aspect, namely nationality
(Horváth, Machyniak, 2018).
On the margins of statistical data, it should be noted that from the national perspective, in the
second elections to the bodies of self-governing regions, twice the number of independent
candidates sat in the parliamentary seats.lt was three times in the third election period, four times
in the fourth election and in the last election period, a total of 161 deputies hold their mandate as
independent candidates, which ultimately represents almost nine times the number of successes
of independent candidates compared to the initial term of office of directly elected bodies of selfgoverning
regions. While maintaining the current trend and in the fragmentation of the party
system can be expected that in the next elections to the bodies of self-governing regions will rise
in the number of independent candidates even more pronounced.
3 Results and Discussion
It is indisputable that independent candidates become a relatively numerous active political force
in elections to the bodies of self-governing regions, and especially in the case of municipal
elections. Across the individual elections for the rest of the period, they are gradually gaining
strength and making themselves known, often at the expense of political parties, which are
typical institutions in the representative form of parliamentary government. The importance of
political parties for a democratic, parliamentary form of government is indisputable, but it seems
that in places where legislators are allowed to use passive suffrage even by independent
candidates, political parties as institutions are oppressed in the background.Why is the success
of independent candidates so great and where are the borders, resp. limits of their success? We
find a large number of answers to this question in the professional and general public. These
stem mainly from the practical experience resulting not only from the election results, but also
from the performance of public function by these types of candidates.
In this context, several experts across the social sciences also point out that the public feels
a significant degree of distrust of political representatives associated in political parties, which
ultimately deepens the crisis of liberal (representative) democracy (Kulašik, Tichá et a l , 2014;
Merkel, 2015; Štefančík, Dulebová, 2017; Daubner, 2019; Dux, 2019; Bull, 2020). For
democracy, political parties thus become a symbol of "public evil", resp. unnecessaryness in the
political system. It is for this reason that the electoral part of this public prefers the so-called
independent candidates. To a certain extent, this may also be an accompanying phenomenon of
the ever-deepening crisis of democracy and the continuing distrust in the democratic partisanship
of not only voters but also members of political groups. At this point, however, we would like to
draw attention to the fact that the institutions of political parties are to a large extent an expression
of the plurality of currents of opinion of society and are therefore a prerequisite for
parliamentarism, resp. stability of political systems dominated by the parliamentary form of
government. And the local level undoubtedly has its place and significance in the parliamentary
form of government. In the conditions of the Slovak Republic, the legislator allows to apply for
directly elected mandates at the national level only within the candidate lists submitted by
political parties. At the local level, in addition to political parties or candidates for political
parties, independent candidates also apply for directly elected seats. Not only the legislative
274
conditions, but also the public's attitude towards the institutions of political parties is behind the
success of independent candidates at the municipal and regional level. At this point, however, it
is noted that the success of independent candidates at lower levels than the state come the risks
associated with the performance of democracy.That is why we cannot be indifferent to the crisis
of democracy that has accompanied us for several years. From it stems the public distrust of
political parties. This can ultimately be (only) one of the many reasons for the success of
independent candidates in municipal and regional elections. Nevertheless, we are increasingly
able to identify cases where the candidates decide tactically under which brand they will compete
for the votes and trust of local community voters. There is a general belief in professional circles
that political affiliation at local and regional level does not play a key role in voter decisionmaking.
An argument in favor of this assumption may be the fact that in relatively small local
communities, the inhabitants know each other so much that personification, resp. the
personification of a candidate is a much greater motivating factor for deciding whether or not to
grant a voter preference than an ideological focus or belonging to a political party.
The contributions published so far on the topic of independent candidates and the search for
answers to questions concerning their success concludes that the important categories in this
context are the size categories of territorial units. While large self-governing units are dominated
by political entities, in the case of smaller self-governments they are mainly independent
candidates (Balík, 2009; Haulík, 2010; Klimovský, Žúborová, 2011; Bernard, 2012; Klimovský,
Maškarinec, 2016; Sloboda, 2017 ). In simple terms, we can say (taking into account expert
opinion) that as the population grows, the success of independent candidates decreases and voter
interest in party candidates grows. In the case of elections to the bodies of self-governing regions,
for the other period we are across the entire territory of the Slovak Republic, resp. all selfgoverning
regions recorded a significant increase in elected independent candidates. This fact
mainly concerned the councils of self-governing regions. If we stay in the last regional elections,
it can be seen that the increase in the number of elected independent candidates is more than
double compared to the previous elections.
In our conditions, the success of independent candidates is becoming a phenomenon at the local
and regional level, but some European countries, resp. their electoral legislation also allows
independent candidates to enter top politics. The following table illustrates a relatively brief but
clear overview of these European Union countries.
275
Table 4 - Independent Candidates in EU at parliamentary level
Country
Opportunity to stand as an
independent candidate
Electoral system
Open / closed
candidate list
Belgium Not Proportional Open
Bulgaria Yes Mixed
Czech Republic Not Proportional Open
Denmark Yes Proportional Open
Cyprus Yes Proportional Open
Estonia Yes Proportional Open
Finland Theoretically yes proportional Open
France Yes Two-round majority
Greece Yes Mixed
Netherlands Theoretically yes Proportional Open
Croatia Yes Proportional Open
Ireland Yes Proportional
Lithuania Yes Mixed
Latvia not Proportional Open
Luxembourg Theoretically yes Proportional Open
Hungary Yes Mixed
Malta Yes Mixed
Germany Yes Mixed (Proportional)
Poland Theoretically yes Proportional Open
Portugal Not Proportional Closed
Austria Theoretically yes Proportional Open
Romania Yes Proportional Closed
Slovakia Not Proportional Open
Slovenia Not Proportional Open
Spain Not Proportional Closed
Sweden Not Proportional Closed
Italy Not Proportional Closed
Great Britain Yes Majority
Source: own processing according to Durinova, 2017
It is clear from the table above that in countries such as Bulgaria, Cyprus, Croatia, Denmark,
Estonia, France, Greece, Ireland, Lithuania, Hungary, Malta, Germany, Romania and the United
Kingdom, the legislation allows independent candidates to apply for directly elected positions in
the legislature. At this point, it should be noted that countries are different not only in the electoral
system, but also in the rules and requirements associated with the candidacy of independent
candidates. Most often it is about depositing or collecting a specified number of voter signatures.
European experience shows that independent candidates can stand in those countries that use a
non-proportional electoral system for national parliaments. As far as countries using a
proportional electoral system for the legislature, only five countries of the European Union allow
independent candidates to stand for election in national parliaments (Cyprus, Croatia, Denmark,
Estonia, Romania).
Conclusion
Based on the acquired knowledge and interpretation of specific empirical data, it can be stated
that over time, independent candidates have indeed become a phenomenon that is a stable part
of elections and the electoral process at both levels of local government. In the last elections,
276
whether at the level of self-governing regions or cities and municipalities, we identify a
significant increase. This concerns not only their absolute number, but especially their ability to
obtain a mandate in the representative collective and monocratic bodies of territorial selfgovernment.
The reason for their ever-increasing success is the distrust of voters and society
towards the institutions of political parties. On the other hand, it should be noted that political
parties have a share in the growing success of their candidates, as they have resigned in recent
decades to the need to build their regional and local structures. It was only a matter of time before
another form of candidates began to fill this space. The natural reaction of political parties was
not to rebuild or create these structures, but to try to make good use of the emerging trend of
independent candidates. It is for this reason that we will probably meet candidates in the near
future who will act as independent, but at certain stages of the electoral process the political
entities themselves will also apply for these candidates (in the form of expressing support for the
independent candidate). It is questionable how independent candidates can cope with this, resp.
their voters, and last but not least, the very principle of governance of democratic rule of law.This
is mainly due to the fact that the principle of the parliamentary form of government is based
primarily on the stable operation of political parties within the political system.The phenomenon
of the independent candidate can thus be perceived in this context as a non-systemic element, in
a still relatively functioning parliamentarism in our conditions. Nevertheless, it can be expected
that in the future there will be more significant efforts to change the electoral legislation, which
would allow independent candidates to enter top politics (following the example of several
European countries).
Acknowledgements
This paper was created within the project: KEGA 001UCM-4/2019- Dynamika premien verejnej
správy SR.
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Contact information
doc. PhDr. Ján Machyniak, PhD.
University of St. Cyril and Methodius in Trnava, Faculty of Social Sciences, Department of
Public Administration
Bučianska 4/A, 917 01 Trnava, Slovak Republic
E-mail: jan.machyniak@ucm.sk
Mgr. Kristína Dzureková
University of St. Cyril and Methodius in Trnava, Faculty of Social Sciences, Department of
Public Administration
Bučianska 4/A, 917 01 Trnava, Slovak Republic
E-mail: kristina.dzurekova@gmail.com
278
Evaluation of the Health Facilities Performance by Value for Money
Method
Daniela Mališová, Jana Strangfeldová
Abstract: Today, one of the main tasks of health facilities is to measure the performance
indicator. It is the evaluation of performance that can contribute to the improvement of the
produced health services and subsequently achieve the goal, which is to improve the health status
of the population. For this reason, the aim of the paper is to evaluate the performance of health
facilities by the value for money method. The object of the research are Slovak faculty and
university hospitals, which are directly financed from public finance. The subject is performance,
measured by the value for money method, which considers the indicator of economy, efficiency,
and effectiveness. In the paper we supplement the main method with descriptive statistics. The
paper follows the period from 2011 to 2019. From the research results we find that the lowest
values of performance in time were achieved by the faculty hospital in Žilina. The problem area
of this hospital are indicators of the effectiveness of provided health services and efficiency.
Overall, we recommend that the health facilities create common categories of indicators for
measuring economy, efficiency, and effectiveness, or measuring the total value for money yearly.
Such an approach will benefit patients, society, and the healthcare facilities themselves.
Keywords: Benchmarking, healthcare, hospitals, market failure, Slovakia, value for money
JEL Classification: C83, H41,115
1 Introduction
The performance of the organization depends on the cooperation of individuals or groups, the
quality of process settings and the internal organization of work. The executive organization is
then able to achieve the set results in measurable values (Carton, Hofer, 2006). Performance as
an economic category includes a clear definition of the value or goal that the organization wants
to achieve. At the same time, we evaluate this category according to predetermined criteria. Such
an approach to performance can be widely applied in the private sector to measure an
organization's performance (Hubbard, 2009). Examples are organizations or companies focusing
on the production of substitute goods. However, when applying the concept of measuring
performance in the public sector, there are concerns about its application (more about concerns
in the public sector in Strangfeldová, Štefanišinová 2021). The reasons are complicated internal
procedures, organizational background of public sector institutions (Strauss, Zechcer, 2013),
ignorance, low motivation, and reluctance to apply the concept of performance in public
institutions (Cepiku, 2017), low level of strategic decision-making or manipulative behaviour of
employees in managerial positions (Verbeeten, 2014). However, measurement of performance
is possible despite these concerns. However, it is important to consider and respect certain
specifics that the public sector contains.
Performance of the health facilities is characterized by such specifics. Market failures mechanism
in the field of health services create a competitive advantage for publicly owned facilities. The
competitive advantage lies in gaining a monopoly position in the healthcare market. The reason
is mainly the design of the health system. The specificity of the healthcare system implemented
in Slovakia is precisely the fact that health services are considered as collective goods (Čepelová,
2017). They are characterized by divisibility and non-exclusion from consumption. Divisibility
is present, for example in the form of a waiting list at the doctor, so the treatment is not provided
without restrictions (especially time restrictions). However, there is controversy about nonexclusion
from consumption. Datta-Chaudhuri (1990) points out that non-exclusion occurs when
279
this is not technically possible or when it is not socially appropriate. According to the legislation
governing the provision of healthcare (Act. No. 580/2004 Coll.), Health care is provided to every
citizen in the event of a life-threatening situation. However, certain health services are listed as
fee-paying goods, which exclude patients who are not willing to pay for these services in addition
to compulsory health insurance. An example of goods with a fee is treatment by a dentist without
undergoing a preventive examination in the previous year, laboratory examination beyond the
scope of health insurance coverage, or other specialized professional examination.
The quality of health services is a concept which, for the above reasons, cannot be fully
objectified or generalized. Healthcare requires increased clarity, reliability, and centralized data
collection for quality measurement. For this reason, it is important to monitor the performance
level of health facilities. However, this is a complex process. The aim of the paper is therefore
to evaluate the performance of health facilities using the value for money method. This method
allows a relatively objective evaluation of the performance of organizations, considering certain
predefined specifics.
1.1 Specifics of Health Services and Health Facilities
Health services are the content of the activities of health facilities. According to Jantosova,
Foltinova (2015) health facilities are a basic means of providing healthcare. Health facilities act
as economic operators that use existing resources to meet the needs of the population. According
to the form, we can divide health care providers in Slovakia into outpatient, institutional and
pharmacy. At the same time, the individual medical facilities together form networks of health
facilities.
We know three networks of health facilities {Slovak Government Regulation No. 640/2008 Coll.).
The public minimum network of health facilities consists of general and specialized outpatient
care for children and adults; institutional healthcare; outpatient first aid care; home nursing
agencies; hospice and mobile hospice. It is a collection of publicly available health facilities in a
certain area. This area takes into account the population of the region, the morbidity of the
population, age and migratory influences. According to the Statistical Office (2021), this public
minimum network consisted of 14,937 health facilities in 2019. The second type is a fixed
network of health facilities, which is made up of urgent patient admissions; specialized
healthcare such as cardiology, neurology, pediatrics, neurology, surgery, etc.
Figure 1 - General Functional Division of the Hospital
Source: own processing according to Jantosova, Foltinova (2015)
Hospital
Specialized Hospital
Wards Radiology Operations Wards
Ward of Intensive
Care Physiotherapy Hospital Managment
Pre-surgery \ J \ Surrjery \ \ Post-surrjery
Care / ? Care / / Care
The last network is the final network of health facilities, which consists of general and specialized
hospitals located in the self-governing region of strategic importance. The institutional health
facility provides patients with a complex of medical services. The organization of the
institutional health facility is graphically represented in Figure 1. Hospitals provide health
services of treatment that do not exceed 24 hours, but also health services whose length exceeds
280
24 hours. Gladkij et al. (2003) state that the division of health facilities into network is important
precisely because of the practical division of healthcare services into groups. As well as to clarify
the specifics of individual types of health facilities. It is the final network of hospitals that forms
the sample on which we will examine the performance of the provision of health services.
The current challenge for the coming decade for hospitals is to provide more and higher quality
healthcare, with less financial and human resources. To successfully meet this challenge, it is
necessary that the health facility meets the basic principles of quality. Kortbeek (2012) outlines
six principles that a health facility must follow. It must be safe - to avoid injuring patients in the
provision of healthcare; effectively - provide services to those who benefit and refrain from
providing services to those who do not benefit from the service; patient-oriented - to provide
healthcare that respects and responds to individual patient preferences and needs; based on early
diagnosis - reduce waiting times and delays in patient examinations; economical - to prevent
excessive waste of financial, material, technical, human or energy resources; fair - to provide
healthcare that does not differ in quality depending on the patient's personal characteristics (eg
gender, ethnicity, socio-economic status, etc.).
From the above, we pay increased attention to the principle of efficiency. From the point of view
of the public economy, the characteristics of this principle are associated with the
overconsumption of health services and the theory of market failure. The Act No. 580/2004 Coll.
imposes an obligation on every citizen to be covered by health insurance. Based on the payment
of compulsory health insurance, the citizen is entitled to reimbursement of health care from this
insurance. On the one hand, compulsory health insurance is perceived positively - a solidary
contribution to the system enables the payment of healthcare even to citizens who do not have a
sufficient socio-economic background. On the other hand, there is over-consumption in the use
of such reimbursed healthcare (Butler, 1994). This is manifested by frequent non-acute visits to
mostly outpatient doctors and causes an increase in waiting times, an increase in the workload
of doctors, congestion of the provision of healthcare by non-acute cases or reduced benefit from
the provided health service for the patient. These are also confirmed by international comparisons
(OECD, 2018), which show that Slovakia ranks first in the number of doctor visits per capita (at
the level of 11.5 visits) and second (at the level of 3,311 visits) in the number of visited patients
per doctor. However, the average of the 23 European countries monitored is at the level of 7.5
doctor visits per capita and 2,147 patient visits per doctor. Based on these data, we can state that
the overconsumption of health services is another specific feature of Slovak healthcare.
In the context of market failures, we can also include information asymmetry among the specifics
of health services. This term refers to a situation where one of the parties has more or better
information than the other (Schiller, 2004). In health services, a typical example is the doctorpatient
relationship. The doctor has information that the patient does not have or cannot evaluate
correctly. A n example is the physician's knowledge of drug contraindications, information on
available generic drug substitutions that the patient cannot easily verify. However, as
demonstrated by a research project (Hlinková, 2019) implemented in cooperation with the private
health insurance company Dovera, a. s., information asymmetry also arises in the relationship
doctor - health insurance company. Health insurance companies have more information about
doctors' patients and work with this information on a long-term and systematic basis. Doctors do
not have this option. The reason is the low level of digitization suitable for monitoring patient
statistics (still widely used file system based on physical paper health cards of patients in
outpatient health facilities), but also the inability to respond to all current trends in medicine. To
eliminate this asymmetry, a project was created in which the health insurance company published
detailed data on patients, their treatment, amount and type of prescribed drugs, etc. for selected
doctors. Thereby supporting doctors' decisions in the provision of healthcare.
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Imperfect competition on market is also a problem when examining health services. If we
consider health services as mixed collective goods, then they are produced by both the private
and public sectors. However, the guarantor of the provision of health services in Slovakia is the
state. It regulates the scope and approach to the provision of health services through health policy.
On this basis, the state determines who can enter the health services market (Act No. 578/2004
Coll.). The establishment of a health facility is possible only after the approval of the Ministry
of Health of the Slovak Republic. An equally significant element is the creation of a price for
health services. The public producer does not influence the creation of the price for the provided
health care. The price for health performance is determined contractually and is the subject of
negotiations with the health insurance company. While the insurance company has the option of
not concluding a contract with all health facilities, it can decide based on the results of the quality
indicators. The content of the contract is the volume of services and the amount of reimbursement
for health services, which is paid once a month. It is the price of health services set in this way
that has an impact on the debt generation of public producers. The reason is that there is an
increase in the volume of health services that are not contractually covered, because of which
they generate a loss for the health facility. For private producers, the price for health performance
is not set contractually, but on the market. Therefore, it may vary depending on the health facility.
The patient pays the price for the health procedure directly. In this case, patient can use
commercial health insurance. However, as research shows (Sapoci, et al., 2015), only 7% of the
population (380,000 inhabitants) use a combination of compulsory and commercial health
insurance in Slovakia.
1.2 Possibilities of Measuring Performance in Health Facilities
Historically, with the advent of new technologies and the expansion of managerial skills, the
methods used to measure the performance of healthcare facilities have also changed. At the same
time, it is the private sector that is considered to be the bearer of innovative ideas. For this reason,
it is not surprising that the public sector draws opportunities for innovation in performance
measurement from the private sector (Bryson, George, 2020). In the 1980s, performance
measurement began to be used in the public sector as well (El-Ghalayini, 2017). The introduction
of strategic management is going through the same process. As already stated by Ch. R. Darwin
in his central idea, the core of the concept of strategic management is the responsibility to change.
Strategic management is becoming a necessary approach in today's organizations. Ginter,
Duncan, Swayne (2018) state that strategic management must take PESTLE factors into account.
They characterize these factors as political, economic, social / demographic, technological,
legislative, and environmental. However, strategic management is not always present in the
management of public organizations. For this reason, it needs to be implemented. The
consequence of implementation in the public sector is the adoption of various schemes to assess
the quality of the organization such as ESO (Efficient, Reliable and Open State Administration),
C A F (The Common Assessment Framework) or in the case of healthcare facilities quality policy
based on compliance with quality indicators.
We can use economic or managerial methods for a comprehensive measurement of an
organization's performance. The identification of the advantages and disadvantages of different
methods for measuring performance in organizations has been the subject of studies by several
authors from different periods (Snow, Hambrick, 1980; De Waal, Kourtit, Nijkam, 2009;
Willems, Boenigk, Jegers, 2014; Sobhanallahi, Gharaei, Pilbala, 2016). From the extensive
collection of methods, for the purposes of the paper, we choose the currently discussed method
of new public management - value for money. The aim of this method is to provide an evaluation
of the organization's performance that takes into account 3E - efficiency, effectiveness and
economy of the organization. Through 3E (Dolton, Gutierrez, Still, 2014), the organization
monitors the ratio of total costs per unit of output, the rate of achievement of the main goal of
282
the organization and the minimization of costs. Thus, quantitative, qualitative, and monetary
indicators are used to measure 3E. Nemec, et al. (2020) Among the advantages of the value for
money method is the parallel evaluation of allocation and technical efficiency. Moullin (2017)
argues that the method helps organizations improve results without increasing overall costs.
Also, the value for moeny method helps to develop performance measures that improve
organizations and ensure the quality of services to the public. The result of measuring
performance using the value for money method is a ranking, and if the organization reaches a
value of 1, it shows 100 percent utilization of its resources (Barr, Christie, 2014). Benchmarking
(Štrangfeldová, Štefanišinová, 2021), or SWOT analysis (Benzaghta, et al., 2021) or causal
analysis are considered suitable additional methods that are used in the interpretation of the
obtained results.
Performance measurement in healthcare facilities is currently based on quality indicators. These
indicators are set internationally. The original idea of uniform quality indicators was introduced
by the World Health Organization (Lawrence, Olsen, 1997). Based on quality indicators, it is
possible to compare healthcare facilities at the national level, or after completing partial results
for the country, to make an international comparison. There is currently a growing interest in
patient-centered quality indicators, such as patient satisfaction or patient communication, which
have usually been assessed using qualitative methods (Joling, et al., 2018). Measuring the
performance of a health facility through quality indicators is suitable for the identification and
analysis of problems, but it is less suitable for measuring changes (Horvat, Filipovič, 2018). This
is because for these indicators to be used for quality assurance, they must be transformed into a
measurable form. The measurable form (Biancone, Secinaro, Bresciasa, 2018) can be achieved,
for example, by using quality of life scores, measurements of functional health status, or by using
valid patient satisfaction questionnaires. Based on the introduction to the issue of quality
indicators and the specifics of health facilities, we move to the selection of appropriate monetary,
quantitative, and qualitative indicators for evaluating the overall performance of selected
hospitals. When measuring efficiency and effectiveness, we focused on currently monitored
quality indicators in hospitals. When measuring economy, we use the collected primary and
secondary monetary data.
2 Material and Methods
Cooperation with selected institutional healthcare facilities was key for the analysis. For the
needs of the research, we coopered with faculty (FH) and university (UH) hospitals in Slovakia,
whose providers are the Ministry of Health of the Slovak Republic. We choose this subject
because the monitored hospitals are connected to public finances - the state budget. This basic
specificity of sample homogeneity allows to compare their inputs, outputs, and costs by the
selected performance method. The sample consists of 11 hospitals (FH Banská Bystrica, FH
Nitra, FH Ružomberok, F H Trnava, U H Košice, FH Žilina, U H Martin, F H Nové Zámky, F H
Trenčín, FH Prešov and U H Bratislava). When obtaining data, we drew on primary data collected
from the Annual Reports of Hospitals, Financial Statements and Accounting Balance Sheets, or
from secondary integrated data provided by the FNEKO portal (2020). In this paper we follow
the period 2011 - 2019. A l l interpreted results are the outputs of our own calculations and
measurements.
As stated in the theoretical basis, the evaluation of performance through the value for money
method is based on the measurement of 3E - efficiency, effectiveness, and economy. To measure
marginal indicators, we use quality indicators set for institutional health care. To express the
overall effectiveness, we will monitor quality indicators: total mortality (quality indicator B.l.l)
expressed as a proportion of the total number of hospitalized patients; the ratio of the number of
deaths of patients from myocardial infarction (quality indicator B . l .4) after immediate admission
to the total number of patients hospitalized with myocardial infarction aged 35-74 years; the ratio
283
of the number of deaths of patients to an acute cerebrovascular accident (quality indicator B.1.5)
to the total number of patients hospitalized for a cerebrovascular accident. We choose these
indicators because they are the most common reasons for the deaths of the population of
Slovakia. According to the Health Profile of Slovakia (2019), ischemic heart disease is the main
cause of death of patients (approximately every fourth death is caused by heart failure or heart
attack). Stroke is, despite a decrease of 180 cases between 2000 and 2019, the second most
common cause of death. For this reason, we consider quality indicators focused on these causes
to be suitable for measuring the overall effectiveness of selected institutional health care
facilities.
To express the overall effectiveness, we will monitor quality indicators: the ratio of the number
of rehospitalized patients within 30 days (quality indicator B.1.13) to the total number of
hospitalized patients in the same group of diagnoses; the number of rehospitalized patients within
90 days (quality indicator B. 1.14) and the total number of hospitalized patients in the same group
of diagnoses and the ratio of the number of reoperated patients (quality indicator B. 1.15) to the
total number to the total number of surgeries. A list of all monitored quality indicators for
institutional health care facilities is given by Všeobecná zdravotná poisťovňa (2019). Please note
that such an approach to measuring performance may contain some bias. However, we consider
quality indicators to be appropriate to demonstrate the use of the value for money method. To
express overall economy, we focus on monetary indicators. Monetary indicators are not included
in the quality indicators. For this reason, we focus on the total costs expressed per unit per
employee and hospitalization and personnel costs expressed per employee. The reason for
choosing personnel costs is the fact that this cost subspecies makes up the largest proportion of
the hospital's total costs.
Standardization is used for data editing. Standardization involves adjusting the data according to
whether the hospital's goal is to maximize or minimize the indicator (Gal, Rubenfield, 2019). In
the case of all marginal indicators, the aim is to minimize them. For this reason, we use the ratio
expression with the lowest value, which was measured in the sample each year. Data
standardization also allows us to fill in missing values. Therefore, when using the above
procedure, in the case of missing values of health facilities, we supplement the worst recorded
result in the sample in a given year. The product of the values of marginal indicators expresses
the total value of the indicator. To calculate performance, we substitute the found values of
indicators into the formula for calculating value for money (1):
VFMa =l
* ~ log,
1
(1)
(H
UE
Uu
ii)
Where:
H j - the overall economic performance indicator of the organization i in year j ;
Eij - the overall efficiency performance indicator of the organization i in year j ;
Uij- the overall effectiveness performance indicator of the organization i in year j .
The method expresses the relationship between all sub-indicators (Barr, Christie, 2014). The
higher measured value of the entity means better use of resources and higher overall
performance. Achieved value 1 expresses 100% use of resources of the monitored subject.
3 Results and Discussion
The efficiency indicator expresses how input sources are transformed into output value for
customers or patients. According to Gronroos, Ojasalo (2004), we can express this indicator by
how efficiently the input resources in the service process are transformed into outputs. The result
of the overall efficiency of the monitored hospitals is shown in Table 1.
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Table 1 - Total Efficiency of 11 Faculty and University Hospitals in Monitored Period (in
percentage)
Efficiency/Year 2011 2012 2013 2014 2015 2016 2017 2018 2019
FH Banská Bystrica 9,37% 10,08% 9,98% 14,06% 9,88% 9,51% 20,43% 14,14% 9,93%
FH Prešov 19,40% 11,43% 28,96% 43,11% 10,21% 23,31% 49,07% 15,05% 38,52%
UH Bratislava 15,61% 9,46% 9,67% 35,41% 5,49% 6,68% 12,21% 6,81% 15,20%
FH Nové Zámky 17,72% 9,24% 22,47% 14,18% 4,27% 13,94% 15,59% 7,58% 19,05%
UH Ružomberok 16,36% 18,65% 16,99% 58,42% 11,30% 26,40% 62,50% 62,77% 65,40%
FH Nitra 6,31% 10,80% 8,31% 8,20% 5,82% 7,79% 9,69% 7,39% 9,61%
FH Žilina 4,22% 3,60% 3,15% 18,84% 4,02% 7,71% 14,14% 17,01% 42,40%
UH Martin 24,37% 16,24% 23,25% 62,62% 16,22% 18,63% 35,40% 14,95% 31,71%
FH Trenčín 29,87% 9,99% 6,27% 42,78% 46,23% 14,83% 34,64% 24,35% 45,07%
FH Trnava 4,86% 13,71% 4,24% 9,74% 8,41% 7,57% 21,28% 6,39% 18,52%
UH Košice 7,11% 11,23% 6,80% 17,09% 6,92% 14,11% 13,27% 9,48% 8,55%
Minimum value 4,22% 3,60% 3,15% 8,20% 4,02% 6,68% 9,69% 6,39% 8,55%
Maximum value 29,87% 18,65% 28,96% 62,62% 46,23% 26,40% 62,50% 62,77% 65,40%
Average 14,11% 11,31% 12,74% 29,49% 11,71% 13,68% 26,20% 16,96% 27,63%
Statistical deviation 8,47% 3,93% 8,74% 19,79% 12,00% 6,74% 17,17% 16,17% 18,43%
Coefficient of
variation
60,05% 34,76% 68,65% 67,08%
102,46
%
49,30% 65,53% 95,38% 66,69%
Source: own processing (2021)
The results show that U H Ružomberok achieved the highest long-term efficiency (average in the
years at the level of 37.64%). In all monitored periods, this hospital shows the lowest values of
the ratio of total patient mortality to the number of hospitalized patients. This result was also
reflected in the measurement of the other two indicators. On the contrary, FH Nitra shows a longterm
low level of efficiency (average in years at the level of 8.21%). This hospital achieves the
second worst result in the number of deaths of patients from myocardial infarction to the total
number of patients hospitalized with myocardial infarction aged 35-74 years (average in years at
the level of 10.17%). From the descriptive results shown at the bottom of Table 2, we find that
the average efficiency value in the sample increases over time (at 8.76% per year) but decreases
in 2015 and 2018. Likewise, the result of the coefficient of variation shows significant slippages.
We can state that there are significant differences in the efficiency of health care provision
between the examined hospitals. At the same time, smaller capacity hospitals achieve better
overall efficiency results.
285
Table 2 - Total Effectiveness of 11 Faculty and University Hospitals in Monitored Period
(in percentage)
Effectiveness/Year2011 2012 2013 2014 2015 2016 2017 2018 2019
FH Banská
Bystrica
45,63% 45,73% 14,23% 9,48% 11,84% 10,73% 10,30% 15,62% 20,30%
FH Prešov 56,58% 45,40% 51,36% 32,68% 38,10% 31,26% 22,71% 27,94% 25,24%
UH Bratislava 39,57% 35,50% 7,37% 7,71% 72,71% 87,31% 73,11% 97,19% 95,89%
FH Nové Zámky
100,00
%
100,00
%
93,45% 59,61% 46,96% 38,40% 40,43% 45,80% 51,96%
UH Ružomberok 52,66% 44,33% 49,61% 8,97% 27,96% 25,41% 26,84% 27,62% 18,92%
FH Nitra 58,63% 60,34% 81,38% 58,40% 51,95% 44,91% 35,38% 46,99% 41,75%
FH Žilina 17,39% 18,62% 2,66% 1,48% 10,20% 7,19% 5,97% 6,38% 8,51%
UH Martin 45,34% 31,55% 6,19% 3,58% 7,53% 4,74% 4,75% 5,05% 6,19%
FH Trenčín 50,38% 49,51% 28,10% 15,01% 13,76% 12,65% 10,14% 11,65% 22,37%
FH Trnava 46,60% 41,49% 7,86% 4,92% 12,06% 15,49% 13,60% 29,44% 37,51%
UH Košice 39,80% 30,80% 14,52% 8,95% 15,37% 11,13% 11,52% 14,53% 19,65%
Minimum value 17,39% 18,62% 2,66% 1,48% 7,53% 4,74% 4,75% 5,05% 6,19%
Maximum value
100,00
%
100,00
%
93,45% 59,61% 72,71% 87,31% 73,11% 97,19% 95,89%
Average 50,24% 45,75% 32,43% 19,16% 28,04% 26,29% 23,16% 29,84% 31,66%
Statistical
deviation
19,88% 21,11% 32,01% 21,37% 21,56% 24,18% 20,38% 26,51% 25,34%
Coefficient of
variation
39,58% 46,14% 98,72%
111,52
%
76,89% 91,96% 87,98% 88,84% 80,04%
Source: own processing (2021)
The effectiveness indicator expresses the relationship between outputs and results. Landes,
McBain, Curran (2020) state in their study that effective is a hybrid concept that expresses the
results obtained by the transformation process. In the case of the examined group, the
effectiveness is monitored by qualitative indicators. These indicators examine patients' rehospitalization
and re-operability. In this context, the result of the transformation process in the
provision of health services is the quality of health services. The results presented in Table 2
show that the highest effectiveness value is achieved by FH Nové Zámky. The second-best result
was recorded by U H Bratislava. The lowest effectiveness value is shown by F H Žilina. In all
monitored periods, it recorded the highest share of the number of re-hospitalized patients up to
90 days to the total number of hospitalized patients in the same group of diagnoses (hospital
average in the years at the level of 23.34%). This value is 7.66% more than the average of the
sample during the monitored years. The overall effectiveness in the group from 2011 to 2014
decreased annually to the level of 27.47%. The subsequent increase in effectiveness until 2019
is only 10.56% per year. Based on these results, we can conclude that the effectiveness of the
varies depending on the equipment. Please note that the coefficient of variation reaches a high
value, which confirms the diverse effectiveness of health outcomes.
286
Table 3 - Total Economy of 11 Faculty and University Hospitals in Monitored Period (in
percentage)
Economy/Year 2011 2012 2013 2014 2015 2016 2017 2018 2019
FH Banská Bystrica 44,84% 56,77% 26,45% 31,50% 28,60% 31,13% 33,66% 29,10% 40,36%
FH Prešov 53,70% 67,40% 29,42% 45,58% 47,04% 68,95% 58,88% 75,20% 65,68%
UH Bratislava 38,02% 46,15% 19,75% 28,67% 26,41% 32,89% 31,58% 20,15% 32,77%
FH Nové Zámky 49,54% 82,73% 40,74% 69,35% 70,08% 98,49% 97,01% 90,66% 85,76%
UH Ružomberok 57,70% 78,65% 28,94% 28,38% 25,85% 35,81% 33,01% 40,65% 46,25%
FH Nitra 82,74% 78,89% 54,43% 57,33% 58,52% 77,53% 68,28% 67,57% 59,41%
FH Žilina 52,83% 69,83% 43,76% 55,76% 51,07% 66,45% 57,10% 63,89% 62,21%
UH Martin 34,95% 43,13% 42,69% 25,72% 28,63% 32,72% 33,58% 35,22% 33,04%
FH Trenčín 48,46% 59,35% 49,95% 58,44% 60,39% 58,79% 65,54% 63,43% 67,53%
FH Trnava 60,43% 85,12% 34,86% 44,22% 45,37% 67,10% 62,24% 58,37% 73,10%
UH Košice 23,25% 29,44% 18,85% 22,26% 21,92% 41,63% 45,13% 53,70% 61,62%
Minimum value 23,25% 29,44% 18,85% 22,26% 21,92% 31,13% 31,58% 20,15% 32,77%
Maximum value 82,74% 85,12% 54,43% 69,35% 70,08% 98,49% 97,01% 90,66% 85,76%
Average 49,68% 63,41% 35,44% 42,47% 42,17% 55,59% 53,27% 54,36% 57,07%
Statistical deviation 15,41% 18,16% 11,84% 16,08% 16,68% 22,32% 20,33% 21,16% 16,97%
Coefficient of variation 31,02% 28,64% 33,41% 37,86% 39,56% 40,16% 38,17% 38,93% 29,74%
Source: own processing (2021)
However, the question remains to what extent the level of effectiveness is the fault of the hospital.
As Krčméry Papulová (2020) states, is a problem mainly in the strategic management of the
health system, in which there is no innovative potential. To increase effectiveness, industry 4.0
policies and procedures should be implemented, such as early diagnosis and monitoring of
patients, digital data archive, coordination of procedures, and departmental cooperation.
Unfortunately, the need for rehospitalization is often associated with C C (complications and
comorbidities), which generally lead to significantly higher resource consumption and other
ancillary health services.
Based on the collected and standardized data of hospitals, in Table 3 we offer the results of the
overall economy. F H Nové Zámky can be described as the most economical long-term
institutional health facility in the group. The hospital shows an overall economy of 76.04% on
average in the monitored periods. We observe that the economy increased from 2013 to 2016,
while in 2016 the hospital showed the highest overall economy in the monitored group and in
the monitored years. Since 2016, the hospital's economy has been declining (down to 4.5% per
year). U H Košice and U H Bratislava show low values of overall economy. Of course, in both
cases it is necessary to consider the fact that these are hospitals located in the two largest cities
in Slovakia. Thus, it is reasonable to expect above-average costs for hospitalization or staffing.
In the case of U H Košice, we observe that it showed the lowest economy in 2013. Subsequently,
with the exception of 2016, the economy increased and for the most recent monitored year it is
4.55% above the average of sample. The overall economy of U H Bratislava decreased in 2018.
In the following year, the overall economy increased, but it is still the lowest value in the sample.
From the point of view of the sample, the average economy of hospitals decreased in 2013, then
increased. The coefficient of variation in this case stagnates around 35.64%. We can state that
hospitals differ the least when measuring the indicator of economy.
287
Table 4 - Value for Money of 11 Faculty and University Hospitals in Monitored Period (in
percentage)
Valuefor
Money/Year
2011 2012 2013 2014 2015 2016 2017 2018 2019
Averag
e
FH Banská
Bystrica 58,23% 63,19% 41,23% 42,07% 40,40% 40,03% 46,52% 46,00% 47,86% 47,28%
FH Prešov 81,33% 68,66% 73,59% 83,86% 57,55% 76,99% 84,53% 66,67% 83,70% 75,21%
UH
Bratislava
61,38% 55,26% 35,06% 47,47% 50,59% 58,24% 64,52% 53,35% 75,71% 55,73%
FH Nové
Zámky
94,64% 89,55% 93,65% 81,17% 54,00% 78,25% 82,39% 66,58% 93,36% 81,51%
UH
Ružomberok
76,71% 84,25% 62,00% 54,71% 47,89% 61,75% 79,57% 86,81% 80,50% 70,47%
FH Nitra 66,03% 77,59% 69,74% 64,04% 57,08% 63,83% 61,33% 61,37% 61,63% 64,74%
FH Žilina 41,47% 42,92% 29,10% 35,63% 37,33% 41,09% 43,16% 46,31% 60,64% 41,96%
UH Martin 70,76% 60,40% 45,22% 44,66% 40,71% 39,38% 44,47% 38,84% 45,71% 47,79%
FH Trenčín 87,95% 65,26% 48,65% 70,15% 70,65% 51,08% 61,06% 57,31% 85,69% 66,42%
FH Trnava 53,66% 76,04% 34,07% 37,40% 42,79% 47,52% 57,33% 51,04% 77,27% 53,01%
UH Košice 45,84% 50,19% 36,63% 40,52% 37,99% 45,78% 46,27% 46,93% 50,38% 44,50%
Minimum
value
41,47% 42,92% 29,10% 35,63% 37,33% 39,38% 43,16% 38,84% 45,71% 41,96%
Maximum
value
94,64% 89,55% 93,65% 83,86% 70,65% 78,25% 84,53% 86,81% 93,36% 81,51%
Average 67,09% 66,67% 51,72% 54,70% 48,82% 54,90% 61,01% 56,47% 69,31% 58,97%
Statistical
deviation
17,04% 14,36% 20,39% 17,47% 10,36% 14,06% 15,49% 13,44% 16,71% 13,41%
Coefficient
of variation
25,40% 21,54% 39,42% 31,95% 21,23% 25,60% 25,39% 23,79% 24,11% 22,75%
Source: own processing (2021)
Table 4 shows the performance results measured by the value for money method. We can state
that none of the monitored hospitals uses their resources 100%. FH Nové Zámky shows the
highest average value for money in the monitored periods. This hospital also shows a very high
level of effectiveness as well as economy. In a detailed examination of the hospital's data, we
can state that it is an average-sized hospital, which in 2019 employed 1,376 employees and
performed 22,899 hospitalizations. Thus, it is not confirmed that smaller capacity health facilities
perform better. The second-best performance was recorded by F H Prešov. It is a larger hospital
with a capacity of 2,433 and 35,231 hospitalizations in the reference year. The hospital showed
low values of total mortality of patients to the number of hospitalized patients as well as the ratio
of deaths of patients from myocardial infarction to the total number of patients hospitalized with
myocardial infarction aged 35-74 years. This hospital also achieved low values of the ratio of
total costs of hospitalization.
On the contrary, FH Žilina was placed at the other end of the evaluation of the performance of
health facilities. By capacity the hospital can be included in the group among the average
hospitals (capacity from 1,000 -1999 employees). In 2019, FH Žilina employed 1,680 employees
and performed 29,313 hospitalizations. The lowest values were recorded by the hospital when
measuring the quantitative indicator of the total mortality of patients to the number of
hospitalized patients (average change in the period at the level of 42.51%). Compared to F H
Nové Zámky, which performed a related number of hospitalizations (for 2019 FH Žilina = 741
hospitalizations; FH Nové Zámky = 744 hospitalizations), the result is 24.68% worse. To achieve
the values of the indicators of FH Nové Zámky, F H Žilina would have to avert 18.27 deaths. In
terms of economic results, FH Žilina employs an average of 325 more employees, which is also
reflected in the amount of personnel costs. In relation to the best, it is on average an increase in
personnel costs by 4,068,122 EUR and total costs by 14,208,003 EUR. The main determinant of
288
the amount of personnel costs is the wages of employees. As data on the number of medical staff
according to salary classification were not made available to us, it is not possible to calculate the
costs in relation to the medical staff of the hospital. Of course, this is an opportunity for future
expansion of research or for the hospital itself, to compare with the best in the group.
4 Conclusion
The application of the concept of performance measurement in the public sector is conditioned
by several specifics resulting from the design of the healthcare system. In the area of measuring
the performance of institutional health facilities, the specifics relate mainly to market failures.
However, despite these specifics, performance measurements can support the efficient operation
of health facilities. For this reason, the aim of the paper was to evaluate the performance of health
facilities using the value for money method. Based on the performance results, we can state that
the value for money method is able to objectively point out the problem areas of the studied
hospitals. Of course, the construction of performance measurement presented by us can be
extended and modified in the future by new approaches or qualitative, quantitative, and monetary
indicators. However, as the results show, the highest rate of use of resources is shown by F H
Nové Zámky. This hospital showed high results in the evaluation of effectiveness and economy
indicators. U H Ružomberok shows the best result in measuring efficiency. On the contrary, the
lowest level of performance was achieved by F H Žilina. The hospital recorded low values in
measuring efficiency and effectiveness indicators. In the overall evaluation of individual
indicators. Also, we find that there is a significant variability between hospitals. This is also
reflected in the comprehensive performance evaluation, where six hospitals show below-average
results. The reason for this may be the low motivation for strategic management in the monitored
hospitals. It is strategic management that can influence the achievement of good results in the
performance of the organization and the quality of services provided (Greer, Carter, 2014). Also,
based on experience in the preparation of research, we state that for a uniform and valid
measurement of performance, it is necessary to have the same data from organizations. The
reporting of data is on the account of each hospital. As we have been pointed out, hospitals are
not obliged to draw up Annual Reports, which has complicated the finalization of the research.
However, it should be noted that this has led to a reduction in the choice of partial indicators for
measuring efficiency, effectiveness, and economy. However, the research we conduct confirms
the need to measure performance in the public sector and suggests challenges for the future.
Measuring and evaluating performance can help change the governance of public service
organizations.
Acknowledgements
This paper is part of the project V E G A 1/0334/19 Evaluating the performance of regional
education by the value-for-money method, using the example of grammar schools.
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Contact information
Ing. Daniela Mališová
Matej Bel University, Faculty of Economics, Department of Public Economics and Regional
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doc. Ing. Jana Štrangfeldová, PhD.
Matej Bel University, Faculty of Economics, Department of Public Economics and Regional
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292
The social aspect of Chinese crafts
Katarzyna Mazur-Wlodarczyk
Abstract: The article presents the issues of Chinese crafts related to the social economy sector.
It includes a section on the characteristics of China's third sector, the government's vision of
community involvement - the idea of craftsman spirit, as well as examples of Chinese craftsrelated
social enterprises. The desk research method was used in the research. The available data
sources in Polish, English, and Chinese were analyzed. The text draws attention to the fact that
despite the relatively short history of the social economy in the PRC, craftsmanship has also
marked its presence in it, as well as the fact that China places a very strong emphasis on
ideological education, which, apart from encouraging pro-ethical behavior in business has
a strong political tone and is an important element of China's economic strategy.
Keywords: China, crafts, Chinese crafts, social economy, economic culture
JEL Classification: B55, Z19
1 Introduction
In 2020, the handicraft market was estimated at US$718 billion (Worldwide Handicrafts Industry
to 2026 - Featuring Asian Handicraft, Oriental Handicrafts and NGOC Don Ha Nam, 2021).
However, traditional handicraft is not the only type of service provided by craftsmen. Apart from
creating artworks, craftsmen have also been present in the third sector. Not being
organizationally dependent on the public sector (Abramuszkinová Pavlíková, 2012), the third
sector complements the private sector by facilitating the involvement of various stakeholder
groups and having a specific goal in achieving social cohesion (Vidal, 2008). Chinese craftsmen
started earning their reputation before the Chinese imperial era especially due to astonishing
works of art designed for many imperial dynasties, both in governmental and private workshops
(s£lifí£, 2014). Their identity and status evolved, but mass production and the developing
consumerism reduced both the demand for their works and the respect they earned during the
times of the People's Republic of China (PRC). However, despite the above, the area of
craftsmanship is still doing well (Kokko&Ráisanen, 2019). Apart from its purely profit-oriented
aspect, quite often craftsmanship indicates the need to engage in pro-social matters by
undertaking socially integrating civic activities addressed to people, many of whom are at risk
of social marginalization, by creating jobs and providing social services and local development
(Ministerstwo Rodziny i Polityki Spolecznej, 2017).
This article provides insight into Chinese craftsmanship and its relationship with the third sector
in terms of the government's view of community involvement - promoting the spirit of
craftsmanship and the social economy's solutions employed by the craftsmen themselves. The
aim of the article is to answer the question of whether, despite the relatively short history of the
social economy in China, this solution is popular and promoted among Chinese entrepreneurs
and craftsmen.
2 Material and Methods
The desk research method was used in the study. The research analysis included articles
published in scientific journals, reports and press articles related to the social economy and
Chinese craftsmanship which were written in Polish, English and Chinese.
293
The research showed that not many Polish-language studies have been conducted to assess the
relationship between the social economy and Chinese craftsmanship. The English-language
articles discuss issues mainly related to social companies, while the Chinese-language papers
cover mainly two groups of issues:
• Articles in which the social and economic development only slightly refer to civic
organizations or they are closely related to the ecologically sustainable
development;
• Articles which directly relate to the socialist economy with Chinese characteristics, in
China also known as the political economy of the new era (Hong, 2020). These papers
highlight the notions of community and social equality, however, they are significantly
biased ideologically - they either present or refer to the theory of Deng Xiaoping, the
Three Representations, as well as the scientific aspect of development and as such are a
continuation of Marxism-Leninism and the thoughts of Mao Zedong (The Theory Of
Building Socialism with Chinese Characteristics, 2016). Therefore, they do not apply
to formally organized private enterprises defined by autonomous decision-making and
activities beneficial for local and marginalized groups (Popoveniuc, 2012). Sometimes,
they discuss some aspects of the community sector, but not with regard to the nonstudent
voluntary sector and social enterprises.
3 Results and Discussion
3.1 Chinese social economy sector
On a global scale, the social economy is becoming more and more popular (Rey-Marti, DiazFoncea&Alguacil-Mari,
2020; Chen et al., 2020; Kubickova&Hodzic, 2020). This is due to
evolving needs and intense social and economic changes. However, the social economy sector
has been a relatively new development in China. According to the data provided by the Social
Entrepreneurship Akademie of L M U , the beginning of Chinese social entrepreneurship dates
back to 1949 when the "Social Welfare Enterprises" were introduced (Social Enterprise in
China, 2015). Yet, quite often the beginnings of the Chinese third sector are associated with the
time period from 2004 to 2008 due to the following events: Chinese-British symposium on social
enterprise and non-profit activities, translated publications on social economy widely available
in bookshops3
, a sustainable social textile enterprise founded by Carol Chyau in the Tibet
Autonomous Region and the Wenchuan earthquake in Sichuan Province which affected Chinese
civic organizations (China Social Enterprise and Impact Investment Report, 2013). The next
stage in the development of the Chinese third sector was marked by the performance of the first
private Narada Foundation and training projects organised by the British Council - "Skills for
Social Entrepreneurs" program (Arantes, 2020). In the following period, only a few scientific
papers discussed the third sector in the PRC. According to Long Wang and Yanto Chandra
(2020), until 2013 the few texts which discussed social enterprises were either conceptual or
descriptive. Moreover, they mainly referred to the Hong Kong Special Administrative Region which
was a dependent territory of the British Empire from 1842 to 1997, and Taiwan - the area
not considered as a part of the PRC by the international community (Chan&Yuen, 2013; Chan
et al., 2011; Ho & Chan, 2010). Back in 2013, the majority of Chinese people were not familiar
with the concept of a social enterprise (China Social Enterprise and Impact Investment Report,
2013). Between 2013 and 2014, Chinese social enterprises were mainly located in Beijing and
Shanghai and later also in Shenzhen, Tianjin and Suzhou (Zhao, 2014). By 2017, there were over
3
Including such books as: D. Bornstein, How to Change the World: Social Entrepreneurs and
the Power of New Ideas and C. Leadbeater, The Rise of the Social Entrepreneur.
294
801,000 social organizations operating in China showing the development tendency in this sector
(Wang&Wo, 2019). Nevertheless, when compared to Western countries, the management of
social entrepreneurship in China has entered its initial phase (Zhang&Li, 2017). More recent
studies4
have shown the increasing interest in social economy in the PRC, however, a clear legal
position (considered as strict) and appropriate legislation with regard to social economy have not
yet been developed (Social Impact Investment 2019. The Impact Imperative for Sustainable
Innovation Ecosystems in South East and East Asian Countries, 2019). On the other hand, a new
trend of strengthening the system of the ecological economy (Yu, 2016) and emphasizing the
sustainable aspect of craftsmanship has become evident (Zhan&Walker, 2018; Fan&Feng, 2019;
Li, Ho&Yang, 2019).
3.2 Craftsman spirit - Chinese vision of community involvement in crafts
The Chinese vision of social involvement in craftsmanship manifests mainly in the term spirit of
craftsmanship [ l E f j f tt], which has become popular not only on the Internet, but also in the
Chinese manufacturing industry. In 2016, the phrase spirit of craftsmanship was listed among
ten most popular phrases [ , , 2 0 1 6 ^ + ^ ^ f i n " ] (W%, 2016). The spiritual aspects of
craftsmanship focus mainly on three qualities:
• respect (teachers, work performance and workers - craftsmen);
• continuous improvement (self-improvement and creation - developing the skills and
talents necessary for technological achievements, thus innovation) (I^^HJJJS,, 2020);
• development of professional ethics (aimed at offering the highest quality services - not
only in individual processes and final products but also by following regulations and
established rules which enhance respect in the entire society (!r£S&, ^M.W^&M^M.,
2020)).
The spirit of craftsmanship is also reflected in the socially expected qualities of craftsmen, such
as: focus, responsibility, diligence/meticulousness, striving for excellence and professionalism (
& ^ , 2 0 2 0 ) .
The way in which the Chinese present the spirit of craftsmanship reveals its ideological
foundations by referring to the socialist economy. The term spirit of craftsmanship was
introduced in 2016 by the Prime Minister Li Keqiang, who called upon all industries to develop
it. Former Deputy Prime Minister Liu Yandong and the current chairman X i Jinping also referred
to the spirit of craftsmanship in their speeches. The significance of the spirit of craftsmanship in
China, has been reflected in the following slogans/ ideas which are or should be associated with
this concept:
• the "Made in China 2025" program introduced in 2015;
• the shift from the notion of "made in China" to "created in China" and the change from
a large manufacturing country to a strong manufacturing country (M$f&$bM.tL, 2020),
becoming a manufacturing power (ZEUT^P, 2016);
• the transformation and modernization of China's manufacturing industry ($H3tjlljl,
2019), thus moving towards the Chinese "age of quality" (tfcBjgfc, 2018);
• the great revival of the Chinese ( ^ H , 2021);
• addressing the evident tendency of seeking higher education - for the "intellectual"
work in the future ( i # & ^ W , 2020);
I.e. studies published in 2020.
295
• as a tool to counteract the relatively slow development of vocational education and
overly traditional teaching methods ($H3tjlljJ, 2019);
• as a tool for preventing technical training without developing "moral quality" ($H3tjlljJ,
2019);
• the necessary condition for professional innovation (f^^jjft, 2020);
• developing the skills and talents considered as useful for the society (such as a response
to social demand) which are developed to promote the country and "help China" (MM,
, 2020) by contributing to Chinese progress ( ^ i J ^ K , 2018);
• a strategic approach to economic development which requires a long-term strategy and
implementation plan ( ^ H & ^ f p , 2017);
• a tool preventing a skills' gap resulting from associating craftsmanship with low wages
and intense work;
• referring to Chinese traditions, the greatness of ancient craftsmanship ( M ^ " ^ " , 2017;
irfeiftftl, 2016) and combining tradition with innovation by incorporating features of
Chinese civilization into global development (iJrX/frMffiM/fy^0$!/MZi''$i'',
2016);
• aiming at educating an army of craftsmen ( ^ M);
• stimulating internal consumption, as a stimulus to buy goods produced domestically
rather than importing them or buying them outside China (if:X/frMffiM/fy^0$!/M
Z 2016);
• striving to develop cultural trust (^^^M/9S^{tM§fMMXlSfi^'h\
• the next stage in shaping a socialist society (Hong, 2020).
Developing a craftsmanship spirit in Chinese society requires: the ideological and political
education provided in vocational and higher schools - strengthening the basic values of socialism
and cultivating patriotism (XIIIJC77, 2018), combining theoretical knowledge with practical
training, education based on the predispositions and interests of pupils/students, conducting
classes in smaller groups to understand the individual circumstances of each student (ZEUT^P,
2016), providing modern vocational training by establishing and developing cooperation
between schools and enterprises (I^BB, 2020), introducing a national certification system for
craft skills (&MM, 2017), organizing craft competitions and exhibitions (rfTAA/MMffltt^
UBM^tPM-mtXXE''ifm%Mfr% (Uff) MMMA#£(2018)50^, 2018),
promotion of craft - including TV programs (Mffi, 2021), accounts in the WeChat application (
gmtb-f'^m-x&ix mftjE^ AMm^mm^mxmmm) coo78^) M&M,
2020), etc.; sharing good practices - through meetings with well-known and respected craftsmen
and entrepreneurs, improving teaching resources (e.g., by using information technology (SPItiEJ^
, 2020)), conducting pro-health practical courses (e.g., aimed at developing healthy habits in a
family, pro-health behaviours in a workspace, providing rehabilitation) ( z E ^ & x W , 2020)), as
well as ensuring safety (e.g., settlement of craftsmen families, career counselling for spouses (
ftWXm%fc&tt&&Mffi% 2019), etc.).
In conclusion, the social dimension which links social economy with the spirit of craftsmanship
is limited to social apprenticeships and internships for students (MM, 2020) and pointing to the
moral aspect of the social responsibility of the craft business.
3.3 International solutions of the social economy used in relation to Chinese crafts
Social companies in China tend to operate locally in such sectors as microfinance, education,
poverty prevention and crafts (Social Enterprise in China, 2015). In 2014, 12% of social
businesses produced handicraft (Zhao, 2014). Third sector activities related to Chinese crafts are
296
mainly presented from the perspective of social craftsmanship companies which are often
established by foreigners (i.e., people of non-Chinese origin). The following social organizations
are most popular on the Internet:
• Tibetan-Qiang Embroidery Center established in 2009 by Yang Huazhen after the
earthquake in Chengdu in Sichuan Province - Great Wenchuan Earthquake. It provides
employment for women from the Qiang ethnic group by offering training courses,
workshops and products which combine traditional Qiang embroidery with traditional
and modern aesthetics. There is also a museum for Tibetan-Qiang culture
(Johnson&Shiling, 2016).
• Jian'ai Crafts Limited Liability Company that evolved from Jian'Ai Papercutting
Design Studio. This company has been operating since 2011 as a social enterprise
dedicated to helping haemophilia patients, their families and people with disabilities.
By making paper carvings and sculptures, designing knitting patterns, providing
decorations for celebrations and weddings, the company provides employment and
boosts self-confidence. People suffering from haemophilia and their families are the
company's main investors, with 20% of the profits being allocated for projects directly
related to haemophilia, while 10% is used to support the Association for the
Rehabilitation of Haemophilia. The company also aims at raising social awareness
about this disease {China Social Enterprise and Impact Investment Report, 2013);
• Shanghai Social Innovation Park was established in 2010. It provides professional
training - including graphic design, art school and handicraft, and employment for
disabled people (China Social Enterprise and Impact Investment Report, 2013);
• Atlas design, a company that encourages women weavers from the Dong ethnic
minority to share their knowledge, discover their hidden economic potential and
emphasize the value of work created by women (Sowley, 2017);
• Dancing Yak, a company operating in the Tibet Autonomous Region, provides sewing
courses and teaching manual production of goods for the poor, single mothers, people
with disabilities and students (Social Enterprise in Sichuan, 2017);
• China Women's Federation and the authorities of Guizhou Province in 2013 initiated
the Embroidery Plan project aimed at preserving the traditional embroidery of ethnic
minorities, as well as offering support to women to find a job and improve their
economic situation. The project was addressed to women from the Miao, Dong, Shui,
and Yao minorities and included the opportunity to learn or improve embroidery skills,
support in setting up their own enterprises, as well as assistance in distributing the
resulting handicrafts in large cities (Ling&Wei, 2019).
Apart from activities aimed at increasing value - generating profit, these enterprises also provide
training aimed at acquiring skills, popularizing a given craft and providing assistance to people
in disadvantaged life circumstances by offering jobs and facilitating access to a given market.
It is worth emphasizing that as their business develops, the craftsmen themselves see the needs
of local communities and try to use their skills for their benefit. They often organize training and
workshops to transfer or improve specific skills in order to support people in a difficult life
situation. These include:
• L i Dehua from Qianxi - Guizhou Province, a craftsman who uses pyrography a
technique of decorating wood, leather or other materials with burn marks with a stylus/
pyrograph, on gourds. In 2017, craftsman L i founded a company which provides
employment for 130 people with disabilities {Disabled craftsman helps locals live
a better life with gourd pyrography);
• Niu Chengguo, who represents the fourth generation of pyrographers on gourds,
founded a cooperative association in Shunyi - a district of Beijing. It gathers 300
297
members and employs 200 people with disabilities to improve their living conditions
and promote crafts (Beijing Gourd Artist Helps World Understand Beauty of China's
Intangible Cultural Heritage, 2021);
• Osung Dorje, a craftsman who produces traditional bows in Jainca - Qinghai Province.
He trains and employs craftsmen with disabilities by cultivating cultural heritage and
helping people challenged by difficult life circumstances (Zhang, 2014);
• Wang Jintang, a craftsman from Queshan - Henan Province, mobilized the inhabitants
to develop handicraft skills and open their craft workshops producing violins and other
stringed instruments. There are currently 122 violin manufacturing plants in Queshan
employing over 2,000 people. The development of crafts in the region increased the
income of over a hundred families, created a place of employment, and offered training
for people with disabilities (Shan&Lu, 2020);
• Pan Xiaohong living in Sunan - Gansu province, opened a craft workshop producing
car decorations based on traditional Uyghur embroidery. The popularity of her products
and the support of local authorities made it possible to start a business in which 58
people found employment, including 22 people with disabilities. The craftswoman also
runs online workshops (Zhao, 2020);
• Dawa Dakpa, a boiler worker working in a studio in Daisu District - Sichuan Province.
Thanks to funds and support from local authorities, he runs a crafts business with 16
employees. The craftsman also conducts workshops for people with disabilities and
unemployed people from the area (Yao, 2016).
4 Conclusion
Despite the relatively short history of social economy in the PRC, craftsmanship has become
a significant part of it. On the one hand, the Chinese pro-social approach toward craftsmanship
has been developed as part of intended governmental actions and the widely promoted concept
of the spirit of craftsmanship. In ancient China, the system of quality management and
supervision for artisans was established very early on. Artisans had to engrave their names on
their artworks for inspection and supervision ($$&%$., 2018). Nowadays, the concept of the spirit
of craftsmanship has been reintroduced to increase professional recognition. However, achieving
this goal seems to be extremely ambitious and difficult since gaining the respect and confidence
of a particular professional group requires time and the commitment of many generations of
craftsmen. On the other hand, this spirit indicates that the Chinese strongly emphasize the
significance of ideological education (and the emerging new socialist fashion, manifested in the
number of statements and texts discussing to or referring to the idea of the spirit of
craftsmanship), which not only encourages pro-ethical behaviours in business but being
politically coloured, it is also an important element of China's economic strategy - the path to
further economic growth. The social aspect of Chinese craftsmanship is also associated with
more grass-roots initiatives, which include training or jobs offered by companies to
disadvantaged artisans and by craftsmen who are interested in transmitting cultural heritage and
providing assistance in the professional integration of people at risk of social marginalization.
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Contact information
Katarzyna Mazur-Wlodarczyk, Ph.D. Eng.
Opole University of Technology, Faculty of Economics and Management, Department of
Enterprise Management, E-Business and Electronic Economy
7 Luboszycka St, 45-036 Opole, Poland
E-mail: k.mazur-wlodarczyk@po.edu.pl.
1.shtml.
303
Efficiency of Contracting out Services in the Public Sector - Experience
from the Czech and Slovak Republic
Beáta Mikušová Meričková, Nikoleta Jakuš Muthová
Abstract: From the theoretical point of view, contracting out services in the public sector should
convey efficiency gains. However, the practice results do not confirm the aforementioned
assumption. The aim of this study is to contribute to the recent discussion about efficiency of
contracting out in public sector via the use of multi-criteria efficiency evaluation using the
method of the best value criteria. The study builds on the original research of contracting out in
the Czech and Slovak public sector and assesses them from a comprehensive perspective. The
research question is set: "Does contracting out in public sector in the Czech and Slovak Republic
bring efficiency gains?" To answer the research questions two alternatives of services provision,
namely internalisation and contracting, were evaluated. The three criteria, 1) expenditure on the
provision of the service per citizen/employee, 2) the expenditure per performance indicator and
3) the quality of services evaluated on the basis of citizen/employee satisfaction as consumers of
services were used in evaluation. It is not possible to come to the final conclusion about higher
efficiency of internal versus external production. However, what can be clearly and undoubtfully
documented is the fact that depending on the concrete case the more efficient solutions
differ. The core factor of the limited success of contracting out - the quality of contract
management represent critical problem in the Czech and Slovak Republic.
Keywords: Contracting out, Czech Republic, multi-criteria efficiency evaluation, public sector,
Slovak Republic
JEL Classification: H44, H72
1 Introduction
The study aims to respond to the matter of externalisation of the production of services in the
public sector. Contracting of service in public sector production is based on a contractual
relationship - a contract between a public institution and an external entity (Cooper, 2003;
Kettner and Martin, 1990; MacNeil, 1978; Rehfuss, 1989). Worldwide, the problem of
contracting out public sector services has roused the curiosity of both the expert and non-expert
public for three decades (Savas, 1987; Osborne and Gaebler, 1993; Kettl, 1993) due to the fact
that the government of each country spends a significant quantity of public funds to finance
contracted services every year, and the importance of contracting out continues to grow (Kettl,
1993; Donahue, 1989; Martin, 1999; Brudney, et al., 2005; Miranda and Andersen, 1994).
Currently, in terms of contracting services in the public sector, the world economic theory solves
the question "make or buy", the question of efficiency of contracting out in public sector. Despite
a number of scientific studies on the subject, it is problematic to obtain an answer to this question
mainly for the reason that many, especially older, foreign studies concentrate on the problem of
simple comparing the cost-effectiveness of internalisation and contracting out services (Brudney,
et al., 2005; Greene, 2002; Savas, 1987; Sclar, 2000; Siegel, 1999).
The standard procedure used to evaluate the efficiency of contracting out by international studies
(Dilger, Moffett, and Struyk, 1997; Hodge, 2000; Kamerman and Kahn, 1989) is to compare the
cost of contracting and the internalization of services. The stated procedure is considered to be
limited in condition of Czech Republic (Ochrana et al., 2008; Páleniková, Mikušová Meričková,
2012; Pavel, 2006; Rousek et a l , 2009; Soukupová, Klimovský, 2016, Soukopová et al. 2017)
and also in condition of Slovak Republic (Balážová, 2006; Beblavý et al., 2006; 2007;
304
Meričková, Majlingová, 2005; Meričková et al, 2010; Meričková et al., 2007; Meričková et al,
2008; Němec et al., 2020; Němec at al., 2005) due to the costs of providing services for objective
reasons cannot be calculated (evidence of complex costs of public sector activities is formally
given, however, does not actually exist) and therefore it is likely to work only with the indicator
of expenditures for providing services.
When evaluating the efficiency of services in the public sector, it is necessary to consider a
number of criteria which are expressed through different units of measurement (e.g. value,
natural, physical, capacity, relative, abstract and statistical indicators) (Halásková, Halásková,
2016; Halásková et al, 2018). Neither partial evaluation based on dominant criteria, nor the
merging of related criteria to facilitate evaluation, are recommended as this results in a reduction
in the objectivity, transparency and complexity of the evaluation. There is a need for a
comprehensive multi-criteria evaluation based on the analysis of various criteria, which allows
a more concise expression of the degree of fulfilment of public benefit objectives and does not
require the reduction of non-economic indicators to economic indicators (Vlček, 2004, p. 73).
According to several authors (Fiala, Jablonský, Maňas, 1994; Lysá, 2002; Murtag, Heck, 1987;
Vlček, 2004), practical approaches in the case of multi-criteria evaluation are mostly based on
the evaluation of preferential relations between individual pairs of alternatives, provide only
partial evaluation and are characteristic by a significant degree of influence of the results by the
evaluated subjects. For this reason, it is necessary to look for ways to formalise the evaluation
processes more precisely. This requirement is met by the method of the best values of the criteria.
The choice of criteria for evaluating the efficiency of service provision in the public sector is
dominated by the costs and quality of the service provided (Engelbeck, 2004; Epstein, 1984;
Shetterly, 1998).
This is an incentive to improve the methodology for assessing the efficiency of contracting out
services in the public sector by considering other efficiency indicators - expenditure on the
performance indicator and considering the quality of services assessed by the level of satisfaction
of consumers. The more complex assessment of the impact of contracting out services in the
public sector can be considered unique in the domestic context of knowledge. Monitoring of
input indicators (contracting expenditure) and output indicators (quality of contracted services)
enables further improvement of the methodology of evaluating the efficiency of contracting out
services in the public sector via the use of multi-criteria efficiency evaluation using the method
of the best value criteria (input and output indicators) whose application in the field is innovative
in an international context.
Method of the best value criteria working with input and output indicators better address to the
risks of contracting out in public sector: 1) moral hazard or problem of hidden activity, and 2)
incorrect selection or problem of hidden information (Arrow, 1985; Kettl, 1993; More, 1984;
Pratt, Zeckhauser, 1986). Moral hazard can occur in contracting because the behaviour of the
private partner is imperfectly controlled and the private partner does not bear the full risks of its
own action or inaction. These conditions create a situation in which either shirking in
performance of duties or inappropriate choices by the private partner adversely impact the goals
(and, potentially, the reputation) of the public partner. In the adverse selection problem, agents
within the private firm have information that is not shared with the public sector organization,
and they use that information to make decisions that affect the public organization. The public
organization, however, cannot check to see if the information is serving the public interest. For
example, consider a public sector organization that wants to hire the best private partner. The
private firms bidding for the contract know more about their own qualifications than the public
sector organization ever will, and this information asymmetry may render impossible a full ex
ante evaluation of the private offers. Bailey (1999, 290-292) examines the effects of such public
services contracting problems.
305
The source of these risks is the discrepancy between the principal's (service provider/contracting
authority) and agent's (service producer/supplier) aims. Both the principal and the agent pursue
their own aims, which may or may not be consistent with each other (DeHoog, 1990; Sclar, 2000;
MacNeil, 1974, 1978; Šebo, Maceják, 2008) and this could lead to service cost increasing (input
indicator) and service decreasing (output indicator).
The issue of contracting of local public services has been the object of systematic research in the
Czech and Slovak Republic for the last twenty years. In addition to papers (like Ochrana et al,
2008; Páleníkova, Mikušová Meričková, 2012; Rousek et al., 2009) and books (Ochrana et al.,
2007 and Meričková et al., 2010, Mikušová Meričková, 2020) prepared or co-authored by the
authors of this article, there are several other interesting publications analysing contracting of
local public services in the conditions of the Czech and Slovak Republic. We should mention
especially the analysis by Pavel (2006) and Beblavý et al., (2006, 2007) documenting the limited
transparency and inefficiency of local companies responsible for the delivery of local services.
The Czech and Slovak contracting research focuses especially on the area of local public service
management - Balážová, (2006) and waste management - Soukopová and Klimovský (2016),
Soukopová et al (2017). This research study carries on and develops the outcomes of mentioned
studies.
The aim of this study is to contribute to the recent discussion about efficiency of contracting out
in public sector via the use of multi-criteria efficiency evaluation using the method of the best
value criteria.
2 Material and Methods
The aim of this study is to contribute to the recent discussion about efficiency of contracting out
in public sector via the use of multi-criteria efficiency evaluation using the method of the best
value criteria.
The aim reacts to the research question "Does contracting out in public sector in the Czech and
Slovak Republic bring efficiency gains?" The source of research question, the research gap is
determined by controversial impact of contracting out on efficiency in public sector in
international context (Brudney, et al., 2005; Greene, 2002; Savas, 1987; Sclar, 2000; Siegel,
1999; Dilger, Moffitt, and Struyk, 1997; Hodge, 2000; Kamerman and Kahn, 1989) and limited
methodology evaluating the efficiency of contracting out in public sector in national context
(Ochrana et a l , 2008; Páleniková, Mikušová Meričková, 2012; Pavel, 2006; Rousek et al., 2009;
Soukupová, Klimovský, 2016, Soukopová et al. 2017; Balážová, 2006; Beblavý et a l , 2006;
2007; Meričková, Majlingová, 2005; Meričková et al, 2010; Meričková et a l , 2007; Meričková
et al., 2008; Němec at al., 2005).
To answer the research questions two alternatives of services provision, namely internalisation
and contracting out, were evaluated.
The research sample covers Czech and Slovak municipalities across different size categories
(Table 1 and 2). We focused on the core sample of local public services: maintenance of local
communications, maintenance of public lighting infrastructure, management of cemeteries,
waste collection and waste disposal, and management of public parks and green areas and of
ancillary services in public service organisations.
306
Table 1 - The research sample
Period of
implementation
of own primary
research
The research samplePeriod of
implementation
of own primary
research
Contracting local public
services
Contracting of ancillary
services in public service
organisations
Slovak Republic
2009
131 municipalities of various
size groups
114 organisations providing
public services
2010
141 municipalities of various
size groups
141 municipal authorities
2015
9 municipalities of various size
groups
2020
115 municipalities of various
size groups
115 municipal authorities
2021
16 municipalities of various size
groups
16 municipal authorities
Czech Republic
2011
98 organisations providing
public services
Source: Own research + Páleníkova, Mikušová Meričková, 2012
Note: TIS- Research in cooperation on the research project Transparency International
Slovakia. The results of the research for the years 2015 and 2021 can be considered as
illustrative given the size of the research sample.
Compared to the simple cost-per-inhabitant analysis in our previous samples (Table 4), in this
study we also used the method of best values of indicators (MBVI) to construct composite
efficiency scores. M B V I is one of the nonparametric multidimensional approaches to the
evaluation of efficiency of Decision Making Units (DMU) based on a weighted sum algorithm.
Here we designated the service delivery method as a D M U . According to some authors (Fiala,
Jablonský, and Maňas, 1994; Lysá 2002; Murtag and Heck, 1987; Vlček, 2004; Hinloopen,
Nijkamp, and Rietveld, 1982), this method makes it possible to express the efficiency of
evaluated DMUs, taking into consideration multiple indicators, measured in different units.
The method is simple to apply and easy to interpret. Following Žižka (1988, 146-147), we
consider m service delivery alternatives A; (i = 1 ... m), and n indicators of evaluation Kj (j = 1
... n). When we assign empirical values for all delivery alternatives and evaluation indicators, we
obtain the evaluation matrix X . Because indicators use different measurement units we normalize
their values xy as follows:
If the best value of the indicator is its maximum value, we normalize by:
Xij
as = (1)
Xmax
If the best value of the indicator is its minimum value we normalize by:
as
Xmin
Xij
(2)
307
Thus we generate a matrix of normalized indicator values (A), which fall in the interval (0, 1).
Then we assign the weights vj to the indicators, where:
_ > = 100 (3)
j=i
The final evaluation of the efficiency of each alternative is obtained by multiplying matrix A by
the column vector of weights VJ:
Indicator
K l K2 K3 K4 ... Kn
Í711 Oil Í713 (714 flln
ail Ü22 Ü21 Olu
Gill!!
Weight
of Indicator
r:
Final Evaluation
hi
IK
(4)
The most efficient service delivery alternative is the option with maximal composite score E.
The composite efficiency of other options is given proportionally to Alternative Emax.
We have chosen three indicators of evaluation as efficiency benchmarks in our analysis:
• The costs of service delivery per inhabitant.
• The unit costs of service delivery (Table 2).
• The quality of service.
Table 2 - Unit Cost Indicators for Selected Local Public Services
Service Calculation unit
Waste 1 metric tonne of waste
Public lighting 1 light point
Communications 1 km of communications
Public green areas 1 m2 of public green areas
Cemeteries 1 grave place
Source: Own research
For local public services we have to acknowledge that measuring the quality of a service is
generally much more difficult than measuring the quality of a good. Service quality may be
identified in terms of performance characteristics, but their assessment may require subjective
judgments. It can be measured through user satisfaction, but this is subjective because individual
opinions on what constitutes a high standard of service quality may vary from one user to another.
To cope with this problem as well as possible we follow the research methodology of several
existing studies in this area (Lóffler, 2002; Wisniewski, 2001; Potůček, 2005). The citizens'
satisfaction with local public services is the measure of local public services quality in these
308
studies. Data on service quality were provided by the users, the citizens of different
municipalities, through a questionnaire. The samples are non-representative, so we accept that
our summary data are partly preliminary.
Citizens evaluated local public service quality using the following scale:
Figure 1 - Rate of satisfaction
Source: Own research.
Absolutely satisfied
Satisfied
More satisfied dian unsatisfied
More unsatisfied dian satisfied
Unsatisfied
Absolutely unsatisfied
100 %
80%
60%
40%
20%
0%
Rate of satisfaction
To calculate M B V I we assigned weights (VJ) to the indicators (Table 3). To set the weights we
used Saaty's method (Saaty et al., 1983) with inputs from a panel of experts on contracting in
both countries.
Table 3 - Weights (VJ) for Indicators
Indicator Vj%
Unit costs of service delivery per inhabitant 30
Unit costs of service delivery per service outcome 30
Quality of service 40
2 100
Source: Own research
3 Results and Discussion
We carried out a multi-criteria evaluation of the efficiency of contracting out local public services
in the conditions of the Slovak Republic in 2009, 2010, 2015, 2020, 2021.
Table 4 - The results of the multicriteria evaluation of the efficiency of providing local
public services in 2009,2010, 2015, 2020, 2021
Year of evaluation 2009 2010 2015 2020 2021
Collection and removal of MSW
Internalisation 92.13 88.20 79.67 52.72 100
Collection and removal of MSW
Contracted out 96.58 95.99 29.29 99.20 49.10
Maintenance of public lighting
Internalisation 89.46 93.81 70.00 93.12 100
Maintenance of public lighting
Contracted out 93.66 96.61 93.70 97.40 X
Maintenance of local roads
Internalisation 98.55 89.79 71.34 92.40 50.85
Maintenance of local roads
Contracted out 81.58 89.09 54.41 84.20 100
Maintenance of public greenery
Internalisation 91.83 78.30 77.00 41.70 100
Maintenance of public greenery
Contracted out 94.05 88.70 62.98 100.00 X
Cemetery services
Internalisation 94.61 96.13 85.39 47.75 36.88
Cemetery services
Contracting out 96.39 94.98 78.61 97.60 100
Source: Own research
X - not evaluated
We carried out a multi-criteria evaluation of the efficiency of ancillary services in public service
organisations in the conditions of the Slovak Republic in 2009, 2010, 2021.
309
Table 5 - Results of multicriteria evaluation of the effectiveness of providing ancillary
services in 2009,2010, 2021
Year of evaluation 2009 2010 2021
Cleaning
Internalisation 94.34 56.40 75.24
Cleaning
Contracted out 91.30 92.85 100
Catering for
employees
Internalisation 79.22 73.04 74.93Catering for
employees Contracted out 97.41 81.19 100
Management and
maintenance of
buildings
Internalisation 88.81 90.78 53.71Management and
maintenance of
buildings
Contracted out 89.23 74.97 100
IT administration
Internalisation 74.09 98.88 100
IT administration
Contracted out 95.25 77.83 73.3
Transportation
Internalisation 83.15 78.86 69.51
Transportation
Contracted out 97.67 99.91 100
Security services
Internalisation 76.10 64.43 100
Security services
Contracted out 96.29 97.73 92.43
Source: Own research
X - not evaluated
In the conditions of the Czech Republic, we carried out such oriented research in 2011 at 98
public organisations providing cultural, social and education services, where we monitored the
provision of ancillary services. As in the conditions of the Slovak Republic, we chose three
criteria entering into the multi-criteria evaluation of efficiency. The first criterion is the
expenditure on the provision of the service per employee, the second criterion is the expenditure
per performance indicator and the third criterion is the quality of services evaluated on the basis
of employee satisfaction as consumers of the service. A more efficient alternative to providing
the service is the alternative that achieves a higher value within the evaluation. The results are
shown in Table 6.
Table 6 - Results of multicriteria evaluation of the effectiveness of providing ancillary
services in selected public sector organizations in Czech Republic in 2011
Public sector
organizations
Culture Social services Education
Services | Variants I C I C I C
Cleaning 98.42 100 84.5 100 94.2 100
Catering for
employees
90.04 100 100 52.4 100 80.2
Management and
maintenance of
buildings
X X X X 100 96.96
IT administration 91.49 100 84.05 100 73.1 100
Transportation 70 100 X X 74.7 100
Security services 100 56.3 79.91 100 59.44 100
Average 89.99 91.26 87.12 88.1 83.57 96.19
Source: Own research
Table 7 summarises the effects of contracting out services in the public sector on the efficiency
of their provision in the conditions of the Slovak Republic and the Czech Republic evaluated by
310
the multi-criteria method of best values of criteria, whereby expenditure per citizen / employee,
expenditure on the performance indicator and quality of service assessed by the degree of
consumer satisfaction were used as evaluation criteria.
Table 7 - Impacts of contracting out services in the public sector in the conditions of the
Slovak Republic and the Czech Republic (% change in the efficiency of providing services
brought by contracting out compared to internalisation)
Country Slovak republic
Czech
Republic
Contracting
out of local
public
services
Year of research
Contracting
out of
ancillary
services
Year of research
Year of
research
Contracting
out of local
public
services
2009 2010 2015 2020 2021
Contracting
out of
ancillary
services
2009 2010 2021 2011
Collection
and removal
of MSW
5 8 -50 46 -51 Cleaning -3 37 25 8
Cemetery
services
4 3 24 50 63
Catering for
employees
18 8 25 -20
Maintenance
of public
greenery
-17 -1 -17 4 X
Management
and
maintenance
of buildings
0 -16 46 -3
Maintenance
of local
roads
2 9 -14 -8 49
IT
administration
19 -21 -27 17
Maintenance
of public
lighting
1 -1 -7 58 X
Transportation 15 21 30 27Maintenance
of public
lighting
1 -1 -7 58 X Security
services
20 34 -8 6
Source: Own research
Multi-criteria evaluation of the efficiency of contracting out services in the public sector in more
than 30% of cases of evaluated local public and auxiliary services in public organisations in
different years of research is to the detriment of contracting out. In these cases, some of the
evaluated indicators (expenditure per citizen / employee, expenditure on the performance
indicator, quality of service), or several indicators achieve worse results in the case of contracting
out. In addition, we must reiterate that we take into account the costs of contracting out services
from the budgets of organisations, not the total costs associated with contracting out, which
would include transaction costs of contracting out, i.e. costs associated with the process of public
procurement of external production and costs associated with its subsequent monitoring.
Thus, in the conditions of Slovakia and the Czech Republic, contracting out is a more expensive
and sometimes even lower quality method of providing the service, even though the theory
assumes the opposite.
When contracting out services in the public sector in one specific form of PPCM implementation
("public-private-civil sector mix") and in its implementation it is necessary to be aware of the
pros and cons of the decision (Petersen, Hjelmar, Vrangbaek, 2018). A public institution
concludes a contract with a private organisation for the production of a certain public service, or
ancillary service in a public organisation for a defined group of consumers. The public sector
component that is contracted to provide the service is responsible for providing the service to the
appropriate extent and quality. There are several forms of contractual security differing in the
ways of invoicing the service, in the degree of distribution of production risk between public and
private sector, in the conditions of using public property to produce the service, as well as in the
duration of the contractual relationship (Ismail, 2013; Viana, Moreira, Alves, 2016).
311
The benefits of contracting out can be seen in the greater degree of transparency in the spending
of public funds which results from clearly defining the purposes of using the funds, creating a
greater opportunity for public control and thus increasing the accountability of elected bodies to
voters (Hefetz, A., Warner, ME, 2012; Viana, Moreira, Alves, 2016). Another problem to which
the contracting out of services in the public sector can contribute is the lack of public resources
for the implementation of capital investments increasing the quality-of-service provision. At the
same time, the application of contracting out services in the public sector initiates the
improvement of public decision-making processes by defining performance indicators of public
organisations (Yescomb, Farquharson 2018).
However, the implementation of contracting out services in the public sector also has major risks
of information asymmetry and moral hazard, in addition to other problems associated with them,
such as: losses from (unrefunded) wear and tear of public property, transaction costs, employee
demotivation, rigidity, capital investment (Brown, Potoski, Van Slyke, 2015).
Differences in expenditure on services between different forms of providing services of
comparable scope and quality suggest that this non-systemic decision-making, together with the
subsequent poor quality of management, often leads to large financial losses in the field of public
funds. Returning to the internalisation of a service can often be a way to make its provision more
efficient, as stated by Kishimoto (2020, p. 230). In the case of local public services, the latest
trend is the remunicipalisation of services (Albalate, Bel, Reeves, 2019; Albalate, Bel, Reeves,
2020), when municipalities decide to return to the internal provision of local public services.
Interesting findings in recent years are provided by studies on inter-municipal cooperation, which
seems to be the most effective form of providing local public services (Soukopová et al., 2017;
Bel, G., Fageda, Mur, 2014; Bel, Mur, 2009; Bel, Warner, 2015; Bel, Gradus 2018; Franzke,
Klimovsky, Pinteric, 2016). In the monitored municipalities in the monitored period, intermunicipal
cooperation represented only 15 to 18% of the applied forms of providing local public
services. Qualitative research by experts in this area has led to several reasons for this situation
(more Nemec, Mikušová Meričková, Soukopová, Šumpíková, 2020): high transaction costs,
additional administrative costs associated with the organisation of cooperation (Klimovsky,
2014), limited motivation of municipalities to choose the most efficient form of provisioning,
non-functioning benchmarking - about successful examples of inter-municipal cooperation or
so-called cases of good practice of which other municipalities often have no knowledge,
insufficient, or absent "service testing".
4 Conclusion
The aim of this study was to contribute to the recent discussion about efficiency of contracting
out in public sector via the use of multi-criteria efficiency evaluation using the method of the
best value criteria.
Contracting out services in the public sector is a common phenomenon in the Czech and Slovak
Republics, as evidenced by the results of our analysis. The results show that the practice has
already begun to make extensive use of private sector capacity to provide various types of
publicly funded services. At the same time, however, the data obtained point to the non-systemic
nature of decision-making processes on the form of providing these services. In public
organisations providing public services, or at the level of local governments, no preconditions
for such systemic decision-making have been created, there is no monitoring of the complex
costs of providing services (even in our analysis we were forced to work only with a partial
indicator - service expenditures from the local government budget), i.e. also adequate
information on the basis of which this systemic decision - making should be implemented. In
addition to the objective causes of this situation, there are also subjective causes, such as the
312
reluctance of decision-makers to make changes. Cases that constitute violations of the Public
Procurement Act are relatively common in practice (the reluctance of public organisations and
municipalities to provide any information on how to select external service providers only
indirectly confirms this).
Our research shows that most municipalities have never approached the evaluation of forms of
service provision systematically and have not compared / tested services. Decisions to turn to an
external company were thus made quite often on the basis of the "observed" (the neighbouring
municipality does the same, so we do likewise); or on the basis of "inherited" (it has always been
so in our country, so why change it if it works) (Nemec, Mikušová Meričková, Soukopová,
Šumpíková, 2020).
Even if the externalisation decision was made "correctly", systemically, the outcome of the
contracting out could ultimately affect the poor management of the contract between the public
institution / contracting authority / participant and the producer / service provider / agent. Both
the principal and the agent pursue their own goals, which may not be (and usually are not)
consistent (DeHoog, 1990; Sclar, 2000; MacNeil, 1974, 1978; Bel. Gradus, 2018; Andersen,
Spjelkavik, Henriksen, 2008). The discrepancy between the objectives of the principal (service
provider / contractor) and the agent (producer / service provider) is the cause of two fundamental
problems related to contracting out, which we have described above: 1) moral hazard or covert
activity and 2) incorrect selection or hidden information problem. (Arrow, 1985; Kettl, 1993;
More, 1984; Pratt, Zeckhauser, 1986). The result or success of the contracting out therefore
depends on the extent to which the emergence of the mentioned problems - risks - can be
eliminated. In this sense, several authors present factors or determinants of the benefits of
contracting out and public sector services arising from the quality of contract management. The
quality of contract management is a priority of current research on contracting out services in the
public sector, where the standard view of the relationship between procurer and supplier through
the lens of agent principal theory changes from competitive to partner perceived through
behavioural economics. Our further research is also moving in this direction.
Acknowledgements
This paper was created within the project V E G A 1/0029/21 Management of contracting services
in public sector.
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Contact information
prof. Ing. Beáta Mikušová Meričková, PhD.
Matej Bel University, Faculty of Economics, Department of Public Economics and Regional
Development
Tajovského 10, 975 90 Banská Bystrica, Slovak Republic
E-mail: beata.mikusovamerickova@umb.sk
Ing. Nikoleta Jakuš Muthová, PhD.
Matej Bel University, Faculty of Economics, Department of Public Economics and Regional
Development
Tajovského 10, 975 90 Banská Bystrica, Slovak Republic
E-mail: nikoleta.jakusmuthova@umb.sk
318
Evaluation of selected indicators of home health care in the Czech
Republic
Eva Molnarova
Abstract: This article aims to measure quality and efficiency of home health care in Czech
Republic. Home health care is present in Czech Republic since 1990 and its efficiency should
rise thanks to many factors including law establishment. Author of this paper uses five indicators
to demonstrate dependency within healthcare employees, non-medial employees, patients, and
visits in 2010-2019 period. It is not possible to state the best or the worst year, because the
indicators are changing throughout those years individually. However, year 2017 has the best
rating in index 1, which deals with the number of patients per employee, index 4 which is the
ratio of the number of visits and the number of employees in individual years and index 5
considering the proportion of visits and the number of non-medical healthcare employees for all
monitored years. At the same time, it has the second best results of indicators for index 2 (number
of patients per one of non-medical healthcare employees). During the pandemic situation with
Covid-19 the home health care should rise even more and it could be interesting point of view
for next paper following this one.
Keywords: Home care, long-term care, healthcare
JEL Classification: C10, C67,110,112
1 Introduction
Concept of home care is very differently understood between the individual countries and its
sectors. It always involves long-term care. Long-term care is a concept of comprehensive sociohealth
support for people with limited self-sufficiency. These are most often people in old age,
for people who suffer with both multimorbidity and so-called geriatric fragility. According to the
World Health Organization, the goal of long-term social and health care is to stay what the
highest possible quality of life in accordance with individual preferences and as high as possible
independence, autonomy, participation, personal fulfillment and dignity. Long-term socio-health
care as such is a set of services for people with reduced levels of functional, physical or cognitive
capacity over time a period dependent on assistance with the basic activities of everyday life.
In general, home care can be understood as any care that takes place at the patient's home.
Services that allow people to stay in their home environment. These services may or may not be
provided only by professionals. We often see cases where patients are cared for in part by
professionals and in part by their husband, wife, children or other relatives. Although the main
emphasis is concentrated on formal care (provided by professionals), informal care is often taken
into account as complementary to formal care and as co-decisive in allocation formal care.
Informal care is provided by family members, friends and volunteers who are not usually paid
or who are privately hired are paid informally.
As for the situation in Czech Republic, number of registered pending placement requests in
residential services for the elderly in recent years the value of 80 thousand, according to qualified
estimate of Association of Personal Services Providers Czech Republic. So there is a large excess
of demand above the offer in all areas of long-term care. Modernizing and improving the
provision of quality home medical care would certainly help a congested long-term care system.
The main goal of this article is to evaluate the productivity and quality of the home medical care
system in the Czech Republic according to selected indicators for the period 2010-2019. Selected
319
indicators are the number of patients per employee, the number of patients per non-medical
healthcare employee, the number of visits per patient, the number of visits per employee and the
number of visits per non-medical healthcare employee. In support of the main goal, partial
hypotheses were also formulated, in the form of research questions. Hypotheses can be divided
into two parts. The first part deals with the productivity of the home medical care system.
• Hypothesis 1: Did the number of visits per non-medical healthcare employee increase
in 2019 compared to 2010?
• Hypothesis 2: Did the number of patients per employee increase in 2019 compared to
2010?
The second part of hypotheses deals with the quality of the home medical care system.
• Hypothesis 3: Is the number of patients per non-medical healthcare employee
decreasing between 2010 and 2019?
• Hypothesis 4: Is the number of patients per employee decreasing between 2010 and
2019?
• Hypothesis 5: Did the number of visits per patient increase compared to 2019 compared
to 2010?
2 Literature Review
Home health care is enshrined in law and i tis a modern form of a health care provided in Czech
Republic since 1990. The major growth of home health care providers came with a law number
160/1992 which has been effective since 1st of april 1992 and which made first private health
facilities possible. The actual law about home health care is number 372/2011 on health services
and conditions of their provision. Home care is an irreplaceable form of health care that is
provided in the patient's own social environment (Ministerstvo zdravotnictví České republiky
(2021). The health care in the patient's own social environment is provided by the visiting service
and home care, which is nursing care, medical rehabilitation care or palliative care. (Zákon č.
372/2011 Sb.)
Home care as such is divided into two areas - home health care and home social care. The main
difference between health and social care is the way how care is paid for. While social care is
covered by the social care contribution, health care is covered by public health insurance. In the
Czech Republic, the care allowance is provided to persons who, due to a long-term unfavorable
state of health, are dependent on the help of another person. With this contribution, the state
contributes to the provision of assistance that can be provided through social services or other
forms of assistance in managing the basic needs of people (Ministerstvo práce a sociálnich vecí
(2021). The costs of the contribution are paid from the state budget. Another difference between
these two areas of home care is that health care is provided by a qualified worker who goes to
the patient's home and performs tasks that have been consulted with a physician in advance. In
contrast, social home care takes place after an investigation of the client's needs. The worker then
assists the patient in activities that are precisely formulated in advance, such as personal hygiene,
food security, laundry and ironing, cleaning, shopping etc.
In the Czech Republic, a major step was taken in the field of home health care in 1993. In that
year, the Association of Home Care of the Czech Republic was founded. It is a non-governmental
professional organization that provides its services at the national level. It brings together
providers of home health care agencies and defends their interests. He is the coordinator of the
entire home health care sector and represents the agencies in negotiations with the Ministry of
Health or in negotiations with representatives of health insurance companies. It is also actively
involved in drafting legislation. One of the goals of the association is to defend the common
interests of home health care operators, to defend the right of patients to health care in their
320
natural environment and to ensure favorable conditions for their lives. It is also a priority for
them to participate in the preparation of laws and other measures that have a direct impact on the
provision of health care. They also want to continue cooperating with the Ministry of Health,
health insurance companies and others who are preparing laws and regulations affecting the
quality of home health care. Among other things, it also tries to inform the general public about
this issue (Asociace domácí péče České republiky (2021).
Home health care is a highly qualified and professional form of care which, thanks to its scope
and quality, makes possible to reduce clients' stay in inpatient health care facilities to the
necessary minimum. In addition, it creates suitable conditions for general practitioners in primary
care, who, in cooperation with home care agencies, can provide a wider range of necessary health
care to clients who would otherwise be hospitalized. The following activities can be included in
home health care according to their expertise. Basic health care includes minor tasks such as
dressing bandages or helping with the prevention and treatment of bedsores. More advanced
professional health care then includes tasks such as monitoring the patient's vital signs, injecting
or collecting biological material. Specialized health care then enables professional monitoring of
chronically ill patients, installation of diagnostic devices etc. (Jarošová 2007).
Providing and securing home health care in terms of efficiency and effectiveness is the subject
of many papers all over the world. For example, Valdmanis et al. (2017) evaluated this issue
using data envelopment analysis (DEA). They examined the technical, scale efficiency and
overall result on a national sample of home health care agencies (HHAs). They researched the
issue in the conditions of the USA. They found that HHAs can save significantly by reducing
inputs on average proportionally by 28 % for overall efficiency, 23 % for technical efficiency,
and 6 % for scale efficiency. Of course, they encountered fundamental differences in individual
states all the efficiency measures.
Other authors looked at the issue of home health care from a different perspective. For example,
Geng et al. (2020) examined the evolution of the home health care market from 2005 to 2018.
They found that the HHAs sector was gradually growing. Specifically, during the period under
review, the number of agencies increased from 7899 to 10818. According to their research, chain
owned HHAs doubled in number from 903 organizations in 2005, which was about 11.4% of all
agencies in that year, to 1841 agencies in 2018, which was about 17% of the agency's market
that year. However, these results are downloaded to the US market. Regarding the type of
organizations monitored, for-profit nonchain agencies have been more represented over the years
than for-profit chain agencies. Significant differences in geographical distribution, patient
composition, and service quality were observed between chain and non-chain HHAs in the study.
The authors considered that chains are playing an increasingly important role in home healthcare
and that exploring this area can help inform reporting and quality monitoring, assess the
adequacy of payments and ensure greater transparency and accountability in the HHAs market.
Kim and Norton (2015) look at the issue of home medical care from a different perspective. They
try to estimate the effect of a 10 percent limit introduced in home health care on the intensity of
treatment and the patient's discharge status. They are focusing on this issue in the period from
2008 to 2010. They used agency-level variations in the proportion of outstanding payments
before the 10 percent limit was introduced to find out how home health agencies adjusted the
number of home health visits and patient discharge status under the new law. According to their
research, agencies have dramatically reduced the number of service visits below the 10 percent
limit. Agencies also abandoned relatively healthy patients and sent sicker patients to nursing
homes.
321
3 Material and Methods
In this chapter are information about data collection methodology and about method for
analysing data.
3.1 Data collection
The term „employees" was used in the data used for this research. The term "employees" includes
a total of five groups of workers. The first of them are doctors, graduates of the master's degree
program in general medicine at the Faculty of Medicine, ending with the university title "Doctor
of Medicine" (in the Czech Republic, the title is abbreviated as MUDr.). Term „employees" also
includes physiotherapists, or medical professionals, specialists who take care of the condition of
the musculoskeletal system. Ter also included non-medical healthcare employees, or general
nurses, as well as general nurses with specialization and general nurses as health and social
workers. The last item included under this term is other workers. Furthermore, the term "visits"
is used in this paper. One visit is a set of all procedures performed in the treatment of one pacient.
All data concerning the number of patients, employees, services and expenses were drawn from
the Institute of Health Information and Statistics of the Czech Republic, specifically from the
document „Stručný přehled činnosti oboru domácí zdravotní péče za období 2007-2019", or in
English brief overview of the activities of the field of home health care for the period 2007-2019.
The Institute of Health Information and Statistics of the Czech Republic is established by the
Ministry of Health of the Czech Republic and creates statistical yearbooks and provides other
statistical services entrusted to it by the relevant legislation (ÚZIS ČR, 2021).
Table 1 - Data collection (2010-2019)
Number of non­
Year
Number of Number of medical
Number of visitsYear
patients employees healthcare
employees
Number of visits
2010 143 423 4289 2783 5 709 983
2011 147 014 4328 2753 5 914 598
2012 148 011 4481 2867 6 006 011
2013 146 336 4468 2823 5 915 804
2014 140 953 4763 3041 6 935 449
2015 135 569 5040 3242 7 955 094
2016 141 369 4796 2899 6917 313
2017 138 303 5406 3217 6 283 277
2018 139 824 5070 3062 6 445 616
2019 143 932 5205 3207 6 495 692
Source: Institute of Health Information and Statistics of the Czech Republic
In the examined period, the number of patients averaged 142,473, with the lowest number in
2015 being a difference compared to the average of less than 7,000 patients. On the contrary, the
highest number of patients in 2012 was with 5.5 thousand extra patients compared to the average.
The median number of patients during the study period is 142,396, thus almost the same as the
average. This is due to the lower number of examined data.
The number of employees in the period under review oscillated around an average of 4785, with
the lowest number being in the first year of the period under review, with a difference compared
to an average of 496 employees. The highest number of employees was reached by Czech home
322
care in 2017, when compared to the average there was an increase of 622 employees. The median
number of employees is 4779, again very close to the average.
Another statistical data is the number of non-medical healthcare employees. In the examined
years, the highest number of non-medical healthcare employees in the same year was the highest
number of employees in total. This year the non-medical healthcare employees were 3217, which
is 228 more than the average of 2989. The lowest number of non-medical healthcare employees
was in 2011, when it reached the level of 2753, which is 236. Median is 2970 in this category.
An interesting statistic may be the ratio of non-medical healthcare employees on the total number
of employees, which is related to the total number of employees. The highest share of nonmedical
healthcare employees in employees was in 2010, ie in the year when there were the
lowest number of employees overall. This year, the share was 64.89%. On the contrary, the
smallest share of non-medical healthcare employees in employees was in 2017, when the highest
number of employees and non-medical healthcare employees was at the same time. This year,
the share was 59.5%.
The number of performances is based on factors other than the number of employees. This
statement is based on data from 2015, when the lowest number of employees in total (135,569)
and the highest number of performances was 7,955,094. This extreme is almost 1.5 million
performances higher than the average in this observed category, 6,457,884. The lowest number
of performances was recorded in 2010, when there were 5,709,983 performances, or visits. This
lowest level is almost 748 thousand smaller than the average in the given category. The median
was 6,364,447, a difference of about 93.5 thousand compared to the average.
3.2 Method
Five indices were created for the purposes of this research. Index 1 shows the number of patients
(P) per employee (E) and is calculated as the ratio of the sum of home care patients for a specific
year and the sum of all employees in the home care system for a specific year, according to the
following mathematical notation (1):
Index 1 = ^ ? (1)
y
The y can be substitute with a year from the researched period, ie from 2010 to 2019.
Index 2 is defined as the number of patients and the number of non-medical healthcare
employees. The letter P in the formula again stands for a patients. The abbreviation NME stands
for non-medical healthcare employees and y is the quantity that represents a selected year from
the researched period (2010 to 2019).
71
Z P
NME y^)
y
Index 3 then shows the share of the number of visits (V) and the number of patients (P) in
individual years (y).
n
Zv
P (3)
y
Index 4 is the ratio of the number of visits (V) and the number of employees (E) in individual
years (y).
323
Index 4
n
- I ? (4)
y
And the last Index 5 is the proportion of visits (V) and the number of non-medical healthcare
employees (NME).
n
Z v
NME yp)
y
4 Results and Discussion
As already mentioned, five indicators were selected for the evaluation of home health care. The
first index is the number of patients per employee. The desired value of this index is as low as
possible. The lower the value, the higher the efficiency, in other words the lower the value, the
more workers per patient there are. Index number 2 is defined as the number of patients per nonmedical
healthcare employee, therefore even here, as in the previous example, the desired value
of the indicator is as low as possible. The lower the number, the lower the number of patients per
non-medical healthcare employee. Index 3 is defined as the number of visits per patient. The
lower its value, the less it was necessary to visit the patient. Index number 4 shows the number
of visits per employee. Again, the lowest possible value is desirable. The lower the value, the
fewer visits the worker had to make and the better services he could provide. A similar situation
occurs with index number 5. It defines the number of visits per non-medical healthcare employee.
Table 2 - Calculated indicators (2010-2019)
Year Index 1 Index 2 Index 3 Index 4 Index 5
2010 33,44 51,54 39,81 1331,31 2051,74
2011 33,97 53,40 40,23 1366,59 2148,42
2012 33,03 51,63 40,58 1340,33 2094,88
2013 32,75 51,84 40,43 1324,04 2095,57
2014 29,60 46,35 49,20 1456,26 2280,65
2015 26,90 41,82 58,68 1578,55 2454,14
2016 29,48 48,76 48,93 1442,31 2386,10
2017 25,58 42,99 45,43 1162,28 1953,15
2018 27,58 45,66 46,10 1271,32 2105,03
2019 27,65 44,88 45,13 1247,97 2025,47
Source: author's calculations
324
Figure 1 - Development of index 1 and 2 (2010-2019)
Source: author's calculations
60
50
M 45
-£
0 40
_
130
2i=
20
53.40
44.88
33.97
2010 2011 2012 2013 2014
—•— Index 1 •
27.65
2015 2016 2017 2018 2019
•—Index 2
Both table 2 and figure number 2 shows the development of index 3, which shows the
relationship between the number of visits and the number of patients. Compared to previous
indices, in this case the year 2015 is the worst. The number of visits per patient is approximately
59. On the contrary, the most favourable indicator is in 2010, when the number of visits per
patient is approximately 40. The year 2015 is significantly the worst. The second worst year,
2014, is still 10 visits per patient more favourable than the mentioned year 2015.
Figure 2 - Development of index 3 (2010-2019)
Source: author's calculations
65
60
55
"S 50
&,
45
^ 40
a, 35
30
'-4-1
o
25
20
15
1 10
5
0
58.68
39,81 40.23 40.58 40
45.43 46.10 4 5 _ 1 3
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
* Index 3
325
The year 2015 has no positive index numbers 4 and 5 too. Here, too, it shows the worst value.
Index number 4 deals with the number of visits per employee, in other words - how many visits
per employee made in a given year. In 2015, one employee made approximately 1.579 visits. On
the contrary, the best value came out in 2017, when one employee made about 1.162 visits.
In 2017, the most positive value was also for index number 5 - the number of visits per nonmedical
healthcare employee. In 2017, there were approximately 1.953 visits. The worst year
was again the year 2015 with the value of the index 2425.14.
Figure 3 - Development of index 4 and 5 (2010-2019)
Source: author's calculations
2600
2500
2400
2SQQ
2200
2100
2000
1900
1800
1700
1600
2454.14
2051.74
1953.15 2025.47
1578.55
1162.28 1247.97
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
• Index 4 Index 5
5 Conclusion
It is not possible to select a single year from the research, which would have all the worst or the
best indicators. However, 2017 has the best values for the index 1, 4 and 5 for all monitored
years. At the same time, it has the second best results of indicators for index 2.
From the above, the main advantages of home care over other forms of health care follow.
Economic efficiency - home care costs of client care and contributes to shortening the duration
of hospitalization and the duration of health indications, according to many authors. There is also
a faster return of the client to the society or work process, which arises from savings in the social
benefits system and in the long run to increase economic efficiency in general. Individualized
care - each client is a unique human being who has his or her individual needs. Home care
agencies approach clients and their families individually and reflect their specific requirements.
Complexity - home care provides a set of all activities related to treatment, nursing,
rehabilitation, psychological and mental support and client care. This means that we have to
apply a holistic approach to medicine in practice.
Home health care is becoming an increasingly important part of the health care system. During
the COVED -19 pandemic was a huge development of new technologies in the field of healthcare
and, for example, telemedicine. These are factors that will certainly interfere in the development
326
of home medical care in the coming years. As home health becomes an increasingly important
component of the health care system and its share of health expenditure at the national level is
growing in many countries, it is important to understand the potential for efficiency. Therefore,
further research is recommended as the sector continues to grow. This is also recommended by
Valdmanis et al (2017). In addition, they emphasize the understanding of the cost structure of
the industry.
Acknowledgements
This paper was supported by project SGS No. SP2021/67, International Evaluation of the
Performance of Health and Social Services with a Focus on the Application of Multicriteria
Methods, Faculty of Economics, VSB - Technical University of Ostrava.
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[10] Kim H, Norton EC. Effects of the Ten Percent Cap in Medicare Home Health Care
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Contact information
Ing. Eva Molnárová
VSB - Technical University of Ostrava, Faculty of Economics, Department of Economics
Sokolská třída 33, 702 00 Ostrava 1, Czech Republic
E-mail: eva.molnarova@vsb.cz
328
The role of the state in financing of local self-government in the Slovak
Republic
Viera Papcunová, Jarmila Hudáková
Abstract: The aim of fiscal decentralization in relationship to municipalities was to increase
their financial autonomy. Nevertheless, municipalities are constantly tied to the state budget
through incomes from personal tax income and transfers, which go primarily to ensure the
transferred competencies from state. The aim of the paper is to evaluate the role of the state in
the financing of municipalities in the Slovak Republic on the basis of selected indicators. We
analysed the selected groups of municipal incomes: incomes from personal tax income and
transfers from the state budget in relationship to the total current incomes of municipalities. The
object is cumulated data of municipalities in the time series 2014-2020. Database we obtained
from the Ministry of the Finance of the Slovak Republic. The analysis showed that, despite the
fiscal decentralization, total incomes from the state budget account for an average of 72.50% of
the total current incomes of municipalities. Incomes from personal tax income accounts for an
average of 44.26% of total current incomes and transfers account for an average 28.24% of total
current incomes. Total incomes from the state budget (incomes from yield of from personal tax
income and transfers) amount to more than 76% of total current incomes.
Keywords: Fiscal decentralization, incomes from personal tax income, municipalities, transfers
from the state, Slovak Republic
JEL Classification: H24, H71, H83
1 Introduction
Public administration has to deal with several specific problems. One of the most discussed is
the financing from public sources and the limited possibilities in deciding on the use of financial
resources, which result from the legislative environment. At the same time, this is a consequence
of an insufficient or non-existent efficiency evaluation system (Daňková, Čepelová, Koreňová,
2017). This is also confirmed by Vavrek (2020), who adds that if public administration entities
want to survive and prosper in a globalized and competitive world, they must change their
thinking and streamline their management.
The process of fiscal decentralization is generally a very complex process, which depends on
many endogenous and exogenous factors, and these determine the success of fiscal reform at
local and central level (Mazllami, Osmani, 2014). From a theoretical point of view, the base of
fiscal decentralization is the fact that the fiscal and expenditures powers delegated to
supranational governments support economic development by improving the efficiency of
government (Oates,1972, Tiebout, 1956). The key issues in connection with the theory of fiscal
decentralization have become moral hazard, the way of providing information, the problem of
asymmetric information, the relations between the various levels of public government and so
on (Poláček, 2017). From a practical point of view, the application of fiscal decentralization in
the state depends primarily on the form of state organization (federal or unitary), but also on
many other assumptions, such as country size, number of government levels, historical,
legislative, social or economic background (Neubauerová, 2003). Clarke, L u (2017) notes that,
although China is formally a unitary state, in 2008, for example, central government expenditures
accounted for only 21% of national budget expenditures. In contrast, even federal states such as
Canada (43% in 2002) and the United States (51% in 1999) reported much higher percentages
of these expenditures. Chen et al., (2020) notes, however, that before 1994, local governments
in China had considerable leeway in distributing of local tax incomes. However, the 1994 tax
329
reform not only removed the local government's control over local tax incomes under the Budget
Act and banned local governments to lend themselves. Slavinskaite (2020) adds that, in general,
the degree of fiscal decentralization is higher in countries with high economic growth than in
countries with low economic growth. Based on empirical research, this is also confirmed by
Aristovnik (2012), who states that, in general, the degree of fiscal decentralization is statistically
higher in developed OECD countries than in most emerging market economies (i.e. the EEC).
Nižňanský, Cibáková, Hamalova (2014) consider fiscal decentralization to be a key prerequisite
for the success of the decentralization process in public administration. According to them, the
goal of fiscal decentralization is to reduce the central government's control over total public
incomes and expenditures and to achieve the connection of local governments with the creation
and use of resources. According to Mazllami (2021) fiscal decentralization reforms should assign
fiscal decision-making powers and management responsibilities to local self-governments in the
transfer of adequate financial resources. However, the experience of many transition economies
also shows that the unavailability of financial resources leads to the inefficiency of public
services causes the failure of local government. Nevertheless, Shin (2017) adds that fiscal
decentralization can provide incentives for greater and more effective local economic
development activity. At the same time, it notes that, on the one hand, fiscal decentralization
promotes tax competition between local governments and, on the other hand, it can support the
provision of public goods, which means that local governments in fiscally decentralized states
have better infrastructure or education services. This is also confirmed by Sow, Razafimahefa
(2017), who argue that fiscal decentralization can improve the fiscal balance by enabling the
provision of public goods and services at a lower cost. It can put pressure on local governments
to improve the delivery of public goods at minimal cost. In post-communist countries, including
the Slovak Republic, tendencies towards decentralization were delayed and practically gained
importance only in the first decade of the 21st century. The inadequate transfer of responsibilities
in relation to fundraising powers has often become an obstacle to the success of fiscal
decentralization in these countries (Maličká, 2019). The lack of funding in relation to fiscal
decentralization is also confirmed by Mazllami (2021), who states that although there have been
some attempts at decentralization in Northern Macedonia, local governments have failed to
secure financial resources. In many cases, the vertical fiscal imbalance has deepened and the
transfer pattern between levels of government has taken on the character of a transfer dependence
of lower levels of government on the central level. Rodden (2002) notes, however, that the
dependence of local governments on transfers may worsen the general government fiscal
balance. Higher dependence on transfers, especially without debt limits, can worsen the overall
balance. Subnational expenditures financed by the transfer may also, according to De Mello
(2007) represent an additional (not a substitute) expenditure of the central state administration.
Transfers can thus become a vicious circle, with higher dependence on transfers leading to higher
local government deficits and requiring bigger transfers. If sub-national governments can finance
a big part of their expenditures with their own sources of incomes (taxes and fees), they have
a stronger incentive to behave fiscally (Governatori, Yim, 2012).
Municipalities in Slovakia need to be perceived as self-governments that have a relatively big
number of competencies and a precisely defined territorial scope. Taking a deeper look at their
competencies established by law in the context of their mission, it can be stated that they are
important actors in local economic policy. Theoretically, it is from this area that their great
development potential stems, which is limited precisely by their own financial insufficiency.
These are the same competencies of municipalities and their different size with respect to the
number of inhabitants. It is from this position that other differences arise, which are manifested
mainly in economic strength, the size of the tax base, the possibility of different access to external
financial resources, as well as limited internal financial possibilities (related to the amount of
local taxes and the number of taxpayers, but also with the yield from personal tax income) (Tej,
Burdová, Vagaš, 2018). One of the reasons for criticizing decentralization in the Slovak Republic
330
is the still great bureaucracy and insufficient systematization of public administration, and the
local level is no exception. As part of the decentralization of public administration, a big number
of duties and responsibilities have been transferred to local levels. On the one hand,
proportionality was achieved in the performance, on the other hand, in many cases this transfer
of competencies was not ensured by sufficient technical equipment or adequate administrative
staff (Vartašová, Červená, 2019). The process of fiscal decentralization in the conditions of
Slovak Republic took place in two stages. In the first stage in 2004, the purposefulness of
subsidies was abolished, with which the state financially participated in ensuring the original
competencies of local self-government. Nevertheless, the financing of the transferred
competencies continued to be provided by the state through a targeted transfer. In the second
stage in 2005, the only one share tax that the state began to redistribute to the level of local selfgovernment
became the personal tax income. From 2005 to the present, the rules for determining
the share of this tax have changed several times at the level of municipalities. At present, 70%
of the total volume of incomes collected through personal tax income is redistributed to the level
of local self-government. The delegated performance of state administration continues to be
financed through a transfer. Maruchnič, Čunderlík (2005) add that the state, on the one hand,
guarantees this transfer to self-governing units under Act no. 564/2004 Coll. on the budgetary
determination of the yield from personal tax income of territorial self-government expressed as
a certain percentage of the total incomes of this tax collected by the state, but on the other hand,
only a government decree decides on its allocation mechanism. This raises legitimate concerns
on the part of local self-government representatives about the security and stability of such quasiown
incomes into their specific budgets. According to Gutman (2014) transfers between regional
and local self-government should only be on the basis of solidarity (e.g. floods or if, for serious
reasons, local self-government is unable to provide basic services - fiscal compensation).
Transfers provided by the central government should be phased out. Also Maličká (2019) notes
that if the share of own tax incomes of the total incomes of local self-governments increases, the
transfer dependence of local self- governments on the central government level decreases and
the vertical fiscal imbalance decreases. With this favorable development, local self-governments
can make a bigger amount of expenditures, which reduces the share of received transfers on total
expenditures.
2 Material and Methods
The aim of the paper is to evaluate the role of the state in the financing of municipalities in the
Slovak Republic on the basis of selected indicators. We analyzed the selected groups of
municipal incomes: incomes from personal tax income and transfers from the state budget in
relationship to the total current incomes of municipalities. The object is cumulated data of
municipalities in the time series 2014-2020. Database we obtained from the Ministry of the
Finance of the Slovak Republic. The obtained data were processed via MS Excel. We analyzed
following indicators:
% share of the personal tax incomes on current incomes =
the yield from personal tax income
- xlOO (1)
current incomes
% share of transfers on current incomes =
transfers within public administration
current incomes
xlOO (2)
331
% share of transfers on the delegated competences on the transfers within public administration
transfers on the delegated competences of state administartion
transfers within public administration
xlOO (3)
% share of the yield from personal tax income + transfers within public administration on current
incomes =
the yield from personal tax income + transfers within public administration
current incomes
x 100 (4)
3 Results and Discussion
The total current incomes of municipalities increased every year during the time period 2014-
2020. Compared to 2014 and 2020, the increase of these incomes represented 48.42%. The state
contributes to the current incomes of municipalities through the incomes from the yield from
personal tax income and transfers. The total volume of financial resources in the yield from
personal tax income and transfers increased every year. In 2020, compared to 2014, the increase
of these revenues was € 1,482 mill. €, which represents 66.39%. The share of these incomes on
the total current incomes of municipalities ranged from 67.88% to 76.11% (Figure 1). It follows
from the above that, despite the fiscal decentralization, the dependence of municipalities on
incomes from the state budget is constantly increasing. This is also confirmed by Vartašová,
Červená (2019), who note that such a situation leads municipalities to permanent dependence on
the state (the yield from personal tax income and transfers). The consequence of such a situation
is the fact that municipalities that are not able to obtain funding in other ways (e.g. by liquidating
of municipal property or using specific grants or loans) simply do not invest in the further
development of the municipality.
Figure 1 - % share of the yield from personal tax income + transfers within public
administration on current incomes.
Source: Ministry of the Finance of the Slovak Republic, own processing
6000
5000
400C
I 3000
2000
1000
LL
2014 2015 2016 2011 2018 2019 2020
80:00
70,00
60,00
50,00
40,00
30,00
20,00
10,00
0.00
X
current incomes
I the yield from personal tax income - transfers within public administration
° o share of the yield from personal tax income - transfers within public administration <
current incomes
332
The negative of this situation is the fact that municipalities are very sensitive to any negative
change at the level of the national economy, because it means a decline of their incomes. Such
dependence of municipalities on the state budget is not specific only to the conditions of Slovak
Republic. Busch, Mukherjee (2018) state that Indian states are also dependent on the central
government, because almost half of their incomes come from the state budget. 24% of state
incomes come from taxes that are collected by the state and are then divided into individual states
on the basis of a multi-element formula. Another 20% comes from state incomes in the form of
earmarked transfers.
Figure 2 - % share of the personal tax incomes on current incomes.
Source: Ministry of the Finance of the Slovak Republic, own processing
During the analysed time period, the rules for determining the incomes from this tax have
changed in relation to municipalities. In 2014, municipalities received 67%, in 2015 68% and
from 1 January 2016 to the present, municipalities receive 70% of the total volume of personal
tax income. The total income from the yield from personal tax income increased every year until
2019. In 2020, the first economic problems in the world began to manifest themselves at the turn
of April and March, when oil prices on world markets fell sharply. The Slovak Republic is an
open economy, so any change significantly affects its economy. At the same time there was a
pandemic COVID-19, which resulted in increasing government spending to combat the
pandemic. And thanks to the lockdown, the overall growth of the Slovak economy also slowed
down, which resulted in a decline of the volume of personal tax income at the state level. This
was automatically reflected in a decline of incomes, which were redistributed among
municipalities. The consequence of these changes was also a decrease the yield from personal
tax income by 73 mill. €, which represents a 3.3% decrease. The yield from personal tax income
is part of the tax incomes of municipalities, which also includes incomes from local taxes and
fees, which municipalities receive directly from their inhabitants. Nevertheless, the yield from
personal tax income on total current incomes ranged from 39.54% to 47.38%. (Figure 2).
333
Figure 3 - % share of transfers on current incomes.
Source: Ministry of the Finance of the Slovak Republic, own processing
Despite the fact that the share of incomes from the state did not change in 2020, there was a
decrease of these incomes on total current incomes by 3.49%, precisely due to the decline in the
Slovak economy. Although local self-governments in the Slovak Republic have no possibility to
influence the tax rate and tax base, according to Maličká (2019) the yield from personal tax
income is intended to cover original competencies and local self-governments themselves decide
on its specific use, in contrast to the situation with delegated competencies, which are financed
by earmarked transfers.
Transfers received by municipalities from the state budget are intended primarily to ensure the
general performance of municipalities. The total volume of transfers increased every year, in
2020 compared to 2014 they increased 1.7 times, which represents an increase of 640 mill. €.
The share of these transfers on current incomes ranged from 27.14% to 32.21%. Despite the fact
that the total volume of transfers increased every year, their share on total current incomes had a
fluctuating trend. In the time period from 2015 to 2018, the share of transfers on total current
incomes decreased. In 2019 and 2020, the share of transfers on total current incomes increased
(Figure 3).
334
Figure 4 - % share of transfers on the delegated competences on the transfers within public
administration
Source: Ministry of the Finance of the Slovak Republic, own processing
isoo
1600
1400
1200
1000
'S 800
600
400
200
0
r 70
n n
201-! 2015 2016 201"; 2018 2019
l transfers within public administration
on the delegated competences of state administration
'•• share of transfers on the delegated competences on the transfers within public
administration
Current transfers consist mainly of transfers for the delegated competences of state
administration. In the process of decentralization of public administration, municipalities
obtained on the basis of Act No. 416/2001 Coll. on the transfer of certain powers from state
administration bodies to municipalities and higher territorial units of competence in various
areas, e.g. in the fields of education, social affairs, etc. The state contributes to their provision
through transfers for the delegated competences of state administration. Of the total volume of
current transfers, transfers for the delegated competences of state administration range from
58.06% to 66.57%. The total volume of these transfers has increased every year. In 2020, these
transfers increased 1.7- fold compared to 2015, it is representing 399 mill. € (Figure 4)
4 Conclusion
The foundations of fiscal decentralization in the Slovak Republic were laid in April 2004 and the
aim of fiscal decentralization was mainly to ensure greater financial autonomy for municipalities
through share tax and local tax, while ensuring income stabilization to ensure original
competencies. Nevertheless, the state continues to financially support municipalities. This was
also confirmed by the analysis of incomes through which the state contributes to the financing
of municipalities. Total incomes from the state budget (incomes from yield of from personal tax
income and transfers) amount to more than 76% of total current incomes. Already during the
economic crisis in 2009, which resulted in a decline in personal tax incomes revenues, the
inability of municipalities to finance their needs without state assistance became apparent.
Therefore, for the municipalities, on the base of the Resolution of the Government of the Slovak
Republic was approved an extraordinary subsidy from the sources of the state budget of the
Slovak Republic in the amount of 100 mill. €. to cover the loss of personal tax income and to
improve the initial situation in 2010. The current COVID-19 pandemic also it causes that
municipalities have lower incomes from the state in the form of yield from personal tax income
due to reduced economic growth in the country. Both of these crises have highlighted the strong
dependence of municipal financing on economic development of state, while opening up new
questions and challenges in the activities and management of municipalities. One way to reduce
the dependence of municipalities on the state could be a more efficient use of municipal property.
However, this should be preceded by a thorough comprehensive financial analysis based on the
335
evaluation of individual components of the municipal budget. Based on the results of such an
analysis, it would be possible to consider changes in local self-government funding, e.g. return
to a mix of taxes that will be redistributed to the municipal level.
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Contact information
doc. Ing. Viera Papcunová, PhD.
Constantine the Philosopher University in Nitra, Faculty of Natural Sciences, Institute of
Economics and Management
Tr. A . Hlinku 1, 949 74 Nitra, Slovak Republic
Masaryk University, Faculty of Economics and Administration, Department of Regional
Economics and Administration
Lipová 41a, 602 00 Brno-Pisárky, Czech Republic
E-mail: vpapcunova@ukf.sk
Mgr. Jarmila Hudáková, PhD., MBA
Constantine the Philosopher University in Nitra, Faculty of Natural Sciences, Institute of
Economics and Management
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Tr. A . Hlinku 1, 949 74 Nitra, Slovak Republic
E-mail: jhudakova@ukf.sk
Artificial Intelligence in Healthcare: Focus on Human Resources
Substitution and Early Adopters in Slovakia
Peter Pažitný, Daniela Kandilaki, Kristina Randlová, Zuzana Rajdlová
Abstract: In the area of management of healthcare services, artificial intelligence has a potential
to influence the production of healthcare services or even substitute healthcare professionals.
Slovak healthcare system faces a shortage of doctors and nurses, and this is not going to change
soon. So artificial intelligence is one of the potential solutions how to compensate the current
and future shortage of doctors, nurses, and other healthcare personnel. The aim of this article is
to (1) search for studies and use cases, where AI has the potential to substitute humans in
healthcare and (2) find out if this Al/human substitution is a motivator for AI implementation in
Slovakia. We are discussing five areas where artificial intelligence has potential to substitute
humans, namely robotic surgery, radiology, radiomics, infectious diseases, and nursing.
Regarding motivation for AI adoption in Slovakia, the lack of human resources was mentioned
spontaneously by early adopters, but it is not the main motivation factor. In Slovakia, it looks,
that medical and business leadership are much higher motivators. Medical leadership brings new
(faster and more precise) ways of treatment people and business leadership has the potential to
strengthen the leader position of early adopters.
Keywords: Artificial intelligence, early adopters, healthcare, human resources, substitution,
Slovakia
JEL Classification: 110,115, 015
1 Introduction
Lost Tapes of the 27 Club is a mental health project that raises awareness by producing artificial
intelligence (AI) created songs of famous artists, that suffered from mental health problems and
their lives were all lost when they were only 27 years old (see more at www.overthebridge.org).
In the "Lost Tapes" project, artificial intelligence created and performed new songs from Amy
Winehouse, Jimi Hendrix or Kurt Cobain.
Listening to these songs, its not only thinking about "what these artists might have created, were
they still with us" (www.losttapesofthe27club.com), but mainly thinking about, to what extent
artificial intelligence is able to do "human" actions and to what extent AI is able to substitute
humans. And if artificial intelligence creates music, is it able to substitute humans in other areas
of life?
In the area of management of healthcare services, the question is, if the artificial intelligence has
a potential to influence the production of healthcare services or even substitute human resources
in healthcare. Slovak healthcare system faces a shortage of doctors and nurses, and this is not
going to change soon. So artificial intelligence is one of the legitimate solutions to compensate
the shortage of doctors, nurses, and other healthcare personnel. Or as Mesko (2017) points out,
while no AI is meant to replace physicians, those physicians who use AI might replace those
who do not.
In this context, we can describe the production of healthcare services as a combination of (1)
gross capital formation, (2) human resource and (3) artificial intelligence. Under gross capital
formation we understand all infrastructure, machinery and equipment and intellectual property
products as defined by the System of Health Accounts (OECD, 2017). Human resources in
healthcare are all qualified health care workers that are working in the healthcare sector (adopted
339
from WHO, 2016). Artificial intelligence is defined as the use of computers for automated
decision-making to perform tasks that normally require human intelligence (USAID, 2019).
The High-Level Expert Group on Artificial Intelligence (EC, 2019) uses a more complex
definition, where "Artificial intelligence (AI) systems are software (and possibly also hardware)
systems designed by humans that, given a complex goal, act in the physical or digital dimension
by perceiving their environment through data acquisition, interpreting the collected structured or
unstructured data, reasoning on the knowledge, or processing the information, derived from this
data and deciding the best action(s) to take to achieve the given goal."
According to Somoili (2019) the core A I domains are: reasoning, planning, learning,
communication, and perception. On other hand, processes like automation, telemedicine or
digitalization are not considered as artificial intelligence. There is no doubt, that for example
laboratory automation reduce manpower needs. According to Yeo (2018) the workload in the
examined laboratory over 10 years has increased steadily against a constant headcount.
Automation aims to manage increasing workload demands, reduce errors, and enhance
laboratory performance while managing a limited labor force.
As we see from the definitions above, AI combines the very substance from both production
factors - gross capital and human resources. The gross capital is presented by hardware part of
AI - starting with computer hardware up to a robotic skeleton. The labor force part is presented
by learning, thinking and up to decision-making abilities of AI.
Based on more than 260 use cases a framework of Artificial Intelligence in healthcare was
created by US AID (2019). This is divided into four domains - population health, individual
health, health systems and pharma & medtech. The potential substitution of medical personnel
by A I is most likely to be in the domain individual health.
Figure 1 - Framework for all AI Use Cases in Healthcare
Source: Artificial Intelligence in Global Health, US AID, 2019
Population
health
Individual
health
Health
Systems
Pharma
& Medtech
^ > Surveillance arid prediction Population risk management Intervention selection Intervention targeting
I Sclf-rcfhrral flS Triage htrsonalizcd outreachC a r e routing
behavior change
* Bfflrdse
* Diet
- Wellness
* tdutatioti
( Data-driver diagnosis
• Symptom based
* Lab-based
Qinical decision support
• Treatjnerrt guidance
• Medication prescribing
I (compliance monitoring
• Medication adherence
' Kehab compliance
Image-based diagnosis
* Radiology
" PaUiülogy
Monitoring: Inpatient monitoring, device monitoring
Al-faciIrtated care: Self-care guidance, psych counseling
Al-faciIrtated care: Robotic surgery robotic PI
Medical records Capacity planning and personnel management Claims processing
^ ) Fraud prevention Quality assurance and training Coding and billing
Clinical trial support and recruitment Drug discovery and medtech R & D D r u g safety and pharrnaccvigilance
Supply chain and planning optimization Process optimization Real w o r l d evidence and H t O f t
In comparison to the two-factor Cobb-Douglas production function (Gechert, 2019), we can
think of artificial intelligence as a specific production factor. This approach was chosen by
DeCanio (2016), where the two production factors - labour and capital - were extended by robots
to present the three-factor production equation: labour, robots, and capital. De Canio concludes
that if elasticity of substitution between human and robotic labor is greater than the 1.7-2.1
range, spreading of robots will have a depressing effect on human wages.
340
The emphasis of this article is not to calculate the elasticity of substitution between these factors,
but rather focus of the substitution possibilities itself in healthcare and specifically in the context
of the Slovak healthcare system. The aim of this article is to:
1. search for use cases, where AI has the potential to substitute humans in healthcare
2. find out if this Al/human substitution is a motivator for AI implementation in Slovakia
2 Material and Methods
This paper is based on (1) literature review to find appropriate use cases and on (2) qualitative
approach.
Literature review was done by internet search using Google Scholar (www.scholar.google.com),
by searching the database of the National Centre for Biotechnology Information (NCBI,
www.ncbi.nlm.nih.gov) and by searching in materials of the Hello AI 2021 course
(www.helloaionline.com). Keywords that were used: artificial intelligence, deep learning,
healthcare, radiomics, human resources, healthcare renovation, AI vs HR, mechanization of
healthcare, AI in medical, AI homecare. After the search a long list of studies emerged, and the
studies were further analyzed, selected, and grouped. From the long list those studies were
excluded, in which there was no answer to the questions whether AI improves the results of care,
replaces, or has the potential to replace human resources in the future. When selecting the uses
cases and studies, we focused on variability of use cases from more areas of health care. In total,
we went through more than 100 studies in more detail, from which we selected the publications
and use cases, in which we saw the answer to the basic question: AI vs human resources.
Qualitative approach was done by personal interviews with so called early adopters of AI, more
specifically healthcare providers who already have real experience with the selection,
implementation and use of artificial intelligence in Slovakia. These early adopters were identified
by media search with keywords: artificial intelligence, healthcare, providers, Slovakia. The
adoption of AI in Slovakia is in very beginning and is spread very rarely. So, the pool of early
adopters is very limited and consist of private hospital using Brainomix (www.brainomix.com),
private provider of diagnostic imaging using IcoBrain (www.icometrix.com) and a public
hospital providing robotic assisted surgery by DaVinci surgical robot
(www.davincisurgery.com). These early adopters were questioned in person (2 onsite visit, 1
online interview) following a semi-structured interview design, which covered areas as
motivation and barriers for AI implementation and a part on recommendations for faster AI
implementation.
3 Results and Discussion
In our research, we grouped the studies, publications and use cases, where AI with high potential
to substitute or replace humans into five areas: robotic surgery, radiology, radiomics, infectious
diseases, and nursing.
3.1 Use cases, where AI has the potential to substitute humans in healthcare
3.1.1 Robotic surgery
The most advanced interaction of artificial intelligence in physical world is robotics. According
to H L E G (EC, 2019) robotics can be defined as AI in action in the physical world (called also
embodied AI). AI physical interventions is a combination of AI and robots, where AI helps to
control robotic surgical devices to perform surgery and controls robot that facilitates a patient's
physical therapy routine. (Artificial Intelligence in Global Health, 2019).
341
The word control in this sense needs to be interpreted in caution, because it is closely linked to
definition of autonomy. According to Panesar (2019), "autonomy" is not a singular state, but
rather a scale in which the degree of human intervention is traded against full independence.
Panesar further distinguishes zero to five levels of automation (Table 1).
Table 1 - Human vs. Robot Surgeons
Human vs. Robot Surgeons
0 1 2 3 4 5
No Some Partial Conditional High Full
automation assistance automation automation automation automation
Traditional e.g. e.g. e.g. e.g. Robot e.g. Robot
surgery: Intraoperative TSolution- CYBERKNIFE, capable of for warzones
Human image One automated pre- performing or deep
surgeon guidance; (ROBODOC) operative most, if space
performs human still hip planning and not all exploration?
all tasks physically arthroplasty radiosurgery parts of Fully
performs all robot; (but not a complex autonomous,
surgery reduced level technically procedure. versatile; no
(DaVinci) of human „surgery") Negligible human
input human assistance
required but input needed
range of required
procedures
Source: Panesar et al., 2019
Robotic surgery utilizes the robotic systems to assist and aid in surgical procedures. Robotically
assisted surgery was created to improve the capacity of surgeons performing open surgery. In
the case of robotically assisted minimally invasive surgery, instead of straightly moving the
instruments, the surgeon uses one of two methods to control the instruments; either a direct tele
manipulator or through computer control (Murali, 2018). Robotic surgery can be applied on
different body parts, like urology, oncology, ophthalmology, orthopedics, traumatology, or
cardiac surgery (Ozmen, 2021 in print).
3.1.2 Radiology
Radiology is naturally a key AI segment. All input images are fully digitalized (MR/CT scans,
mammograms, etc.). Usually implemented by entities which are decentralized and have full
control over the collected patient data. Recent research in this area is very promising. According
to McKinney at al. (2020) AI predicts breast cancer in mammography more accurately than
radiologists - reducing false negatives and false positives.
This trend was also confirmed by Salim et al (2020), by external evaluation of three commercial
AI algorithms for independent assessment of screening mammograms in Sweden. The results of
this study indicated that a commercially available AI computer-aided detection algorithm can
assess screening mammograms with a sufficient diagnostic performance to be further evaluated
as an independent reader in prospective clinical trials. Combining the first readers with the best
algorithm identified more cases positive for cancer than combining the first readers with second
readers.
Further on, according to Dembrower et al (2020) AI reduces radiologist workload, allows earlier
detection of critical cases. Commercial AI cancer-detector algorithm could be used in triaging
mammograms to decrease radiologist time spent on clearly negative mammograms and use these
resources for women at risk of having a false-negative screening. The study shows that a
342
commercial AI cancer-detector algorithm could be used as both a single reader to determine
easily read, negative mammograms with no radiologist involvement, and to select women for
enhanced supplemental screening after a negative double reading by radiologists.
3.1.3 Radiomics
According to www.radiopedia.org radiomics (as applied to radiology) is a field of medical study
that aims to extract many quantitative features from medical images using data characterization
algorithms. The varied use of artificial intelligence in the diagnosis and treatment of oncological
diseases has given rise to a whole new method: radiomics. Radiomics is a quantitative processing
of medical data that enables more accurate and faster diagnosis of cancer, personalized diagnosis,
compilation of models of cancer development, evaluation of treatment responses and more.
Rogers (2020) describes a gradual transition historical qualitative method of data processing
using artificial intelligence as very beneficial. Quantitative diagnostics can, with the help of
artificial intelligence, achieve such derivations in health that are invisible to the human eye.
Radiomics is most often used in the diagnosis of cancer diseases of the head, neck, and chest,
but it is also used in other areas of health care (Niha, 2020).
In addition to the initial diagnosis, radiomics also enables the prediction of the return of cancer.
Tang (2021) describes the possible use of artificial intelligence to early predict the recurrence of
esophageal cancer, using quantitative analysis of CT images of patients. Zhouying (2021) sees a
great advantage of using artificial intelligence in the treatment of cancer patients in compiling
personalized diagnostics and predictive models of cancer development, which is possible thanks
to quantitative analysis of large amounts of data obtained from medical images (CT, MRI, PET
CT), molecular marker of tumor cells analysis and others.
The involvement of radiomics in the health care of oncology patients represents a significant
improvement and increase in the quality of care provided. The use of artificial intelligence
reduces the time required for diagnosis and increases the number of patients that the doctor can
treat, during his working hours. Radiomics therefore brings the possibility of solving insufficient
human resources. However, artificial intelligence tools only improve the quality and speed up
the doctor's care, but they are not able to completely replace the doctors. Human resources are
still an indispensable factor in the treatment of oncological diseases, and artificial intelligence is
used only as a supportive tool for patient care (Mesko, 2018).
3.1.4 Infectious diseases
An important opportunity is the involvement of artificial intelligence systems in the case of
infectious diseases. It is possible to use a diverse set of tools of artificial intelligence that reduce
the direct contact of healthcare professionals with infectious patients as well as mapping the
progress of the epidemic of infectious diseases. Rahman (2020) ranks among the usable tools
such as monitoring the patient's bed and vital functions without the physical presence of a nurse
and remote diagnosis of patients. Another possibility is the use of drones to disinfect premises
or transport drugs to patients. Kumar (2020) further expands these possibilities of using artificial
intelligence with the possibility of effective data collection on patients, the spread of infection
and subsequently the creation of models of epidemiological predictions.
These possibilities of using artificial intelligence increase the safety of medical staff, as replacing
part of the activities of employees with artificial intelligence tools reduces the direct contact of
medical staff with infectious diseases. There is a positive substitution in potentially dangerous
job positions, with the results of increasing the safety of direct health care workers. Both above
authors describe the possibility of using artificial intelligence tools to control the COVfD-19
343
epidemic. Moreover, the described tools are universal and usable also in the case of other
infectious diseases.
3.1.5 Nursing
In nursing, the robotic revolution has accelerated by the COVED-19 pandemics. In June 2021,
the humanoid nursing robot Grace was presented. Grace is targeted to interact with elderly and
help those isolated by the pandemics (Reuters, 2021). Pepito already in declared (2019) that it is
very important involvement of nurses in the technological development of AI. On the other hand,
artificial intelligence is perhaps the domain of the future, but empathy and compassion are
difficult to model in machines (Asada 2015). Human nurses are more empathic and understand
the emotions of human senses and their nuances, so its reason why they can provide better care
than robots (Hojat, 2016).
Tran's research (2019) found that patients think that AI should help clinicians "predict" results.
However, decisions, active care and recommendations should remain a human task. Technology
would be "only" an aid for doctors. 12% of the examined sample, who were most suitable in their
care for the use of AI technologies, perceived this possibility only as a supplement - and not as
a substitute.
The problem is that the medical staff is scarce. The waiting rooms are full of people who often
have only a trivial problem and home care is overloaded. The solution was presented by
Darthmouth-Hitchcock and their Imagine care project. This system monitors the current real
health needs of the client. It evaluates its life functions and fluctuations in his health. All data are
analyzed and saved in the cloud. In case of problems and changes in health status, the system
notifies the doctor. It is the moment when the patient really needs his care. It saves time, money,
health, and medical staff (Belciug et al., 2020).
3.2 AI implementation in Slovakia
3.2.1 Motivation and barriers
The motivation for the introduction of artificial intelligence in Slovakia is conditioned by several
specifics. The key and most important criterion is a unique combination of medical leadership
with support from top management, respectively partners of the company (business leadership).
This was clearly formulated and declared by all hitherto successful implementers of artificial
intelligence in Slovakia.
In the context of clinical leadership, in addition to the physicians' own motivation to "be the first
in Slovakia" after completing a foreign internship (or a conference), several important
motivations for the introduction of artificial intelligence emerged. Medical reasons and the need
to improve clinical benefits and patient well-being dominate. Attention is also paid to avoidable
deaths (e.g., stroke), chronic diseases (e.g., oncology) and neurological diseases (multiple
sclerosis, Parkinson's disease, or dementia).
Equally important motivations for the implementation of artificial intelligence are the effort to
improve population health, prevention and prediction of chronic diseases, algorithmizing of
treatment processes in the hospital and the need to strengthen patients' chances of affordable
health care (horizontal equity).
In addition to clinical motivations, broader business motivations have also emerged. These
manifested themselves primarily in the form of enthusiasm for the use of artificial intelligence
as well as in the opening of new dimensions that artificial intelligence offers. This has been
344
linked to the provision of better health services than the competition, and to the confirmation of
market leadership through the use of artificial intelligence. Closely related to this was the
providers' strategy to invest in quality, not only in high-tech devices, but also in modern
evaluation methods (such as artificial intelligence). In addition to the most technologically
modern devices, the most modern software equipment (like AI) has been added.
One of the very stimulating business motivations for the introduction of artificial intelligence is
the lack of workers. It is artificial intelligence that can help with technological sophistication in
activities where it can compensate for the lack of healthcare professionals. For example, in
radiology Slovakia is very specific. Slovak radiologists are not organ-specialized, while Western
university radiologist are organ-oriented (e.g., musculoskeletal system), so in Slovak conditions
we are not yet able to reach the level of a Western organ specialists. However, there is a chance
in the implementation of artificial intelligence, which shows as good results as Western experts
in the diagnosis of some serious diseases (e.g., multiple sclerosis, dementia,...).
Finally, a very important motivation is to create savings in the health system by improving the
review system, hospitalization management, or emphasis on prevention with a societal reason to
differentiate itself from the competition - creating value for the client and avoiding unnecessary
expenses.
Medical and business leadership as key factors were also supported by the fact that early adopters
are not financially rewarded for investments in using artificial intelligence. Neither from the state
budget nor from health insurance companies. Thus, neither capital costs nor operating costs are
covered. Despite this handicap, they invest time, energy, and financial resources for the
introduction of artificial intelligence in Slovakia.
The capital costs of artificial intelligence are paid exclusively by the implementers. Both among
providers and in health insurance companies. For providers, one option is to agree on a costsharing
agreement with the AI supplier, so the actual costs are a matter of internal trade policy.
Operating costs are also covered by providers, while services that use artificial intelligence are
not covered by public health insurance. Simply - there is no "code" for this, while providers agree
that wider AI implementation would be faster if consultations using artificial intelligence were
covered by health insurers.
3.2.2 Recommendations for faster AI implementation in Slovakia
The area where artificial intelligence is used in the Slovak healthcare system is very narrow,
concentrated mainly in the field of radiology, robotic surgery and some activities of health
insurance companies such as automated review activities.
First key recommendation for successful implementation of AI is digitalization of everything
that can be digitalized. In this context, the Slovak healthcare system could be today characterized
as mostly analogous with certain elements of digitalization, but only in some areas. One of the
biggest challenges today is digitalization of laboratory diagnostics, pathology, and the whole
medical documentation, in line with the transition to electronic communication, the launch of
electronic online ordering systems, or pilot testing of chatbots, symptom checkers or risk
prediction algorithms.
Second recommendation is clinical compatibility. It is important that the provider is convinced
of the AI solution and that the technology corresponds to the ideas of the implementing
physicians. There is a problem when AI is oriented only to normal performances and does not
support the interpretation of less frequent, severe cases. At the same time, AI technology should
not consume a lot of physician's times on typing in information. It is crucial for a successful
implementation that the AI modality is user-friendly for physicians and healthcare professionals.
345
At the same time, the recommended treatment must be based on European standards, resp.
standards close to Slovakia so that the result recommended by AI can be applied in practice and
to suit local Slovak realities and settings. It is important to listen to clinicians where they see an
AI system that will have added value. Forcing certain software "from above" (top-down) does
not work. Also, it is necessary to listen to the sending doctors (neurologists, oncologists,...) what
are their requirements for the evaluation of CT/MR, because in the end they interpret these results
and adjust the treatment.
Third recommendation is to measure indicators of benefit for the patient. Health insurance
companies are willing to support services with the help of AI only if there is a clear benefit for
the patient and at the same time created savings for the health insurance company. Using the
principle of value for money. Conditional AI support by health insurance companies. Both
private health insurance companies make the payment of the application of artificial intelligence
conditional on a win-win-win mechanism. First, it is necessary to find a benefit for the patient.
Secondly, it is necessary to find a payment mechanism for the provider (risk-sharing, success
fee-based payment, value-based payment). Third, the solution must bring real financial savings
over a certain time horizon (not necessarily short-term).
Fourth recommendation is a necessity of a modern legislative and institutional framework for
artificial intelligence, especially a modern catalogue of healthcare services. Implementing ehealth
to create a suitable environment for making anonymized e-health data available, not only
to providers and health insurers, but also to academics, research institutions, the pharmaceutical
sector, and others.
4 Conclusion
In our research we focused on artificial intelligence in healthcare. First, by using literature
review, we looked at areas, where AI has the potential to substitute or replace humans. Second,
by using personal interviews with three early adopters of AI, we looked at motivations for AI
adoption in Slovakia.
We have discussed five areas where artificial intelligence has potential to substitute humans,
namely robotic surgery, radiology, radiomics, infectious diseases, and nursing.
Regarding motivation for AI adoption in Slovakia, the lack of human resources was mentioned
spontaneously by early adopters, but it is not the main motivation. It looks, that medical and
business leadership are much higher motivators. Medical leadership in the context bringing new
(and faster and more precise) ways of treatment people and business leadership by meaning to
be the first company that is introducing a new technology in Slovakia to strengthen the position
among competition.
Acknowledgements
Peter Pažitný was a member of the team responsible for designing the National strategy for
artificial intelligence in healthcare in Slovakia, that is funded by D G SANCO, and the main
beneficiary is the Ministry of Health of the Slovak Republic.
Krishna Randlová took active part in the summer program Hello AI 2021
(www.helloaionline.com)
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Contact information
doc. Ing. Peter Pažitný, MSc, PhD.
Prague University of Economics and Business, Faculty of Management, Department of
Management
Jarošovská 1117/11, 377 01 Jindřichův Hradec, Czech Republic
E-mail: peter.pazitny@vse.cz
349
Financial Management and Control Assessment Tool for Local
Government Authorities
Romana Provazníkova, Ruslana Rudnitska
Abstract: The aim of developing new Financial management and control (FMC) Assessment
Tool for Local Government Authorities is strengthening of local government financial and
general management and ensuring that the operational and financial relations between central
and local government are compatible with securing the central government objectives. The paper
presents the author's approach to the development and adaptation of F M C assessment tools to
the local government authority needs. The development of a mechanism for evaluating the
effectiveness of the FMC-system at the local level performs the number of important functions,
among which the authors singled out: reducing information asymmetry by providing reliable and
comprehensive information, protecting the property and documents, ensuring effective economic
performance, observation of accounting principles and presentation of reliable financial records,
obeying laws and executive acts, implementation of the effective system of risk control. The
authors proposed such elements of F M C assessment for local government authority as
Questionnaire for Senior Management; F M C benchmark criteria; Assessment Questions
regarding relation local body and subordinated/related bodies; Questionnaire for preliminary
assessment phase; Interview questions. The combination of instruments depends mostly on the
scope of assessment.
Keywords: Budgetary Policy, Financial management and control, Local Government Authority,
Public Finances
JEL Classification: H7, H83, M48
1 Introduction
The concept of good governance is interlinked with institutionalized values such as democracy,
observance of human rights, accountability, transparency and greater efficiency and
effectiveness of the government sector of any country. Good governance in the context of
countries is a broad term. It has a significant impact on government performance and is therefore
essential in building trust in government and delivering necessary structural reforms.
The central government has a key responsibility to manage the national economy and the balance
between the public and private sectors. Local government (LG) expenditure forms part of public
expenditure and therefore central government economic management decisions impact L G .
Managing the economy the central government must have a comprehensive understanding of the
impact that its decisions will have upon the different sectors of the economy including LGs.
Without that understanding inefficiencies in public expenditure management will occur. Those
inefficiencies can be compounded in the case of local government by inadequate information
about the actual costs of providing services by local governments to certain standards as well as
by the arrangements for the timing and transfer of funds from central to local governments as
well as the arrangements for the equalization of resources against needs. The quality of financial
management within local governments will determine how well the local government sector of
the economy is managed and the central government will be concerned about the efficiency and
effectiveness of L G and its actions should encourage LGs to improve its performance.
Achievement of the goals of creating integrity-based public administration by local government
authorities covers attainment of long-lasting improvements, transparency and accountability in
public financial management (ACCA, 2010).
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However, not only accounting for funds should be the focus of government managers, as longterm
strategic planning needs monitoring of daily tasks for compliance with long-term goals,
which requires assessment of the value of the programs and measurement of their
accomplishments. Financial management is about much more than the preparation of budgets to
meet the consequent budgetary control arrangements. An important element of general
management is FMC, which is not just a form of financial and budgetary control, although these
are part of Financial management and control. FMC is about the delivery of the objectives, to
time, to standard, efficiently and effectively, by the management of the organization. This means
that the manager should be involved in the formulation of the budget and that the expected
achievements should be directly linked to the available budget. Accountability then requires that
those objectives and performance standards are published and that in turn generates pressure
upon managers to improve efficiency and effectiveness. Being ingrained in all business systems
and functions F M C is essential to ensuring that an organization is functioning effectively and
efficiently (DiNapoli, 2016). Institutional development of FMC-system will always lead to
improved financial performance (Nyakundi, et al., 2014).
Financial management and control system's challenges at the L G level are similar to the central
government level (Eton, 2019). F M C at the local level should be focused on the achievement of
the organization's mission, with special emphasis on reducing opportunities for fraud and
minimizing corruption, avoidance of bad publicity and insurance of public confidence, prevent
loss of resources, and information asymmetry neutralization through minimization of reporting
errors.
Ineffective FMC is a consequence of serious deficiencies in financial data, systems and staff
skills resulted in unreliable planning, budgeting and reporting (ACCA, 2010). Eton (2019)
clarifies such problems of F M C for local authorities as a demonstration of oversight to
implementation of planned activities just for the sake, that's why some projects appeared to be
poorly coordinated and, in some cases, are abandoned before completion. DiNapoli (2016) states
that one of the most dangerous things in weak Financial management and control system is that
it leads to a lack of accountability and as a consequence, this results in the erosion of public
confidence and support and hampers an organization's ability to serve the public effectively.
Local governments F M C mechanisms in developing countries appeared to be weak at actual
management of risks, so management at the local government level should tighten and strengthen
the Financial management and control systems (Eton, 2019).
Therefore, it becomes increasingly important to define the main problems with the present
financial and institutional arrangements between central and local government. The specific for
transition and developing economies challenges are:
• suboptimal range of spending powers of local budgets: the lists and amounts of
expenditures on the exercise of delegated and own powers are not settled; the
mechanism of the calculation of expenses on the exercise of delegated powers is
inefficient;
• insufficient financial capacity of LGs resulting in stringent budgetary restrictions
imposed on the exercise of their powers and hampers the investment development of
communities;
• lack of the available L G budgetary policy toolkit to support the day-to-day management
of budget funds;
• lack of optimization and efficiency gains in the budget process and lack of mediumterm
budgeting;
• lack of proper financial transparency and accountability of LGs to municipalities, and
mechanisms of independent external audit and public oversight over the management
of local finances and municipal assets.
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A particular concern of the central government is that weaknesses in financial management in
LGs also result in inconsistent and sometimes poor service delivery of delegated powers, quite
apart from the further concerns about poor internal financial control and lack of transparency.
Examples of the weaknesses that presently exist in former Soviet Union countries can be defined
as (?) non-efficient budget process prone to potential errors with potentially inconsistent use of
accounting principles; limited capacity to monitor the budget for results, use budget funds costefficiently
and in a result-oriented way, with a medium-term time horizon; (ii) weak fiscal
framework and oversight of local government borrowing and (Hi) limited accountability of local
governments (weak internal and external audit).
The organizational and managerial infrastructure must support, know how to utilize and followthrough
using accountability mechanisms to ensure that objectives and performance are
achieved. Without that reforms will be largely nominal and will not achieve the benefits hoped
for. It is also not simply a matter of writing rules and approving legislation. The aim of this article
is to stress the importance of financial management and control development for local
government and to propose the new Financial management and control Assessment Tool for
Local Government Authorities. Such a tool might be used as the instrument for testing the FMC
systems, based on assessment results, development of recommendations for improvement, as
well as for comparison of the F M C systems in between different Local Government Authorities.
2 Theoretical background
During the analyses of theoretical aspects of the concepts of F M C system Lakis and Giriurias
(2012) gave a broad definition of FMC as "all-inclusive activity in financial and management
accounting, as well as in the strategic management of projects, operations, personnel and the total
quality management" (Lakis and Giriurias, 2012). DiNapoli (2016) defines FMC as a process,
effected by an entity's board of directors, management, designed to provide reasonable assurance
regarding the achievement of objectives relating to operations, reporting, and compliance. In a
broad sense, F M C is the integration of the activities, plans, attitudes, policies, systems, resources
and efforts of the people of an organization working together to achieve its mission (DiNapoli,
2016).
In terms of unfolding the permanent financial crises and increasing imbalances in capital
markets, King (2011) defines FMC over fixed assets as "not just having a printout of bought
assets but having an assurance that the assets you think you own are still there, and that they have
not gone missing" (King, 2011). Some researchers consider F M C as an intervening variable in
the budgeting process (Gachoka, et al., 2018). In the context of budget implementation Financial
management and control systems manages public finance in a way that minimizes deficits and
ensures value for money to taxpayers (Eton, 2019). F M C will be most effective when it is built
into financial the entity's infrastructure and is a part of the essence of the organization (Saeed
and Dashti, 2014). F M C being a part of Financial management and control system encompasses
the managerial responsibilities, at all levels, of public income and spending centres related to
implementing a system of control that ensures adequate planning, programming, budgeting,
accounting, controlling, reporting, archiving and monitoring. Managers that bear these
responsibilities should be held accountable for their activities (operational activities as well as
activities related to FMC) (e.g. 'Welcome to the world of PIFC, European Commission, 2006).
Based on the effectiveness concept F M C is a set of policies and procedures adopted by an entity
in ensuring that an organization's transactions are processed appropriately to avoid waste, theft
and misuse of organization resources, to enable the production of reliable reports and ensure
compliance with laws and regulations (Nyakundi, et al., 2014). The study of Benedek et al.
(2014) is focused on the FMC-system of the public finances' subsystem of local governments.
FMC-system is defined as a management information system that serves as a basis for all
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management decision making and, at the same time, ensures that steps are taken in the direction
of the organization's goals (e.g. Benedek et. al, 2014).
F M C is mostly identified as measures instituted by an organization to ensure the attainment of
the entity's objectives, goals and missions. INTOSAI specifies the following general objectives
for FMC: 1) executing orderly, ethical, economical, efficient and effective operations; 2)
fulfilling accountability obligations; 3) complying with applicable laws and regulations; 4)
safeguarding resources against loss, misuse and damage (INTOSAI, 2004).
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) developed
The COSO Integrated Control Framework (1992) aiming at uncovering fraud, identifying,
managing organizational risks and established a system of FMCs. The COSO Guidelines
specifies five necessaries for effective F M C components: Control Environment, Risk
Assessment, Control Activities, Communication, Monitoring (COSO, 1992). An updated
Internal Control-Integrated Framework is developed on a principles-based approach that
provides flexibility and allows for judgment in designing, implementing, and conducting Internal
control (COSO, 2013). Being an internationally recognized integrated framework for Financial
management and control, the COSO model is based on 17 underlying principles and 81 points
of focus necessary for an entity or organization to effectively manage risks through the
implementation of Financial management and control (COSO, 2015). The versatility of the
COSO model lies in the possibility of its use for different levels of management - a separate
department or an organization as a whole.
Developed by the Federation of European Risk Management Associations (FERMA) and the
European Confederation of Institutes of Internal Auditing (ECIIA) Three Lines of Defense is a
widely used model to describe functional groups in any organization that have responsibilities
related to FMC. First-line deals with operational management combining Management Controls
and Financial management and Control Measures. The second-line performs supportive,
oversight, control and monitoring functions covering Financial Control, Security, Risk
Management, Quality, Inspection and Compliance. Third-line deals with independent and
objective Internal Audit. Being implemented into systems and processes under the guidance of
operational management F M C as the first line of defense. It should be noted that separate and
clearly defined lines of defense are the key to the success of establishing an effective F M C
system. Being quite flexible the Three Lines of Defense Model outlines coordination and
assignment of specific duties related to risk and control within an organization, regardless of its
size or complexity and clarifies the difference and relationship between the organizations'
assurance and other monitoring activities (COSO, 2015).
The European Commission (2006) developed a Public Internal Financial Control (PIFC)
framework for countries in a reform which encompasses the key requirements for adhering to
good public governance principles: adequate FMC-systems, an independent and objective
internal audit function and a central harmonization unit as accelerator and stimulator for PIFCreform
(EC, 2006). PIFC follows the latest in International Standards on Financial management
and control - INTOSAI Guidelines for Internal control Standards for the Public Sector (2004),
the EC IIA Position Paper on Internal Audit in Europe (2015). Internal accountability
arrangements are recognized to be a determining factor, as is the content of accountability of
those responsible for carrying out public tasks (EC, 2014).
Internal control Working Group of the Public Expenditure Management Peer Assisted Learning
(PEMPAL) Internal Audit Community of Practice (IACOP) developed Guidance for Public
Sector Internal Auditors to create a tool for assessing the Effectiveness of Internal control. The
purpose of the guidance is to help internal auditors better understand the main features of
effective FMC. The ways of assessing and evaluating the functionality of F M C systems are also
under consideration. IACOP developed a generic four-level model for assessing the maturity (or
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capability) of Internal control: 1st level - Informal (Ad-hoc /Chaotic); 2nd level - Defined
(Standard / Repeatable); 3rd level - Managed & Monitored (Predictable); 4th level - Optimized
(Efficient/ Effective) (IACIOP). The National Academy of Finance and Economics of the Dutch
Ministry of Finance is also actively involved in the development and testing of the F M C
assessment tool for central government authorities.
Regular assessment of the F M C system ensures the safety of the organization against fraud from
senior management, company management and its employees. For this purpose, it is proposed to
use individually developed test polls for each audited organization given its specifics. The
premises on which the F M C assessment tool should be based embraces the idea that targeted
actions for improvement of an entity's F M C and control are only possible after a thorough
assessment which should deliver sufficient insight into the area's that are suitable for
improvement. Only when that insight is available management can formulate relevant and
realistic actions. DiNapoli, T. P. (2016) emphasizes the importance of the adaptability of the
F M C assessment tool to the entity's structure as it should be flexible in application to the entire
entity or a particular subsidiary, division, operating unit, or business process. The key issues
include the form of ownership of the entity, its size, industry specification, etc. In the context of
local bodies, F M C help to assure that public funds are administered and expended in compliance
with applicable statutes and regulations; that funds are used for purposes for which they were
authorized and intended; and that there is accurate reporting regarding the use of those funds
(Vermont League of Cities & Towns, 2017).
As F M C in the public sector basically cannot be separated from efforts to improve and enhance
managerial performance impact on society, it is extremely important to implement F M C system
on the local level to improve the financial accountability of the organization by driving decisionmaking
by managers better (Kewo, 2017). Kewo (2017) states that F M C and assessment system
on a local level is a very important part of the overall spectrum control mechanisms are used to
motivate, measure and impose sanctions on the actions of managers and employees a prerequisite
for better performance.
2.1 Financial management and control development in different countries
Establishing good governance requires local government officials to become more responsive to
the demands of their environment, to provide better, transparent and accountable services (Kewo,
2017). To meet specifically for each country economic, operational and legal aspects the system
of F M C should be adopted to the context of national administrative culture. Public F M C reform
started in different countries at different times, and the start of the reform did not depend on the
level of economic development of the country, for example in Croatia in 2004, Georgia in 2010,
France in 2011. Preferably the system of F M C among the countries is based on generally
recognized core principles of the COSO Framework, for example, the COSO concept model is
widely used in France, United Kingdom, Croatia, Georgia, Kazakhstan.
Local government FMC-systems is prescribed by legal regulations, for example in Hungary such
documents are - Act on the Local Governments of Hungary, Act on Public Finances, Government
Decree on the Financial management and control system and the Internal Audit of Central Public
Administration Bodies. In Georgia, the core document is Public internal financial control law, in
Croatia - Public internal financial control act, in the Czech Republic some of internal control
function contents Act on Financial control. Such countries as France and the United Kingdom
do not have separate core documents on FMC.
The Concept of F M C varies, while some countries have special independent F M C institutions,
others give the responsibility for F M C to the respective administrative entities; a decentralized
system of F M C can be embedded and form an integrated part of the administration.
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Supreme Audit Institution or similar body/organization exist in Kazakhstan in the form of
Accounts Committee, in Georgia, Croatia - State Audit Office and in the Czech Republic
Supreme Audit Office, in France - Accounts Chamber, in the United Kingdom - National Audit
Office. It should be noted that the scope of the Supreme Audit Institution in mentioned countries
cover local bodies and local budgets, except the Czech Republic. Czech Supreme Audit Office
is not authorized to audit either finances of local and regional authorities or to audit companies
co-financed by the state or by a self-government. In Kazakhstan and the United Kingdom
financial inspection doesn't exist as an independent body but its functions are performed by the
Accounts Committee and National Audit Office respectively. In some countries the functions of
financial inspection are centralized - General Economics and Finances Control (Ministry of
Finances) and General Inspection Service (Ministry of Finances) in France; Sector for budget
supervision and supervision of concessions in Croatia. Still from the considered countries, the
scope of financial inspection covers local bodies only in France and Croatia. Internal audit is a
mandatory function only for the central government in France and the United Kingdom, while
local representatives are deprived of such responsibilities. In contrast in Croatia and the Czech
Republic, internal audit is obligatory for local and as for central level representatives.
The problem of a weak finance performance and FMC-system is widespread. Kewo (2017)
complained about the poor performance of the local governments in planning at the local level
such as provinces, districts and cities in Indonesia as "the management of financial resources the
country still marked deviations, from the planning and budgeting, implementation, and
accountability report" (Kewo, 2017). But demand always generates supply. The local council in
Australia have demonstrated minimal levels of accountability in the late 1990s, this resulted in
increasing demand for additional information on how governments manage and spend public
funds (Jones and Beattie, 2015). Recognition of the problem is the prerequisite for the
development and implementation of an effective system of counteraction.
3 Results and Discussion
The previously defined depth and scope of the F M C assessment determine which instruments
are suitable to use, at what level and to what extent. Depth' refers to the question of whether a
substantial, 'deep digging' assessment which contains document study, questionnaires and
interviews should be conducted or, only a quick scan of the current situation. The depth of the
proposed assessment is for the most part dependable on what is already known and the available
time and resources to conduct the assessment.
FMC may vary significantly cause controls in small towns with few employees will naturally be
different from controls in larger towns that have more employees in the financial function. The
general concept requires the development and adaptation of basic F M C assessment tools to the
L G authority needs. We suggest the following elements of F M C assessment for L G authority:
Questionnaire for Senior Management; F M C benchmark criteria in a form of baseline MATRIX;
Assessment Questions regarding relation local body and subordinated/related bodies;
Questionnaire for preliminary assessment phase; Interview questions. It should be noted that as
not one assessment environment is the same we advise combining instruments. This is partly
dependable on the scope of the assessment.
3.1 Questionnaire for senior management
This tool should be developed to interview responsible representatives at the local level which
bears the ultimate responsibility for a sound functioning FMC. It aims to assess the integrity and
ethical values, the extent and the way senior management has sufficient oversight on F M C
matters, the way senior management sets responsibilities and authorities throughout the entity
(and if applicable, its subordinated and related bodies), the way commitment to competence is
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guaranteed and in what way reporting and accountability structures related to the organizational
objectives are set by senior management.
The leadership, the actions and the tone established by the senior management have a profound
impact on how the responsibilities and tasks of the organization are performed, how objectives,
goals and mission are achieved.
3.2 The FMC-assessment MATRIX
F M C benchmark criteria in a form of MATRIX encompasses the inner workings of F M C and its
coherence combining a set of overall criteria determined by the benchmark criteria against which
the assessment results should be analyzed. Criteria are described for the core managerial
activities (e.g. risk management and ensuring proper controls). In addition, also specific criteria
are mentioned which have a relation to the budget cycle (e.g. integration of budgeting with the
planning process). The MATRIX can be divided into five sections:
1. General conditional characteristics: these elements contain the minimum requirements
which should be in place to build and maintain a proper F M C system;
2. Criteria related to PLANNING activities;
3. Criteria related to EXECUTION activities;
4. Criteria related to CONTROL and MONITORING activities;
5. Criteria related to RESPONSIVE ACTIONS.
The key assessment criteria as outlined in the M A T R I X can be summarized or grouped in a
shortlist of FMC-related areas:
• Managerial Accountability: the cornerstone of FMC. These criteria are aimed at how
on the managerial levels the balance is organized between responsibility, authority and
accountability;
• Objective setting: criteria are aimed at assessing in which way objectives are set at the
managerial and oversight levels. Also, the level of SMART-ness is assessed;
• Risk and Control: defines criteria concerning the risk assessment, the risk management
process and its relation to control activities;
• Tasks and responsibilities: aims to assess criteria related to specific tasks and
responsibilities related to crucial (internal) control activities;
• Planning and control: defines criteria aimed at assessing how internally reporting lines
are organized and what it consists of in terms of managerial information (Key
Performance and Financial Indicators) and communication;
• Monitoring: assesses the criteria mainly concerning second-line functions and their
monitoring role towards the first line;
• Role of internal audit towards FMC: criteria that link internal audits role to F M C (part
of monitoring);
• The budget cycle: assesses criteria that connect the managerial (first and second line)
responsibilities and -accountabilities to specific aspects of the budget cycle (e.g. budget
execution).
3.3 Assessment questions regarding relation local body and subordinated/related bodies
The role of these questions is to evaluate the budgetary and managerial relations. Interviews
should be conducted with local representatives of key functions which play a role in planning,
execution, monitoring and adjusting the budgetary, managerial and operational relationship
between the local authority and subordinated and/or related bodies.
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The interview aims to show that the fundamental key requirements are expected to be in place
(in regulation and practice), such as:
• Is the local authority responsible for the execution of delegated budgets to subordinated
and/or related bodies as well as operational- and policy outcomes;
• The local authority has sufficient insight into the F M C at the level of subordinated
and/or related bodies: hence, the local authority can rely on the managerial information
send from these bodies;
• The local authority has sufficient insight into the budget execution of subordinated
and/or related bodies as well as insight into the performance;
• Management (senior and operational) of the subordinated and/or related bodies has the
responsibility for executing the budget and thus ensure that the operations which should
achieve intended objectives are organized efficient, effective and well-controlled;
• Management (senior and operational) of the subordinated and/or related bodies is held
accountable (by the local authority) for the execution of the budget, the operations
(performance) and the quality of F M C (IC-system);
• Operational managers at subordinated and/or related bodies-level are involved in
planning and budgeting/programming in coordination and cooperation with the local
authority;
• Operational managers at subordinated and/or related bodies have sufficient delegated
mandates to conduct their tasks and achieve their objectives: this includes the objectives
of efficiency, effectiveness and proper control;
• Operational managers at subordinated and/or related bodies receive sufficient support
from the local authority to achieve their objectives;
• Operational managers at subordinated and/or related bodies conduct risk management
and adjust/asses their control systems based on it.
To get the picture complete regarding the fundamental key requirements as outlined above, it is
first vital to get sufficient insight on the level of legislation and procedures. Examples of
recommended documents to study in this respect are:
• The translation of strategic goals to operational objectives;
• The budget process: preparation, approval, execution and evaluation: how is this process
regulated? Who is involved?
• F M C related regulations/procedures: how are KPFs linked to objectives, how is the
accountability structure organized? What are the key-reporting lines (and about what?)?
What requirements are formulated regarding FMC? What are key checks and balances
in the relation between the local authority and subordinated and/or related body;
• Budget programs/budget passports: might give additional insight into how the previous
aspects are worked out related to a specific program objective;
• Task, responsibility and mandate procedures give insight into the relation between local
authorities and subordinated and/or related bodies.
3.4 Questionnaire for assessing and scoring the FMC system within an entity
The questionnaire for the preliminary stage should be based on the F M C - M A T R I X which
provides a baseline for benchmark criteria. For each criterion in each section, a key question
should be formulated together with scoring possibilities. It should be noted that the assessment
aims to make visible where the gaps are related to the benchmark baseline criteria. This means
that the questionnaire does not provide a definite scoring, or maturity level rating, of the F M C
overall. This is done on purpose since there is no one best way to configure the FMC. It is highly
dependable on the context, the legislation, existing procedures and the organization and tasks of
the entity itself.
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The questionnaire is primarily useable to send out to key officials/employees within the
distinctive lines of defence. It can be used tailor-made depending on the needs and wishes of
senior management. However, it is recommended to use the questionnaire in its totality given the
interdependency of the sections and criteria. The results of the questionnaire can be presented in
(for example) a traffic light format in which it becomes visible in which area's deviations occur
compared to the benchmark baseline.
3.5 Interview Questionnaire for self-assessment/interview set
Interview Questionsfor first-line (operational) managers
• How would you categorize the level of delegation in your institution? Very limited or
not?
• Is it clear for you as a manager what your mandates are regarding operational decisions?
Is this described?
• As a manager, are you able to make changes in the way the processes you are
responsible for are organized? Can you give some examples? If you would see a way to
make your processes more efficient, what would be your approach to introduce that
change?
• Do you need permission from senior management for operational decisions (e.g.
procurement, staff exchange etc.)?
• Do you have a say/influence or do you play a role in decisions in and phases of the
budget cycle?
• Are the resources that you have (budget, people, assets) well balanced with the
objectives that you need to achieve? If this would not be the case, what would be your
course of action?
• Are the responsibilities for you and your staff clearly connected with the objectives that
must be achieved? How this is expressed in for example task descriptions/job
descriptions?
• How would you define the range of responsibilities? Is it confined to operational
responsibility (reaching my operational objective)
• Are you responsible for the F M C measures that should prevent undesired risks in your
process?
• Do you have KPFs related to the objectives that you need to strive for? What kind of
KPI's? Where are they described? Examples?
• If objectives are not reached, what happens then?
• In general: do you see a clear connection between operational objectives (like yours)
and the strategic goals of the institution?
• Are you also being held accountable for financial aspects?
• Do you have insight in your financial position?
• Do you get periodically feedback from the units/functions you are reporting to? What
kind of feedback?
• Can you describe how objectives are set in the institution? What is your role in that
process? Where are objectives described?
• Are objectives clear, precise, measurable, and realistic in your opinion? Are the
objectives related to the budget? How is that done?
• Are there also objectives related to F M C and financial management? (At your level, at
other levels?)
• Do risks within your realm of responsibility get assessed? Who does this? Is this
registered somewhere?
• Are you, as a manager, involved in assessing and dealing with risks in your processes?
• What kind of risks is typical/inherent for your processes?
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• Who implements control measures (if necessary) in your processes? Can you give some
examples?
• Are your processes described? Who supports you (if any) in ensuring that your
processes run smoothly?
Interview Questions for second-line functions (e.g. planning department or financial
department)
• What information do you /your department have regarding the operational/program
level? How does this information come about?
• What is your role in the budget cycle?
• What reporting mechanisms are in place? (Accounting system, information from
internal audit etc.)
• Do you have insight in the risks that the operational/program level might face?
• What is the role of your department concerning the operational level?
• Does your department/unit play a role in the setting of objectives? If so, how?
• In your opinion: do you think objectives in the institution are logically aligned (cascade
from strategic to operational level)?
• What is your role in the risk management process? (if any)
• Who assesses the risks in the institution? Is these process documents? Is there a risk
register?
• Who keeps track of specific financial risks related to the budget? What is the course of
action here? Is this described somewhere?
• In case you detect financial risks, what is your course of action?
• In case you detect operational risks, what is your course of action?
• Do you discuss risks (whether it's financial or not) with the operational level or with
senior management?
• How would you describe the 'risk culture' in your institution? Is it a topic that is on the
agenda?
Interview Questionsfor Internal Audit
• Do you assess the F M C unit as a specific topic of interest? How?
• How would you rate the awareness regarding F M C in the institution?
• Does internal audit assess specific aspects of the budget cycle? What elements?
• Does internal audit assess the quality of internal reporting? Provide an example
• Does internal audit assess the overall internal governance system? Provide an example
• Is internal audit involved in the managerial risk management process? Provide an
example
• How are the follow-up arrangements organized for results of internal audits work? Is it
discussed at the senior level? Is the operational/program level involved?
The suggested set of questions may be used in a self-assessment by the operational managers
(from the working group) or by the assessor in an interview or a meeting with operational
managers. These ways are depending on the maturity of the F M C configuration, as well as on
the proficiency and skills of the assessor. If the entity staff is sufficiently competent and skilled,
then is suitable to use the questions for the self-assessment approach. If not, then interviews
performed by an external party are a good solution.
The efficient and effective provision by LGs of such important services as health, education and
social care functions requires a high standard of general and financial management. So far as
financial management is concerned this requires much more than being responsible for input
controls. Budgets should be linked to objectives and performance standards. Costs should be
analyzed over cost centres and particular activities (such as for education, individual schools,
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courses, age groups, types of activity, transportation of children; for health diagnostic related
groups, types of institution, different activities within hospitals such as operating theatres and
ambulances; for welfare services, costs of administering different types of welfare benefits, costs
of different benefits offices), not just those required for budgetary control purposes.
Changes to the financial management arrangements within LGs along with the development of
output budgeting could also affect the present organizational arrangements for the preparation of
budgets and therefore the role and responsibilities of the finance departments of regional
councils. Shifting the F M C focus to outputs from inputs also means that performance outputs are
linked to budgets. Therefore, to achieve improvements to budgeting and accounting in LGs and
considering the principles of good governance (which mean that decisions should be transparent
and take into account only those factors that relate to the particular problem or issue) this should
not be treated as simply a technical reform.
As FMC is not a serial process but a dynamic and integrated process, a smaller entity's system
of FMC may be less formal and less structured (COSO, 2013). Still, if s critical for F M C
Assessment Tool for Local Government Authorities to be focused on five general aspects which
can be seen as the driving forces of FMC:
• Integration: refers to the extent to which crucial FMC-related processes are combined
and/or are seen/organized in its interconnectivity (planning, programming/budgeting
and accounting);
• Participation: refers to which extent relevant functions within the entity are involved in
FMC-related activities (e.g. involvement operational management in planning and
budgeting);
• Delegation: refers to the extent of delegated mandates, responsibilities and tasks.
Delegation influences internal accountability arrangements;
• Coordination: refers to what extent FMC-activities are coordinated regularly (e.g.
coordinating meetings with planning- and financial departments, AudiWControl-
Committee's);
• Communication: refers to to what extent relevant information regarding F M C flows
through the entity in a timely fashion aimed at the right target groups (e.g. flow of
managerial information, accounting systems).
To improve the quality of financial management a strong and effective finance department is
necessary. That finance department should cover the responsibilities summarized above and
should be accountable to the management of the local government. The financial department of
the local government needs to play a key role in assessing efficiency and effectiveness or in the
linking of budgets with service objectives, performance standards and performance outputs.
4 Conclusion
The system of F M C should be implemented at state agencies and should be actively used by
local public authorities to help safeguard public assets at the local level and promote
accountability in local government. The main purpose of our research is to propose a set of tools
that will help to implement an effective system of F M C assessment at the local level (not only
for developing countries). Therefore, the right combination of instruments that suits certain needs
of an entity should be selected. At the local level, FMC-system efficiency should not be evaluated
for the sake of assessing as the assessment should generate sufficient information for targeted
action plans. Information asymmetry worsens the coordination of some general purposes of the
system of FMC. To improve the coordination between central authority, local bodies, and
subordinated entities it's extremely important to find weak points of contact in the
communication sphere.
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We are aware that each country has its specifics, the size structure of the local self-government
and the legal regulations of its functioning and as well the concept of FMC-system in individual
countries varies. Suggested F M C assessment tool for Local Government Authorities is designed
as a universal tool that an individual local authority should adapt to its conditions and the specific
country legislation. Further research will be devoted to the adaptation and analysis of F M C system
implementation in the conditions of local authorities in selected countries.
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Contact information
doc. Ing. Romana Provazníkova, Ph.D.
University of Pardubice, Faculty of Economics and Public Administration, Institute of
Economics Sciences
Studentská 84, Pardubice, Czech Republic
E-mail: romana.provaznikova@upce.cz
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Assoc. prof. Ruslana Rudnitska, PhD.
Lviv Regional Institute of Public Administration, National Academy of Public Administration,
Offcie of the President of Ukraine
Suhomlinskogo, 16, Lviv-Briuhovychi, Ukraine
E-mail: r.ruslana@hotmail.com
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Transformation of the model of open innovation in the digital space
Tetiana Pushkar, Viktoriia Parkhomenko, Hanna Sobolieva, Hanna
Zhovtiak
Abstract: The formation of the information society, which has been active in recent decades,
actively promotes the transformation of the pattern of open innovation from the latest model of
innovation, based on choosing an effective business model of innovation, to define it as a priority
concept of innovation at the national level. The aim of the study is to determine the relationship
between the development of the information society and the formation of the concept of open
innovation under the influence of the global information environment. The object is the
specificities of the manifestation of the model of open innovation in the global information
environment and the opportunities for its implementation that provide the processes of digital
transformation. To identify the manifestation of these processes, a comparative analysis of the
positions of national economies of Ukraine and the Czech Republic on the basis of rating
indicators that reflect key aspects of information society development: global competitiveness,
economic freedom, network readiness, e-government development.
Consideration of manifesting the main trends in the information society allowed us to determine
that under their influence, the concept of open innovation becomes a priority in innovation.
Openness of information, its mobility and accessibility, the need to implement complex
innovation programs increases the importance of scientific and innovative cooperation based on
the implementation at the national and global level of cloud open science and open innovation
information space, development of smart specializations, active knowledge and technology
transfer, openness and availability of scientific information.
Keywords: Innovations, innovative activity, open innovations, information society
JEL Classification: F01, 031, 039
1 Introduction
Transforming information as an economic resource, intensifying information flows, increasing
the openness of information, which on the one hand helps to expand new ideas and expand
innovation, and on the other - exacerbates the problems of information ownership and legitimacy,
creates new conditions for developing the latest model of innovation activities - open
innovations. The formation of the information society, in which the availability of information,
development of information infrastructure, simplification of access to its receipt and use is
growing extremely fast, turns the pattern of open innovation into one of the priority models of
innovation at all levels: from firm to large geographical regions and integration formations. The
concept of open innovation defines the process of scientific and technical research and
development as an open system. With this approach, any company can attract new ideas to create
new products and enter the market with these products not only through their own innovative
developments, but also through cooperation with other firms and obtaining information from the
environment. At present, a significant number of factors actively influence the formation of a
model of open innovation, including the growth of competition at the global level, significant
reduction of product life cycles, accelerating "aging", increasing global mobility of innovators,
strengthening government support for "small" innovative enterprises, availability of a universal
information environment and the development of the latest information retrieval technologies,
increasing the role of venture capital. Considering these factors, it is indisputable that the
formation of the information society, the transition to the information economy, only increase
364
their impact. That is, these processes create a system of interrelated influences, actively creating
the conditions for each other's development.
The formation of the information society contributes to the fact that the principle of openness is
a priority in all spheres of life. This principle is reflected in the main priorities of E U policy,
which are based on the concept of "discovery", which involves increasing transparency,
openness, consumer orientation in various spheres of society. Openness, according to E U policy,
finds its expression in scientific activities, where the concept of "open science" is proclaimed, in
public administration, where "open government" is proclaimed, in politics, where "participatory
democracy" is defined, in economics, where "open innovations" is the basic concept proclaimed.
The latest innovation pattern "Open Innovation 2.0", introduced by the Dublin Declaration in
2013, outlined the unique possibility of explosive increase in total value due to such innovations
that lie at the intersection of mega-trends such as digitalization, mass cooperation and sustainable
development needs. The implementation of the Open Innovation 2.0 pattern clearly demonstrates
that, emerging as the latest model of innovation for companies, open innovation under the
influence of the information society reaches a new level and becomes a priority for the regional,
national and international levels.
The purpose of the article is to substantiate the factors of formation of the information society,
which determine the further formation of the pattern of open innovation and its formation as a
priority at the level of national economies and integration associations.
Thus, it is possible to define the following hypothesis: the development of processes that
contribute to the formation of the information society, deepening the digitalization of social
institutions form the latest concept of open innovation, taking it beyond the theory of innovation
of an individual company. To confirm or refute this hypothesis, the authors use a system of
research methods and appropriate research methodology.
1.1 The concept of open innovation as a basis for the formation of the latest model of
innovation
The concept of open innovation received its rationale at the beginning of the 21st century as the
latest model of organizing the company's innovation, which changes the understanding of the
movement of the idea from its inception to implementation in an innovative product. The reasons
that helped move companies to the field of open innovation were the intensification of the
dissemination of useful knowledge between the subjects of innovation, understanding the
impossibility of making full use of ideas that may later be lost by companies, lack of even large
companies necessary resources, equipment for use in production many patented developments
and bringing them to an innovative product, a significant dependence of the value of the idea on
the type of business model used by the company, the active dissemination of intellectual property
in order to create its open market. The main features of the latest model of open innovation for
companies were the organization of cooperation with scientists and the academic sector of
science, the possibility of involving the company in innovative developments at any stage of the
innovation process, the advantage of creating a perfect model of innovation over the market,
from both internal and external ideas (Chesbrough, H., 2003). In the search for a solution to the
most effective organization of the innovation process in the management of open innovation
there are multilevel determinants of decisions on their implementation: "make or buy", "integrate
or retain", "save or sell" when opening the innovation process (Lichtenthaler, U., 2011 ).
Gassmann, O., Enkel E., Chesbrough, H., looking at the future of open innovation, emphasize
that in recent years the phenomenon of open innovation has emerged from a limited range of
practitioners dealing with this issue in high-tech industries. Open innovations are transformed
into the latest innovation practice, which is actively implemented. The main trends in the
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development of open innovation, which significantly affect the formation of the model of open
innovation is their active penetration into the industry ("from pioneers to the mainstream");
increasing the intensity of research, which is reflected in the fact that open innovations go beyond
high-tech developments and are manifested in a wide range of areas; transformation of perception
of the size of companies implementing the model of open innovations (from large companies to
small enterprises); changing the structure of research and development from autonomous to
development by creating strategic alliances; the latest perception of intellectual property in the
process of increasing openness (from the object of protection to the product that is actively sold
and bought) (Gassmann, O., Enkel E., Chesbrough, H., 2010). An important direction in the
formation of a model of open innovation at the company level is to create a strategy that combines
as much as possible all the opportunities provided by both the traditional model of innovation
("closed innovation") and the latest model of open innovation. It is within the framework of the
strategy of open innovation that an appropriate business model of innovation activity should be
formed, taking into account all the advantages and disadvantages (Appleyard, M., Chesbrough,
H., 2007). Improving business models of innovation is one of the priority areas of modern
research on open innovation. When industrial innovations become open, there are significant
changes in the management of companies. External sources of knowledge become more visible
and decisive in innovation (Chesbrough, H., 2016).
The open innovation model assumes the commercialization of external sources of innovation,
which focuses on the values created by external innovations, rather than on how companies
benefit from these innovations (West, J., Bogers, M., 2013).
At the moment, open innovation involves more than just openness to innovation. Open innovation is an
innovation strategy based on the approach of companies to innovation, which involves the active
participation of external actors in the innovation process (Marcolin, E , Vezzetti, E., Montagna, E , 2017).
But changes in the approach to innovation, which began with the introduction of the open innovation
model, are not limited to companies. The latest approaches to innovation are formed at the national and
international levels, which is greatly facilitated by the processes of internationalization, globalization and
the formation of the information society. The cycle of knowledge at the international level is critical for
the development of innovation, improving national competitiveness in the sense that the
internationalization and growth of global interdependence of national economies expands companies'
access to academic knowledge and research skills in any country. These processes increase the relevance
of the organization of cooperation at all levels in the formation of the model of open innovation (Inzelt,
A., 2010). Collaborating with colleagues to gain access to the latest knowledge is a viable alternative for
companies trying to increase their innovation. The growing popularity of the open innovation model thus
contributes to the emergence of new participants in the innovation process (Ollila, S., Elmquist, M.,
2010).
Open innovation as a concept can be implemented in many different ways, and the process of open
innovation concerns both the transition to the model of open innovation and possible management
practices. The practical experience of implementing open innovations by many leading companies in
various contexts has determined their importance and role in the management of innovation processes
(Huizingh, E , 2011). But, despite the definite place of the concept of open innovation, there is still a
significant range of issues that need further research. West, J., Salter, A., Vanhaverbeke, W., Chesbrough,
H. identified key trends in the study of open innovation, improving the measurement of these processes,
outlining the application of the model, the study of the relationship of these issues with existing
developments in economics and management (West, J., Salter, A., Vanhaverbeke, W., Chesbrough, H.,
2014).
Thus, the active introduction of the model of open innovation in the practice of innovation of companies,
at this stage outgrows the level of firms and reaches the level of formation of this model at the regional,
national, international levels, ie transformed from the microeconomic level of innovation to the
366
macroeconomic level. At the macroeconomic levels, the formation of the model of open innovation is
actively influenced by the processes of digitalization of the economy, the development of information
economy and the formation of the information society.
1.2 Formation of the information society concept
The formation of the information society and information economy as its integral component is
based on the intellectualization of life, which involves changing the perception of information
and accelerating the exchange and processing of information. That is, intellectualization involves
the process of developing the ability to perceive and process information, i.e. increase the
intellectual potential of society, including the use of artificial intelligence. The transition from
the knowledge economy, which was defined as a new concept of economic and social
development in the 1950-1960s, to the modern concept of the information society is manifested
in the definition of the role of information. If the knowledge economy defined information as a
commodity, then in the information society, information is the environment in which it exists
and develops. The basis of the information society is the high-tech development of information
and communication technologies that facilitate access to and receipt of information.
At this stage, the information society has received a number of features that are significantly
reflected in the formation of the model of open innovation. In the information society, any
person, organization or enterprise in any geographical point and at any time can obtain the
necessary information and knowledge. The information is received for free or for a fee, but it is
not essential. The important thing is that there is constant access, which does not depend on other
factors. To provide such access in society, it is necessary not only to produce modern information
technologies, but to ensure their accessibility for all categories and segments of the population,
enterprises and organizations, regardless of form, type and affiliation. Thus, in the information
society a developed information and communication infrastructure is formed, which in turn
initiates the creation of the latest information resources, accelerating scientific and technological
progress in national economies. These processes cause radical changes in social structures,
expanding the range of information activities and the provision of information services.
Considering the model of open innovation as a process of obtaining information, its processing
and implementation, there is an active influence on its transformation of the processes of
formation of the information society. Obtaining information that can be refined and embodied in
innovation, not only accelerates, but also has ample opportunities. The basic position of the
theory of open innovation, which determines that the idea can at any stage come to the company
from the outside or leave it in the external environment, in the information society gets a new
embodiment, because the accelerated and free movement of information, active knowledge
transfer is inevitable, its capacitive component. Thus, the formation of the information society
and the development of the model of open innovation at any level have an active mutual influence
and determine the development of each other, which requires the definition of those processes
that shape the conditions for the transformation of open innovation processes.
2 Material and Methods
One of the main methods used to assess the development of digital transformation, information
society, innovation development is the index method, which is actively used to assess the
dynamics of these processes based on statistical indicators of national and international statistical
surveys. One of the main indices that determines the country's position on innovation
development is the Global Innovation Index. The Global Innovation Index is a generalized
indicator used in global studies of the ranking of countries in the world by the level of innovation
in national economies. This index is defined as the ratio of the cost of innovation and the effect
of them.
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Assessment of innovation efficiency takes into account a number of important components of
innovation: patents, technology and knowledge transfer, other results of research and
development, as well as the effectiveness of entrepreneurial activity in the field of innovation.
An extensive system of indicators that are taken into account in the calculation allows you to
cover a significant number of aspects and to present the most detailed innovation processes and
the formation of models of innovation in countries. The Global Innovation Index consists of 81
indicators that reflect the country's innovation opportunities, the quality of innovations, their
results and the development of innovation infrastructure, in two groups:
• available resources and conditions for innovation (Innovation Inputs);
• achieved practical results of innovation (Innovation Outputs).
This approach allows you to objectively assess the effectiveness of innovation efforts in the
country.
Table 1 - Leading countries in the global ranking of innovative development
PiK Gill Score Economy
1 66,1 Switzerland
2 62,5 Sweden
2020 3 60,6 United States of America (the)
4 59,8 United Kingdom (the)
5 58,8 Netherlands (the)
1 67,2 Switzerland
2 63,7 Sweden
2019 3 61,7 United States of America (the)
4 61,4 Netherlands (the)
5 61,3 United Kingdom (the)
1 68,4 Switzerland
2 63,3 Netherlands (the)
2018 3 63,1 Sweden
4 60,1 United Kingdom (the)
5 59,8 Singapore
1 67,7 Switzerland
2 63,8 Sweden
2017 3 63,4 Netherlands (the)
4 61,4 United States of America (the)
5 60,9 United Kingdom (the)
1 66,3 Switzerland
2 63,6 Sweden
2016 3 61,9 United Kingdom (the)
4 61,4 United States of America (the)
5 59,9 Finland
Source: Cornell University, INSEAD, WIPO: The Global Innovation Index.
https://www.globalinnovationindex.org/home
Considering the positions of countries in the global ranking of innovative development, it should
be noted that in recent years, a stable place among the leaders in this indicator are Switzerland,
Sweden, Britain and the United States (Table 1). The five leaders in terms of innovation
development in the period 206-20299 consistently include four European countries.
368
Regarding Ukraine, it should be noted that certain processes in the national economy of the
country have had a negative impact on the positions of the national economy in the ranking of
innovative development. The best position (43rd place in the ranking) was occupied by Ukraine
in 2017-2018 (Table 2). However, comparing with other processes, taking into account that this
indicator evaluates the positions of 141 national economies of the world, we note that the level
of innovative development of Ukraine occupies a fairly high position.
An important point for the characterization of innovation processes in Ukraine and the formation
of new models of innovation in the national economy is that the country's relatively high position
in the global ranking of innovation is formed mainly due to the achieved practical results of
innovation (Innovation Outputs). According to this sub-index, the country's position is almost
twice as good as the sub-index's assessment of available resources and conditions for innovation
(Innovation Inputs).
Table 2 - Ukraine in the global ranking of innovative development
Ukraine Gill Innovation Inputs Innovation Outputs
2020 45 71 37
2019 47 82 36
2018 43 75 35
2017 43 75 40
2016 56 76 40
Source: Cornell University, INSEAD, WIPO: The Global Innovation Index.
https://www.globalinnovationindex.org/home
The processes of innovative development at the national level in the Czech Republic, based on
the results of the assessment of the place of the national economy in global innovative
development, are different from Ukraine (Table 3).
Table 3 - Czech Republic in the global ranking of innovative development
Czech Republic Gill Innovation Inputs Innovation Outputs
2020 24 28 17
2019 26 29 21
2018 27 30 20
2017 24 27 16
2016 27 26 21
Source: Cornell University, INSEAD, WIPO: The Global Innovation Index.
https://www.globalinnovationindex.org/home
Having a fairly high position in the global ranking of innovative development, the Czech
Republic occupies a fairly high position both in terms of available resources and conditions for
innovation (Innovation Inputs) and the achieved practical results of innovation (Innovation
Outputs).
Thus, one of the main methods used to assess the development of innovation processes at the
national and global levels are index methods, which are actively used along with rating and
comparison methods, which allows to compare the current state and prospects of national
innovation models with best innovation practices. Using these methods, we will analyze which
processes of information society development at this stage are beginning to have an active impact
on shifting the priorities of innovation in favor of further active development of national models
of open innovation.
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3 Results and Discussion
In the context of forming global information environment, which is the basis for the formation
of the information society, the model of open innovation acquires the latest features that take its
application outside the individual company. Accelerating the movement of information,
simplifying access to it, increasing the value of information as an economic resource, which is
directly related to the time parameters of receiving, processing the use of information, actively
influences the efficiency of information resources, motivates the development of information
infrastructure and new information technologies. This forms a vicious circle of interactions,
when the development of information and communication technologies accelerates the process
of informatization of society and the introduction of innovative products, which in turn brings
national economies to a new level of innovative development, which in turn requires significant
renewal of information infrastructure technologies.
The creation of the latest innovation models, among which the priority and information society
is the model of open innovation strengthens and depends on a number of important economic
processes. First, the formation of the information economy and information society brings
competition to the global level, which on the one hand provides new opportunities for national
producers, and on the other - strengthens and complicates the competitive environment. The
assessment of the country's position in terms of the competitive potential of the national economy
is conducted annually by the World Economic Forum (WEF), using index, rating methods and
the method of comparing national economies. The Global Competitiveness Index is calculated
based on statistics and the results of a global survey of leaders of leading companies in the region.
The index consists of 113 partial indicators, grouped into 12 sub-indices, which reflect the quality
of institutions, infrastructure, macroeconomic stability, health and primary education, higher
education and training, market efficiency of goods and services, labor market efficiency,
financial market development, the level of technological development, the size of the domestic
market, the competitiveness of companies, innovation potential.
There are many index indicators that are used to assess the processes of forming the information
society at the global level. One of such indicators is the Network Readiness Index, which
characterizes the level of development of information and communication technologies in the
world and its impact on national competitiveness. With the help of the Network Readiness Index,
the driving factors and the degree of influence of network readiness and the possibilities of
information and communication technologies in the country are assessed.
Forming the latest models of innovation in the information society is actively influenced by the
development of entrepreneurship and the availability of economic freedoms in society. Openness
of information involves not only access to it as an economic resource, but to increase the
openness of all business processes in society. Openness of information on business, government
activities in the field of economics and regulation of economic processes, accelerating the
transfer of knowledge and technology in the information society is the basis for the formation of
competitive relations, the interest of participants in innovation processes in their development.
In the global economic environment, the level of economic freedom is often determined by the
index of economic freedom, which reflects the fundamental right of each member of society to
manage their own labor and property. The Index of Economic Freedom is based on 10 indicators:
freedom of business; freedom of trade; tax freedom; government spending; monetary freedom;
freedom of investment; financial freedom; protection of property rights; freedom from
corruption; freedom of labor relations. Each of the components evaluated by the index is actively
related to the processes that determine the formation of the information society, as well as
directly based on the principles of openness and transparency of these processes.
An important component of forming a model of open innovation at the national level is the
formation of e-government and e-government. On the one hand, the development of e-
370
government is an integral and mandatory component of the information society. On the other
hand, e-government is a condition for increasing openness and transparency of economic
processes, their state regulation, state involvement in entrepreneurship and innovation in the
national economy . In the global context, the evaluation of these processes is also based on the
index method. The E-Government Development Index, developed under the auspices of the
United Nations Program on Public Administration (UNPAP), includes three groups of indicators:
the degree of coverage and quality of Internet services, the level of development of ICT
infrastructure, and human capital. That is, the components of the assessment of the development
of e-government at the national level characterize the main processes that determine the
development of the information society.
Based on the data of 2019, we will consider how the level of development of innovation
processes in the national economy is correlated with the country's place in terms of global
competitiveness, the level of network readiness, the development of economic freedom and egovernment.
As a basis for comparison, the national economies of Ukraine and the Czech
Republic are compared with the development of these processes in the leading countries in terms
of global innovation development (Table 4).
Table 4 - Ranking of national economies on the main indicators of assessing the
development of the information society in 2019
Economy
Rank
Economy
The
Global
Innovation
Index
Global
Competitive
ness Index
Network
Readiness
Index
Index of
Economic
Freedom
E-
Governme
nt
Developme
ntIndex
(2018)
Switzerland 1 1 7 4 15
Sweden 3 9 3 19 5
The Czech
Republic
27 31 36 23 54
Ukraine 56 85 64 147 82
Source: Global Competitiveness Index, https://www.weforum.org/reports
Network Readiness Index, https://networkreadinessindex.org/
Index of Economic Freedom, https://www.heritage.org/index/ranking
E-Government Development Index. https://publicadministration.un.org/egovkb/en-us/Data-
Center
The positions of the national economies of the leading countries in the ranking of global
innovation development in terms of global competitiveness, network readiness, economic
freedom, e-government development are quite high, which clearly demonstrates the relationship
between these processes. The high level of competitiveness of the economy is directly dependent
on innovation processes. In turn, ensuring high competitive positions and active innovation
development is impossible without creating conditions for the realization of economic freedoms
in society and is determined by the state and prospects of network infrastructure, information and
communication technologies, involvement in increasing openness and transparency of economic
procedures and public administration and society. Further development of processes that shape
the information society and are reflected in global competition, the creation of the latest
information infrastructure, ensuring economic freedoms and transparency of public procedures,
is crucial for the development of models of open innovation. Awareness that the openness of
information, simplification of access to it, contributing to the formation of the latest national
concept of open innovation, requires a clear delineation of problematic issues that are
371
exacerbated in the information society. Information protection, transformation of approaches to
protection of intellectual property rights, creation of the newest forms of research and design
activity, transfer of knowledge and technologies on the basis of possibilities of information and
communication technologies, increase of attention to ethics of use of scientific developments are
only a small list of problematic questions, detailed elaboration in the development of concepts
of open innovation at the state level (Table 5).
Table 5 - The impact of the formation of the information society on the formation of a
model of open innovation at the national level
Processes of formation of information
society
Reflection in the model of open
innovations
1
Development of information and
communication infrastructure, ensuring
100% access of the population to highspeed
technologies for receiving and
transmitting information
Creation of national and global cloud
scientific, research structures, use of
cloud technologies for the organization
of cooperation in the field of scientific
developments and innovations
2
The growth of information competence
of the population, the introduction of
information and communication
technologies in everyday life
Acceleration of knowledge transfer
processes, development of distance
education, growth of intellectual
potential in society
3
Development of e-government, self-
government
Increasing the transparency of state
participation in innovation processes,
creating conditions for the influence of
operational business structures on the
tools of state regulation
4
Implementation of the concept of Smartspecializations
of territories, in
particular Smart-city
Creation and development of
technopolises and technoparks, their
inclusion in the structures of cloud
science and cloud innovations
5
Implementation of programs for the
creation of electronic information
resources, including scientific, library,
statistical, archival
Activation of knowledge transfer,
increasing the availability of data for
research, expanding opportunities for
open access to scientific information, as
well as the presentation of scientific
results
Source: Own processing
Thus, the development of the information society is reflected in a set of measures that form a
model of open innovation at the national level, actively promoting the development of national
and global cloud research structures, organization of cooperation in science and innovation based
on them, growth of intellectual and scientific potential, society, involvement of business
structures in the formation of national programs for the development of innovations based on egovernment,
the development of technopolises and technology parks in the framework of
programs Smart-specializations of territories, intensification of the transfer of scientific
knowledge.
4 Conclusion
Thus, forming the model of open innovation at the macroeconomic level, transforming this model
from the pattern of innovation of a company to the basic concept of innovation in the global
economic space is under the active influence of the information society. The processes that cause
372
digital transformations in all spheres of public life, in relation to the model of open innovation at
the national level, act not only as factors influencing its formation, but also are an integral part
of this concept.
Accelerating the transfer of information and knowledge in the information society clearly reflects
the basic idea of open innovation that any idea at any time can leave the company, any research
and development can not necessarily be implemented and implemented in the company that
carries them out. The ability to find, identify and effectively use the necessary information in the
information society and open innovation becomes the key to successful innovation at any level.
References
[I] CHESBROUGH, H . (2003). Open Innovation: The New Imperative for Creating and
Profiting from Technology. Boston: Harvard Business School Press. 227 P.
[2] LICHTENTHALER, U . (2011). Open Innovation: Past Research, Current Debates,
and Future Directions. Academy of Management Perspectives. Vol. 25, No. 1. pp.
75-93.
[3] G A S S M A N N A , E N K E L E., CHESBROUGH, H. (2010). The future of open
innovation. R&D Management. Vol. 40. pp. 213-221.
[4] A P P L E Y A R D , M . , CHESBROUGH, H . (2007). Open Innovation and Strategy.
California Management Review. Vol. 50. Issue 1. pp. 57-76.
[5] CHESBROUGH, H . (2016). Managing Open Innovation. Research-Technology
Management. Vol. 47. pp. 23-26.
[6] WEST, J., BOGERS, M . (2013). Leveraging External Sources of Innovation: A
Review of Research on Open Innovation. Journal of Product Innovation
Management. Vol. 31, Issue 4. pp. 814-831.
[7] MARCOLIN, E , VEZZETTI, E., M O N T A G N A , F. (2017). How to practise Open
Innovation today: what, where, how and why. Creative Industries Journal. 10:3. pp.
258-291.
[8] INZELT, A. (2010). Collaborations in the Open Innovation Era. Nanotechnology and
Microelectronics: Global Diffusion, Economics and Policy. Vol. 47. pp. 61-86.
[9] OLLILA, S., ELMQUIST, M . (2010). Managing Open Innovation: Exploring
Challenges at the Interfaces of an Open Innovation Arena. Creativity and Innovation
Management. Vol. 20, Issue 4. pp. 273-283.
[10] HUIZINGH, E. (2011). Open innovation: State of the art and future perspectives.
Technovation. Vol. 31, Issue 1. pp. 2-9.
[II] WEST, J., SALTER, A., V A N H A V E R B E K E , W., CHESBROUGH, H. (2014). Open
innovation: The next decade. Research Policy. Vol. 43, Issue 5. pp. 805-811.
[12] World Economic Forum, The Global Competitiveness Report 2019, 2019.
[13] World Economic Forum, The Global Competitiveness Report 2015- 2016, 2015.
[14] OECD (2020), "Digital Government Index (DGI): Methodology and 2019 Results",
OECD Working Papers on Public Governance, No. 41, OECD Publishing, Paris.
373
Contact information
Tetiana Pushkar, PhD.
O. M . Beketov National University of Urban Economy, Department of Economics
7, Marshal Bazhanov Str., 61002, Kharkiv, Ukraine
E-mail: Tetyana.Pushkar@kname.edu.ua
Hanna Sobolieva, PhD.
O. M . Beketov National University of Urban Economy, Department of Economics
17, Marshal Bazhanov Str., 61002, Kharkiv, Ukraine
E-mail: soboliva.ag@gmail.com
Hanna Zhovtiak, PhD.
0. M . Beketov National University of Urban Economy, Department of Economics
7, Marshal Bazhanov Str., 61002, Kharkiv, Ukraine
E-mail: zhga77@gmail.com
Viktoriia Parkhomenko, PhD.
National Academy of Statistics, Accounting and Audit
1, Pidhirna St., 04107, Kyiv, Ukraine
E-mail: pviktoria@ukr.net
Estimation of Unemployment Using Changes in the Housing Market
David Slavata
Abstract: The aim of the article is to identify the relationship between housing market and
unemployment. The relationship was searched by using of very unique data recorded from the
housing market servers. The data describing number of apartments for sale, apartments for rent
and single family houses for sale were recorded daily since 2018. The data was transformed to
the universal housing market indicator. Using of the indicator there was constructed the model
which was tested. I find out there is close relationship between housing market and
unemployment. The changes on housing market and labour market are registered just in time.
There is possible to construct very simple and easy model which can monitor daily changes of
unemployment. The model can help to all analysts in their day to day decisions.
Keywords: Unemployment, forecast of unemployment, housing market, household behaviour
JEL classification: R30, P50
1 Introduction
Currently during the days of corona crisis there is a very difficult to forecast the development of
basic macroeconomic indicators. Measures against covid can change the economic conditions in
very short period. That is the problem for macroeconomists how to evaluate the limitations done
against covid disease. In my opinion in online world there can be lots of data sources which can
be used as in advance indicator for the future values of some macroeconomic indicators. That is
my assumption for creating indicators of housing market to indicate the changes of
macroeconomic indicators. The paper focuses on analyse of relationship between Czech
housing market and future unemployment. By analysis of changes in supply of housing market
it identify some sensitive indicators.
Currently, the flat prices in Czech housing market are increasing which possibly decrease the
housing affordability for households. The problem of housing price bubble in Czech Republic
tries to analyse Cadil (2009). Some authors (Zemcik 2011) in their paper investigated the
situation of decreasing of U.S. real estate market after the beginning of the financial crisis. They
used the regression analysis to explain the main fluctuations. There are even some other authors
who analyse the real estate prices (Gomez-Gonzales, J. E. et al., 2018).
To analyse the changes in household behaviour on housing market it is necessary to uncover the
main motivations why households offers their houses or apartments for sale or for rent. There
are lots of sources which analyse the main top reasons for moving from homeownership or from
rented flat. There are even some authors who analyse the housing markets from point of
unemployment (Hughes 1991, Munch 2007). They try to inspect the relationship between labour
market flexibility, unemployment and structure of housing market.
The most mentioned are: growing of family, not happy with the location, changing job,
retirement, tired of the upkeep, need of money end the neighbourhood is going downhill. Yale
Aly(2021).
The other source presents as top reasons why the homeowners move: home related reasons, the
home is too small, the home does not meet the homeowners needs, the neighbourhood has
changed, financial reasons, deferring maintenance, cashing in equity, personal reasons, new job,
need a new challenge, different interests and priorities. Weintraub, E. (2021).
375
Eberlin, E. (2021) presents in his article the main common reasons renters move. They are: renter
cannot afford the rent, apartment is too small, apartment is too large, job change of renter,
maintenance issues, neighbours problem, renter want to change neighbourhood,
separation/divorce/marriage, more available units, change in state support of tenant.
It is seen there are many of reasons for selling or renting. The motivations for making the decision
for sale or rent can be different because of different kind of property. The motivations come from
legal and material substance of real estate. There are many disadvantages or advantages of
homeownership or rent.
For instance Haury, C. Amanda (2021) in article 10 Reasons Why Renting Could Be Better Than
Buying states the 10 main reasons for renting of apartment. They are: no maintenance costs or
repair bills, access to amenities, no real estate taxes, no down payment, more flexibility, few
concerns about decreasing property value, flexibility to downsize, fixed rent amount, lower
insurance costs, lower utility costs.
The different segments of real estate market implicates different decision which should be solved
by responsible person. There are at least three different segments of real estate market with its
advantages and disadvantages. Let analyse them taking into account the above mentioned
motivations of homeowners and renters.
There are three different segments permanently offered on real estate market:
1. Single family houses for sale
2. Apartments for sale
3. Apartments for rent.
Except of mentioned three main segment of course you can find some other minor segment (such
as single family houses for rent), but from the point of the presented three segments it has no
meaning to implement it to the next analyse.
The single family houses for sale segment is in comparison and in general to the other segment
highly heterogeneous. Each house can be characterised as unique. Many of differences cause
many problem to calculate the real market price. Such as assumption leads me to express that the
market price is difficult to determine by the seller and buyer. Within the condition of the
significant heterogeneous segment it takes much more time to seek and determine market price
by the seller and by the buyer. Once market price is determined there are plenty of other reasons
why the house cannot be sold quickly (Oswald 1999). The social value of the house is usually
higher than the market value. The house built and maintained for generations with substance of
family memories increases the value of property. If there is no serious reason for sale, the owner
in such circumstances will never sell. In case the owner lose the job, it is even very difficult to
calculate the benefits from his new job (in different place) with the value of lost social
relationship in the place where he lives. Such conditions leads me to assumption that there is no
relationship between the number of single family houses for sale and unemployment. The main
reasons why the owners sell their houses are different. They are death in family, divorce,
marriage, maintenance, financial reasons etc.
Apartments for sale in comparison to the single family houses segment is highly homogenous.
There are plenty of the similar apartments for sale. It is even not so difficult to calculate
comparative value of the flat in few minutes. The value can be quickly calculate by the seller or
buyer, so the agreement can be completed in short time in comparison to the sale of single family
house. The banks are usually ready to provide loans to the buyers. They know the apartments are
easy to be sold. The apartment provides some other advantages in comparison to the single family
house. The maintenance of apartments is organised by condominium, so there is no needed to
lose the time by organising reparations of house. The apartment is more anonymous with
376
comparison of single family house. The social value of apartment is much lower in comparison
to the single family house. The apartments in general serves to young families in their beginning
of common life. The conditions of ownership of apartment provide possibility for quick life
changes. Such conditions for owning the apartment leads me to the assumption there can be
indicate the relationship between the number of apartments for sale and unemployment.
Apartments for rent is the third significant segment. Compared with the segment of single family
houses for sale, the apartment for rent is much homogenous. It can be compared with the segment
apartments for sale. The main reasons why the apartments are offered on the housing market is
to make a profit. Because of its homogeneity there is no problem to identify the market rent both
for renter and for landlord. What makes the difference in comparison to the previous two segment
is the lease agreement. The agreement conditions mostly come from the civil law of the country.
The situation of the tenant is of course less stable in comparison to the ownership. The change
of economic situation of the tenant can quickly cause the change of a decision for both sides of
agreement. The rental sector is more dynamic in comparison to the rest of the sectors. Especially
it will be sensitive to the all the changes connected with the households income. Because of this
1 assume a significant relationship between number of flats for sale and unemployment. I do even
expect some time shifts because of the notice period implemented into the rental agreement.
As next I will make an analyse of collecting data to inspect weather there are some relationship
between housing market and unemployment. I do expect some time shifts will be indicated.
2 Material and Methods
To analyse the relationship between changes of housing market segments and unemployment
there were collected daily data from the 17.2.2018 - 4.7.2021. All together it represents 1230
independent data sentences. There were collected the informations:
1. Date of search
2. Number of apartments offered for sale
3. Number of apartments offered for rent
4. Number of single family houses offered for sale.
The data were collected using the www.trzniceny.cz. The data describing the level of
unemployment were collected from public database of Czech Statistical Office (www.czso.cz)
and from Labour Department (www.uradprace.cz). The data are provided monthly.
The steps for next analysis will be done as:
1. There will be set indicator in accordance of assumptions done in chapter 1.
2. Identification of main relationship of variables
3. The estimation of data by the ordinary least squares (OLS)
To analyse the relationship between housing segments and unemployment I constructed the main
indicator, using the assumptions described in chapter 1 of this paper. I expect the segments
Apartments for sale and Apartments for rent will have some relationship to the unemployment,
while the segment Single family houses for sale does not have any relationship to unemployment.
The segment single family houses for sale I will use as independent base for construction of
indicator. I assume that the segment single family houses for sale is influenced by factors that do
not affect unemployment (deaths, marriages, divorces etc.). I assume the same factors (deaths,
marriages, divorces etc.) influence even the segments apartments for rent and apartments for sale.
In the segments there is some constant level of offers initiated by the factors which do not have
any relationship to unemployment. I will avoid such factors which do not have any relationship
377
to unemployment by deduction of number of single family houses offered for sale. To implement
all the assumptions I will create indicator.
The indicator can be express as:
Id = ((NASd + NARd ) - (NSFHd))/(NSFHd) (2.1)
Where
NAS..
N A R .
NSFH
number of apartments offered for sale in day d
number of apartments offered for rent in day d
number of single family houses offered for sale in day d
To avoid fluctuations I will count all the values of indicator to its 30 day moving average
The value of indicator will be inspected using OLS model. To get as accurate information as
possible the each values of parameters (NAS, NAR, NSFH) will be inspected using of time shifts.
After each time shifts there will be done OLS estimation with its level of significance.
3 Results and Discussion
The table 1 presents the basic data that enter the OLS model. The indicator I is counted in
accordance of assumption presented in Chapter 2. The unemployment has increased since
beginning of 2018. At the moment the level of unemployment stays near 4%. The unemployment
was influenced by the state subsidies during corona crisis. That is the main reason, why it has
not increased sharply. The third column presents the values of indicator I.
Id30 — (Ll + Id2 + +Id3o) / 30 (2.2)
378
Table 1 - Basic data
Month/Year Unempl. in % I
V.21 3,90 3,84
IV.21 4,10 3,90
111.21 4,20 3,71
11.21 4,30 3,48
1.21 4,30 3,21
XII.20 4,00 3,01
XI.20 3,80 2,84
X.20 3,70 2,36
rx.20 3,80 2,35
VIII.20 3,80 2,36
VII.20 3,80 2,37
VI.20 3,70 2,34
V.20 3,60 2,09
IV.20 3,40 1,81
111.20 3,00 1,40
11.20 3,00 1,27
1.20 3,10 1,22
XII. 19 2,90 1,13
XI. 19 2,60 1,09
X.19 2,60 1,04
IX.19 2,70 1,03
VIII. 19 2,70 1,05
VII. 19 2,70 1,12
VI. 19 2,60 1,10
V.19 2,60 1,11
IV.19 2,70 1,12
111.19 3,00 1,16
11.19 3,20 1,16
1.19 3,30 1,11
XII. 18 3,10 0,99
XL 18 2,80 0,95
X.18 2,80 0,93
LX.18 3,00 0,90
VIII. 18 3,10 0,87
VII. 18 3,10 0,85
VI. 18 2,90 0,85
Source: own calculation, www.czso.cz, www.uradprace.cz
In the next table 2 will be created the OLS model to find significant relationship between
unemployment and indicator of housing market I. There will be especially inspected the
significant possibility of time shifts, which could help to forecast future unemployment.
379
Table 2 - OLS estimation results
Time shift R -square Explanation Coef. *** Const.
ItO, uo 0,915 0,839 0,513 2,375
Itl.UO 0,893 0,799 0,534 2,380
It2, UO 0,872 0,760 0,572 2,358
It3, UO 0,872 0,760 0,572 2,359
Source: Own calculations
Note: *** symbol imply statistically significance at the level of1%
The OLS model does not confirm significant time shifts between contemporary level of
unemployment and past level of housing market. The table 2 there was inspected the time shits
one month back (Itl), two months back (It2) and three month back (It3). The past levels were
compared with the contemporary level of unemployment. The parameters deteriorated as the
input values moved away from the starting position.
The best value we get if we compare unemployment with housing market parameters in the same
time (U0, ItO). The relationship between the housing market indicator and unemployment is
represented by R - square parameter (0,915). It represents high relationship. The model can be
explained by 83,9%. The statistical level of significance is less than 1%.
The model confirm the relationship between unemployment and housing market. All the labour
changes of households are just in time transferred to the housing market. Such findings are
useful to monitor everyday changes in unemployment, which this findings support. Many of
macroeconomists must wait for official information on level of unemployment provided by
labour department or by statistical office. The official publication of such indicator take month
at least. This method offers fast, efficient and rational solution.
The relationship between unemployment and index I (created in chapter 2) can be seen in the
next Table 3. You can see the trend connectors as well. The Figure 1 presents the positive
relationship. The higher the value of index I, the higher the rate of unemployment.
Figure 1- Relationship between unemployment and I
Source: own calculation
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
•
•••
m
2 3
Unemployment
380
The model presents the relationship between unemployment and I in done numbers of
unemployment. There is the possibility, which it would be interesting to inspect, weather in very
low rates of unemployment the relationship does not exist. The reason for this consideration is
that in case of very low unemployment the tenants (or the owners) will be able to find very simply
the job in the area where they live. Because of it they will not have to make a transfer to a new
flat. The model in table 3 suggests there is no relationship below 3% rate of unemployment. It
suggests no elasticity. To explain such consideration it would be good to explore the relationship
between I and unemployment below the 3% level. Unfortunately, data are not yet available for
such claims. It is also possible the shape of dependence will be different in case of different input
values of unemployment.
3 Conclusion
The main results of the research are:
• No time shifts between the housing market and unemployment was confirmed.
• he relationship between the housing market and unemployment was confirmed.
• All the changes on housing market and labour market are done just in time (the changes
are registered just in time in relevant database).
• There is possible to construct very simple model, which will registered daily movements
in unemployment. It will help to all analysts in their day to day decisions.
The results done by OLS model confirm close relationship of housing market and labour market.
Both the markets are like continuous vessel. If the household finds itself at a disadvantage due
to the loss of employment, it starts immediately to solve the problem on the level of housing.
The change of offer can be immediately indicated in housing market. It is expressed by increase
or decrease of number of apartments for sale or for lease. It is typical, the household tries to find
new, more suitable place for living. It probably seeks the new living in area with high potential
of getting new job.
The model was developed on the base of Czech housing market data. It is challenge to make the
similar research in other countries as well. I do hope there will be the same results as presented
in Czech environment.
References
[1] CADIL, J. Housing Price Bubble Analysis - Case of the Czech Republic. Prague
Economic Papers 1 pp. 38 - 47.
[2] EBERLIN, E. 2021, 10 Common Reasons Renter Move.
https://www.thebalancesmb.com/reasons-tenants-leave-rental-2125040.
[3] GOMEZ-GONZALES, J. E. et al., 2018. When Bubble Meets Bubble: Contagion in
OECD Countries. Journal of Real Estate Finance and Economics, vol. 56, issue 4, pp.
546-566.
[4] HALÁSKOVÁ, M . , HALÁSKOVÁ, R. (2014). Impacts of Decentralization on the
Local Government Expenditures and Public Services in the E U Countries. Lex
Localis- Journal of Local Self - Government. Vol. 12, no 3, pp. 623-642.
[5] HAURY, C. Amanda 2021, 10 Reasons Why Renting Could Be Better Than Buying
https://www.investopedia.com/financial-edge/1112/reasons-renting-is-better-than-
buying.aspx
381
[6] HUGHES, G., MCCORMICK, B. (1991). Housing Markets, Unemployment and
Labour Market Flexibility in the UK. European Economic Review. Vol. 31, pp 83 -
114.
[7] M U N C H , R., J., ROSHOLM, M . , SVARER, M . (2007). Home ownership, job
duration, and wages. Journal of Urban Economics. Vol. 63, pp. 130-145.
[8] OSWALD, A , J., 1999. The Housing Market and Europ's Unemployment: A Non
Technical Paper. Working Paper. Warwick: Working Paper Series.
[9] WEINTRAUB, E., 2021. Why Do People Sell Their Homes?
https://www.thebalance.com/why4iome-owners-sell-1799021
[10] Y A L E A. 2021, https://www.newhomesource.com/learn/why-sell-your-home/
[11] ZEMCIK, P., 2011. Is There a Real Estate Bubble in the Czech Republic? Finance a
uver - Czech Journal of Economics and Finance, vol. 61, issue 1, pp. 49-66.
Contact information
Ing. David Slavata, Ph.D.
VSB - Technical University of Ostrava, Faculty of Economics, Department of Public
Economics
Sokolská třída 33, 702 00 Ostrava 1, Czech Republic
E-mail: david.slavata@vsb.cz
382
Gender and electronic submission of tax returns
Jiří Slezák, Ivana Čermáková
Abstract: Since 2003 it has been possible to file tax returns electronically. But most tax entities
prefer the physical form, whether they are taken directly to the tax office or via postal services.
However, in recent years, there has been an increase in the filing of tax returns electronically,
which has been and is affected by the COVID19 pandemic. The aim of the paper is to evaluate
the relationship between men and women on the methods of filing tax returns and opinions on
the electronic form of filing tax returns, primarily through a questionnaire survey and %2 test of
independence in a contingency table. The answers of the sample of respondents show that the
electronic form of tax returns is mostly preferred by men over women.
Keywords: Tax returns electronically, Modern and Simple taxes, %2 independence test, tax boxes
JEL Classification: K34, M41, 031
1 Introduction
On the issue of online communication and digitization in the Czech Republic, for example in
(Sojkova, 2017). Spacek, Csoto and Urs (2020) proves that the level of digitization in the Czech
Republic is very low, as evidenced by the Digital Economy and Society Index (DESI), which
evaluates the level of digitization in the European Union (EU) and which ranked the Czech
Republic in 17th place in 2020 (ec. Although the introduction of electronic devices and
digitization of public administration services in the Czech Republic is one of the main priorities,
the Czech Republic is not doing very well in this area, although it has improved in recent years,
for example in Simonová (2018)). More on the topic, for example in (Azis and Idris, 2014) or
Parvianinen, Tihinen, Kaariainena and Teppola (2017). According to the SAO (2018), the
biggest barriers to digitalisation of public and financial administration include, for example,
unpreparedness of legal regulations, insufficient use of current electronic services by tax entities
and insufficient communication of these services to entities or slow and insufficient
modernization of systems.
The paper deals with the use of information technology in the administration of taxes,
respectively in the submission of tax returns by tax entities. At the beginning of the COVID-19
pandemic, some tax offices shut down their services and people relied on other forms of
communication with the authorities than they were used to in the past. More than ever, various
electronic forms of filing tax returns came to the fore, which was difficult for some taxpayers
because they were not used to other methods and did not know them. Probably for this reason,
among other things, the Modern and Simple Taxes portal was launched at the beginning of 2021,
which provides a more comfortable option for taxpayers to file tax returns. The electronic form
of filing tax returns represents a number of advantages for entities, the biggest of which are
undoubtedly time savings. It is possible to file a tax return electronically from home and it is not
necessary to go with it to the tax office or send it via postal services. However, many people have
respect for this form, or do not know how it is possible to file such a tax return.
The article is very beneficial in its thematic focus, especially at a time when the Czech Republic
was hit by the COVID-19 pandemic, the effects of which are and will be significant on the
economies of all countries and due to possible re-closure or reduction of financial services.
Current topic, for this reason the author will address them in his future research.
383
2 Material and Methods
The data for the research were obtained based on the primary research, namely the method of
questioning, through a questionnaire survey. Which was carried out using the method of
Computer Asisted Web Interviewing - questioning through an online questionnaire. 51
respondents participated in the questionnaire survey, of which 23 were men and 28 women.
Secondary data were provided by Finanční správa.
To verify the independence in the PivotTable, when the obtained (nij) and theoretical (n'ij)
frequencies are compared, the %2 test of independence in the contingency table is used.
Deviations from the independence of individual fields of the contingency table are monitored by
Pearson's statistics (1):
the first index indicates the i-th variant of the character A, the second index the j -th variant of
the character B. The tested statistic G has a distribution with degrees of freedom v = (r - 1) (s -
1) if the null hypothesis X 2 is valid.
To use this test, the size of the set must be such that the expected frequencies reach a value of at
least 5.
For example, the Cramer coefficient (V) is used to measure the strength of the relationship
between variables (2).
where: m represents the greater of the two numbers r and s.
The value of the Cramer's coefficient is from the interval (0, 1). In the case of a zero value, there
is no relationship between the variables, in the case of a value of 1, there is a complete
relationship between the variables.
3 Results and Discussion
Filing a tax return electronically is an obligation for all business entities that own a data box or
have an obligation to have their financial statement verified by an auditor (Finanční správa,
2019).
The "electronic filing for financial administration" (EPO) application is most often used for the
electronic submission of tax returns. Within the EPO, it is possible to send a tax return:
• with a recognized electronic signature,
• without an electronic signature, but with delivery of a confirmation of submission,
• via data box,
• by verifying the identity by logging in to the data box, which is the most common
method (Finační správa, 2019).
The Financial Administration also makes it possible to fill in tax returns through interactive
forms, which enable a limited degree of automatic data completion (Finanční správa, 2019). It is
possible to log in to the EPO application via the Citizen's Portal or via the National Identity
Authority (NIA), which is intended only for natural persons (Finanční správa, 2020). Among
other things, the EPO application enables automatic mathematical control of entered data, the
(1)
384
possibility of saving and retrieving, the possibility of an electronic attachment or display of help
directly at individual lines of the tax return (Finanční správa, 2014).
As part of the incentive of the government of the Czech Republic, there was a change in 2021 in
the area of filing tax returns. If a business entity uses the option to file a tax return electronically,
its filing deadline is automatically extended by 1 month, which is good news for many entities
who leave this obligation at the last minute.
Figure 1 shows the number of filings of personal income tax returns physically and electronically
from 2012 to 2021.
Figure 1 - Development of the number of filed tax returns for personal income tax
Source: Finanční správa (2021), own processing
2500000
2000000
1500000
1000000
500000
I I I I I I
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
• Electronic • Personal
Figure 1 shows that most tax entities prefer the physical form of filing a tax return over the
electronic form. However, the share of electronic tax returns is increasing every year. In 2012, a
total of 31,726 tax returns were filed electronically, and as of 31 May 2021, 428,086 tax returns
had been filed electronically.
The growing trend of electronic tax returns is likely to continue in the coming years, for example
due to the introduction of the Modern and Simple Tax Portal, which was launched on the basis
of an amendment to the Income Tax Act, more about this amendment in Slezák and Kahánková,
2021.
This portal provides a modern and friendlier environment for taxpayers and serves for better
online communication with tax authorities. Login to this portal is possible in various ways,
through the so-called E-identity, which includes the login of medium-sized bank data, then
through the data box and through data assigned by the financial administration. The portal allows
automatic pre-filling of data in the tax return and easier submission. It contains, for example, a
tax calendar or the possibility of notification of future tax dates, more about the Modern and
Simple Taxes portal, for example in (Slezák, Přikrylová, Hakalová and Bieliková, 2019).
385
The basic tool for electronic communication is electronic mail. However, from a technical point
of view, it is to some extent easy to falsify information about who and when exactly sent the
message by e-mail, so this form of communication is used for the delivery of documents only to
a very limited extent.
The most important tool for electronic delivery of documents between business entities and the
financial office are data boxes, which enable online communication with the public
administration, also enable, for example, finding out the status of the driver's points account,
changes in the real estate cadaster and tax returns (Ministerstvo Vnitra, 2009).
If the tax subject has a data box set up, it is obliged to communicate with the financial authorities
only through it. The obligation to establish a data box arises directly from the law, for example
for people doing business as a tax advisor, insolvency administrator or statutory auditor. Other
natural or legal persons establish a data box only at their own request. An application for the
establishment of a data box can be submitted, for example, online, via an electronic ID card with
an activated chip (eObčanka), which has been issued in the Czech Republic since 2018 or in
person at the Czech National Verification Information Terminal (Datové schránky, 2020).
Figure 2 shows the development of the number of established data boxes for the period 2012-
2021 (July 21).
Figure 2 - Development of the number of established data boxes from 2012 to 2021
Source: Datové schránky (2021), own processing
160 000
140 000
120 000
100 000
80 000
60 000
40 000
i I II2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
From Figure 2 it can be seen that the number of established data boxes increases in all monitored
years. The largest year-on-year increase can be seen in 2020, where compared to 2019, the
number of established data boxes increased by 148 646, which represents a 12.5% increase. This
increase was influenced by the COVED-19 epidemic. This fact is evident in the monthly
comparison. In April 2020, 22 336 data boxes were set up, which is 9 442 more than in March
2020 and 14 413 more than in April 2019. The higher number of data boxes set up in 2020 was
also affected by the fact that in times of emergency in the Czech Republic, sending mail messages
is free (Datové schránky, 2020).
386
A total of 51 persons participated in the questionnaire survey, who submitted a tax return for
personal income tax at least once. Of this number, 12 people filed at least one tax return in any
electronic way, the rest of the respondents always preferred the physical form, most often in the
way that they printed the tax return at home on a computer and brought it to the post office. No
respondent has yet had an established data box or electronic signature. Most respondents stated
that the information provided by the financial administration on the electronic form of filing tax
returns was sufficient.
Graph 3 below shows the most common reasons why respondents prefer the physical form of
filing tax returns over the electronic form.
Figure 3 - The most common reasons for filing a tax return physically
Source: Computer Asisted Web Interviewing by authors
Do not know exactly where they should look for
information
Prefer personal way
Prefer electronic way
Personal it is more safe
0 2 4 6 8 10 12 14 16
Men • Women
It is clear from Figure 3 that most respondents consider personal contact with the tax office or
the postal service to be the most common reason why they do not use the electronic form of filing
tax returns. 4 respondents do not know exactly where they should look for information on the
possibilities of electronic filing, of which 3 have not yet registered the launch of the Modern and
Simple Taxes portal. The remaining 8 respondents are concerned about the security and possible
misuse of their data.
Figure 4 shows the most frequently mentioned benefits of electronic tax filing.
387
Figure 4 - Advantages of electronic filing of tax returns
Source: Computer Asisted Web Interviewing by authors
It is clear from Figure 4 that the most common benefits include simplicity and speed, and the
associated time and administration savings associated with completing and submitting tax returns
to the tax office. 6 respondents consider the extended deadline for filing a tax return to be the
greatest priority.
Figure 5 shows the disadvantages of the electronic form of tax returns.
Figure 5 - Disadvantages of electronic filing of tax returns
Source: Computer Asisted Web Interviewing by authors
0 2 4 6 8 10 12 14 16 18
Women • Men
388
The most common disadvantages are considered impersonal communication with officials at the
tax office, or at the post office, and concerns about the security of the data provided and, finally,
the complexity of filling in the tax return.
Table 1 contains the theoretical and expected values of the methods of filing a tax return in terms
of the division of men and women.
Table 1 - Theoretical and expected values of methods of filing tax returns
Electronic
Electronic
and Tax
Office
Electronic
and Post
Office
Handwritten
and Tax
Office
Total
Men
Theoretical
values
10 3 6 4 23
Men
Expected
values
5.4 5.4 6.8 5.4 23
Women
Theoretical
values
2 9 9 8 28
Women
Expected
values
6.6 6.6 8.2 6.6 28
Total
Theoretical
values
12 12 15 12 51
Total
Expected
values
12 12 15.0 12 51
Source: authors
One of the most common ways to file a tax return is to fill it out on a computer and then send it
to the tax office via postal services. Other forms include filling in a tax return on a computer and
taking it to the tax office, as well as a handwritten tax return and taking it to the tax office, and
an electronic form was equally popular among respondents. For women, the most common form
of filling out a tax return on a computer and sending it via postal services, on the other hand, the
least popular is the electronic form. Men preferred the electronic form of filing tax returns and
filling in data on a computer and sending them to the tax office, while the least popular is the
option of filling in data on a computer and taking them to the tax office.
Due to the fact that the conditions for the %2 independence test in the contingency table were met
(the minimum expected value is 5.41), it is possible to use the given test.
• The form of filing a tax return does not depend on the gender of the respondents.
• The form of filing a tax return does depend on the gender of the respondents.
Table 2 shows the results of the %2 independence test in the contingency table.
Table 2 - Results of yl independence test in contingency table
Value P-value
Pearson Chi-Square 9.871 0.020
N of Valid Cases 51
Source: authors
The value of the test criterion for the %2 independence test in the contingency table is 9,871 and
the p-value is 0.020. The P-value is lower than the chosen level of significance (5%), therefore
the null hypothesis is rejected and an alternative hypothesis is accepted: The form of filing a tax
return depends on gender. The electronic form of tax returns is mostly preferred by men.
389
The value of the Cramer's coefficient is 0.403 and their dependence is moderately strong.
Table 3 contains the theoretical and expected values of whether they will file tax returns through
the My Taxes portal in terms of the division of men and women.
Table 3 - Theoretical and expected values of filing a tax return through the Modern and
Simple Taxes portal
Yes No Total
Men Theoretical values 10 3 6
Expected values 5.4 5.4 6.8
Women Theoretical values 2 9 9
Expected values 6.6 6.6 8.2
Total Theoretical values 12 12 15
Expected values 12 12 15
Source: authors
The questionnaire survey showed that 12 respondents plan to file a tax return through the Modern
and Simple Taxes portal, most of whom are men, namely 9. The remaining part, ie, 39
respondents do not consider filing a tax return through the portal. 7 respondents, of which 5
women stated that they had never heard of this portal.
Due to the fact that the conditions for the %2 independence test in the contingency table were met
(the minimum expected value is 5.43), it is possible to use the given test.
• Filing a tax return via the Modern and Simple Taxes portal does not depend on the
gender of the respondents.
• Filing a tax return via the Modern and Simple Taxes portal does depend on the gender
of the respondents.
Table 4 shows the results of the %2 independence test in the contingency table.
Table 4 - Results of yl independence test in contingency table
Value P-value
Pearson Chi-Square 5.667 0.017
N of Valid Cases 51
Source: authors
The value of the test criterion for the %2 independence test in the contingency table is 5,667 and
the p-value is 0.017. The P-value is lower than the selected level of significance (5%), therefore
the null hypothesis is rejected and an alternative hypothesis is accepted: Filing a tax return via
the Modern and Simple Taxes portal depends on the gender of the respondents. Men usually
prefer this option to file a tax return.
The value of the Cramer's coefficient is 0.304 and their dependence is moderately strong.
4 Conclusion
The paper deals with the analysis of online communication of business entities with financial
authorities in the Czech Republic with a focus on filing tax returns. However, tax subjects still
prefer physical communication. However, it should be noted that the development is improving
every year towards an increase in the share of electronically filed returns. In 2019, 314,541
returns were submitted electronically, in 2020 it was 358,780 returns and by 31 May 2021 it was
390
already 428,086 returns. Based on a questionnaire survey, it was found that the main reason why
people file tax returns physically is a personal form of communication with officials at the
financial administration or at the post office. The personal form was found to be the main
disadvantage in the case of the electronic form of tax returns. The most common way of filing
tax returns is on the basis of a questionnaire survey, filling in the return on a computer and
sending it via postal services. Furthermore, it was found through the %2 independence test in the
contingency table that the form of filing tax returns depends on gender and the electronic form
of tax returns is mostly preferred by men, and filing tax returns via the Modern and Simple Taxes
portal depends again on gender and respondents. The recommendation for financial
administration in the issue of tax returns is that tax returns for all types of taxes should be filed
electronically, which would simplify administration for both businesses and the financial
administration itself. However, this option cannot yet be enshrined in legislation, and is therefore
still on a voluntary basis.
Acknowledgements
This research is supported by Project SP2021/51 at VSB-Technical University Ostrava.
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Contact information
Ing. Jiří Slezák
VSB - Technical University of Ostrava, Faculty of Economics, Department of Accounting and
Taxes
Sokolská třída 33, 702 00 Ostrava 1, Czech Republic
E-mail: jiri.slezak@vsb.cz
Ing. Ivana Čermáková
VSB - Technical University of Ostrava, Faculty of Economics, Department of Applied
Informatics
Sokolská třída 33, 702 00 Ostrava 1, Czech Republic
E-mail: ivana.cermakova@vsb.cz
392
Expenditures of Regions on Roads
Petr Tománek
Abstract: The paper focuses on the issue of one of the important components of regional
expenditures, namely expenditures on roads management and maintenance. The competence of
the regions includes the administration and maintenance of roads of II. and III. class in the region.
The extent of roads in the regions originated historically and these roads passed to the regions
with the establishment of the regions in 2000. The extent (length) of roads does not change much,
but relatively varies between regions. To finance roads, resources for roads management and
maintenance were included in the regional budgets, depending on the state of funds previously
provided for these roads. The paper shows the expenditures of the regions, how the expenditures
of the regions on these roads differ, resp. how other factors affect these expenditures. The aim of
the paper is to show the different conditions of individual regions in the field of expenditures on
roads of II. and III. class, due to the different lengths of roads in individual regions and due to
other characteristics of this infrastructure, in connection with the issue of distribution of funds to
regions within the budgetary allocation of taxes. The paper covers the issue of regional
expenditures on roads, which it evaluates in terms of roads characteristics in the regions.
Keywords: Regional expenditures, roads, regional budgets
J E L Classification: H71
1 Introduction
Regions were established in the Czech Republic in 2000 as an independent level of territorial
public administration. When defining the competence of regions in the area of self-government,
areas such as secondary education, health care, transport services, social services, as well as
administration and maintenance of roads of II. and III. class in the region and other smaller areas
of public services were included in the competence of regions. The above definition of public
services is important especially from the point of view that, in connection with the scope of these
services, resources from shared taxes have been allocated to individual regions. This allocation
of resources to regions was made in the form of relative shares of shared taxes, which, due to the
different scope of public services in the region, differ significantly per capita (this is a difference
of about 100% between the region with the lowest and highest revenues from shared taxes per
capita). This system has been applied without changes since 2005. Since then, there have been
changes in the area of public services provided by the regions, however, the method of tax sharing
has not responded to this. In addition to regional revenues from shared taxes, regional budgets
are supplemented annually by resources from transfers, which account for about 66% of total
resources within the regional budget (transfers mainly include transfers to regional education).
Due to the diversity of regions, the issue of the size of resources for regional budgets is important
for the financing of regions. The possibilities of using specific tax revenues collected in the
territories of the regions are very limited (Tománek, 2001). Due to the differences in the nature
of regions, the number of inhabitants cannot be used as a decisive criterion for sharing taxes to
regions, similarly to the municipalities (Tománek, 2015). The use of shared taxes in the form of
budgetary allocation of taxes (BAT) to regions also reduces possible large disparities in tax
revenue between individual budgets and allows to spread the risks of non-fulfillment of tax
revenue between the state and local government (Peková, 2011). Theoretical findings show that
a number of requirements have previously been defined for the tax revenues of decentralized
budgets (e.g. Musgrave, 1994); on the other hand, the criteria set for shared and entrusted taxes
create individual conditions for individual decentralized budgets. The current real conditions
393
modify the conditions for providing appropriate tax resources to decentralized budgets, resp.
theoretical knowledge in this area should be developed (Tománek, 2015), incl. issues of assessing
tax autonomy within fiscal federalism (Blóchliger, 2011).
The above view on the issue of road financing in the regions is a detailed view on the given issue,
which is not dealt with in more detail by theories or publications. From a regional point of view,
the publications focus on road expenditure in the regions in general, but the differences between
regions, monitoring road expenditure in individual regions and in terms of recalculation to a
length unit of road, per capita and the like are not described. The issue of road financing is
described in various publications (Andersson, 2012, Gomez, 2016, Poliak, 2017, Grahn, 2013,
Liu, 2020), however, this paper deals specifically with the issue and specifics of financing the
relevant segment of public expenditure under decentralized budgets (regional budgets) in the
conditions of the Czech Republic, where self-governing decision-making of regions is
particularly evident and where road expenditures are only a partial part of regional expenditures.
This contribution is focused on only one part of the sources for financing the regions, namely the
sources resp. the expenditures for roads financing in regional administration. Regional
expenditures on roads are one of the important areas of regional expenditures. These are
expenditures on administration and maintenance of roads of II. and III. class in regional
administration. The extent of roads varies in the regions and it is therefore necessary to assume
that regional expenditures in this area will also differ. Regions have no limit to how many sources
from BAT funds have to provide on roads and it's so at their own decisions.
The aim of the paper is to show the different conditions of individual regions in the area of
expenditures on roads of II. and III. class, due to the different lengths of roads in different regions
and due to other characteristics of this infrastructure.
The article wants to show, among other things, the issue of financing public goods in the regions,
where these public goods serve not only to the inhabitants of given region, but also to other
regions ; in the case of roads, the point is that vehicles from other regions can also move on the
roads of a given region. The observed problem of road network maintenance can thus be
considered as a kind of externality of the region, where the expenditures should be appropriately
compensated to the region. The paper looks at the issue of roads financing in the regions from
alternative perspectives, which could serve in the selection of appropriate criteria for regional
financing.
The paper focuses on the issue of roads expenditures of existing regions. However, Prague is not
included here, which represents on the one hand a region, but also a municipality, and the roads
cannot be divided from this point of view, and therefore the data captured in this way are not
comparable with other regions; Thus the contribution in all parts tracks only 13 regions5
of CR .
The paper for the analysis uses data for the period 2017 - 2019, which are not distorted by the
crisis in connection with Co vid - 19.
5
These are the following 13 regions in the Czech Republic: South Bohemian Region (JHČ),
South Moravian Region (JHM), Karlovy Vary Region (KVK), Vysočina Region (KVY), Hradec
Králové Region (KHK), Liberec Region (LBK), Moravian-Silesian Region (MSK), Olomouc
Region (OLK), Pardubice Region (PAK), Pilsen Region (PLK), Central Bohemia Region (STČ),
Ústí nad Labem Region (ÚLK), Zlín Region (ZLK).
394
2 Methodology and data
2.1 Characteristics of the road network in regions
Road network size of II. and III. class vary from region to region. It is given both by the territory
of the regions, but also by other parameters. Characteristics of the size of the road network in the
regions are shown in graphs 1 to 3, which show both the total length of the road network in
individual regions, but also its relative size in relation to the area and population. The values of
these parameters vary significantly between regions, and therefore it can be expected that the
expenditures spent by regions for the administration and maintenance of roads in individual
regions will vary.
The regions of STC, JHC, PLK, JHM, K V Y have the longest length of roads in the regions (see
Figure 1), which are the regions with the largest area. However, it turns out that the length of
roads does not correlate with the area of the region, so the relative share of roads length in regions
by area varies and this share is highest in the regions STC, K V Y , KHK, PAK, U L K (see Figure
2) . The highest density of the road network is in the STC region, while the lowest in the Z L K
region. Furthermore, the length of roads in the regions can be characterized by a relative share
to the number of inhabitants; K V Y , JHC, P L K have the longest road network per capita (see
Figure 3), and the MSK, Z L K and J H M regions have the smallest. From these physical
characteristics it is clear that the conditions of individual regions in the field of roads are very
different.
The characteristics of the road network in the regions (see above) for the analysis of financing
therefore differ. The problem of financing of the road network in the conditions of the Czech
Republic is often discussed, due to the lack of financial resources of the regions. However,
regions usually receive transfers from the State Fund for Transport Infrastructure for roads
maintenance every year to ensure higher resources for roads financing; the provision of these
transfers to the regions is based primarily on the length of the road network. It is not possible to
directly identify whether these funds are sufficient, given that there is no overall characteristic
of the state of roads quality in the regions.
Figure 1 - Length of roads of II. and III. class in regions (km)
Source: Data from the Road Database
10 000
9 000
8 000
7 000
6 000
5 000
4 000
3 000
2 000
1 000
0
I •III IJHC JHM KVK KVY KHK LBK MSK OLK PAK PLK STC ULK ZLK
395
Figure 2 - Length of roads in regions per 1 km2
of region area (km/km2
)
Source: Calculation based on data from the Road Databank and regional area according to the
CZSO
Figure - 3 Length of roads per 1,000 inhabitants of regions (km / 1,000 inhabitants)
Source: Calculation on the basis of data of the length of roads from the Road Databank
10.00
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00 IJHC J H M K V K K V Y K H K L B K M S K O L K P A K P L K STC U L K Z L K CR
However, other available indicators can be used to characterize the road network in the regions,
which are monitored at certain intervals by the organization of the Directorate of Roads and
Motorways, which provides data in the form of a road database. It is mainly an indicator of traffic
performance6
, which is measured on individual roads. The highest performances can be recorded
Traffic performance on roads is reported in vehicle-kilometer indicators in 24 hours, which
reflects the number of vehicles that pass on individual roads in 24 hours. The indicator is
396
in the regions of STC, JHM, M S K and JHC, the lowest are reported by the regions of K V K and
L B K (see Figure 4).
Based on transport performance, it is then possible to evaluate the indicator of average traffic
intensity in the regions, as the average share of transport performance on roads in individual
regions, which then reflects the average occupancy of roads in the regions. These values differ
between regions and it turns out that the traffic intensity in the region with the highest intensity
(MSK) is at the level of 227% of the level of regions with the lowest intensity (JHC, PLK) (see
Table 1).
Table 1 Traffic intensity in regions (1,000 vehicles / 24 hours)
Intensity
JHC J H M K V K K V Y K H K L B K M S K O L K P A K P L K STC U L K Z L K C R
Intensity
0,81 1,69 1,04 0,86 0,99 1,09 1,84 1,12 0,99 0,81 1,13 0,99 1,84 1,11
Source: Calculation on the basis of values from graph 4 and graph 1.
Figure 4 - Total transport performance on regional roads (in 1000 vehicle-km / 24 hours)
Source: Road Databank, 2016
12000
10000
8000
JHC JHM K V K K V Y K H K L B K M S K O L K P A K P L K STC U L K Z L K
The above indicators cover the basic possibilities of characterizing the road network in individual
regions , which should be reflected in particular in the resources that are provided to regions for
roads so that the territory of the entire state (all regions) of roads II. and III. class could be
maintained in the same quality.
2.2 Regional expenditures on roads
Regional expenditures on roads have an important place in the total expenditures of regions. The
size of these expenditures can be characterized on the one hand from the point of view of total
determined for individual roads and there are also calculated average values on roads in regions.
Measurement of traffic performance is performed at intervals of 5 years.
7
The Road Databank also monitors roads widths (however, data are not available for all roads)
and the number and area of bridges, where bridges are also reflected in roads management
expenditures (bridges aren't specifically examined in this paper).
397
regional expenditures, which are significantly affected by the representation of subsidies in
regional budgets and regional roads expenditures make share of 10.27%, or from the point of
view of expenditures from BAT, where it's a share of 22.70% (see Table 2).
As already mentioned, no criteria are set within the BAT of regions, and therefore since 2005 the
system of financing regions through BAT has been preserved, although conditions in the regions
may change and the original method of determining the amount of funds provided to regions for
roads is a question at all. In addition, the significance of regional expenditures in a given area
may change over time within regional budgets.
Table 2 Expenditures of 13 regions on roads for the period 2017 - 2019 (in CZK, %)
Expenditures Share in %
Expenditures
paid from
B A T *
Expenditures
paid from
RUD in %
Roads 62 755 361 516 10,27 46 271 779 822 22,70
Total regional
expenditures
610 990 874 826 100,00 196 276004925 100,00
Source: calculation based on the Monitor and documents from the regions
Notes: * Expenditures paid from the budgetary allocation of taxes (BAT) after deduction of
resources from transfers, non-tax and capital revenues.
From the point of view of providing funds to the regions for roads, it turns out that such a criterion
cannot be the number of inhabitants of the region, which is one of the basic characteristics of the
differences of regions in the Czech Republic. In this respect, it turns out that the differences in
expenditures per capita between regions are three times as large between the regions with the
lowest and highest expenditures (see Graph 4). This follows from the overall characteristics of
the road network in the regions (see Chapter 2.1).
In terms of comparing the actual expenditures of the regions, which are monitored here for a
period of 3 years, so it is possible to assess the values of regional expenditures per unit in terms
of the length of the road network and in terms of transport performance.
398
Figure 5 - Regional expenditures on roads for the period 2017 - 2019 per capita (thousands
of CZK)
Source: Calculation based on Monitor data
If we assess regional expenditures in relation to the length of the road network (see Figure 5),
then the division of regions into two groups can be deduced, so it is into regions where
expenditures are relatively lower than the length of the road network in the region and other
regions with expenditures relatively higher than length of the road network. The first group
includes the regions JHC, JHM, KHK, LBK, P A K and STC. This situation in these regions may
be associated with factors such as: lower traffic intensity, lower amount of available resources
of the region, lower priority of the region in ensuring roads management, lower costs of public
procurement, but also other factors. Unambiguously stated values do not indicate any factor,
because even though, for example, from the mentioned group of regions, most regions have an
average traffic intensity, resp. below average, the JHM region is one of the regions with the
highest traffic intensity.
The second view of regional expenditures is made through regional expenditures in relation to
transport performance (see Graph 6). The use of the traffic performance indicator, or the traffic
intensity indicator, can be combined with the assumption that more traffic on the roads causes
more wear and tear on the roads and thus the need for higher expenditures on roads management
(repairs). Looking at the comparison of the share of expenditures on roads with transport
performance, the JMK, LBK, MSK, STC and Z L K regions belong to the group of regions where
roads expenditures are relatively lower than transport performance. Even in this case, the
situation is not the same in terms of traffic intensity, however, most regions (except for the L B K
region) belong to the group of regions with the largest traffic intensity among the regions.
Figure 6 Comparison of shares of roads length in regions and shares of regions'
expenditures on roads
Source: Values are determined: length of roads = share of individual regions on the total length
of roads of II. and III. class from 13 regions of the Czech Republic (data from Figure 1); regional
expenditures = the share of individual regions on the total expenditures of regions on the roads
(excluding expenditures paid from subsidies) from data from the Monitor and from regional
documents.
399
20.0
18.0
16.0
14.0
12.0
JHC J H M K V K K V Y K H K L B K M S K O L K P A K P L K STC U L K Z L K
• Expenditures • Roads lenght
Figure 7 Comparison of the share of transport performance in regions and the shares of
regional roads expenditures
Source: Values are determined: transport performance = share of individual regions on the total
transport performance from 13 regions of the Czech Republic (see Figure 4); regional
expenditures = the share of individual regions on the total expenditures of regions on the roads
(excluding expenditures paid from subsidies) from data from the Monitor and from regional
documents.
20.0
18.0
16.0
14.0
12.0 m
10.0
JHC J H M K V K K V Y K H K L B K M S K O L K P A K P L K STC ÜLK Z L K
• Expenditures • Performance
If we then compare both views on the expenditures of individual regions in relation to the size
of the road network and the size of transport performance in individual regions, then from both
perspectives the JMK, LBK, STC regions are regions where expenditures are relatively lower
and at least in these regions can be expected the overall average worse condition of roads
compared to other regions or to the average. Of course, it does not have to be just these regions,
but in connection with the mentioned factors, the situation may be similar in other regions.
400
3 Conclusions and discussion
The paper focuses on the issue of regional expenditures on one of the important expenditure areas
of regions, which are expenditures that regions have in connection with the fact that they manage
roads of II. and III. class. The system of resources from which the administration of regional
roads is financed is based, apart from sudden transfers, on shared taxes, which are not provided
to regions by reflecting criteria, but since 2005 fixed regional shares have been set in shared
taxes, which reflected earlier volumes used to manage these roads. Since 2005, the shares of
individual regions on shared taxes have not changed in any way, however, since then the
conditions of individual regions in the given area of expenditures may have changed.
The analysis showed that the provision of funds to regions that are different in size both in terms
of population and territory, is not appropriate to provide through these criteria of population and
area. Based on a real analysis of regional roads expenditures, the paper tries to find possible
criteria according to which funds should be provided to regions.
The basic parameter is its length of the road network in the regions, which is a parameter that
does not change much. More dynamic changes can occur in the area of traffic intensity on the
roads of regions, which may be related to changes in economic conditions of regions (e.g. in
connection with the establishment or closure of economic entities in the region) but also other
factors such as population movement for shopping, recreation, etc. These soft data, i.e. data on
traffic intensity, are available and can be used to supplement knowledge about roads conditions
in the region. Differences in traffic intensities are not negligible and averages vary up to 2.2 times
between regions, which has an impact on the need for roads maintenance in the regions.
However, monitoring the size of roads expenditures in relation to traffic intensity is not carried
out.
Various analytical views on regional roads expenditures point to the complexity and diversity of
the issue. The analytical data do not allow unambiguous conclusions to be drawn, especially in
terms of the fact that regions are territorial self-governing units, which independently decide how
to divide their available resources between areas of expenditures and thus how much money they
spend on roads management and maintenance. Why it is not possible to unambiguously identify
suitable rules for providing regional resources for roads, there are reasons such as traffic
intensity, amount of available resources of the region, the region's own priority in ensuring roads
management, the level of public procurement costs, but also other factors, which manifests itself
in the state of the road network in the regions.
The paper shows that the relative amount of funds that regions spend on roads varies between
regions both in terms of comparison to the length of the road network and in terms of transport
performance. Of the 13 monitored regions from both perspectives, the JMK, L B K and STC
regions spend a relatively smaller amount of funds, and it is thus possible to assume a worse
condition of the road network. Of course, in addition to the above indicators, other circumstances
may also manifest themselves in the state of the regional road network, resp. solving problems,
such as the condition of bridges in the regional road network, which was not considered in the
analysis.
The performed analyzes of expenditures cannot give a clear answer and therefore it is necessary
for the given system to look for an approach in the form of consensus between regions.
Acknowledgements
The article/paper was created within the frame of the T A CR project TLO1000145
"Methodological - Application Tools for Efficiency Financial Management of Territorial
Structured Statutory City" and with financial support of the student grant project SGS No.
401
SP2017/129 "Economic Factors Affecting the Ensuring of Public Services with Collective
Consumption" on Faculty of Economics, Technical University of Ostrava.
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[4] GRAHN-VOORNEVELD, S. (2013) The Effects of Decentralized capacity decisions
for congested self-financed roads. Transportation Research Part A-Policy And
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[5] LIU, WD., ZHANG, Y L , XIONG, W. (2020). Financing the Belt and Road Initiative.
Eurasian Geography and Economics. Vol. 61(2), pp. 137-145.
[6] M F ČR (2021). Monitor (2017-1019). [online]. [cit. 2021-06-15].
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Contact information
doc. Ing. Petr Tománek, CSc.
VSB - Technical University of Ostrava, Faculty of Economics, Department of Public Economics
Sokolská tř. 33, 702 00 Ostrava 1, Czech Republic
E-mail: petr.tomanek@vsb.cz
402
Multi-criteria evaluation of the performance of health systems of EU
Member States to the Health 2020 targets
Ivana Vaňková, Iveta Vrabková
Abstract: The international document Health 2020 points to the main regional targets, which are
linked by 19 measurable indicators that assess the health status of the population in a given area.
Each targets defined in this document represents a concrete step towards improving health care.
The paper objective is to determine a ranking of the 28 E U Member States, with an emphasis on
the position of the Czech Republic, according to the fulfilment of the first five Health 2020
objectives, including 15 indicators as of 2015. Based on the methodological procedure, an index
indicator was calculated for each target, which subsequently became the basis for determining
a ranking of states in terms of the targets achieved by the Technique for Order of Preference by
Similarity to Ideal Solution. The weight of individual criteria was determined by expert
estimation. The results generate an interesting finding that the results are influenced by the set
weights of the individual criteria and that the overall results have the greatest impact on the
achievement of the value under the fourth objective, which is aimed at improving the well-being
of the people of Europe. The Czech Republic ranked 17t h
in terms of the ranking of individual
states and is below the average of the 28 E U states. Sweden had the best ranking and Bulgaria
the worst results.
Keywords: Health 2020, health system performace, TOPSIS method
JEL Classification: 114, C60
1 Introduction
Healthcare as a subsystem of the public sector and the economy as a whole of a given country is
based on the interdependence (systematization) of specific procedures, activities and resources
aimed at effective and efficient care of the health status of its population. As a compact part of
society, the healthcare system must respond in a functional and timely manner to internal and
external influences of a natural, social and economic nature. Quality of the healthcare system
and its ability to respond to these influences is in the government's hands. The availability of
a country's health system is then crucial in coping not only with routine situations and healthcare
needs, but also with emergency situation such as the COVID 19 pandemic crossing national
borders.
The functionality and quality of the healthcare system from the perspective of the population
health and social status is determined by public policies that are the starting points for effective
management and improvement in the health sector. We may state that the quality, outputs and
outcomes of the healthcare system are conditioned by the socio-economic maturity of the given
country. In this point of view, it is important that states apply modern, effective and participatory
healthcare policies, especially when they are part of larger entities like the European Union. At
the E U level, specific public healthcare policies are adopted that concentrate to health protection
in particular, as well as the WHO approaches.
E U Member States therefore apply their own original healthcare policies. However, the
convergence and, more importantly, the improvement of the healthcare outcomes of the E U
member states (e.g. life expectancy, premature and infant deaths, prevalence of chronic diseases,
health financing to GDP ratio or the burden of negative phenomena such as smoking, alcohol,
drugs) is very important not only in terms of the population's health status, but also in terms of
403
increasing equity and quality of healthcare services in the E U context (Barták, 2012, Smith et
al., 2008).
Comparative studies and individual policies of the E U Member States suggest that there have
been relatively significant differences between countries in terms of both healthcare economics
and healthcare outcomes over the long term, (Smith et al., 2008, European Commission, 2019).
With the aim of cohesion and improved healthcare performance in Europe, a single set of
measures called Health 2020 was implemented in 2013 across the policies of the member states,
(MoH, 2013).
The assessment of the performance of the individual member countries' healthcare systems
according to multiple heterogeneous factors (Health 2020 indices) implies the use of a multiple
attribute decision making, where all discrete variants can be identified, including the assignment
of specific criteria values. One of the methods that allows for multiple attribute decision making
is the TOPSIS method.
The paper objective is to determine a ranking of the 28 E U Member States, with an emphasis on
the position of the Czech Republic, according to the fulfilment of the first five Health 2020
objectives, including 15 indicators as of 2015.
In the context of the paper objective this research question was formulated: Is the Czech
Republic's performance in meeting the first five Health 2020 targets in 2015 above the EU
average?
The paper is structured into five parts. The first part is devoted to introduction; the second part
includes a brief theoretical definition of the possibilities of healthcare systems' international
evaluation and the first five Health 2020 goals of the World Health Organization. The third part
of the paper is devoted to description of the monitored Health 2020 indicators' evaluation and
the TOPSIS method. The fourth part of the paper presents the results of the summary indices of
the five Health 2020 goals and the calculations of the TOPSIS method. The conclusion is the
fifth part of the paper and briefly summarizes the main findings of the research.
2 Evaluation of health systems
In healthcare, as Smith et al. (2008) state, performance evaluation and measurement monitor,
evaluate and communicate the extent to which different aspects of the healthcare system meet
their key objectives. The need to measure the performance of a healthcare system or its individual
elements is based on the stakeholders' accountability - from citizens (the public), patients,
healthcare providers, through insurance companies, public administration up to governments.
Healthcare system performance involves evaluation and measurement from the macro- and
micro-perspective. These are specific areas of measurement of the outputs and outcomes
produced by the healthcare system as a whole or in parts, and examples include population health
or equity of access to health care, as well as the economics and efficiency of healthcare providers.
In the developed countries there is a growing demand for improved information, transparency of
financing and managerial accountability of healthcare services and the healthcare system in
general. It is not surprising, then, that most of the healthcare policy actors are finding out that
without specific measurements and international comparisons, it is difficult to detect optimal
service delivery solutions, design institutional healthcare service schemes and reforms, protect
patients and healthcare payers, and make key investments (Papanicolas, Smith, 2013).
The international comparison of healthcare systems or their performance is a very popular topic
among academic researchers as well as among supranational institutions such as OECD, WHO
or the European Commission. The importance of international comparison of healthcare system
404
performance is growing because it also allows shaping more accountable healthcare policies,
improving quality of healthcare or increasing the governance and partnership capacity in general.
Equally important is the fact that the performance of healthcare systems has an impact on crossborder
healthcare and health tourism. At the European Union level in particular, international
comparisons are of one crucial importance, namely that they form the necessary basis for the
development of the legal and organisational framework needed to implement the directives
governing the free movement of people and services in healthcare, i.e. cross-border health care
(Olsen and Dahl, 2007, Sole-Auro and Crimmins, 2008, Toor et al., 2018, Menne et al., 2020).
A comprehensive view of the level of healthcare systems and how they can be measured and
compared is presented in the WHO Health 2020 paper: the European policy for health and wellbeing
in the 21st century. The Health 2020 is based on 6 key objectives and 19 quantitative
indicators telling about the level of the population's health, of reducing health inequalities and
of strengthening the role of public administration in the health area (WHO, 2021).
WHO: Health 2020 targets:
• Target 1: Reduce premature mortality in Europe by 2020, it includes six indicators
(Alcohol (1), Measles, Polion (2), Tobacco (3), Mortality External Cases (4), Premature
Mortality (5), Overweight (6));
• Target 2: Increase life expectancy in Europe, it includes one indicator (Life expectancy
(7));
• Target 3: Reduce inequities in Europe, it includes six indicators (Life expectancy (7),
Unemployment (8), School enrolment (9), Infant Mortality (10), GINI (11), Inequities
Policies (12));
• Target 4: Enhance the well-being of the European population, it includes six the
indicators (Unemployment (8), School enrolment (9), GINI (11), Life satisfaction (13),
Sanitation (14), Social Support (15));
• Target 5: Universal coverage and the right to health, it includes three indicators
(Measles, Polion (2), Health Expenditure (16), Our-of-pocket expenditure (17);
• Target 6: National targets or goals set by Member States, it includes two indicators
(Target setting (18), Evidece Docum (19)). (WHO, 2021)
An international comparative evaluation incorporating the W H O Health 2020 targets was
published by Zuidberg et al. (2021). In their paper, the authors evaluated selected indicators of
50 Member States of the WHO European Region in 2005, 2010 and 2015.
3 Methodology
3.1 Indicator index for Health 2020 targets
In the first phase, the research methodology involves collecting and validating the necessary data
mainly from the WHO database, i.e. Health 2020 database. Some data were also drawn from the
Health for All database (e.g. GINI coefficient, Unemployment rate) and the World Happiness
Report (Life satisfaction). The data is evaluated for 2015 as it is available for all indicators
(except for the indicators 12 and 15) and all surveyed E U countries at the time of this research.
In the second stage, the value of each indicator index and then the value of Health 2020 targets
(C1-C5) for the 28 E U countries is calculated, following the methodology of Zuidberg et al.
(2021). In terms of evaluation, there was the following methodological procedure (1).
405
The formula for the indicator index is the following:
(actual value — minimum value)
Indicator index = - -—-x 100 (1)
(maximum value — minimum value)
Some indicators are negative indicators (e.g. indicators 1, 3, 4, 5, 6, 8, 9, 10, 11, 17), in which
lower value corresponds to better progress. Indicators 2, 7, 13, 14, 16 are positive indicators, in
which a higher values corresponds to better progress. In case of negative indicators, the indicar
index was subtracted from 100 to get the actual indicator index. The calculation of the indicator
index was executed for each indicator of the E U states. Indicator indices of zero were rounded
up to one to avoid problems with the calculation of the geometric mean.
The geometric mean of five Health 2020 targets was then calculated for each states. The formula
for geometric mean are (2-6):
Target 1 = Mind indexl x ind index! x ind index3 x ind indexA x ind indexS x ind index6 (2)
Target 2 = Mind indexl (3)
Target 3 = Vind indexl x ind index8 x ind index9 x ind indexlO x ind indexll (4)
Target 4 = Vind index8 x ind index9 x ind index 11 x ind indexl3 x ind indexlA (5)
Target 5 = Mind indexl x ind index!6 x ind indexll (6)
In the third phase, the weights of the calculated indexes of the five Health 2020 objectives are
determined, for the needs of evaluating the ranking of countries according to the multi-criteria
method - TOPSIS, (see Table 2). The weight of individual criteria was determined by expert
estimation, the biggest weight is given by CI and C2, because they are direct factors of the level
of health of the population of the given country. Criterion C3 has a compromise weight, given
that it is a question of Reduce inequities in Europe Infant Mortality. The lowest weights are
determined by C4 and C5, because they include indirect (economic and social) factors of
population health. All criteria are maximizing, as indicated in Table 1, where the values of the
criteria for individual countries are color-coded (green best and red worst).
Table 1 - Criteria for Multi Criteria Evaluation
Criteria (C1-C5) Weight (Wci.es) Characteristics (C1-C5)
CI Index of target 1 0.3 Max.
C2 Index of target 2 0.3 Max.
C3 Index of target 3 0.2 Max.
C4 Index of target 4 0.1 Max.
C5 Index of target 5 0.1 Max.
In the fourth phase of the research, basal and ideal values are calculated according to the TOPSIS
method and the order of countries is determined.
406
3.2 TOPSIS method
The TOPSIS (Technique for Order of Preference by Similarity to Ideal Solution) method is one
of the Multi Criteria Decision Making methods. The purpose of the TOPSIS method is to select
the variant that is closest to the ideal variant and farthest from the basal variant. (Ardelli, Vavrek,
2019, Vrabkova et al, 2021)
The calculation procedure using the TOPSIS method can be described in the following steps:
• creation of a matrix D, in that the alternatives are ranked according to relevant and
predefined criteria;
• construction of the normalized criterion matrix that is then used to calculate the
normalized values according to formula (7):
where xy = the value of the j-th criterion achieved by the i-th alternative;
multiplying by the weights of the respective criteria, according to relation (8):
v
ii=w
ii-r
ii (8)
where Vy = weighted normalised value and Wy = weight of the criterion;
determination of the ideal variant Hj and the basal variant Dj, according to relation (9):
Hj = max(wii),Dj = min(H>,:/) (9)
calculating the distance of the variants from the ideal variant and the basal variant,
according to (4):
1/2
d:
;'=1
(10)
calculating the relative distance from the basal variant, according to (11):
d~
c = •
' d:+d*
where c; is an indicator of the relative distance from the basal variant.
(11)
The resulting values of Cj are in the interval <0, 1>, where 0 represents the basal variant and
1 represents the ideal variant. The variants are then ranked according to the values of Ci from
highest to lowest, resulting in a complete ranking of the evaluated variants (Jablonský, Dlouhý,
2015).
According to the TOPSIS technique, an important step of the entire calculation is the
determination of the weights of the criteria, that reflect the relative importance of each criterion.
The weights can be determined, for example, through the ranking method, the scoring method,
the Saaty method or the Fuller's triangle (Jablonský, Dlouhý, 2015). Vavrek, Bečica (2020) states
that the weights of criteria can be set in subjective, expert, objective or integrated way
(a combination of the first and the second approach).
407
4 Results
4.1 Method 1: Index of Targets of Health 2020 of methodology Zuidberg et al. (2021)
From the calculated values of the indicator indices, it is clear that the lowest ratings are achieved
by two countries, namely Bulgaria (BGR) and Romania (ROU). Austria (AUT), France (FRA),
Finland (FIN) and Luxembourg (LUX) also have high ratings.
Table 2 - Values of individual targets according to EU countries, in %
Country of E U
Index of
Target 1
Index of
Target 2
Index of
Target 3
Index of
Target 4
Index of
Target 5
Austria AUT 71.29 80.28 85.31 91.39 76.30
Belgium B E L 69.86 77.25 81.47 87.48 79.43
Bulgaria BGR 23.25 1.00 3.13 4.55 25.60
Cyprus C Y P 61.73 82.85 65.42 58.54 11.39
Czechia CZE 50.60 49.01 82.45 90.71 57.93
Germany DEU 63.74 73.28 79.48 85.97 71.20
Denmark D N K 82.50 75.38 74.94 93.95 74.77
Spain ESP 69.69 98.02 47.70 45.53 59.16
Estonia EST 28.37 40.26 61.59 61.37 34.32
Finland FIN 77.88 79.11 87.34 88.96 70.05
France FRA 60.32 100.00 80.35 78.09 80.95
United Kingdom GBR 62.49 76.31 68.95 74.59 66.19
Greece GRC 35.91 76.20 22.30 19.10 49.06
Croatia H R V 49.95 34.42 53.62 58.66 54.56
Hungary H U N 41.69 16.80 52.44 66.02 53.20
Ireland IRL 66.06 80.28 76.56 72.32 52.45
Italy ITA 62.79 95.57 66.71 61.98 36.60
Lithuania L T U 19.63 1.58 20.71 41.54 32.18
Luxembourg L U X 76.28 99.30 82.86 79.18 57.89
Latvia L V A 36.61 6.30 35.53 47.74 22.28
Malta M L T 37.26 86.81 74.93 83.22 52.82
Netherlands N D L 79.4 83.5 82.4 83.1 81.8
Poland POL 59.15 35.82 54.75 67.45 34.64
Portugal PRT 79.05 79.58 61.99 52.18 66.30
Romania ROU 26.38 6.30 7.68 13.83 4.13
Slovakia SVK 60.32 29.17 47.65 66.39 55.18
Slovenia SVN 69.55 74.80 88.91 80.27 67.20
Sweden SWE 90.56 89.38 86.95 89.44 90.72
The statistical characteristics of "target index values" (from Table 2) is given in Table 3. It can
be seen from Table 3 that, on average, the best results are achieved by the countries monitored
under Target 4. The worst results are achieved on average by countries under Targets 1 and 5.
The largest differences between countries can be traced under Target 2. Overall, the statistical
analysis suggests that there are two extremes between the monitored countries in the form of best
(max.) and the worst results (min).
The average results for all targets from the perspective of individual countries are shown in the
graph in Figure 1 (countries are ranked from worst to best). For clarity and broader context, two
typical funding systems are distinguished - the Bismarck model (green column) and the
408
Beveridge model (blue column). From this perspective, it is not possible to state a deeper
connection between the type of funding model and the results of fulfilling the targets of Health
by 2020.
Figure 1 - Ranking and mean of values of targets according to EU countries, in %
u
^3
a
a
95
90
85
80
75
70
65
60
55
50
45
40
35
30
25
20
15
10
II
Mean= 60.26
O O H > P á ^ ^ o í O > > H
^ H N _ a i _ e Q U > W D Q i 2 ; _ D Q ^
In terms of ranking, the Czech Republic is in 15t h
place out of 28 E U Member States, the average
value of the Czech Republic for the five target indexes is 66.14 %, and this is above the average
of the whole set, which is 60,26 %.
A comparison of the average values of the indexes of individual targets for all countries (Table
3) with the value of individual indexes of the Czech Republic shows that within the first and
second targets the Czech Republic achieved below-average results, however within 3-5 targets
above-average results and to the top three states.
Table 3 - Statistická charakteristika target index values
N=28 Index of Target 1 Index of Target 2 Index of Target 3 Index of Target 4 Index of Target 5
Average 57.58 (CZE 50.6) 61.74 (CZE 49.1) 61.93 (CZE 82.45) 65.84 (CZE 90.71) 54.22 (CZE 57.93)
Median 62.11 76.25 67.83 69.88 56.54
Maximum 90.56 100.00 88.91 93.95 90.72
Minimum 19.63 1.00 3.13 4.55 4.13
SD 19.23 32.01 24.26 23.60 21.71
409
4.2 Index of Targets of Health 2020 of the TOPSIS model
The results of the calculations of the multi-criteria evaluation of the performance of health
systems according to TOPSIS method, where the evaluation criteria are the targets of WHO
Health 2020, show (Figure 2, Figure 3) that:
• the best results are achieved by six states, in the range of 0.93-0.80 (Sweden,
Netherland, Luxembourg, Finland, Denmark, Austria);
• above-average values or in addition to the above-mentioned countries reach 11 states;
• The Czech Republic achieves a slightly below-average value (0.559), however, in terms
of former post-communist states, the Czech Republic achieves the best results;
• the worst results are achieved by Bulgaria (0.062) and Romania (0.095).
In summary, it can be stated that in 2015, in the context of the monitored indicators within the
five Health 2020 targets, the differences between the E U countries were quite large. The results
are generated by three groups of countries. The first group consists of the five countries with the
best results, followed by 11 states with above-average results and 11 states with below-average
results.
Figure 2 - Ranking of EU states according to TOPSIS results
g
BGR
ROU
LTU
L V A
HUN
EST
HRV
SVK
POL
GRC
CZE
MLT
CYP
GBR
DEU
ITA
ESP
IRL
SVN
PRT
BEL
FRA
AUT
DNK
FIN
L U X
NDL
SWE
Mean c. = 0.597
0.2 0.4 0.8
ci
410
Figure 3 - TOPSIS results on the map
Pouzi'va technologii Bing.
© GeoNames, Microsoft, TomTom
The results of the ranking of countries according to the TOPSIS method clearly did not confirm
the results, which are presented in Figure 1, which is also evident in terms of the order when the
Czech Republic is in 18t h
place and is below the average of 28 E U states. Obviously, the results
are influenced by the weights set for each target. However, in both types of calculations, SWE
(Sweden) is the best and BGR (Bulgaria) is the worst.
5 Conclusion
The paper dealt with the sub-topic of performance evaluation of healthcare systems of the 28 E U
states by 2015, from the perspective of meeting the five Health 2020 objectives. These goals are
defined by a set mix of specific indicators taking into account various factors (social, health and
economic). The fulfilment of each objective is monitored through calculated indices (in %) of
given indicators (Method 1) and these indices then form the evaluation criteria of the TOPSIS
method (Method 2).
The evaluation shows that the 28 E U states are fragmented into four groups according to both
methods - the first group consists of the five best performing countries, the second group consists
of the above average performing countries, the third group consists of the below average
performing countries and the fourth group consists of the very low (worst) performing countries.
According to the calculation of method 1, where the indicators of the Health 2020 targets are not
differentiated by weights, the Czech Republic belongs to the second group of countries with the
above-average results. On the other hand, according to the calculation of method 2, where
weights are assigned to the individual indicators of the Health 2020 targets (importance
according to direct impact on health), the Czech Republic belongs to the third group of countries
with the below average results.
411
Sweden has the best results in both calculation methods and Bulgaria the worst results. Postcommunist
countries (except the Czech Republic in method 1) perform below average in both
methods. In this point of view, the results are in line with the findings of other authors (Zuidberg
etal.,2021).
Two main findings emerge from the multi-criteria evaluation of the 28 E U Member States
focused on the achievement of the first five Health 2020 targets as of 2015: (1) the final results,
including the ranking of countries, are influenced by the chosen calculation method, in particular
by the set weights of the criteria; (2) the fourth target, which includes a mix of criteria - Life
satisfaction, Sanitation, School enrolment, Unemployment, GINI - has a significantly positive
impact on the overall achieved results of Health 2020.
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Contact information
Ing. Ivana Vaňková, Ph.D.
VSB - Technical University of Ostrava, Faculty of Economics, Department of Public Economics
Sokolská třída 33, 702 00 Ostrava 1, Czech Republic
E-mail: ivana.vankova@vsb.cz
doc. Ing. Iveta Vrabková, Ph.D.
VSB - Technical University of Ostrava, Faculty of Economics, Department of Public Economics
Sokolská třída 33, 702 00 Ostrava 1, Czech Republic
E-mail: iveta.vrabkova@vsb.cz
413
Forming opinions on the role of the state in the beginnings of economic
theory
František Varadzin
Abstract: The topic of the state in economic theory is addressed in this paper. Its purpose is to
highlight the origins of such a commonly used category in economics, particularly in public
economics. Its purpose is not only to provide a detailed record of its activities and changes, but
also to emphasize the significance of earlier stages of economic thinking, which were developed
in response to specific religious and socio-economic conditions and concepts of thought. Apart
from sticking to the core European line, special emphasis is devoted to Central European authors,
whose contribution to the concept of the state is largely overlooked by mainstream economics,
which essentially means impoverishment of today's concept. The result of the paper is the
assertion that in Central Europe since the 17th century there has been a specific concept of the
state. The state was not the result of a social contract of individuals, but of a social and
administrative institution functioning as a whole. The paper seeks to clarify the basic tendencies
of thought that lead to the concept of the public sector and meritorious goods, because according
to the author without methodological postulates one cannot understand the numerous statements
of various authors, which in its consequences leads to unnecessary discussions and contradictions
not only in the economic community but also between representatives of different political
currents. This paper's ultimate goal is to contribute to the rationality of this debate.
Keywords: Cameralism, German historical school, history of economic thinking, mercantilism,
state
JEL Classification: BIO; B11, B12, H70
1 Introduction
Nowadays, we often forget the fact that our thinking is genetically dependent on the ancestors'
ideological heritage. We accept the beliefs and attitudes that emerged in the past, without
realizing it; we regard them as the dogma of our world, which is the result of the "revealed truth".
However, if rationally critical thinking is to maintain the legitimacy of its existence, then to
comprehend the contemporary world we must sometimes go back to the past and have a think
about the meaning of categories and phrases by which we describe a new reality, often different
in content from the reality in which the categories and phrases were born. Understanding the
present in our conception also means knowing the past and the processes that took place in the
minds of our predecessors.
The purpose of this article is to demonstrate the emergence of certain perspectives on the state
as an economic category, which has distinct content at each stage and is thus a socio-historical
phenomenon.
At the same time, the paper's scope is limited to the expansion of classical economics and is
largely focused on the specifics of Central Europe.
2 Formation of the concept of the state in antiquity and the Middle Ages
The issue of the existence of public management, i.e., the state, as well as other public structures
(church and self-government) and their operation in economic life, first appeared in the very
formation of primary state societies. Today we can observe such phenomena as palace and temple
414
economies in Mesopotamian civilizations8
and other ancient cultures. These economies
developed alongside the general and private property, which took the form of family or individual
property. It was not just about the land and the means of management, but also about the entire
infrastructure - irrigation equipment, writing schools, state archives, etc. This was related to the
tax system, which was based on land ownership or possession. It was typically in a natural form
(1/10 to 1/3 of the harvest) or a work duty. The income from tributes, i.e., levies from dependent
or semi-dependent states, was a significant part of the large empires' income. With further
development, payments in metals (silver) are beginning to appear. From the beginning of the
formation of public institutions, there were often leases of tax collection and the responsibility
fell on the royal (temple) officials.
These epochs in civilization's development were reflected in the creation of laws. Here we can
observe their ideological foundation here, especially in the preambles and declarative
introductions. Following the proclamations of "liberation" from debt slavery, reduction of state
administration power, exemption, or reduction of the tax burden, etc., we can point to the
directions of influencing the state of real social and economic processes to maintain social
balance. We can see from these known codes that the "invisible hand of the state" had a relatively
strong influence on the life of the society at the time.
In ancient literature, we find relatively more comprehensive ideas about the role of society and
the state. As an example, consider Plato, Xenophon's contemporary. In his Constitution9
, he
defines the state as a necessary condition for human life and the functioning of society. His ideal
state with communist elements is imbued with the idea of order, which determines regulatory
rules that extend into the economic sphere. In some ways, this was a continuation of previous
events, such as the Greek polis crisis, when several reformers arrived to try to reorganize social
governance.10
At the same time, it did not only remain with social reforms, but for example in
Solon, we see currency reform, the introduction of a new system of weights and measures, and
a change in the structure of state administration and justice. A deeper understanding of this way
of thinking can be obtained by studying Xenophon's work "On Revenues,"11
which is possibly
the oldest systemic economic interpretation of this problem. The work was inspired by the efforts
to rebuild Athens' destroyed economy following the Allies' defeat in the war (357-358 BC). He
discusses the importance of state investment in infrastructure (ports, warehouses, and lodging
facilities) as well as the advantages of state business in shipping and mining. In the spirit of the
times, he is also considering the purchase of state slaves who will work for the benefit and wellbeing
of the citizens. Simultaneously, he argues for the importance of maintaining peace in order
for prosperity to grow.
8
"The role of the temple in collecting and redistributing goods created the need for a whole new
class of specialists, namely administration. Management became so complex that accounting
procedures were needed.... This required the skills of people familiar with the tools and
procedures of the bureaucracy." ." (VAN D E MIEROOP, M . Dejiny starověkého Blízkého
východu, okolo 3000-323př. Kr. Praha: Academia, 2010, s. 38) Similarly, it is possible to point
to King Entemen (ca. 2430 BC) and his public strikes and the implementation of conscious social
reforms (KLÍMA, J. Lidé Mezopotámie. Praha: Orbis, 1976, s. 201) and other examples of the
existence of the public sector.
9
Platón, Ústava. Praha: OIKOYMENH, 2001.
1 0
From the extensive literature see FREL, J. Od tyranů k Sokratovi. Malý český Plutarch. Praha:
Mladá Fronta, 1969; OLIVA, P. Sparta a její sociální problémy. Praha: Academia, 1971.
1 1
Published in Czech In: XENOFÓN, Řecké dějiny. Praha: Svoboda, 1982, s. 313-327.
415
Other approaches can be found here, for instance, Aristotle's1 2
approach to the interpretation of
the role of the state as a community of free citizens, which has never been denied. The reason
for this was the fact that in the Greek Polis, and transferred to the Roman reality, it was
impossible to imagine a citizen who did not belong to the community. Individualist conceptions
of classical and neoclassical methodology were also something beyond medieval man's
existence. His connection to other members of the community was an important part of his
opinion anchor.
The transition between ancient and medieval thinking on public affairs was complicated.
Aurelius Augustinus,13
a major Christian theologian, recognizes the divine and earthly states,
though these terms do not always have the same meaning. The divine state is a socially
hierarchical ecclesiastical phenomenon - a heavenly community of the elect, whereas the earthly
world is a society of doomed devilish beings. The earthly state is a violent institution that
responds to sinful human nature and is not founded on the principle of justice. He then views
human history as a fluctuation between the two states. His historical periodization is based on
the Bible. Unlike Plato, the Community is a theocratic society whose purpose is to save
Christians in this world, rather than a divine state of philosophers. This concept was later
reflected in the conflicts between secular and ecclesiastical structures that pervaded Christian
civilization's development. It also lasted into the modern era in various forms, such as the debate
over the nature of Indians as beings, when the church recognized baptized Indians as members
of the colonial community, which did not suit the conquistadors or the Spanish state's interest in
immediate profits.14
The goal of life, according to the supreme Christian thinker Thomas Aquinas, is contained in the
"eternal law," which contains God's will and the intention of enlightenment, which even his will
cannot change, and which becomes a natural law for man and is gradually expressed in his mind.
People are obligated, according to him, to preserve their lives, to know the truth about God, and
to live in society."15
The material-technical and natural conditions of the medieval inhabitants
determined their social ties. The system's social existence was determined not only by horizontal
but also by vertical ties.16
Simultaneously, Thomas Aquinas asserts that "society contains,
creates, and preserves all human fields; it carries out the highest perfection of the human species.
As a result, its welfare, as well as the welfare of the species, takes precedence over the welfare
of the individual".1 7
Ideologically the then European society was not oriented towards maximizing the benefit of the
individual. Not that many of them did not strive for it, but it was regarded as undesirable because
the basis of the ideological fulfilment of life was spiritual life, frequently accompanied by
asceticism. In this sense, the value of material goods is positive when used for higher purposes.
1 2
ARISTOTELES. Athénská ústava. Praha: Baset, Arista, 2004. Here he attempts to capture the
logic of the functioning of public administration with an empirical description and historical
insertions.
1 3
Viz AURELIUS AUGUSTINUS. O obci boží I, II. Praha: Karolinum, 2009.
1 4
See the work of the church dignitary Bartolomeo de Las Casas from 1552 for Charles V. (DE
LAS CASAS, B. O zemích indijských pustošení a vylidňování zpráva nejstručnější. Praha:
Lidová demokracie, 1954) The last important chapter in the dispute is probably the liquidation
of the "Jesuit state" in Paraguay.
1 5
HÔFFDING, H. a J. KRÁL. Přehledné dějiny filosofie. Praha: Nakladatel František Strnad,
1941, s. 84.
1 6
See more PETRÁNOVI, L. a J. Rolník v evropské tradiční kultuře. Praha: Set Out, 2000.
1 7
BÍLÝ, J. Horno oeconomicus evropského feudalismu. Plzeň: Vydavatelství a nakladatelství
Aleš Čeněk, sro, 2014, s. 286.
416
In Thomas Aquinas, the relationship between society and the individual is solved as a dialectical
connection, where the individual cannot exist without society and society cannot exist without
the individual. In this sense, society exists as an entity that takes care of its members and therefore
ensures the general well-being of its members.18
This point of interpretation then became the ideological basis, when the government was
interpreted by God's will as a means of protecting members of society, including the weakest.
As a result, the medieval church was also conceived as part of the "divine" state's social policy.
It is obvious that an ideally conceived state was often in contrast to reality. Rather, it resembled
Hobbes's "Bella omnia contra omnes," but on the other hand, many self-sacrificing individuals
in the organizational structures of society at the time respected these moral imperatives resulting
from the institution's religious conception, thereby aiding in the preservation of society as a
whole, albeit without preventing negative phenomena. It is necessary to realize that the Church,
as a social organization, carried all the contradictions of the society of that time1 9
, but for its
functioning, it had to maintain a considerable degree of ideological closeness, otherwise, it would
disintegrate. As a result, doctrinal disputes arose, which, to a large extent, reflected societal
problems, though we may not always understand them today due to word content shifts, different
symbolism, incorrect interpretation of analogies and allegories, and so on. On the other hand, we
see the conscious performance of many functions and activities by ecclesiastical organizations,
which we now associate with the state as the guarantor of public goods (education, health care,
librarianship, etc.).
The Middle Ages saw a significant fusion of state and ecclesiastical institutions in European
cultural content, and thus their concepts of thought merged, though the duality of the divine and
earthly state remained and constantly intertwined history and took place as a dispute between
secular and spiritual power. There are also differences of thought between the contemporary and
the then use of many categories, so that, for example, many of our terms used in the field of
public goods at the time does not make sense. One of the most distinguished Middle Ages
scholars put it succinctly: "Latin originated in a completely different era, the meaning of words
used in antiquity and the Middle Ages changed, while the language itself remained the same as
before... Latin overshadowed their signs of a qualitative breakthrough in world development... " 2 0
Self-government is one example. Until Hussite times, the highest representative in Czech lands
in royal towns was the advocatus, who was originally a "locator civitatis," then a leaseholder
(collector) of royal taxes and the king's deputy. His primary responsibilities were to uphold the
law. Advocatus' revenues came from various royal privileges (court fines, customs revenues, and
ungelt (medieval market fee), shops, and etc).
Councillors were elected to serve as self-government representatives, but their appointment was
not uniform. Throughout the year, the councillors rotated in the position of Burgomaster, which
was created as a counterweight to the advocatus. The Burgomaster was in charge of the city seal
and was involved in municipal law-making. The councillor and the Burgomaster had the right to
receive municipal revenue. The scribe was an important position, and Prague's highest scribe
was known as the chancellor. The number of scribes differed depending on the size of the town
and the number of languages spoken (Latin, Czech, German). The scribe's office was often
1 8
For this concept, see Bílý, J. cds 296-302.
1 9
In this context, Zikmund Winter writes that "For example, public notaries in our country, as in
Italy, sat at their tables in temples, chapels and cloisters practicing their writing and legal craft.
The Olomouc Order from 1318 forbids priests to compose and write threatening, arson letters to
the arsonists." (WINTER, Z. Život církevní v Čechách II. Praha: Nákladem české akademie
císaře Františka Josefa pro vědy, slovesnost a umění, 1896, s. 899)
2 0
GUREVIČ, AJ Kategorie středověké kultury. Praha: Mladá Fronta, 1978, s.100.
417
associated with teaching at the town school, as the teacher was an assistant scribe. The most
important position was held by the primas (mayor), i.e., the first councillor who was responsible
for the management of the town. The councillors had paid officials at their disposal, who were
paid individuals who collected the tax, delivered the summons to court, and performed other
administrative tasks. It was also about the advocatus' assistants, helpers, and other individuals.2 1
From the point of view of the concept of self-government, we can observe that the advocatus
enters the Hussite wars as "the body of the lord of the town, soon the representatives of the town
self-government stand next to him, who over time participate more and more in decision-making
in urban matters".22
At the same time, towns were not only producers of public goods (administration, justice,
protection), but also had their own economic dimension in the form of Mile Law, which restricted
economic activities in areas adjacent to the town, commanded routes for buyers and warehouse
rights, which required them to offer local merchants their goods. A n economic policy that
increased economic power resulted in the acquisition of urban property by the town and its
inhabitants. As a result, towns are transformed into nuclei that begin to connect the surrounding
territories into their reproductive process. This complex activity means an increase in the need
for a new approach to economic theory. It can no longer contain ethically moral approaches but
must instead respond to the practical needs of the economy.
3 The birth of the modern concept of the state in Central European economic thinking
With the advent of the Renaissance in the 14t h
century in Italian city republics, economic
activities related not only to production (textiles, glass, iron products, etc.) but also trade,
transport, banking, education, etc., began to develop actively. The need for economic
development became a regular part of state activities. The transition from a natural into a
monetary economy began to emphasize the issues of financial administration (taxes and
expenditures), infrastructure construction (roads, ports, forts), professional state bodies (army,
administrative authorities) are created, and thus the entire course of society is transformed.
The birth of mercantilism, a system of economic thinking based on the opinions of merchants
and financiers, the first social groups that specialize in economic activities, is a reflection of this
process. A dual approach can already be discerned within this first identifiable direction of
economic thinking. Where this change in human attitudes and opinions was triggered by the rise
of the middle classes' power (Italian city republics, Venetian and Flemish cities, business centres
such as London or some Hanseatic cities), we can notice a tendency to limit state influence on
economic development, as "nobility" was interpreted as a consumer of resources and defender
of the "old order". On the other hand, it can be observed that many rulers are aware of the need
for change, as evidenced by de Suly and later Colbert as representatives of conscious reforms in
France, Prussian state reforms in the 17t h
and 18th
centuries, etc.23
However, systematic organization of views on the role of the social sector in the national
economy is associated with a special branch of mercantilism known as cameralism. The issue
was that the conflicts of the 16t h
to 18t h
centuries had a significant impact on Central Europe.
These were religious wars, wars with the Ottoman Empire, and dynastic disputes over European
hegemony between the Habsburgs and other families. Due to the peculiarities of historical
2 1
The description of the structure see WINTER, Z. Kulturní obraz českých měst. Život veřejný
v XV. a XVI. věku. I. Praha: Nákladem matice české, 1890, kniha IV. Úřady a obce.
2 2
KEJR, J. Vznik městského zřízení v českých zemích. Praha: Karolinum, 1998, s. 235.
2 3
Here, the classical concept from Macchiaveli to Hobbes and other classics is not further
explained.
418
development, there were a large number of states and small states (more than 300), and the
position of landowners - the nobility - had been adjusted due to the demand for food in the
relatively fast-growing economies of France, the Netherlands, and England. The so-called
"second slavery" is emerging here, and all of this contributes to the strengthening of the states'
feudal-clerical character. J. Bodin's teachings (1530-1596) also played a role. This is especially
true of his work Methodus adfacilem historiarum cognitionem, which is based on the idea that
God, who gave the laws to the world and man in his creation, is not responsible for acting on the
principle of good and evil. Man is endowed with free will and must seek the meaning of his
actions under the pressure of circumstances. The history of Bodin's method reveals more than
just God's laws, but it also determines the goals that the state should pursue at a given historical
stage. Natural law and the state system are the curricula in this sense, but politics, as defined by
Aristotle as a science of the coexistence of man and state, modifies these fundamental principles
of society. Natural factors, race, cultural coexistence, and other aspects of social existence all
have an impact. The historical-philosophical method, which is based on comparison, allows one
to learn about the natural divine principle and individual-specific forms that emerge in a given
historical situation.
Bodin's concept had an impact not only on legal disciplines, but it also justified a particular way
of viewing state administration's functioning. The fact that it did not fully converge with Roman
law principles was a significant shift in this concept. In the Central European concept, it was no
longer about universal principles and recommendations, but about measures that were
appropriate for the time and circumstances. In Bodin's view, the state is more than just an
aggregate of families; it is an economic unit that begins to distinguish rulers as both functions of
the state and specific individuals. This establishes the basis for the separation of state property
(public) and the monarch's personal property, which has the same character as other private
property.
Thanks to these ideas, the ground in the German area is prepared for the operation of public
sector workers. As a result, the first works dealing with the state's relationship to society and the
proper functioning of the apparatus appear.24
At the end of the 15t h
century, the forefathers of German cameralists appeared in Italy. (Johanes
Betrachinus - Tractatus de gabelis, tributis etvectigalibus (1489), Petras de Antibolus - Tractatus
munerum (1493) These were rather instruction manuals explaining the fundamentals of taxation.
The first representatives of cameralists followed Aristotle's policy. Christian Thomasius (1655-
1728) had a significant impact on Aristotle's conception of the state. He was not an atheist, but
he was among the first in Central Europe to attempt to explain legal and philosophical thinking
regardless of religion.
According to Thomasius, science does not have intrinsic value; rather, its purpose is to provide
procedures for problem solving. As a result, the task of politics is to create the best possible
living conditions rather than the best possible state model.
Consequently, as seen in the works of the most prominent mercantile cameralists von Becher,
von Hornigk, and von Schroder, many thinkers influenced by Thomas endow cameralism with a
practical character. Von Pufendorff, who views natural law and society as independent of
religious principles, is also influenced by this approach. It is conceptually based on other thinkers
of the constitutional conception, such as Grotius and Hobbes. Philosophically, he accepts
Spinoza's and Leibnitz's approaches.
For more information on this issue, see NIELSEN, H . Die Entstehung der deutschen
Kameralwissenschaft im 17. Jahrhundert. Jena: Verlag von Gustav Fischer, 1911.
419
Cameral studies are defined broadly as the science of governance of local authorities and public
enterprises. Thus, the cameral sciences included public accounting, management theory of
economic and social subjects, law, and economic policy principles. As a summary of this
knowledge, the term Policeywissenschaft was also used. (Policey - social, public.)
Thus, the cameral studies evolved into a science of state economics, the operation of state
administration, and the issues of asset management. Simultaneously, groups of the so-called
cameral sciences began to emerge. King Frederick Wilhelm I of Prussia established the first
departments with a cameralist concept in Halle a der Saale in modern-day Saxony and Frankfurt
a der Oder (1727) known as Cameralia Oeconomica und Policeywissenschaft). As a result, the
cameral studies began to take shape as a science of state economics, the operation of state
administration, and the issues of asset management. The so-called cameral sciences groups began
to emerge as well. Johann Friedrich von Pfeiffer (1717-1787), a theorist of an absolutist economy
based on the state's decisive role in the functioning of the national economy, was one of the key
representatives.
The Thirty Years' War had a significant impact on the spread of absolutist ideas in the German
area of the Holy Roman Empire. At the time, the population of the estuary, which was controlled
by the Netherlands and Sweden, was declining, as was Germany's foreign trade. There was no
single market because the entire territory was highly fragmented. The Holy Roman Empire
included 166 secular states, 68 ecclesiastical states, and over 100 imperial cities.2 5
All of these
territories had varying degrees of sovereignty and their own state administration, both of which
were required to be saturated with educated officials. At the same time, Prussia's "demonstration
effect" had an impact.
The "Great Elector" Friedrich Wilhelm's practical measures to entice expelled Huguenots from
France, particularly the Edict of Potsdam (1685), in which he guaranteed tolerance of Calvinism
alongside the dominant Evangelical Lutheran faith, exemption from customs duties and taxes,
and subsidies to start businesses, resulted in Prussia and Brandenburg's economic prosperity.
This was preceded by the reception of Jews expelled from the Habsburg Monarchy (1671). Von
Pfeiffer generalized these experiences and findings from personal activities in many works he
began publishing in 1768. (Main works Lehrbegriff sdmmtlicher oeconomischer und
Cameralwissenschaften 4 volumes after 1770). His works are empirical in nature and are
regarded as typical cameralist thinking. Perhaps this is why they were so prevalent, as they
addressed specific issues with economic functioning. (For more details see Von Pfeiffer.
Allgemeine Deutsche Biografie. Leipzig: Oveus - Philipp, 1887, pp. 641-642)
Johann Heinrich Gottlob von Justi was the second most important author (1720-1770). He began
his career with the Prussian army as a regimental lodging provider after studying at the
universities of Wittenberg, Jena, and Leipzig (staff rear function). Following additional practice
in Saxony-Eisenach, he was appointed professor of cameral studies at the newly established
Theresian Academy in Vienna. Later, he took over as professor of rhetoric. He collaborated
closely with Friedrich Wilhelm von Haugwitz, a Theresian reformer. After the failure of silver
mining, he left the Habsburg monarchy and went to work as a lecturer at the University of
Gottingen. He then rejoined the Prussian army, but his efforts failed miserably, owing in large
part to corruption. After his arrest in Kiistrin, he died there.
His work was centred on reforming the Holy Roman Empire's larger territorial units. He
envisioned the empire as a military and economic counterweight to the then-great powers of
25
Tentorium in Heiligen Römischen Reich. In: de.wikipedia.org/wiki, kategorie: Teritorium-in-
Heiligen-romischen-Reich
420
France and England. He drew on the work of French authors such as Fenlon, Sain Pierre,
d'Argenson, and Montesquieu when writing his attitudes. As a result, he favoured private
ownership and limitations on monarchist government. The government, on the other hand, must
promote and coordinate necessary reforms, as well as support social measures for population
growth. At the same time, it allows for certain foreign trade regulations to ensure the growth of
productive forces. He specifically advocated for the abolition of octroi, i.e., a specific tax levied
on food. The government ought to raise funds for the implementation of the goals by reforming
the tax administration, i.e., abolishing excise duties and increasing the taxation of personal
income. Agriculture and mining, which were intended to have an anti-import effect, were vital
to him for the economy's development. Catherine the Great, the Russian Empress, had a strong
influence on his approach. (For more details see Johann Heinrich Gottlob von Justi, Allgemeine
Deutsche Biography. Leipzig: Jetzer - Kahler, 1881, pp. 747-753).
Joseph von Sonnenfels (1732-1817) was an important figure in the cameral sciences in the
Habsburg lands. He came from the family of a Brandenburg rabbi. His father's name was Valter
Lipman Perin, he converted to Catholicism in Vienna, and thus acquired a new surname. In 1746
he was elevated to the nobility as a free lord von Sonnenfels. His son Joseph von Sonnenfels,
born in Moravia, studied law and worked for Count Hastig, another important Theresian official.
In 1763, Joseph von Sonnenfels was appointed professor of Policey- and Kameralwissenschaften
at the University of Vienna. He was one of the great proponents of the Enlightenment and was
also a Freemason. Maria Theresa appointed him to the Court Council at the Secret Czech and
Austrian Court Offices in 1779.
Christian Wolff (1679-1754) played an important role in shaping the environment in which
Sonnenfels worked. He was a prominent lawyer, Enlightenment philosopher, and mathematics
professor whose influence extended beyond the German border. He was a member of several
royal learned societies, including the Academy of Sciences in St. Petersburg. He was inspired by
Thomas Aquinas and preferred Leibnitz's ideas in his nationalism. His ideas were spread
throughout the Habsburg lands by the first learned society in the monarchy, Societas eruditorum
incognitorum in terris Austriacis, and the first scientific journal, Monatliche Auszüge.
Wolff held views similar to Aristotle on the concept of the state and public activities. However,
he asserts that economics is the foundation of politics. One of the most important matters is to
ensure the well-being of the state's citizens. Of course, he accepts the thesis that the meaning of
human life extends beyond satisfying needs, and thus the state must care for its citizens' morale.
This leads to the concept of a regulatory state, which will set interest rates, among other things.
It also intends to enact legislation governing working hours and wages. The reason for this is
man's limited rationality, which prevents people from recognizing their true interests.
Since he was involved in various Theresian and Josephine reforms, it is difficult to pinpoint the
main focus of this Mikulov native's activities. His efforts can be traced back to the use of standard
German; he intervened in theatres; he actively participated in the legal settlement of the Jewish
position; and his other activities are associated with police strengthening, etc. His contribution
to judicial reform, particularly the prohibition of torture (1776), and his motivation for a
comprehensive legal and judicial reform under Joseph II are particularly noteworthy. Joseph von
Sonnenfels was not an original thinker in terms of creating new concepts, but in his works, he
presented the ideas of several personalities in simple formulations - Turgot, Montesquie,
Rousseau, Locke, and others. Von Justi's work was one of his most important sources. His
cameralist work primarily consisted of Leitfaden in den Handlungwissenschaften und in der
Policeywissenschaft (1776) and the three-volume textbook Grundsätze der Policey-, Handlungsund
Finanzwissenschaft (1765-1776).
421
His works exhibit a cameralist approach. He preferred the welfare of the state and the formulation
of rules of conduct in political science. He was an ideological supporter of absolutism, which
was to be mitigated by philanthropic approaches. That is why he was well-liked by both Maria
Theresa and Joseph II. His professor's salary was significantly increased immediately following
the publication of the first part of his textbook, and after Volume II, he received the title of
Government Council in addition to the higher salary. Besides his professional activities, he was
involved in belles-lettres and maintained relationships with many authors. (J.W. Goethe, G.E.
Lessing, and others).
Sonnenfels, through his pupil Josef Ignác Buek (Butschek), also had a significant impact on the
overall situation in the Czech lands in terms of ideological ferment. The formation of economic
thinking in the countries of the Czech Crown reflects the overall situation in Central Europe. The
reason is the affiliation with the Holy Roman Empire and the incorporation of these countries
into the Habsburg system. The situation was further complicated by the fact that, following the
re-establishment of the land, a large part of the intellectuals, led by J.A. Comenius, left and the
natural process was not restored for many decades.
Own economic writings or writings with economic themes appeared here as early as the 16t h
century. This is, for instance, the famous work of the Bishop of Olomouc Dubravia De pisonis
(On ponds) or instructions for farmers by Jan Brtvin from Ploškovice or property management
by Mikuláš Černobyl. Both writings were published together near Veleslavín in 1587 under the
title Hospodář. In the 17t h
century, the "Instructions of Friedland" by Adam Chval Kunáš of
Machovice (1628) were expanded, as was the work of an economic administrator for the
supervisor at the Jesuit estate "Oculus domini" by the Jesuit Kryštof Fischer, which was
translated from Latin (1680) into German (1690) and Czech by the Jesuit Jan Barner under the
title "Economic Books". The arrvial of mercantilists (P.H. Morgenthaler, F. S. Malínský from
Maliv), who, like Becker, Hórnigk, and Schroder, demanded active state policy and public
support for the construction of their own production capacities and state infrastructure26
is linked
to further development in the Czech lands. In addition to general considerations, specialized
works on transportation infrastructure (Kryšpín Fuk from Hradiště, an abbot of Strahov, a former
merchant and later senior official of the Czech governance Gerhard Leux from Luxenstein) also
appeared. The most famous of them was probably Jan Kryštof Bořek (1664-1730), a highranking
official of the Czech governance, who, among other things, demanded that the state take
over the construction and maintenance of roads into its administration. Simultaneously, he
opposed private tolls because they increased the cost of economic development.
Only the advent of Theresian reforms brought a great impetus for the development of economic
thinking in the Czech lands. The entire spiritual milieu established by recatholicism following
the Thirty Years' War began to shift27
under the influence of these reforms. Simultaneously, the
administrative apparatus, religious groups, law, the army, education, and other institutions are
undergoing changes.28
Karel Jindřich Seibt was the individual who most embodied the dawn of the new era. (1735-
2 6
For more details, see KLÍMA, A. Manufakturní období v Čechách. Praha: Nakladatelství
ČSAV, 1955, subkapitola II. 1., Merkantilismus v Habsburské monarchii.
2 7
For this transformation, see WINTER, E. Josefinismus a jeho dějiny. Příspěvky k duchovním
dějinám Čech a Moravy 1740-1848. Praha: Nakladatelství Jelínek, 1945.
2 8
For more details, see Kol. autorů. Počátky českého národního obrození. Praha: Academia,
1990.
422
1806). He was a native of Upper Lusatia, studied humaniora2 9
in Kosmonosy, and philosophy
and law in Prague. At the age of twenty, he left for Leipzig, where he was educated by several
excellent educators. Seibt himself acquired these skills and after returning to Prague began
lecturing free of charge. He earned his living as a secretary to the archbishop's consistory. After
the abolition of the Jesuit order, he became the director of philosophical studies and grammar
schools (1775). He was an advocate of "social capitalism," i.e., strengthening the individual's
position by the use of social ties. He was founded on utilitarianism, and he did not consider
enrichment to be a sin. He considers the state as the result of the organization of citizens. In Von
der Einflüsse der Erziehung auf die Glückseligkeit des Staates, he claims, "The general bliss of
the state is nothing but the individual bliss of citizens." (SLAVÍK, B. From Dobner to
Dobrovský. Prague: Vyšehrad, 1975, p. 44) However, he had some conflicts with the Vienna
court mainly due to the permission of forbidden books. Maria Theresa, on the other hand,
eventually came to his aid.
Seibt was the "head" of non-Austrian German culture, which included personalities such as S.
Rautenstrauch and F.K. Kresl, who later held important positions in the Austrian administrative
apparatus. The non-Austrian orientation was counterbalanced by a group centred around the
Society for Plowing and Freedom of Crafts. They met at the noble families of Nostic and
Fürstenberg. These included J. Dobrovský and F.A. Pelcl, and for a short time they also published
the magazine Prager gelehrte Nachrichten (1771-1772). Many experts in the field of natural
sciences, such as Jan Křtitel Boháč (1724-1768), Ignác Born (1742-1791), touched on some
economic issues. Boháč attempted to describe the relationship between agriculture and industry
and Born saw the main cause of the backwardness in the lack of education of the population and
the application of scientific knowledge. In his conception, society's role is in the implementation
of institutional reform with a focus on the advancement of science.
Among them, Josef Buček (1741-1831) was a pure cameralist economist. He was born in Příbor
in the family of a draper. He became an officer in the Habsburg army after studying philosophy
in Olomouc and law in Vienna, and as a result, he got to know a large part of the monarchy and
Germany. As a disciple of Sonnenfels, he accepted his conception of the three-layered system of
political science (police, business, and finance), which he applied in his work as a professor of
the political and cameral sciences at the newly established department within the Faculty of Arts
of Charles University. He acquired his professorship on the basis of Sonnenfels' influence and
lectured here for another forty years. In 1784, these lectures were transferred to the Faculty of
Law. At the same time, Buček took part in the activities of the Patriotic Economic Society, and
when the first department of agricultural sciences was established at the Faculty of Arts in 1776,
he was also appointed professor here. It was abolished in 1781. His most important writings were
Versuch über die Absichten der Landesregierung bei Leitung der Landwirtschaft (1768),
Grundriss der Forstwirtschaft (1778), Abhandlung von der Polizei. He also published a book on
finance, Geschichte und Betrachtungen über das böhmische alle und neue Finanzwesen (1790).
He was a supporter of natural law and promoted the need for state intervention in agriculture
(agricultural reform). He also raised his successor Václav Gustav Kopetz (1781-1857). However,
this native of Chodova Planá was gradually transitioning from cameralism to classical
economics, and his main ideological inspiration was K.H. Rau (1792-1870). However, he
brought A. Smith and other classical economists to the Czech lands. We might consider Jiří
František August Buquoy among those who developed partly in the cameralist tradition, but
9
The study of humaniora was a lower level of education than the study of superiora. This system
was originally introduced by the Jesuits, with the lowest level of study being inferiora.
423
already in their work, the germs of classical theories surfaced.30
He was a polymath who lived
on inherited estates, and his most important economic work was Die Theorie der
Nationalwissenschaft let einem neuen Plan und mehreren eigenen Ansichten dargestellt
(Leipzig, 1815). The work has two parts, the first is devoted to production technologies and
calculations, the second is devoted to the description of the course of practical activities. He
wrote three more additions, in which he addressed, among other things, the issue of economic
institutions of the state, taxation, and technology.
His uncle, Count Jan Buquoy (1741-1803), after whom he inherited property, established the
first general school system and social institution on his estate, which is interesting from the
standpoint of public economics. Thanks to that, Joseph n. called him to Vienna to help the
monarchy establish similar social institutions. This was the germ of systematic social care, which
developed in later years.
The discrepancy between practice and theoretical views can be observed in the formation of
Poland's economic thinking. The first representatives of mercantilism, Andreas Fricius
Modrevius (1502-1589) and M . Rej (1505-1569) formulated a rather stronger conception of the
state here, but in later development the influence of the estate conception of the nobility
manifested itself. The power of the magnate families was so enormous that no theoretical
interpretations, nor the growth of the economic power of the surrounding states, could push
through the necessary economic reforms. The reformers' experiments, of which Hugo Stumberg
Kolltaj is arguably the most well-known, and his contribution to the Constitution on May 3,1791,
were no longer able to prevent Rzecz Pospolita's disintegration.31
4 The influence of cameralism on the further development of the concept of the state in
Central Europe
In German economic thinking, the concept of collective needs and collective goods had a strong
position based on the previous cameralist tradition. Many works contain interesting observations
that, to this day, economic theories do not always fully appreciate. L.H. von Jakob (1759-1827),
who switched from philosophy to economics at the age of forty and, on the basis of J.B. Saye,
considered state management as public consumption but placed it on the level of private
economic activities, made a significant contribution to theoretical thinking. The loss of the
company due to taxation must then be compensated by an increase in the benefit of state-financed
consumption. The principle of thrift in public management, he believes, is the most important
moment, and only what follows from the nature and character of civil society is public. Another
group of economists could be studied, including G. Hufeland (1760-1817), K.H. Rau (1792-
1870), Lorenz von Stein (1815-1890), A. Wagner (1835-1917), and others.3 2
It is sufficient to point out the richness of thought in one of the most important representatives
of the German historical school, A . Wagner, on the basis of the division of the economy. He
distinguishes individual economies, i.e., units led by a unified idea of natural or legal entities and
3 0
In addition to economics, he had several inventions in the field of glassmaking, he founded
one of the first nature reserves in our territory - Zofinska and Hojnovicky primeval forests.
(1838).
3 1
For a basic overview of Polish thinking, see GROLOWSKI, Z. Rozvoj pojec ekonomicznych
w Polsce w kohcu XVIII wieku. Warszawa: Towaryzystwo wyzszych kursow handlowych, 1908
3 2
In the 19th century, the ideas of the classical state based on "contract social" associated with
classical economic thought (A. Smith, D. Ricardo) began to prevail in Central Europe in later
years, the contribution of Italians (U. Mazzola, M . Panteleoni and others). However, this broader
context is not monitored here due to the scope of the paper.
424
divides them into individual, family, legal private persons (associations, cooperatives, joint
ownership), public persons (municipalities, state, and other public organizations), and further he
divides them into private, based on personal (profitable interest) and general, following economic
principles in general.
The opposite of individual economies is the national economy, in which there is no single will
(except for centrally controlled economies). He describes this as an organic or social concept of
the national economy. This system is driven by psychological motivations. The operation of the
system is then based on a voluntary or forced principle. He sees the solution in the concept of
Stein's administrative doctrine as the heiresses of the mercantilist Polizeiwissenschaft.
The extensive legacy of German economists was reflected in American institutionalism and also
influenced the development of economic thinking in the 20t h
century in Germany.3 3
Bernard Bolzano was a specific figure who was intriguing, yet almost did not impact the
development of ideas in the Czech state in the form of followers, in economic thinking about the
challenges of a public economy in the Czech lands (1781-1848).34
The work On the Best State was written as a Utopia about the functioning of society, and B o l z a n o
originally considered publishing it, but in 1848 forbade it to be published. After 100 years, it was
finally printed in German in 1932 and Czech in 1934. Nonetheless, we know that this work was
well-known, as evidenced by the fact that several authors wrote about it.3 5
He was self-taught in
terms of economic theory's roots, and even Buquoy's then-famous treatise Die Theorie der
Nationalwirtschaft remained uncut in his large collection. However, he was influenced by the
French Utopians Saint Simon, Etien Cabot, the reformer of Prussia von Stein, and others.
His Utopian socialism and communism led him to a different vision of the public sector than
anyone in the Czech lands could have envisioned in the nineteenth century. For instance, he
proposed the abolition of private ownership of houses and flats and their replacement by
municipal ownership, with rents to be derived from the cost of acquisition and maintenance. He
saw the basis of the administration in the municipality, demanded the creation of institutional
science as a structure of payment from state money and taxation should be only on persons with
above-average incomes3 6
. His disciples and friends, such as J. Hoffmann, R. Zimmermann, K.
Lieblein, and others, tried to promote his socio-economic ideas even after his death. Several
hundred of his exhortations37
were thus published between 1849 and 1852, and others in 1884.
Bolzano's influence on subsequent thinking development in the Czech lands was limited, as his
concept was widely rejected and the author himself did not specify how to achieve "the best
state." However, thanks to his flawlessly rationally working intellect, he created an inspiring
3 3
For more details, see V Y B R A L , V . Německá teorie státního hospodářství. Praha - Brno:
Nakladatelství Orbis, 1937.
3 4
For more details, see SEIDLEROVA, I. Politické a sociální názory Bernarda Bolzana. Praha:
Nakladatelství Československé akademie věd, 1963.
3 5
See e.g. BRAF, A. Politické vědy v Čechách na sklonku věku osmnáctého a v první polovici
devatenáctého. Tiskem ALOISA WIESNERA v Praze Nákladem České Akademie 1909;
HORAČEK, V. Bolzanův nejlepší stát. V Praze: Nákladem vlastním, 1907.
3 6
For more details, see BOLZANO, B. O nejlepším státě. Praha: Mladá fronta, 1981.
3 7
Exhortation has no equivalent in the Czech language. It originated from the Latin "exhortatio"
- sermon and from the German "Erbauungsrede" - exhortation, command, incitement. Probably
the best translation is educational speech. Selection from Bolzano's exhortatios see BOLZANO,
B. Exhorty. Praha: Nakladatelství Lidové noviny, 2008. A total of 577 Bolzano's exhortations
are known.
425
image that makes one think even today. Following generations of Czech economists attempted
to apply the findings of economic research to Czech conditions, and so adopted classical
economics and the Austrian school of thought.
The basic Czech work in the field of state and municipal management was written in 1887
(second edition 1892) by Josef Kaizl (1854-1901). This doctor of law worked as a private
associate professor at the University of Prague. He taught national economics and financial
sciences here. He also served as finance minister in Thun's government.
Ideologically, he was influenced by the German historical school (A. Scháffle), with whom he
became acquainted closely as a scholarship holder at the University of Strasbourg, and the
Austrian school's subjectively psychological approach. He was the first author to publish a
comprehensive textbook of economics in Czech.3 8
His main focus was on the so-called socialism
"ex cathedra". This was reflected in his conception of the state. He saw the centre of his activities
in the social-economic policy. Unquestionably, the state's and municipalities' active approach to
public finances was reflected in its concept of public finances. In this area, he published a major
work that sought a systematic interpretation of finance from the perspective of public entities.39
Book I deals with "public management and financial science" and defines municipalities and
their management, political economy and state sciences, municipal property, and their budgeting.
It concerns general and societal needs, and even formulates the germ of the "free-rider" theory.
"Even where it would be possible to leave the provision of such needs to a private act, the activity
of the state (municipal) evidences that satisfaction through a private group of citizens at private
and special costs would prove at the same time satisfying the need for citizens who they did not
accede to the group and their costs: e.g. lighting, drainage, medical equipment, etc."40
This
Kaizl's work became a basic textbook of the approach to public sector issues even during the
First Republic. However, Karel Engliš (1880-1961) took the lead then.
In the writings of Frederyk Skarbek, we find a gradual transition to the classical concept of the
state in Poland (1792-1866). In his work Gospodarstvo národové I, n. (Warszawa 1821)
economics is understood in the context of administrative sciences, and in the later work Ogolne
zásady nauki gospodarstwa narodowego czyli czysta teorja ekonomity politycznej. (Warszawa
1858) we can clearly observe a strong preference for classical viewing. However, there is a trend
here that is comparable to F. List's idea of the national economy as the economic system basis.
5 Conclusion
Mercantilism, which had two parallel branches, had a profound impact on the concept of the state
as an economic category. A group of scholars from developed countries advocated for the state
to play a larger role in foreign trade regulation and private enterprise institutionalization. In some
practical systems (Colbert, the reforms of Peter I of Russia, etc.), the support of the economy led
to the emergence of state-owned companies and a state-run sector.
The second branch of mercantilism, cameralism, arose from the practical needs of state
administration, such as the necessity to resolve tax concerns, legal issues, social issues, construct
an army, police force, etc. This creates a system of the cameral sciences, designed to educate
3 8
See KAIZL, J. Národní hospodářství. Praha: Nákladem J. Fořta a soudr., 1883.
3 9
See KAIZL, J. Finanční věda. Praha: Tiskem a nákladem Josefa R. Vilímka, 1892. Ta se
členila na části Kniha 1. Hospodářství veřejné afinanční věda; Kniha 2. Druhy a vývoj financí;
Kniha 3. Důchody výrobní; Kniha 4. Poplatky - Všeobecná teorie daní.
4 0
Kaizl J. . Finanční věda, s. 9-10
426
civil servants in then fragmented Central Europe and Italy. Its main centre was Central Europe,
and we can see many ideas here that are part of the public economy today, nevertheless due to
multidisciplinarity, there is a lack of theoretical generalizations. The state, on the other hand, was
viewed as a unified entity that pervaded all aspects of human life.
Although in the second half of the 19th century, even in Central Europe, the classical conception
of the state based on the theory of the social contract prevailed, the cameralist tradition remained
in the background. The state is a social institution that grows through society, manages it and is
responsible for it. It was also connected with the Christian tradition and the advent of Marxism
and the concept of the state as a national subject.
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Contact information
prof. PhDr. František Varadzin, CSc.
Silesian University, School of Business Administration in Karviná, Department of Economics
and Public Administration
Čechovova 1241/19, 716 00 Ostrava Radvanice, Czech Republic
E-mail: varadzin@opf.slu.cz
428
Usage of methods offinancialanalysis at the level of regional selfgovernment:
Case study of the Trenčín region
Roman Vavrek, Petra Gundová, Jiří Bečica, Eva Benková
Abstract: This paper aims to assess the present state in the use of methods of financial analysis
in the municipalities at the Trenčín self-governing regional level in the Slovak Republic.
Following the main research goal, two research problems were addressed. Attention was paid to
the question of whether the municipalities in the Trenčín region use methods of financial
analysis, and what are the most significant methods of financial analysis used by the
municipalities. Using the questionnaire method, an empirical survey was carried out on a sample
of the elementary set of the Trenčín self-government region municipalities, with a questionnaire
return rate of 35.14%. The survey results indicated that the Slovak municipalities do not use
methods of financial analysis. According to the results, only 25.77% of the municipalities apply
some financial analysis methods in creating their municipal budgets.
Keywords: Municipalities, financial analysis, Slovak Republic, Trenčín self-governing region
JEL Classification: H72, M21, P43
1 Introduction
Public sector efficiency in the strict sense of the word, according to Peková (2011), is seen as a
result of the relationship between inputs and outputs. According to Cibáková and Nináčová
(2006), it is based on two conditions - Pareto efficiency and the individual efficiency associated
with the creation of specific public goods. However, a tendency towards inefficiency is
considered to be the main problem from a long-term point of view: a) the effort to maximize
inputs of organizations, b) absence of intense pressure to reduce costs, c) stagnation of outputs/
minimizing organizational outputs. The literature outlines several options for measuring
efficiency in public administration. Provazníkova (2009), Malý, Němec (2011), Loskot (2012),
and others focus on either individual methods or groups of methods. One of these groups is
evaluation methods based on one criterion, also including financial indicators/analysis. Financial
analysis in the public sector should particularly take into account different principles of funding,
compared to the private market sector. Some indicators of financial analysis can be used in public
non-profit organizations (including municipalities) with almost no modifications; the use of
some is either not suitable for this sector (e.g. profitability indicators) or should be adapted
(indicators of indebtedness). Financial analysis also offers specific indicators directly for the
non-profit sector, e.g. autarky indicators. Using different indicator types (not only financial ones
but also performance indicators) is desirable for territorial self-governments and for
organizations established by them, primarily because the results lead to the reflection of elected
representatives (the management) on a more effective way of managing these organisations.
Given that the object of our research is municipalities of the Slovak Republic, we consider it
necessary to provide some brief theoretical background on them. According to the authors,
a municipality is an independent self-governing territorial unit which unifies citizens with
permanent residence on its territory; it is actually the level of local self-government. Vavrek
(2015) state that the basic and general definition of a municipality as a primary unit of local selfgovernment
is based on the constitution of an individual state and is always being amended.
According to the Act No. 369/1990 Coll., the Act of the National Council of the Slovak Republic
on Municipal Establishment, a municipality (town) is a legal entity which, under the conditions
provided by law, independently manages its property and income. The municipality (town)
finances its needs mainly from its own revenues as well as from state subsidies. The main role
429
of the municipality (town) in the exercise of self-government is to care for universal development
of its territory and the needs of its inhabitants. The state may intervene in the activities of the
municipality only in the manner provided by law. Obligations and restrictions can be imposed
on a municipality (town) exercising self-government only by law and under an international
treaty. In matters of territorial self-government, and in order to ensure the tasks arising for the
self-government by law, the municipality (town) may issue generally binding regulations. The
execution of assigned tasks of local government may be transferred to the municipality (town)
by law. The costs of transferring the execution of state administration in this way shall be paid
by the state. During its administration, a municipality (town) may issue generally binding
regulations within its territorial competence on the basis of an authorisation provided by law and
within its limits.
Financial analysis is used to assess the financial situation of organizations; its purpose is to assess
the financial health of the organization and formulate recommendations for its future
development. We can see here that the tools of financial analysis are used to evaluate the degree
to which formulated financial objectives are achieved (ex post analysis) or predict the future
development of the financial situation of a company (ex ante analysis) (Hiadlovský et al., 2016).
A thorough financial analysis identifying the causes of deviations and discrepancies, establishing
causal relationships, is one of the most important tasks of the financial management of an
organization (Lesáková et a l , 2019); implicitly, it is assumed to be used in private sector
organizations, which does not exclude its use in organizations in the public sector as one of the
tools of their economic decision-making. For this thesis we proceed from the assumption of the
observance of the principles of economy, efficiency, and usefulness of spent public funds, which
should be one of the primary objectives of all organizations operating in the public sector,
including territorial self-government (municipalities). However, financial analysis of
organizations in the public sector has its specific characteristics. Unlike profit-making
companies, the main goal of these organizations is to secure public goods for their citizens and
advance the public interest. Despite the absence of a primarily profitable goal, non-profit
organizations (municipalities) can still make a profit. Using financial analysis can be a weakness
in the management of the organization, and the results of the financial analysis can be compared,
especially when comparing homogeneous entities, which is respected in this case.
Ochrana et al. (2010) emphasize the importance of any monitoring of financial indicators that
will, in the long term, help to rationally finance various services from public sources. Using the
example of contributory organisations, Merlíčková Ružičková (2011) points out that there is
a greater emphasis placed on the importance of the main mission when setting up non-profit
organisations, and although the amount of revenues is secondary, it is not irrelevant.
It is then interesting to use selected indicators of financial analysis using the example of specific
non-profit organisations in the field of culture, for example the functioning of contributory
professional theatres in the Czech Republic (Bečica, 2018) or Poland (Galecka and Smolny,
2019). From the point of view of the practical use of financial analysis in territorial selfgovernment
(municipalities) and the organizations established by them, the most frequently used
indicators are financial stability indicators, reflecting the capital structure of the organization,
indebtedness, and autarky indicators. Each publicly founded organization first uses its own
capital for financing, and if that is not enough, it then also uses foreign capital. The use of external
resources is to some extent desirable, but it is associated with risks that, at the municipal level,
the elected representatives of territorial self-government are usually not willing to take. The most
frequently used indicators of financial analysis in territorial self-government are the indicators
of indebtedness. It is desirable that, over time, the value of indebtedness indicators either does
not increase or is at an acceptable level, which is, due to the generally conservative approach of
elected representatives of local government, respected. Indebtedness is usually evaluated using
the indicator of total indebtedness or the indicator of equity indebtedness. The total indebtedness
430
indicator can also be defined in terms of long-term and current indebtedness. The value of the
equity indebtedness indicator depends on the developmental stage of the organization and the
attitude of the elected municipal representatives toward risk. The autarky indicator for public
organizations can be divided separately into its main and secondary activities (typically for nonprofit
organizations established by municipalities in the areas of education, culture, health, social
life or sports). The indicator provides information about the extent to which the organization is
self-sufficient in terms of its ability to cover expenses from its revenues. The autarky indicator
of the main activity, based on costs and revenues, can be positively evaluated if its value is 100%.
If the indicator is below the predetermined optimal value, it indicates that the coverage of costs
by the organization's revenues is insufficient.
2 Materials and Methods
The aim of this paper is to determine the current situation in the use of financial analysis at the
level of territorial self-government in the Slovak Republic. When developing this paper, two
research questions were identified:
Q l : Do municipalities of the Trenčín self-governing region use methods of financial analysis?
Q2: What are the most important financial analysis methods in municipalities of the Trenčín selfgoverning
region?
To obtain the necessary data to fulfil the stated objective and answer the research questions, we
decided to carry out a questionnaire survey, which was conducted from 19 September 2019 to
4 October 2019. The questionnaire survey was carried out in two phases to ensure the maximum
possible rate of return of the questionnaire. The questionnaire was developed using the Google
Docs tool and consisted of 7 closed-ended questions and 5 identification questions (see Appendix
1). We decided to use the closed-ended questions since in the case of open-ended questions, we
often see that the respondents are unwilling to answer the questions. We addressed the whole
basic set of 276 municipalities of the Trenčín self-governing region. We tried to send the
questionnaires electronically directly to mayors of given municipalities, as we assumed that they
have the most knowledge and competence in the analyzed area of financial analysis. We obtained
information about the mayors' e-mail addresses directly from the municipal websites. In terms
of citizen awareness these days, the municipality website and contact details can be taken for
granted. This fact was also evident from the results of Mohelská, Sokolová research (2017),
according to which 99% of Czech municipalities publish a contact or e-mail address on their
website; the contact is often directly to the mayor. Scott (2006) states that websites provide the
most basic public services and citizens are therefore more connected with the government. Web
content and its usage requirements are constantly increasing. Municipalities must monitor and
enhance the quality of their websites regularly, in order to attract and satisfy users. On the Slovak
municipality website, it is also possible to find some information on the financial situation of
municipalities. We received 97 full questionnaire replies out of 276 questionnaires sent, for
a return rate of 35.14%. The following table shows the division of the selected sample and basic
set (all municipalities are located in the Trenčín self-governing region) based on the criteria of
the district.
431
Table 1 - Classification of the selected sample by districts
district
research sample base sample
response ratedistrict
abs. rel. abs. rel.
response rate
Bánovce nad Bebravou 20 20.62% 43 15.58% 46.51%
Hava 11 11.34% 21 7.61% 52.38%
Myjava 8 8.25% 17 6.16% 47.06%
Nové Mesto nad Váhom 11 11.34% 34 12.32% 32.35%
Partizánske 7 7.22% 23 8.33% 30.43%
Považská Bystrica 10 10.31% 28 10.14% 35.71%
Prievidza 16 16.49% 52 18.84% 30.77%
Puchov 5 5.15% 21 7.61% 23.81%
Trenčín 9 9.28% 37 13.41% 24.32%
Bánovce nad Bebravou 20 20.62% 43 15.58% 46.51%
Source: Authors' own processing
The table shows that the largest number of municipalities in the sample comes from the districts
of Bánovce nad Bebravou (20.62%) and Prievidza (16.49%). The average population of 97
municipalities in the sample is 1,502 and the current mayor holds his office for less than 7 years
on average, i.e. less than two terms of office.
Descriptive statistics was used to verify the survey, including selected moment characteristics,
which were graphically supplemented by A N O M analysis. Using the Kendall coefficient of rank
correlation, we observed a linear relationship between the frequency of using financial analysis
methods and the motives for their implementation, or rather frequency of the use of financial
analysis methods and the use of specific methods of financial analysis (see also Vavrek, 2019).
All analyses were developed in MS Excel, Statistica 13.4, Statgraphics XVIII.
3 Results and Discussion
The first question in the questionnaire was a classification question and divided the sample into
two groups. Municipalities were supposed to indicate whether they are currently using one of the
methods of financial analysis. The results showed that financial analysis is not used at the level
of self-government, as up to 72 municipalities (74.33%) answered the question negatively. To
assess their financial situation, only 25 municipalities (25.77%) carry out financial analysis. We
evaluate this fact negatively. In this case, it is questionable whether the respondents know what
financial analysis is and what it is composed of. Under the Act on Accounting No. 431/2002
Coll. as amended, municipalities keep their books using the double-entry bookkeeping system.
In a case where municipalities monitor the development of their economic results or the
development of other financial indicators, for example, we can claim that they already use the
methods of financial analysis (in this case, specifically horizontal analysis). Utilizing financial
analysis methods, municipalities could identify the occurrence of unfavourable facts well in
advance and, if corrective (remedial) actions are taken, they could prevent a negative situation
or minimize its consequences. The results of the financial analysis also help to identify the
weaknesses and strengths of the municipality, which are also important in terms of strategic
management and decision-making for a longer period.
Since the issue of financial analysis is extensive and there are different types of methods and
indicators, we were interested in assessing their significance from the perspective of local
government, namely municipalities. 64% of respondents consider the indicators of indebtedness
to be an especially important group of indicators. We can deduce that capital structure is
important for the given municipalities, i.e. the ratio of their own to external resources, which can
432
be monitored through the indicators of indebtedness. For municipalities, indicators that express
the percentage of debt from current incomes are especially important. In this case, Act no.
583/2004 Coll., the Act on Budgetary Rules of Territorial Self-Government and on amendment
of some acts, states that the total amount of the municipality's debt should not exceed 60% of
the actual current revenue of the previous financial year. Based on this indicator, the most
indebted municipalities are identified in the Slovak Republic and the per capita debt is quantified.
Within the Trenčín self-governing region, the per-capita debt in 2018 was 75 euro (the average
of Slovak self-governments is 93 euro per capita). It can be argued that it is important to monitor
the indebtedness indicators, from which sources the individual activities of the municipality are
financed.
48% of municipalities consider indicators based on the value of cash flow to be a particularly
important group of indicators, which we consider logical, as municipalities monitor the
development of their incomes and expenditures. The results of the questionnaire survey showed
that municipalities do not attach much importance to prediction models. This may also be due to
the fact that individual representatives of municipalities do not have the necessary knowledge
and awareness of prediction models. The following chart presents the differences in the use of
individual methods of financial analysis.
Figure 1 - Differences in the use of different methods of financial analysis by A N O M
analysis.
Source: Authors' own processing
4.7
4.4
-1,1
3.8
3.5
UDL=4,65
CL=4,14
LDL=3,<54
4h 4b 4c 4d 4c 4f 4g 4h 4i
* Note: The designation of the individual motives (a-m) corresponds to the designation of the
methods listed in Appendix 1.
As in the previous case, it is not possible in most cases to observe a linear correlation between
the frequency of one of the methods of financial analysis with that particular method (Figure 1).
However, the use of liquidity (4a), profitability (4d) and cash flow (4f) indicators correlate
significantly with the frequency of using financial analysis methods. Based on these results, we
conclude that those municipalities that work more often with financial analysis emphasize
primarily these three groups of indicators. Here we can see a link with the results of the motives
for using financial analysis methods. A l l municipalities stated that they consider the drawing up
of a budget to be an especially important motive for financial analysis. Given that the budget is
prepared for the following budget period (except for multi-annual budgets), we can speak of
short-term management and decision-making, for which liquidity and cash flow indicators are
important. These groups of indicators are also referred to as analytical tools for short-term
433
management and decision-making, i.e. associated with activities up to one year. In the case of
liquidity indicators, the municipality focuses on whether it can meet short-term liabilities with a
maturity of up to one year.
Table 2 - Rank correlation of the frequency of use of financial analysis methods and the
use of specific methods of financial analysis
item in the questionnaire rank correlation
4a 0.341
4b
4c
4d 0.392*
4e
4f 0.414*
4g
4h
4i
* Significant at significance level a <0.05
Source: Authors' own processing
The last question in the questionnaire was focused on finding the main reasons / benefits for
which municipalities use methods of financial analysis. Respondents had a choice of seven
options.
Table 3 - Benefits of using financial analysis
benefits of using financial analysis percentage
Simplicity in terms of calculation and interpretation 28%
Time-saving (speed) 24%
Comprehensive assessment of the overall financial situation 92%
Identification of the main factors affecting the financial situation 44%
Analysis of past development of the financial situation 12%
Determination of market position 4%
Possibility to predict the financial situation for the future 36%
Source: Authors' own processing
Municipalities could choose more than one option. The above table shows that the main reason
is a comprehensive assessment of the overall financial situation (92%). This finding also
corresponds to the outcome of the question on financial analysis motives (Figure 1), as up to 20
respondents consider finding the current financial analysis a very important motive for applying
financial analysis methods. A comprehensive assessment of the overall financial situation is an
assessment of not only current, but also past and future financial developments. The second
reason is to identify the factors that have influenced financial health. In this case, it is necessary
to quantify the impact of the deterministic factors affecting the financial situation of the
municipality. Consequently, corrective actions can be directed to the problem area. The
possibility of prediction was indicated by 36% of respondents, while the need for forecasting at
the municipal level is important, especially when drawing up budgets for the following period.
Here too, our previous finding, that the analyzed municipalities do not consider their comparison
with other municipalities important, was confirmed. The reason of finding the market position
was ranked last (4%). In the conclusion of this part, we can state that the results of the survey
conducted by us showed that the use, or rather the non-use, of any method of financial analysis
434
cannot be linearly linked to the size of the municipality (rK = 0.123; p = 0.427), i.e. from this
point of view, the municipalities are equal in our survey.
4 Conclusion
In the present-day situation, we can observe that increasing competitiveness and effectiveness is
becoming more important in both the private as well as public sector. We agree with the opinion
of Papcunová (2013) that one of the methods for increasing the effectiveness of municipalities
is to use financial analysis and specify the financial conditions of municipalities. The
municipalities' financial stability and responsible financial management are basic significant
starting points for their long-term sustainable development and their competitiveness
(Otrusinová and Kullová, 2019; Šebestová et a l , 2018; Sytnyk et al., 2019). This was the reason
the paper dealt with the use of financial analysis at the level of territorial self-government in the
Slovak Republic. The questionnaire survey results show that the municipalities situated in the
Trenčín self-governing region in the Slovak Republic do not use methods of financial analysis
(74.32%). The reason for not using financial analysis is that the municipalities are too small, and
there is a lack of skilled and qualified staff with experience and knowledge in financial issues.
Municipalities use methods of financial analysis mostly in creating their budgets for the next
budget period, with liquidity and cash flow being the most significant indicators. This
corresponds with the finding of Daniels et al. (2018) that liquidity and its indicators are
immensely significant in the territory of municipalities. Their survey results confirmed the fact
that the usage of financial advisors of higher quality may result in greater liquidity. We are in
compliance with the claim of Otrusinová and Kulleová (2019) that municipalities can define the
mutual relationships between short-term assets and short-term liabilities depending on their
circumstances and limitations, e.g. in dealing with flow and specific transfers, tax income,
expenses and money in funds. A more significant problem that the municipalities may face is the
cash flow of projects and operational liquidity management.
Acknowledgements
This paper was created within the project "Performance evaluation of public service providers in
the Czech Republic". Project registration number SP2021/18.
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Appendix 1 - Questionnaire
Question no. 1: Do you use any of the methods of financial analysis to determine/evaluate the
financial analysis of your municipality? (yes/no)
Question no. 2: Indicate how often you use any of the methods of financial analysis, (once a year,
daily)
Question no. 3: Please indicate the significance of individual motives for using financial analysis
in your municipality using the methods of financial analysis (5-degree scale)
Question no. 4: Indicate the significance of the use of each group/method of financial analysis
(5-degree scale)
a) Liquidity indicators
b) Activity indicators
c) Indebtedness indicators
d) Profitability indicators
e) Differential indicators
f) Vertical analysis
g) Horizontal analysis
h) Prediction methods
i) Cash-flow indicators
Question no. 5: State the main advantages of (reasons for) using financial analysis methods (8
answer options)
Question no. 6: Please indicate the main reasons for not using the methods of financial analysis
in your municipality (8 answer options)
Question no. 7: In what time horizon do you plan to use any of the methods of financial analysis
(5 answer options)
Question no. 8: Identification questions (district, number of inhabitants)
Contact information
PhDr. Roman Vavrek, PhD.
VSB - Technical University of Ostrava, Faculty of Economics, Department of Public Economics
Sokolská třída 33, 702 00 Ostrava, Czech Republic
E-mail: roman.vavrek@vsb.cz
Ing. Petra Gundová, PhD.
Matej Bel University in Banská Bystrica, Faculty of Economics, Department of Corporate
Economics and Management
Tajovského 10, 975 90 Banská Bystrica, Slovak Republic
E-mail: petra.gundova@umb.sk
Ing. Be. Jiří Bečka, Ph.D.
VSB - Technical University of Ostrava, Faculty of Economics, Department of Public Economics
Sokolská třída 33, 702 00 Ostrava, Czech Republic
E-mail: jiri.becica@vsb.cz
Ing. Eva Benková, PhD.
University of Prešov, Faculty of Management, Department of Intercultural Communication
Konstantinova 16, 080 01 Prešov, Slovak Republic
E-mail: eva.benkova@unipo.sk
437
Allocative efficiency of providing long-term social care: evidence from
the practice of public and private nursing homes
Iveta Vrabková, Ivana Vaňková
Abstract: The main role of the state in many democratic countries is social protection of the
population. In all modern states, special attention is paid to the population aged 65+. One of the
substantial factors is the demographic aging of the population, which brings problems in both
the social and economic spheres. The aim of the paper is to evaluate the allocative efficiency of
nursing homes in the Czech Republic according to the input-oriented DEA model with a focus
on the income of nursing homes in terms of their legal form. The allocative efficiency were
examined from a set of nursing homes (a total of 522 nursing homes in the year 2019), which
operate in individual regions of the Czech Republic. The results of allocation efficiency are
examined in three models, namely overall efficiency, pure efficiency and scale efficiency.
Attention was given to the legal form of nursing homes. The liberalization of social services
makes it possible to create conditions for competition and improve the quality of services
provision. Nursing homes a private profit institution were found to have the best efficiency
scores. Contrary, in the case of nursing homes a private non-profit institution, it has been shown
that they achieve slightly worse results in terms of pure efficiency compared to the average of
the whole group. It can be stated that the average score of allocative efficiency for all nursing
homes in the region is influenced by the composition of types of nursing homes.
Keywords: Allocative efficiency, care for the elderly, data envelopment analysis, financing
JEL Classification: C67, H44, H55
1 Introduction
The changes in today's society are reflected in discussions about the scale of the state's function
in providing services for its population. In many democratic countries, the provision of public
services is perceived as one of the main roles of the state, in terms of ensuring the security of the
population, hygienic protection, education or social protection and care. The scope and structure
of social care, including social services, is influenced by the accepted model of the Welfare state.
The liberalization of social services also plays an important role, which to a certain extent creates
conditions for competition and the improvement of social services. (Aspalter, 2003; TaylorGooby,
2008; Greve, 2015).
A significant and dynamic part of social services is focused on the long-term care of elderly.
A population aging is not only a social problem but also economic. Modern public economics
sees the solution to the efficiency of public funded social services and programs as a compromise
between efficiency and equity in the concept of "of Pareto improvement ", (Stiglitz, Rosengard,
2015; Pestieau, 2018). On the other hand, international research shows that a population aging,
especially in countries with a strong Welfare State policy, increases the pressure on public
budgets on both the expenditure and revenue sides. Public policy makers are constantly looking
for new solutions for the provision of social services to ensure the sustainability of the system in
the required quantity and quality. Possible solutions include a higher degree of involvement of
private entities in the system of providing social services. (Arltová et al., 2016; Kim, Lim, 2015;
Sirovátka, Válková, 2017). The impact of the population aging on the economic productivity of
the state are indicated, for example, by the indicator of old-age dependence. According to the
authors Horečky, Průša (2019), the ratio between the number of people over the age of 65 and
the working population is growing in the countries of the European Union. In 2016, the value of
the old-age dependency indicator was 28.1 % and in 2070 it is expected to increase to 49.7 %.
438
From the point of view of public budgets, we can therefore expect a reduction in tax revenues
and an increase in expenditure on long-term care for the elderly.
In the Czech Republic, subsidies from the state budget are the most important source of income
for social service providers - nursing homes. According to the Ministry of Labor and Social
Affairs of the Czech Republic (2019), there was an average increase in the subsidy for one bed
in nursing homes by 96 % between 2014-2019. The study also proves that in the abovementioned
years, the cost of nursing homes in the Czech Republic increased on average by 37 %.
The most significant cost item is personnel costs and on average it accounts for 73 % of the total
costs of nursing homes, regardless of their type (public / private, non-profit / profit).
The long-term care market for the elderly in the Czech Republic is strongly asymmetric in terms
of the type of providers. The dominant providers are public non-profit institutions. The reason
is, as Horečky, Průša (2019) states, a financing system that is extremely unfavorable for private
providers and investors, unlike in most European countries. The economic importance of the
social services segment is underlined by OECD statistics, which state that the social services
sector is the fastest growing service sector in Europe, with more than 10 million employees and
an increase of 2 million jobs between 2008-2012. The privacy of social service providers plays
an important role in this market. The private sector has a large share of the social services market,
especially in the Netherlands, Denmark, the UK, France, Spain, Italy and Belgium.
The requirement of efficiency and sustainability of long-term care for the elderly is, in view of
the above arguments, a relevant research topic and a fundamental requirement of society. The
topic of the efficiency of long-term care is the subject of a number of studies in various countries,
as evidenced by studies that used non-parametric multicriteria methods to evaluate efficiency,
especially the Data Envelopment Analysis model, e.g. (Min et al., 216; Dulal, 2018; Luasa et a l ,
2018; Tran et al., 2019), and many others, as evidenced by the study Emrouznejad, Yang (2018),
dealing with the use of the DEA model in the literature for the period 1978-2016. However, the
evaluation of the technical efficiency of social services according to the D E A model is, in
contrast to other areas of the public sector (health care, culture, education, public administration),
completely ignored.
The aim of the paper is to evaluate the allocative efficiency of nursing homes in individual
regions of the Czech Republic by 2019 according to the input-oriented DEA model with a focus
on the income of nursing homes in various legal forms.
The analysis subjects are two levels of production units. The first level is represented by 522
nursing homes, which provide residential social services of long-term care for people aged 65+
with reduced self-sufficiency. These are facilities that are set up by both local and regional
governments (hereinafter Public Non-profit Institutions) and private entities (hereinafter Private
Non-profit Institutions and Private Profit Institutions). The key incomes of these facilities are
subsidies from public budgets, payments from service clients and own incomes. An essential fact
is that the guarantors for the availability of all social services are self-governing regions and they
reperesent the second level of the evaluated production units. There are 14 regions in the Czech
Republic, including the Capital City of Prague. The efficiency of 522 nursing homes is examined
from the perspective of an input-oriented DEA model, which assumes the minimalization of
inputs at given (unchanging) outputs.
Within the research, two research questions (RQ1, RQ2) and two hypotheses (HI, H2) were
determined.
RQ1: "What effect do the results of pure efficiency and scale efficiency have on the results of
the overall allocative efficiency of nursing homes in the regions?" H I : "Worse efficiency results
439
of nursing homes in individual region affect the results of pure efficiency, which are worse than
the results of scale efficiency."
RQ2: "Is allocative efficiency affected by the composition of nursing homes in the region in
terms of their legal form?" H2: "The average value of the efficiency of the basic set and sample
sets does not differ."
2 Literature review
The issue of the long-term care system is one of the key areas of the social protection system of
the population. Attention is paid to this topic both in the national strategic documents of
individual states of the European Union and in many professional articles. The problem that the
individual articles deal with is the interconnection of the basic mechanisms of organization,
financing and management in order to increase the synergy effects resulting from their
interaction. The subject of the articles is mainly the evaluation of the performance of facilities
that provide long-term care. The key methods for this evaluation belong to multi-criteria
methods.
Björkgren, Häkkinen, Linna (2001) also evaluated the efficiency of 64 long-term care facilities
in Finland using the D E A method. Efficiency was determined on the basis of four types of
efficiency: cost, technical, allocative and scale efficiency. The results showed significant
differences at the level of individual homogeneous production units and the authors'
recommendations were aimed at improving the management and allocative of resources
(personnel and financial).
Allocative efficiency according to the DEA model was evaluated by Fizel, Nunnikhoven (1993),
in the conditions of nursing homes, with regard to whether the care service is provided by forprofit
or non-profit entities.
The determinants of efficiency and the potential for increasing efficiency at the local and national
level in the field of social services for the elderly in Norway in 2003 were assessed by Borge,
Haraldsvik (2009). They used input and output oriented CRS models for evaluation, chose six
outputs, which included numbers of different types of social services for seniors (residential,
outpatient and field), as input they chose expenditures on social services from the municipal
budget in 2003. Homogeneous units were 420 municipalities. They used regression analysis and
bootstrap to explain the results obtained according to the DEA model.
Martin, Jerome (2016) also dealed with the performance of nursing homes. The subject of the
analysis was 370 units that provide long-term care on a profitable basis. The analysis focused on
the evaluation of cost-efficiency and the results show that if institutional pressure to reduce costs
is exerted, the cost-efficiency of nursing homes improves. The article by Luasa et al. (2018),
provides a methodological and empirical view of the evaluation of technical efficiency and scale
efficiency of homes providing long-term care. 39 public and 73 private homes were surveyed
using the DEA method oriented on input variables. The results of the analysis were partially
presented according to the division of the examined sample of units with regard to the type of
ownership, capacity and location of the facility and the quality of long-term care provided.
Proven results have shown that private facilities are less efficient than public facilities. In
particular, facilities which tend to improve the quality of care provided show a deterioration in
the technical efficiency of the facilities.
Min et al. (2016) used the D E A method for the efficiency of nursing homes with regard of
organizational changes (change in the number of employees in direct service activities per client
of the facility in the context of the quality of care provided) that took place within the period.
440
Wichmann et al. (2018) implemented an international evaluation of the efficiency of long-term
care facilities for the elderly of six Europeans (Belgium, England, Finland, Italy, the Netherlands
and Poland) according to the D E A model. The efficiency estimation model included two
personnel inputs and the number of beds, two outputs the quality of life index of seniors and the
quality index of dying. The results were very different and it was not possible to make general
or specific recommendations.
Using a combination of the DEA model (Epsilon-based measure, EBM) and the M E A method
(metafrontier efficiency analysis), Taiwan evaluated the operational efficiency and quality level
of 91 residential senior care facilities (59 general senior care facilities, 32 nursing homes) in
Taiwan (2017). The results of the estimation of the operational efficiency of 91 production units
were compared in relation to the achieved level of quality through regression analysis. The study
concluded that the relationship between operational efficiency and the level of quality of nursing
homes is negative and neutral for general senior homes. It was also found that the privacy of
nursing homes is more efficient than public providers.
The technical efficiency of 388 "nursing homes" from California in 2009 was evaluated by Dulal
(2018), according to an input-oriented model with variable returns from the DEA model. In the
second phase of the evaluation, the author focused on the "a left censored random-effect Tobit
regression model". The evaluation examined the relationship between the average level of
technical efficiency and the level of quality of nursing homes. The quality of nursing homes was
assessed according to the outputs of the health inspection, the professionalism of the employees
and the availability of the website. Dulal (2018) concluded that efficiency is not related to quality.
This means that effective nursing homes did not belong at the same time to full quality nursing
homes and vice versa.
Luasa, Dineen, Zieba (2018) focused on evaluating the efficiency of 111 Irish nursing homes,
namely 39 public nursing homes and 73 private nursing homes according to the input-oriented
DEA model. The interval of the average value of technical efficiency was analyzed in the second
phase of evaluation according to the bootstrap method. The average pure technical efficiency
(according to the model with variable economies of scale) of all nursing was 62 % and the
average efficiency of scale efficiency was 88 %. The authors came to two important conclusions:
private nursing homes are less effective than public nursing homes, and with the increasing size
of nursing homes, technical efficiency increases.
Tran et al. (2019) pointed out the connection between demographic changes in the population,
especially the issue of population aging and the increased demand for long-term care facilities.
The aim of the article was to examine the literature in terms of statistical methods used to evaluate
the efficiency of the facility, selected input and output parameters for its evaluation and indicators
taking into account the quality of long-term care provided. Standard techniques for measuring
efficiency include DEA, stochastic methods and their specifications (orientation, categorization
of scale efficiency). In conclusion, they stated that when interpreting the results of the efficiency
of the facility, it is appropriate to keep in mind the quality of health care provided and the quality
of life of the population. Quality assessment should reflect its multidimensionality (structure,
process, result).
3 Research objective, methodology and data
The evaluation of the efficiency of financing long-term care for nursing homes is verified in 522
nursing homes in the Czech Republic, i.e. in 99.4% of nursing homes operating in the Czech
Republic. This ensemble does not contain nursing homes, which disappeared or started their
activities during 2019.
441
Table 1 distinguishes three types of legal forms of nursing homes, namely public non-profit
institutions, private non-profit organizations and private profit institutions and their numbers in
the regions. From the total number of 522 nursing homes in the Czech Republic are:
• 350 (67 %) public non-profit institutions;
• 108 (21 %) private non-profit institutions;
• 64 (12 %) private profit institutions.
The largest number of nursing homes of the private profit institution type is in the Capital City
of Prague, namely 41% of the total number of nursing homes. There are no private profit
institutions in the Vysočina and Zlin regions.
In 2019, nursing homes in the Czech Republic collected an average of 10.8 thousand C Z K per
month from public sources (excluding the client care allowance). Subsidies from public sources
were not provided to six private nursing homes in three regions - Liberec, Hradec Kralove and
South Moravian.
Table 1 - Subsidies and costs per bed and month according to the legal form of nursing
homes, year 2019
Name of a region
(R1-R14)
Public non-profit
institution
Private non-profit institution Private profit institution
(a) (b) (c) (d) (a) (b) (c) (d) (a) (b) (c) (d)
R l Cap. City of
Prague
R2 Central
Bohemian
R3 South
Bohemian
R4 Plzen
R5 Karlovy Vary
R6 Usti
R7 Liberec
R8 Hradec
Kralove
R9 Pardubice
R10 Vysočina
R l 1 South
Moravian
R12 Olomouc
R13Zlin
R14 Moravian-
Silesian
17 19.6
56 14.8
28 15.3
12 10.5
9 15.2
31 11.2
14 14.8
28 14.5
16 13.5
19 11.5
32 17.0
27 14.5
21 10.2
40 13.9
37.2
33.6
36.3
28.0
36.4
27.8
35.1
35.6
32.9
31.2
35.9
32.4
29.9
34.4
52.8
44.2
42.2
37.6
41.8
40.3
42.0
40.8
41.1
36.8
47.3
44.9
34.2
40.6
23 17.5
4 10.1
3 13.5
8 14.9
11.0
7.7
18.7
22.1
13.4
11.1
9 6.7
6 10.4
11 13.5
23 12.5
3
6
2
3
3
4
38.2
31.3
44.0
35.1
27.4
24.0
33.7
39.7
34.4
33.4
24.1
28.5
34.2
31.1
45.7
32.3
30.7
42.4
40.1
32.2
55.5
55.7
39.1
33.2
27.8
36.3
39.4
40.3
21 2.5 31.8 8.0
13 10.6 25.3 41.8
3 11.0 33.7 32.6
1
5
3
1
4
5
0
1
1
0
6
3.2 23.2 14.0
11.7 29.5 39.6
11.7 32.8 35.6
0.0 31.6
0.0 13.3
0.8 26.0
0.0
0.0
0.0
3.0
0.0
0.0 23.9 0.0
7.1 28.1 25.3
0.0
0.0
0.0 0.0
3.1 26.9 11.7
Min
Max
Mean
SD
9.0 10.2 27.8 34.2 2.0
56.0 19.6 37.2 52.8 23.0
25.0 14.1 33.3 41.9 7.7
12.1 2.5 3.0 4.4 6.7
6.7 24.0 27.8 0.0 0.0 0.0 0.0
22.1 44.0 55.7 21.0 11.7 33.7 41.8
13.1 32.8 39.3 4.6 4.4 23.3 15.1
4.1 5.5 8.2 5.6 4.7 10.7 15.8
Note: (a) number of nursing homes, (b) average amount of subsidyfrom public sources in thous.
CZK per 1 bed and month, (c) average costs in thous. CZK per 1 bed and month, (d) share of
subsidies in costs per 1 bed and month in %.
Source: Ministry of Labor and Social Affairs of the Czech Republic
442
The average cost of nursing homes in the Czech Republic per 1 bed and month was 31.1 thousand
CZK. The average share of subsidies in the cost per bed and month was 33%. However, in the
case of nursing homes (public non-profit institution) this share is 42%, in the case of nursing
homes (private non-profit institution) this share is 39% and nursing homes (private profit
institution) this share is 15%.
3.1 Methodological approach
Evaluation of the allocative efficiency of long-term social care of nursing homes is verified
within 14 regions (R1-R14), see Fig 1 a total of 522 nursing homes operating in 2019 are
included in the evaluation (ie 99.4% of nursing homes operating in the Czech Republic). The
evaluation was carried out according to the established procedures and methods, especially
according to the logic of the evaluation scheme below (Fig 1):
• calculation of allocative efficiency for 14 regions (R1-R14) of a given set of DMUs
(nursing homes - for each region calculation was implemented according to the inputoriented
DEA model),
• within each region (R1-R14) the results of IO D E A calculations were evaluated
(statistics min., max., standard deviation, number of effective units, total average results
for each region),
• the average results of allocative efficiency for individual regions of the CRS, VRS and
SE models were analyzed using correlation and regression analysis. This was grouped
according to individual 14 regions and according to the legal forms of the nursing
homes: public non-profit institution; private non-profit institution, private profit
institution. The IBM SPSS Statistic program was used for the calculations.
Figure 1 - Allocative efficiency evaluation scheme
61 73 34 21 17 40 17 35 24 23 42 34 32 69
Rl R2 R3 A
R 4 R5 R6 R7 RS RS> RM) A R | [ RI2 RI3 RI4
Inputs Outputs
XI Number of employees pet bed Yl Incomes from subsidies per bed
X2 Number of employees in direct bed cure S Y2 Incomes from own services per bed
X3 Wage costs per bed Y3 Other incomes per bed
A
Input oriented model DEA (CRS, VRS. SE)
efficiency / . - I. inefficiency •/.< 1
The starting point for the evaluation of allocative efficiency was a search of professional sources
and statistics, detection of performance technical and financial parameters of nursing homes (see
Table 2) and also interviews with the management of nursing homes. The most important sources
of data were internal (non-public) sources by the Ministry of Labor and Social Affairs of the
Czech Republic (2019), the public register of social services and public networks of social
services of 14 self-governing regions.
Chosen inputs and outputs were statistically tested. The correlation relationship between the
input and output parameters was analyzed according to Speaman's correlation coefficient, then
the confidence interval was also calculated for the correlations according to the bootstrap
method.
443
3.2 Input and output analysis
The values of the average, median, maximum, minimum and standard deviation (SD) of selected
inputs and outputs for 522 nursing homes in the Czech Republic as of 2019. All parameters are
relative, i.e. converted into one bed of a nursing homes. This recalculation made it possible to
analyze and compare all nursing homes, regardless of their size.
Table 2 - Statistical characteristics of inputs and outputs, year 2019 (n = 522)
N=522 Mean Median Maximum Minimum SD
XI Number of employees per bed 1.31 1.00 12.4 0.31 1.03
X2 Number of employees in
direct bed care
0.54 0.40 4.9 0.05 0.48
X3 Wage costs per bed (in
thousand CZK)
275.3 275.5 722.5 17.1 80.4
Y l Incomes from subsidies per
bed (in thousand CZK)
161.6 161.5 694.6 0.0 83.1
Y2 Incomes from own services
per bed (in thousand CZK)
229.1 229.9 751.7 28.9 56.1
Y3 Other incomes per bed (in
thousand CZK)
11.3 3.3 323.2 0.0 27.2
Source: own research
The correlation relationship between the variables was calculated according to Speaman's
correlation coefficient (p). The calculation was verified at the significance level a = 0.01
(Correlation is significant at the 0.01 level) and a = 0.05. The Spearman coefficient has the
advantage that it is a nonparametric coefficient, does not assume a normal distribution, is not
dependent on the linearity of the relationship between two variables and is not distorted by
possible outliers (Hendl, 2015).
The correlation coefficients p between the input and output parameters are given in the
correlation matrix (see Table 3). A very strong correlation (p = 0.741) was detected between
inputs X I (number of employees per bed) and X2 (number of employees in direct care per bed),
i.e. that as the number of employees in houses for elderly per bed grows, so does the number of
employees in direct care per bed and vice versa. In 95% of the samples, the correlation coefficient
for these two inputs will be in the interval <0.689; 0.788>. There is also a very strong correlation
(p = 0.774) between input X3 (wage costs per bed) and output Y l (income from subsidies per
bed), ie. that with the growth of income from subsidies, wage costs also increase and, conversely,
the 95% confidence interval is CI <0.725; 0.813>. A moderate correlation (p = 0.433) was
detected between X3 (wage costs per bed) and Y2 (revenues from own services per bed), 95%
confidence interval is CI <0.350; 0.512>. The correlation analysis further indicated a negative
moderately strong correlation (p = -0.478) between inputs X I (number of employees per bed)
and X3 (wage costs per bed), i.e. that with the increase in the number of employees per bed, the
wage costs per bed decrease and, conversely, the 95% confidence interval CI <-0.478; -0.315>.
Furthermore, a low negative correlation was detected between output Y2 and input X I and input
X2, as well as between output Y3 and input X I and input X2.
444
Table 3 - Corelations matrix Spearman's rho p (n=522)
XI X2 X3 Y l Y2 Y3
P 1.000
XI
CI
lower 1.000
CI
upper 1.000
P 0.741** 1.000
X2
CI
lower 0.689 1.000
CI
upper 0.788 1.000
p -0.401** -0.216** 1.000
X3
CI
lower -0.478 -0.305 1.000
CI
upper -0.315 -0.132 1.000
p -0.270** -0.115** 0.774** 1.000
Y l
CI
lower 0.002 0.001 0.725 0.000
CI
upper 0.047 0.047 0.813 0.000
p -0.216** -0.229** 0.433** 0.048 1.000
Y2
CI
lower -0.302 -0.319 0.350 -0.045 1.000
CI
upper -0.129 -0.143 0.512 0.148 1.000
p -0.183** -0.145** 0.101* 0.019 0.014 1.000
Y3
CI
lower -0.272 -0.231 0.008 -0.076 -0.073 1.000
CI
upper -0.093 -0.056 0.187 0.115 0.101 1.000
CI Confidence Interval 95 %, ** Correlation is significant at the 0.01 level, *. Correlation is
significant at the 0.05 level.
3.3 Input-oriented DEA model
The essence of estimating the allocative efficiency of primary DEA models lies in the division
of researched objects into efficient and inefficient according to the size of consumed resources
(inputs) and the amount of production (outputs). The solution of D E A models defines the
empirical production function. The DEA model compares the units with respect to the best units
in a given set and thus derives the relative efficiency of these units. DEA models are based on
the premise that for a given problem there is a production possibility set formed by all possible
combinations of inputs and outputs. The D E A method makes it possible to evaluate a set of
DMUs through input-oriented models and output-oriented models. The advantage of estimating
efficiency according to the DEA model is that they allow the inclusion in the model of nominal,
relative, technical and financial inputs and outputs, weights of individual parameters are
calculated by the model for each unit, unlike Stochastic Frontier Analysis (Borge, Haraldsvik,
2009; Kumbhakar et al., 2015).
For the needs of the evaluation of nursing homes, an input-oriented CCR model (according to
Charnes, Cooper & Rhodes) with constant returns to scale (CRS) and an input-oriented BCC
model (according to Banker, Charnes & Cooper) with variable returns to scale (VRS). Inputoriented
models are based on the minimization assumption, where the value of the inputs is
reduce while maintaining the value of the outputs (Fried et al., 2008; Zhu, Cook, 2013).
The calculation of efficiency according to the CCR model, is realized using the Charnes-Cooper
transformation, and is converted from a linear polynomial programming task to a standard
programming task and formulated according to the notation (1):
max
z=) iiryro (1)
subject to
445
Vi Xi0= 1
i=l
Hr, Vi>£>0
The efficiency calculation according to the B C C model has, in addition one variable, which
corresponds to the constraint of convexity, and is not constrained by the conditions of nonnegativity.
Mathematical notation (2):
max
z = y u r y r o - u 0 , (2)
subject to
UrYrj-^ ViXij-Uo<0, •= ^
n,
i=l
vt >e,ur> e, u0 free
The efficiency coefficient g for both of the above models is determined by the ratio of the
weighted sum of inputs to the weighted sum of outputs, but weights are sought such that the
value of the coefficient g is greater than or equal to one. For the effective unit Uq, the coefficient
z = 1 and for the inefficient unit z< 1 (Cooper, Seiford, Tone, 2007; Cooper, Seiford, Zhu, 2011).
The degree of allocative efficiency, which is calculated according to the CCR and B C C models,
is the basis for the calculation of the so-called scale efficiency (SE) according to relation (3).
Cooper et al. (2007) define efficiency from scale as the ratio of the efficiency of a production
unit obtained by the C C R 8 C C R A
* model and the BCC 8 B C C A
* model, where the SE rate
of the production unit in input-oriented models is greater than or equal to one.
SE = f ^ (3)
°BCC
The decomposition of allocative efficiency (4) makes it possible to express the so-called pure
efficiency (VRS) and scale efficiency (SE).
CCR 9*CCR = 9*BCC x SE (4)
4 Results
4.1 Allocative efficiency of nursing homes according to individual regions
The degree of efficiency of financing long-term care of 522 nursing homes according to the
input-oriented D E A model and its components is shown in Table 4. Table 4 contains the number
of effective and average efficiency for all nursing homes in the region, in terms of the overall
efficiency of IO CRS, pure efficiency of IO VRS and scale efficiency of IO SE in the region.
The total results for all DMUs are shown in the last line of the table.
446
In the Czech Republic in 2019, the best results of the allocative efficiency of long-term care were
detected in the R7 Liberec Region, where 53% of 17 DMUs were effective and the average
efficiency of DMUs in the region was CRS = 0.969, VRS = 0.987 and SE = 0.981. The worst
results of DMUs efficiency are concentrated in the R2 Central Bohemian Region, where 73
DMUs operate, only 16.4% of effective DMUs were detected and the average efficiency was
CRS = 0.784, VRS = 0.818 and SE = 0.961. It can be well seen from Table 4 that the lower
average efficiency at the level of 80 % and less is also achieved by three other regions R l The
Capital City of Prague, R5 Karlovy Vary Region and R8 Hradec Kralove Region.
Table 4 - Results of the efficiency of financing long-term care in 2019 by region
DMUs II. DMUs IO CRS IO VRS IOSE
Regions I. g=l Mean g=l Mean g=l Mean
R l Cap. City of
Prague
61 12 0.804 17 0.834 16 0.967
R2 Central
Bohemian
73 12 0.784 21 0.818 13 0.961
R3 South Bohemian 34 11 0.918 15 0.955 11 0.962
R4 Plzen 21 9 0.908 10 0.924 9 0.981
R5 Karlovy Vary 17 5 0.828 13 0.950 5 0.876
R6 Usti 40 10 0.883 19 0.932 10 0.948
R7 Liberec 17 9 0.969 14 0.987 9 0.981
R8 Hradec Kralove 35 7 0.842 14 0.920 8 0.915
R9 Pardubice 24 5 0.856 10 0.905 5 0.946
RIO Vysočina 23 9 0.941 12 0.960 9 0.980
R l l South
Moravian
42 10 0.892 15 0.911 10 0.981
R12 Olomouc 34 6 0.895 16 0.949 6 0.943
R13 Zlin 32 9 0.919 17 0.962 9 0.955
R14 Moravian-
Silesian
69 15 0.893 21 0.910 17 0.982
Total 522 129 0.881 214 0.923 137 0.956
In terms of 100% efficiency (z= 1), the number of DMUs is as follows: 129 DMUs in the IO
CRS model (25 % of 522); 137 DMUs in the IO SE model (26 % of 522); 214 DMUs of IO VRS
(41 % of 522).
In terms of the average value of the efficiency rate in nominal and percentage terms, the results
are as follows:
• in model IO CRS (Mean: z=0.88; 88 %),
• in model IO VRS (Mean: z=0.92; 92 %),
• in model IO SE (Mean: z=0.96; 96 %).
4.2 Influence of pure efficiency and scale efficiency on overall efficiency score
The average value of the IO CRS efficiency score for DMUs of individual regions is more
significantly affected by one of the components (VRS, SE). IO CRS is more significantly
447
affected by the result of IO VRS at nursing homes in the following regions: R8 Hradec Kralove
Region, R5 Karlovy Vary Region.
The above mentioned results (see Table 4) are confirmed by graphs of regression lines (Figure
2, Figure 3), which show the relationship between the average results of calculations of the total
allocative efficiency of IO CRS and IO VRS, IO CRS and IO SE for individual regions of the
Czech Republic. However, no correlation was confirmed between the results of IO VRS and IO
SE (p = 0.012), and therefore the regression relationship between the above variables was not
modeled.
A significant positive correlation (p = 0.883, a = 0.001) was detected between the results of the
overall efficiency of IO CRS and the pure efficiency of IO VRS, as evidenced by the regression
line and equation. This means that as the IO CRS value increases, the IO VRS value increases
and vice versa. On both sides of the regression line, there are curves defining the boundaries of
the diameter of the intersection of the IO CRS and IO VRS values, above and below the
regression line. Very inefficient both components (CRS and VRS) beyond the average have two
regions - R l The Capital City of Prague and R2 Central Bohemian Region.
Figure 2 - Regression relationship between CRS and VRS efficiency index results
0.S0 O.S:> D.SD D.B5, 1.00
VRS
IO CRS is more significantly affected by the result of IO SE at nursing homes in the following
regions: R l - The Capital City of Prague and R2 Central Bohemian Region. Also, a significant
positive correlation (p = 0.0482, a = 0.001) was detected between the results of the overall
efficiency of IO CRS and the scale efficiency of IO SE, as proved by the regression line and
equation. This means that as the value of IO CRS increases, the value of IO SE and vice versa.
On both sides of the regression line are curves defining the boundaries of the diameter of the
intersection of the values of IO CRS and IO SE, above and below the regression line. Very
inefficient both components (CRS and SE) beyond the limit of the average have one region - R5
Karlovy Vary Region.
Figure 3 - Regression relationship between CRS and SE efficiency index results
448
OSS 0.90 092 094 0 9fi OSS L QO
5E
4.3 Efficiency results by types of legal form of nursing homes
The basic comparison of efficiency results is shown in Table 5 and Fig 4, namely the average
values of efficiency of C R O IO, VRS IO and IO SE according to legal forms.
Table 5 - Overall average results compared to average results by legal form
Regions
T
CRS mean
PN PRN PP T_
VRS mean
PN PRN PP T
SE mean
PN PRN PP
Rl 0.804 0.869 0.731 0.815 0.834 0.913 0.822 0.846 0.967 0.948 0.985 0.959
R2 0.784 0.781 0.795 0.829 0.818 0.804 0.806 0.905 0.961 0.968 0.981 0.915
R3 0.918 0.910 0.916 1.000 0.955 0.946 0.980 1.000 0.962 0.960 0.935 1.000
R4 0.908 0.871 0.952 1.000 0.924 0.906 0.960 1.000 0.981 0.969 0.996 1.000
R5 0.828 0.839 0.723 0.852 0.950 0.988 0.760 0.997 0.876 0.850 0.991 0.855
R6 0.883 0.872 0.864 1.000 0.932 0.929 0.927 1.000 0.948 0.942 0.966 1.000
R7 0.969 0.959 1.000 1.000 0.987 0.986 1.000 1.000 0.981 0.978 1.000 1.000
R8 0.842 0.851 0.851 0.757 0.920 0.920 0.888 0.982 0.915 0.933 0.958 0.756
R9 0.856 0.863 0.833 0.872 0.905 0.901 0.949 0.890 0.946 0.950 0.870 0.975
RIO 0.941 0.934 0.974 X 0.960 0.954 0.984 X 0.980 0.977 0.989 X
R l l 0.892 0.888 0.909 1.000 0.911 0.899 0.953 1.000 0.981 0.987 0.961 1.000
R12 0.895 0.892 0.891 1.000 0.949 0.947 0.950 1.000 0.943 0.942 0.938 1.000
R13 0.919 0.939 0.989 X 0.962 0.964 0.955 X 0.955 0.974 0.918 X
R14 0.893 0.891 0.893 0.909 0.910 0.918 0.894 0.940 0.982 0.983 0.987 0.948
T mean 0.881 0.883 0.880 0.920 0.923 0.927 0.916 0.963 0.956 0.954 0.963 0.951
x - there are no nursing homes a private profit institution in this region
• In all models (IO CRS, IO V R S and IO SE), nursing homes of the public non-profit
(PN) type achieve values comparable to the overall average (IO CRS, IO VRS and IO
SE).
• In all models (IO CRS, IO VRS and IO SE), nursing homes of the private non-profit
(PRN) type achieve values comparable to the overall average (IO CRS, IO VRS and IO
SE).
449
• Nursing homes of the private profit (PP) type achieve higher average values in two
models (IO CRS and IO VRS) and thus better than the values of averages for the whole
basic set. The IO SE model is comparable to the whole set.
Figure 4 - Average results of DMUs efficiency according to legal forms
100 WW WW w w f
0.95 i 1
I h ' I I ! _ H "
O.H0 I* i I H I I I I
0.75 ! ^
0.70
Rl R2 RJ R4 R5 R« R7 R8 Rl
J R10RHR12R13R14 R l R2 RJ R4 RS R6 R7 R3 R9 R10R11R12R]3R14
• Tmcan SE PNmcaii SE PRNmcan St •PPmcan SE "Tmcan CRS PNmcan CRS PRNmean CRS •PPmcaii CRS
100 p p w P P P P
• ' • ' i ^ ! i i ,
p l ^ l ^ l
i 0.85 p I
J
0.80 I
0.75 I
0.70 ^
Rl R2 R3 R4 R5 R« R7 R8 R'J R]OR] 1R12R1 3R]4
iTnrcan VRS PNmcan VRS PRNimean VRS •PPmiain VRS
I T n u a i i CRS • T m c a n VRS • T m ^ i i i i SF,
I !>(j
j.;
r5
a
—' O.M
0 75
0.70
1
" I
•::flw
• .ill.
1 2 3 4 5 <j 7 S 9 10 II 12 13 14
Regions Kl-RM
5 Discussion and conclusion
The key sources of financing of long-term care in the conditions of nursing homes in the Czech
Republic include revenues from public budgets at all levels of public administration, especially
the central level (from the state budget). The relative indicator - income from subsidies per bed
shows that for nursing homes of the public / private non-profit institution type, subsidies make
up on average 42 and 39 % of the total income of nursing homes converted to one bed. It is
therefore the second highest source of income for these institutions.
The highest income is collected by nursing homes from payments from clients for services
provided, however, 50 % of the volume of payments from clients represents the care allowance
provided by the state to persons with reduced self-sufficiency. On average, nursing homes of the
non-profit type collect income from public sources in the amount of 60 % of the total volume of
income for the services provided. In contrast, in the case of nursing homes of the private profit
institution type, the direct subsidy makes up on average only 15 % of all income per bed. The
key source of financing for private profit institutions is income from clients, including the abovementioned
care allowance. On average, therefore, nursing homes of the profit type collect income
from public sources in the amount of 35 % of the total volume of income.
It is also interesting that nursing homes of a private profit institution show one third lower costs
per bed than nursing homes of the public / private non-profit institution type. In contrast, the
results of estimating allocative efficiency according to the input-oriented DEA model show that
nursing homes private profit institution, although numerically only 12 % of the total number of
522 nursing homes in the Czech Republic, have the best score. In the context of the above, it is
450
possible to consider a lower quality of care provided by nursing homes of the private profit
institution, similar to the suggestions of previous research by Luasa et al. (2018).
For the evaluation of the allocative efficiency of 522 nursing homes in the Czech Republic
broken down by regions (R1-R14), an input-oriented model is chosen. Critically, it is possible to
look at the conclusions of authors who used also input-oriented models for their evaluation
(Dulal, 2018; Wichmann et al., 2018; Zhang et al. (2019), and subsequently recommend nursing
homes to increase efficiencies reduced inputs, both personnel and personnel costs. A similar
recommendation would mean a significant reduction in the quality of social care for nursing
homes in the Czech Republic, especially in the conditions of private profit providers.
The results of allocative efficiency are examined for sets of nursing homes operating in a specific
region. There are a total of 14 of these regions in the Czech Republic. The biggest regions of
nursing homes, and therefore also the number of beds, have the largest regions in terms of
population - Central Bohemian, Moravian-Silesian and The Capital City of Prague. An exception
is the South Moravian region, which has the lowest offer of long-term care for the elderly aged
65+, as also confirmed by a study by the Ministry of Labor and Social Affairs of the Czech
Republic (2019). The results of allocative efficiency are monitored from the perspective of three
models. The first model examines the overall allocative efficiency (CRS), the full (100%)
efficiency reaches 25 % of nursing homes and the average efficiency is 0.881 (in percentage
terms, i.e. 88 %). The other two models examined are components of overall allocative
efficiency, namely pure efficiency (VRS) and scale efficiency (SE). In the pure efficiency model,
41 % of homes are fully efficient and the average efficiency is 0.923 (i.e. 92 %). From the point
of view of the third model of scale efficiency, 26 % of nursing homes are fully effective and the
average efficiency is 0.956 (i.e. 96 %). The relatively high number of fully efficient units and the
relatively high average efficiency in all models suggest that the potential for improving the
efficiency of nursing homes in the mode of selected inputs and outputs is in the range of 4-12 %.
For comparison, the results of a study by Borge, Haraldsvik (2009) estimate that the potential for
increasing the efficiency of residential social services for the elderly in Norway is 10 %, but in
outpatient and outreach services the potential for improvement is much higher, namely up to 25
%. In contrast, Luasa et al. (2018) estimate that the potential for increasing the efficiency of Irish
nursing homes is in the range of 27-61 %. In general, it should be noted that the results of
individual studies are significantly influenced by the selection of inputs and outputs, the number
of units of the evaluated set and the type of evaluation model. These determinants suggest that
the scores achieved in the individual countries cannot be compared without the results of the
comparison being affected by errors.
The breakdown of the overall efficiency at the level of average results for 14 regions shows that
the worse results of the overall efficiency are affected either by one of the components (VRS,
SE) or by both components in a balanced way. In the case of the four regions that show the worst
average efficiency score, the regression analysis confirms that for two regions, R l The Capital
City of Prague, R2 Central Bohemian, worse results are affected by pure efficiency results, in
the Central Bohemian region, worse results are affected almost equally by both components, and
in the case of R5 Karlovy Vary, worse overall efficiency results are affected by worse scale
efficiency results. The set HI "Worse efficiency results of nursing homes in the region affect the
results of pure efficiency, which are worse than the scale efficiency results", it is not possible to
unambiguously confirm or refute.
The composition of nursing homes in the Czech Republic and individual regions in terms of their
type is significantly uneven in the Czech Republic. Numerically dominant are the nursing homes
of the public non-profit type, which account for 67 % of the total number of nursing homes,
followed by nursing homes private non-profit of 21 % and the remaining 12 % of the private
profit institution. The highest number of private profit nursing homes operates in the territory of
451
The Capital City of Prague, Karlovy Vary and Central Bohemian. Contrary, in the Vysočina and
Zlin regions there are no nursing homes of the private profit institution type. Nursing homes a
private profit institution were found to have the best efficiency scores. Especially in the case of
overall efficiency and pure efficiency, nursing homes achieve better results compared to the
average of the whole file.
Contrary, in the case of nursing homes a private non-profit institution, it has been shown that
they achieve slightly worse results in terms of pure efficiency compared to the average of the
whole group. It can be stated that the average score of allocative efficiency for all nursing homes
in the region is influenced by the composition of types of nursing homes. The determined H2
"The average efficiency value of the basic set and the sample sets do not differ" was refuted in
the two cases mentioned above.
From the evaluation of allocative efficiency, which means efficiency of income of social care
nursing homes in the conditions of the Czech Republic, it is possible to indirectly deduce
connections that may have implications for improving not only efficiency but also the quality of
social care provided to seniors. First of all, it is a detected significant positive correlation between
income from subsidies per bed and wage expenditures per bed. Secondly, it is the best efficiency
score for nursing homes private profit institution. For input-oriented models, inefficient units are
advised to reduce the value of inputs, and therefore it can be considered, that reducing the number
of professional staff will lead to improved efficiency, but at the same time to a deterioration in
the quality of provided care. In contrast, increasing revenue from subsidies should increase wage
expenditures and consequently improve the quality of care.
Acknowledgements
This paper was supported by project SGS No. SP2021/67, International Evaluation of the
Performance of Health and Social Services with a Focus on the Application of Multicriteria
Methods, Faculty of Economics, VSB - Technical University of Ostrava.
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Contact information
doc. Ing. Iveta Vrabková, Ph.D.
VSB - Technical University of Ostrava, Faculty of Economics, Department of Public Economics
Sokolská třída 33, 702 00 Ostrava 1, Czech Republic
E-mail: iveta.vrabkova@vsb.cz
Ing. Ivana Vaňková, Ph.D.
VSB - Technical University of Ostrava, Faculty of Economics, Department of Public Economics
Sokolská třída 33, 702 00 Ostrava 1, Czech Republic
E-mail: ivana.vankova@vsb.cz
454
Regional and legal aspects of transport services in the Czech Republic,
with special regard to peripheral regions
V
René Wokoun, Petr Cechák, Pavel Mates
Abstract: The transport accessibility is the significant factor in the effort for the balanced
development of the regions and preservation of the internal cohesion of the Czech Republic, the
real form of which is the result of a number of components, often staying against each other in
the conflict positions, economic, political, legal, population and others.
The analysis of the transport accessibility of larger settlement centers, which are municipalities
with extended powers (ORP) and regional cities, was done during the solving the project, within
which this article was created. The transport accessibility of the ORP was expressed
cartographically through the number of public transport connections during working days
(Wednesday was chosen) and during non-working days, respectively free days (Saturday was
chosen). The results obtained here were, of course, influenced by the fact that at the time of this
analysis, the restrictions related to the fight against COVTD-19.
Keywords: Transport services, transport, legal aspects, regional aspects, Czech Republic
JEL Classification: K19, R50, H70, H73
1 Introduction
The transport accessibility is the significant factor in the effort for the balanced development of
the regions and preservation of the internal cohesion of the Czech Republic, the real form of
which is the result of a number of components, often staying against each other in the conflict
positions, economic, political, legal, population and others ones.
When so-called inner peripheries were established in the territory of today's Czech Republic
during the period before November 1989, the deterioration of living conditions was associated
with a declining state of the infrastructure, limited supply of the shops and services and even
only very limited public cultural and social life.4 1
The limited scope of the public transport played
its role there, which provided primarily only the possibility of way from and to work. At the
same time, the limited scope of the public transport did not allow or made it very difficult to
travel for missing services, shops or culture beyond the territory of the peripheral areas. Even
visiting a doctor, dealing with official matters or buying consumer goods outside the place of
residence were associated with considerable time requirements for the inhabitants of these areas,
and daily commuting to school or work by public transport for some groups of the population
was "greater than usual ballast".42
The insufficient volume of the public transport thus
contributed to the fact that the peripheral areas were considered largely to be the trap, wherefrom
especially younger people tried to move to the areas with more favorable living conditions.
4 1
MUSIL, J. Urbanizace českých zemí a socialismus (Urbanization of the Czech Lands and
Socialism). In: HORSKA, P., M A U R , E. and MUSIL, J. Zrod velkoměsta: urbanizace českých
zemí a Evropa (The Birth of the Big City: Urbanization of the Czech Lands and the Europe). 1st
edition Praha (Prague): Paseka, 2002, p. 272
4 2
See to the topic Musil, J. Urbanizace českých zemí a socialismus (Urbanization of the Czech
Lands and Socialism), p. 272
455
As it turns out, these problems can be reproduced or even reproduced in the current, although
completely in different, political and economic conditions.43
The extent to which living
conditions actually worsen in peripheral areas in fact depends significantly on the political
decisions and the willingness to invest the resources into maintenance of infrastructure and the
provision of the public services, including public transport.44
Not only in purely peripheral and
economically declining areas but also in general in rural areas not adjacent directly to larger
agglomeration and economic centers, there is a need to find a reasonable balance between the
two approaches, which should be balanced rather rationally than one of them should prevail
clearly. It deals with a conflict between the requirement to guarantee the same level of services
(or ensuring the highest possible standard of the services in the largest possible area) and
economic rationality, which arises in the sphere of standards of transport services of the
peripheral areas and rural areas farther from the larger centers quite lawfully.4 5
Lower population
density is typical logically for the rural areas. Especially where it would also deal with the areas
with a relatively more fragmented settlement structure (a larger number of smaller settlements
separated from each other), the question of public transport congestion and thus economic
efficiency arises logically. The costs are high for it and it is necessary then to cover them partly
from the public budgets. At the same time, the costs are high and there is little to be covered from
the public budgets, because only a small share of the costs for ensuring the service can be covered
from the selected fare under these conditions, with regard to the low occupancy.46
It is also possible to point out the fact that peripheralization led to a deterioration of the living
conditions, for example in the territory of the former GDR after year 1990. Naumann and
ReichertSchick note the impact of peripheralization on the decline of the infrastructure and the
extent of the provided services in the case of the Eucker-Randow region at Germany's northeastern
border, and also the sharp reduction in the extent of the public transport that happened
there was one of the factors worsening significantly living conditions in the region (cited by
Bernard J. and col.: Nic se tady neděje: Životní podmínky na periferním venkově. Publishing
Slon, 2019, p. 34-35)
4 4
If, under the conditions of Czechoslovakia before 1989, sufficient investments were made into
technical infrastructure and civic amenities in the peripheral areas and a sufficient volume of the
public transport was ensured too (this fact would also correspond to the principle of balancing
the economic level of the individual areas of the socialist state and living standards of their
inhabitants that should apply at least under the official proclamations), the lack of work
opportunities and, also partly, the decline in economic activity in the peripheral areas did not
have to lead to such a significant deterioration in living conditions. The investments and funds
were, however, at that time, concentrated primarily into other areas that were to be developed as
a priority (for the territory of today's Czech Republic, it was based on the Concept of the
Development of the Settlement and Urbanization of the Czechoslovak Republic approved by
Government Resolution No. 4/1976), and there were insufficient funds for investments outside
the center of gravity for the intended further development.
4 5
Bernard J. and col: Nic se tady neděje: Životní podmínky na periferním venkově (Nothing is
Happening Here: Living Conditions in the Peripheral Countryside). Sociologické nakladatelství
(Sociological Publishing), 2018, p. 62
4 6
To some aspects rather in relation to the outer peripheries see for example Jeřábek, M ;
Dokoupil, J.; Havlíček, T. České pohraničí - bariéra nebo prostor zprostředkování (Czech Border
- Barrier or Space for Mediation)? Praha (Prague): Academia, 2004; Bóhm, H.; Dokoupil, J.,
Jeřábek, M . Crossing the Borders. Studies in the cross-border cooperation within the Danube
Region. Case Study The Euroregion Šumava-BayerischerWald/UntererlnnMúhlviertel..Budapest:
Central European Service fo rCross-Border Initiatives, 2016, and
Jeřábek, M . and col. České pohraničí - Od periferní národní pozice ke stabilnímu prvku evropské
integrace (Czech Border - From a Peripheral National Position to a Stable Element of European
456
At the same time, the mutual relationship between public transport and individual car transport
plays a crucial role in providing transport services of the peripheral and rural areas, both in
relation to the question of the necessary scope of providing public transport as a service and the
costs for its ensuring.
In the case described above, the insufficient volume of the public transport in the peripheral areas
of our state before 1989 forced the inhabitants of these areas to buy cars and secure transport by
using them, however it was more expensive for them, the financial resources of the inhabitants
of these areas were limited and there was a lack of the cars on the market.47
After year 1989, the
degree of motorization was roughly doubled and the wide possibility of using individual
passenger transport influences strongly the patterns of behavior of the rural population.48
With
regard to the advantages from the user's point of view4 9
, individual car transport represents today
a real competition of public transport. This fact reduces to some extent the need to ensure
transport services of the area by public transport, without coming to an end entirely the need to
provide public transport in the rural areas. The need for "competition" with individual car
transport can reduce then at the same time the economic rationality of the public transport (and
increase the costs for its ensuring), when it influences the real occupancy of public transport
connections and the economic efficiency of their operation logically.5 0
Under the low economic
rationality of the excessive increase of the volume of the public transport in sparsely populated
areas, as this increase would probably run into the problem of low occupancy of public transport
connections51
, the logical question arises how to ensure relatively the most possible high level of
Integration). Studie Národohospodářského ústavu Josefa Hlávky (Study of the National
Economy Institute of Josef Hlávka), 1/2021. Jeřábek, M.; Dokoupil, J.; Havlíček, T. České
pohraničí - bariéra nebo prostor zprostředkování (Czech Border - Barrier or Space for
Mediation)? Praha (Prague), Academia, 2004.
4 7
Musil, J. Urbanizace českých zemí a socialismus (Urbanization of the Czech Lands and
Socialism), p. 271
4 8
Bernard J. and col: Nic se tady neděje (Nothing is Happening Here), p. 62
4 9
Although it is usually associated with higher costs compared to the public transport, it allows
greater time flexibility and is more convenient, especially in the rural areas with a sparse
frequency of public transport lines (typically this is the case, for example, when shopping, when
it is common, that it should deal with the purchase for many days for the whole family, and the
public transport stop is not directly at the house where the purchase is to be transported.
5 0
It also brings with it the impossibility of projecting the costs for operating public transport in
the fare in a large extent, because it could lead to a further reduction of the attractiveness of the
public transport compared to the individual car transport and further reduce the real occupancy
of public transport connections, that is necessary to keep them, at least to a certain extent, usually
in the public interest, at least as the alternative to individual car transport (with the effort for
higher degree of using public transport, for example its greater environmental friendliness in
comparison with the massive use of individual car transport can play a role there).
5 1
In the course of solving the project, within of which this article was created, the managed
interviews with mayors in the selected model areas also took place. Information obtained from
these interviews if they concerned the transport services, could be used as a reflection of the real
relations and behavior of people in the rural areas.. This information confirms simultaneously
misgivings about the low economic rationality of an excessive increase of the scope of public
transport. For example, the mayor of one municipality in the Pardubice Region stated during the
interview that there was a clear demand from the inhabitants of the municipality to increase the
volume of the public transport. Therefore, the municipality ordered one additional bus line,
which is used regularly, in reality, only by one inhabitant of the municipality. This example
cannot be generalized fully and the experience of the mayors of other municipalities may differ
457
the transport services, respectively the level of the services, in peripheral and generally rural
areas father from larger centers, that should be ensured by the transport services (and especially
public transport), with the maitenance of the economic rationality.
2 Material and Methods
2.1 Legal regulation and conception documents
From the point of view of the researched problem, the fundamental importance belongs to the
concept of transport services. According to section 2 of the Act on Public Services in Passenger
Transport and on Amendments to Other Acts (Act No. 194/2010) (hereinafter the Public
Transport Act), the transport services are defined as "provision of the transport for all days of
the week, primarily to the schools and school facilities, to the public authorities, to the
employment, to the medical facilities providing basic health care and to the satisfaction of
cultural, recreational and social needs, including transport back, contributing to the sustainable
development of the territorial district".52
From the point of view of legal regulation, the provision
of transport services is thus considered to be one of the tools of the regional development, when
its conceptual feature is that it serves for the sustainable development.
The Public Services Act deals only with the issue of ensuring the transport services by public
transport53
and in this sense also uses the term "provision of transport services" as a legislative
abbreviation. However, individual car transport is also taken into account when providing the
transport services. This fact is also reflected in the fact that in the conceptual material Transport
Policy of the Czech Republic for the Period 2021 - 2027 With a View to 205054
distinguishes four
in this respect. However, this example was used here to illustrate the problem that may arise in
the case of increasing the volume of the public transport in terms of its economic rationality.
5 2
This legal definition should then be used wherever special laws and other regulations refer to
the transport services, without determining its content in any way. This is the case, for example,
the Act on Regions (Act No. 129/2000 Coll.), which entrusts generally in its section 35 to the
regional council to determine the scope of the transport services within the independent
competence or in its section 50 of the Act on Municipalities (Act No. 128/2000 Coll.), according
to which the subject of the activity of the union of the municipalities may be the introduction,
expansion and improvement of the system of public passenger transport for ensuring the transport
services of the given territory of this union. Another example of a general regulation is the Decree
of the Ministry for Regional Development No. 501/2006 Coll. on general requirements for usage
of lands, which stipulates that the provision of transport services should be taken into account
when making-decision on the location of buildings. An exception in this respect is rather the
Education Act (Act No. 561/2004 Coll.), whose sections 178-179 requires for the regions to
provide transport to and from the catchment school, respectivelly kindergarten within the
transport services on their territories, if the distance of the catchment school from the pupil's
place of permanent residence exceeds 4 km..
5 3
The Act was adopted as a tool of the adaptation of the Czech law to Regulation (EC) No.
1370/2007 of the European Parliament and of the Council on public passenger transport services
by rail and by road and repealing Council Regulations (EEC) No. 1191/69 and No. 1107/70,
whose purpose, under the Article 1 of the Regulation, is to define how the competent authorities
of the Member States may, in accordance with the rules of Community law, intervene in the
public passenger transport sector, for the purpuse to ensure the provision of the services of
general interest which are, inter alia, more frequent, safer, better in the quality or cheaper than
services that individual market mechanisms could offer.
54
www.mdcr.cz/Dokumenty/Strategie/Dopravni-politika-CR-pro-obdobi-2014-2020-s-vyhled
458
levels of the transport service in the Czech Republic by public transport. In the first two levels,
public transport is only a supplement to individual car transport. These two lower levels will also
apply especially in the areas with lower population density (which will affect at least a large part
of peripheral and father-off rural areas). In level No. 1, the basic transport service is provided by
individual car transport. In this case, we can speak about some kind of self-service, because it
lacks an important defining feature, namely its provision by public services.55
Public transport is
focused on satisfying on, as a general rule, the narrowly specifically defined needs of the
inhabitants (commuting to the schools, to the health care or to the authorities). At level 2, the
public transport ensures already wider range of population needs, "but for the economic reasons,
it cannot provide the necessary standards in terms of quantity". The independence on the
individual car transport is assumed in this division only in levels No. 3 and 4. At level 3,
individual car transport and public transport are understood as mutually full-fledged alternatives.
That one at level 4 is even the basis of the transport service system, which ensures all the needs
of the population throughout the day and throughout the week, and, conversely, the individual
transport becomes a complement to the public transport.
The transport policy of the Czech Republic counts with the fact that the 1st level of the transport
services provided by the public transport should be reduced in the future, the 3rd level should
prevail in the most areas,56
and the 2nd level should be maintained in sparsely populated areas.
In these areas, with regard to economic rationality, the character of public transport should be
preserved only as a supplement to individual car transport, despite the fact that the Transport
Policy of the Czech Republic also admits that at level 2 of the transport services provided by
public transport, the groups of those people, who do not have their own car, are disadvanteged
(especially women, children and the elderly), and the insufficient scope of the public transport
and poor interconnection ultimately "contribute to the outflow of the population from the
peripheral areas to larger agglomerations and have a significant negative impact on the
demographic development in these areas".
2.2 Analysis of the transport services of larcer centers
The analysis of the transport accessibility of larger settlement centers, which are municipalities
with extended powers (ORP) and regional cities, was done during the solving the project, within
which this article was created.57
The transport accessibility of the ORP was expressed
cartographically through the number of public transport connections during working days
(Wednesday was chosen) and during non-working days, respectively free days (Saturday was
chosen). The results obtained here were, of course, influenced by the fact that at the time of this
analysis, the restrictions related to the fight against COVJD-19 disease (public transport
frequency analysis in November 2020) were in force, and smaller movement of the inhabitants
5 5
For example KOVALČÍKOVÁ, D, ŠTANDERA, J. Zákon o veřejných službách v přepravě
cestujících a o změně dalších zákonů, Komentář (Act on Public Services in Passenger Transport
and on Amendments to Other Acts, Commentary), cited by ASPI.
5 6
4th level should apply particularly to larger cities, where, especially in their historic cores, the
priority of public transport can help to solve the problem with the lack of parking space, prevent
the formation of convoys, etc.
5 7
The reason for this analysis was, due to the fact, that the solved project is focused on the
peripheral areas, the transport accessibility of these settlement centers means good or poor
accessibility of public and private services for the residents of the peripheral areas - whether it
deals with health care sector (specialized medical facilities), education (secondary, higher and
university education), services from the banking and insurance sector, accessibility of the
business network (specialized shops, shopping centers), culture and sports, availability of the
transport services (long-distance bus connections, high-speed railway, or fly connection).
459
during this period was reflected also to the reduction of the transport services provided by the
public transport. This fact is also reflected in the maps, which were created based on the results
of the analysis. It is necessary to take into account the existence of a certain "distortion", if it
deals with the extent of the public transport captured in the maps, in areas around Prague or other
large agglomeration centers (eg. Brno or Pilsen) when trying to interpret these maps.58
Frequency of public transport connections - Wednesday (November 2020)
The map 1 shows the problematic accessibility of the municipalities with respect to the central,
respectively marginal position of ORP within the catchment area (SO) ORP and position of the
municipalities of main and secondary roads, respectivelly railway tracks. In the case of the
eccentric position of the ORP within SO ORP, the states occur for the farthest municipalities,
respectively for the municipalities out of the main roads and railway tracks, when no line of
public transport goes to the municipality or only minimum number of the lines (1-4) goes to them
even during the work days.
Map 1: Frequency of public transport connections - Wednesday (November 2020)
Source: Project T A CR number TL03000527 „Internal and external peripheries in the regional
development of the Czech Republic - from genetic determination to territorial cohesion", 2020-
2023.
Frequency of public transport connections - Wednesday (November 2020)
The project, within which the analyzes were processed, is focused on the peripheral areas of
our state, and with regard to this fact, the extent of public transport to the ORP in the
administrative district of this ORP was determined within the analyzes. The existence and
sufficient capacity of this transport is relevant particularly in rural areas away from other large
aglomeration centers. However, in the areas with the immediate proximity of large
agglomeration centers, the same function, as in the rural areas is usually performed by the
transport accessibility of the relevant ODP, ie. the access to services, opportunities for shopping,
etc., is fulfilled also by the transport services of these large agglomeration centers, even in
relation to the territory not falling within their administrative district as ORP.
460
Frequency of public transport connections - Saturday (November 2020)
However, a significantly worse situation occurs on Saturday, when the number of municipalities
without a connection or with only a minimum connection increases enormously. In the above
cases of analyzes of the transport accessibility of SO ORP centers by public transport, it is not
possible to define unambiguously the peripheral areas that have a location at the internal
(interregional) and external (state) borders. However, data were obtained during the pandemic
situation (Covid - 19) as of November 2020. Therefore, especially for the number of public
transport lines on Saturdays, this may not be long-term relevant information - Map. 2.
Map 2: Frequency of public transport connections - Saturday (November 2020)
Source: Project T A CR number TL03000527 „Internal and external peripheries in the regional
development of the Czech Republic - from genetic determination to territorial cohesion ", 2020-
2023.
Frequency of public transport connections - Saturday (November 2020)
Time availability of the regional city by car
The transport accessibility of the regional cities was expressed by their time availability by car,
while the accessibility of the regional cities from municipalities according to administrative
jurisdiction was analyzed (availability of the regional administrative office and its departments)
and the accessibility of the nearest regional cities (availability of the centers with higher
services). There can be also see the problematic accessibility of municipalities with respect to
the central, respectivelly marginal location of the regional city within the region + location of
municipalities on the main or secondary roads. The map shows the location of the peripheral
areas on the interregional borders, while the number of the municipalities with a peripheral
location is increasing in the large regions, respectively regions with an elongated shape of the
territory - especially the southern border of the Pilsen region, the western border of the Ústí nad
Labem region, the eastern border of the Pardubice region, the northern border of the Hradec
Králové and Olomouc regions and the northwestern border of the Moravian-Silesian region. The
analyzed data can be considered relevant from a long-term perspective. Map. 3.
461
Map 3: Time availability of the regional city by car
Source: Project T A CR number TL03000527 „Internal and external peripheries in the regional
development of the Czech Republic - from genetic determination to territorial cohesion ", 2020-
2023.
Time availability of the regional city by car
3 Results and Discussion
The scope of the transport services according to section 3 of the Public Services Act is determined
in the independent competence of the municipality and the region. The municipalities and regions
also ensure the transport services (the only exception is given in its provision of trains by national
transport by transport, which has a supra-regional or international character). The fact that the
municipalities and regions determine the scope of the transport services in their independent
competence, ie. within the exercise of the right to self-government of municipalities, gives the
state only a very limited space for the possible ingerencido of this decision. Especially in the
case of the areas with low population density, the question of setting the standards of transport
services provided by the public transport arises. These standards should define the scope of the
transport services in terms of the frequency of the lines (and, where appropriate, also their
capacity) and the maximum permissible walking distance to public transport stops. The need for
such standards is currently reflected in the transport service plans of some, but not all, regions.
The approaches of the individual regions to set these standards differ from each other, which, in
addition to the objective factors influencing the need for the scope of the transport services, also
reflects the fact that setting these standards is essentially a political decision of individual regions.
When determining the scope of the transport services by public transport, the requirement of
economic rationality also appears, both in the form of the requirement for municipalities to
participate financially in providing the transport services in an above-standard scope,59
as well
5 9
It can be referred there, for example, to the transport service plan of the Liberec region
(accessible is here: https://silnicni-hospodarstvi.kraj-lbc.cz/Dokumenty-odboru-dopravy/plandopravni-obsluznosti-lk)
or in the effort to set the standards of the transport services from the
part of the Central Bohemian Region towards the municipalities in its territory (see to it for
462
as in the various scope of the transport services in the individual parts of the territory of the
region. The areas with lower level of the economic activity and population density, and thus
especially in peripheral and rural areas, will be on the worse level logically.6 0
In connection with the fact that peripheral areas are typically located along the regional borders
and sufficient transport services of these areas, including public transport, can be understood as
a condition for their development, the question of ensuring transport services by public transport
across the regional border also arises.61
That one is unsured currently on the basis of the
agreements on the interregional cooperation in providing transport services between the
individual regions.62
The contracts are concluded in the independent competence of the regions
and are not identical in content, but they have6 3
certain common features, which follows from
their purpose, which is the interest in the development of that part of the territory adjacent to the
common border between the regions.64
example: https://www.idnes.cz/ekonomika/doprava/standardy-dopravni-obsluznostistredocesky-kraj.
A210616_094327_eko-doprava_cfr).
6 0
The current plan of the transport services in the Central Bohemian Region does not regulate
explicitly the scope of transport services provided by public transport. The previous plan of the
transport services for the years 2016-2020 set this scope, but at the same time stipulated that it is
given for each municipality (guaranteed by the region) "only with justifiable demand in the time
distribution of the operating day according to transport needs and local conditions" (see
https://www.kr-stredocesky.cz/web/doprava/dopravni-plan). This formulation can be difficult
probably to interpret otherwise than in relation to the fact that while areas at the "inner" regional
border with the Capital City of Prague show a high degree of economic activity and the need for
high public transport capacity, areas at the "outer" regional border are characterized, according
to current Development Strategy of the Territory of the Region, by so-called "inner periphery"
(strategy is accessible from: https://www.databaze-strategie.cz/cz/sck/strategie/strategie-
rozvoje-uzemniho-obvodu-stredoceskeho-kraje-2019-2024?typ=download).
6 1
The current development strategy of the Central Bohemian Region states in this context, for
example, that "connecting the inner periphery with the centers in the neighboring regions is often
more important for these areas, because it will enable increased availability of job opportunities
and education". However, the same thing, at least when it deals with the job opportunities, also
applies in the case of the so-called external peripheries on the borders of the regions with the
neighboring states.
6 2
The largest number of these contracts was concluded in the years 2018-2020 by the Central
Bohemian Region, which concluded them with all neighboring regions. Concluded conctracts
are available at: https://smlouvy.gov.cz/vyhledavani.
6 3
Pursuant to Section 3, Paragraph 2 of the Public Services Act, regions may also provide
transport services on the territory of another region, with the consent of that region. The Czech
legal system does not regulate more detailed regulation to it. The contracts thus differ, inter alia,
in their designation, some of them are designated as public coordination agreements, ie. pursuant
to Section 160 (4), others are designated only as agreements pursuant to Section 24 of the
Regional Act. A closer analysis of this issue goes beyond the purpose of this article, but it must
be mentioned that the public contracts may be concluded by territorial self-governing units only
if it is set by law, and no special law gives them such authority (see efor example POTĚŠIL, L.
HEJČ, D., RIGEL, F., M A R E K , D. Správní řád. Komentář (Administrative Procedure.
Comment), Praha (Prague): Publishing C. H . Beck, 2020, p. 784-785.
6 4
Based on these agreements, the interregional lines are included into the integrated transport
systems of both regions and both regions undertake to provide transport services to the other
party by a carrier with which they have a public service contract in transport also for the other
463
With regard to the fact that the provision of the transport services in their territorial district and
across the regional border is provided by the regions in their independent competence, the
determination of the extent to which they will provide it is based on their political decision.6 5
Financial coverage is thus the important limit in this decision-making. Since 2005, when the
financing of the transport services was transferred to the independent competence of the regions,
its provision depends on the financial resources available to the region for this purpose, which
can be always basically an argument why a certain location was not included in the order,
optionally the range of the transport services by public transport is limited significantly there.
Even with a high degree of motorisation, it seems necessary (or perhaps desirable) to have the
minimum standards of the transport services provided by public transport, which would also
apply to peripheral and sparsely populated areas, in order to eliminate at least the disadvantage
of non-car owners.66
The transfer of the determination of the scope of the transport services (and
optionally its provision) by public transport into the transferred competence of the regions could
be one of the possible solutions, thereby the state obtain the possibility to intervene in it.
However, such an interference into the regions' right to self-government would be difficult to
enforce politically. With the political will to take this step, an agreement between the state and
the relevant region on what standard of the transport should be provided in a given area (or an
unsurpassable standard could be set by law) would seem much more feasible, while the provision
of the transport services in sparsely populated areas could be subsidized by the state.
It seems appropriate to seek further solutions to provide functions that would otherwise be
provided by public transport, given the impossibility of relying only on individual car transport
in peripheral and sparsely populated areas and the necessarily limited scope of the public
transport for the economic reasons. The Transport policy of the Czech Republic sets in general
the goal for optimalization of the needs for mobility (not to waste with traffic), when the
limitation of a very need to use the transport should be counted, in particular, as a reduction of
the negative impacts of the transport on the environment. It can be achieved it even in sparsely
populated areas, for example, by subsidizing the permanent shops and service establishments, or
optionally with the help of the mobile shops and service establishments that will go around the
individual settlements (this solution could also be cost-effective, with regards to the savings that
this optimization of the need for mobility could bring in the sphere of the subsidies for public
transport). However, as the suitable complementary solution, it seems to be desirable the support
and help in the organization of a carpooling system during using privately owned cars and also
ensuring the transport services aimed as the social services adressed to the concrete groups of
people (for example taking people from the individual municipalities in a sparsely populated area
region and they should compensate mutually the resulting financial costs. Contracts are
determined generally as frameworked, so determining on which tracks respectively lines this
transport shall be provided, is specified in them only exceptionally, it shall happen usually on
the basis of a specific order of each region, which shall determine where the transport service
will be provided.
6 5
The provision of the transport services by public transport is imposed by the Public Services
Act authoritatively by the statement "regions... provide transport services...", but at the same
time the legal system lacks the tools, how to force them to do it if they do not do it in reality.
6 6
It has been already stated above that the Transport Policy of the Czech Republic draws
attention to the disadvantages of these persons in the areas where the 2nd level of the transport
services is through public transport, while acknowledging that this disadvantage has significant
negative impact on the demographic development in these areas.
464
for a specific service that they cannot draw directly at their place of residence, such as medical
treatment).67
5 Conclusion
The nature of the public transport as a positive element enables to reduce regional disparities,
provided that the function is defined properly and the nature of this transport is determined, and
thus contribute to the cohesion of the territory. Within the Czech Republic, the solution of the
problem of the transport services is hampered by multi-directional spatial relations of the
individual municipalities and regions and a settlement structure with a large number of the small
settlements.
However, with regard to the current situation in the Czech Republic, it can be stated that transport
accessibility is ensured for all regions, but not in sufficient quality. This is one of the reasons for
the unequal position between the regions, because the quality of transport accessibility is one of
the aspects of the regional competitiveness.
The analyzes done by the research team of the project (TA CR number TL03000527 "Internal
and external peripheries in the regional development of the Czech Republic - from genetic
determination to territorial cohesion", 2020-2023) show that according to the analysis of the
transport accessibility, in comparison with the Czech and Moravian regions, the transport
accessibility becomes better in the Moravian regions, and thus the transport accessibility of the
centers generates fewer spatial peripheries, with the exception of the northern to northwestern
area of the Olomouc region.
We consider as essential that the regional borders concentrate hard-to-reach, far-off
municipalities, and thus a higher proportion of spatial peripheries, with the exception of the
regional borders of the Ústí Region, the regional borders of the Hradec Králové and Pardubice
regions and the internal borders of Moravia in general. Differences can also be noticed at the
state borders, where the worse situation is at the borders on the former "Iron Curtain", and parts
of the Czech-Polish border significantly far-off from the regional centers. In essence, this is a
systemic problem that should be solved centrally and at the regional level.
When ensuring the transport services in the peripheral areas, it is necessary to look for a
compromise between the requirement of economic rationality and the effort to achieve the same
(or at least still acceptable) level of the services on the territory of whole state. Although it will
continue probably to be based on individual car transport in the future, it is necessary, so that
certain minimum standards of the transport services were defined provided by public transport.
In addition, however, it seems effective in these areas to choose other ways of achieving the level
of services that transport services (and in particular public transport) should provide.
Acknowledgement
This paper was elaborated as part of the Technology Agency of the Czech Republic,
TL03000527, Internal and external peripheries in the regional development of the Czech
Republic - from genetic determination to territorial cohesion.
6
The voluntary associations of municipalities could play an active role there. They could fulfill
mainly an organizational function in the carpooling system, when, for example, the co-driver
would get in the car to the car owner during the journey to the destination, for example also in
another municipality on the way to the destination. In the case of ensuring transport services as
a social service, the voluntary association of the municipalities could also be the customer.
465
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Hlávky (Study oftheNationalEconomy Institute of Josef Hlávka), 1/2021.
[5] JEŘÁBEK, M . , DOKOUPIL, J., HAVLÍČEK, T. České pohraničí - bariéra nebo
prostor zprostředkování (Czech Border - Barrieror Spacefor Mediation)? Praha
(Prague), Academia, 2004.
[6] KOVALČÍKOVÁ, D., ŠTANDERA, J. Zákon o veřejných službách v přepravě
cestujících a o změně dalších zákonů, Komentář (Act on Public Services in Passenger
Transport and on Amendments to OtherActs, Commentary), cited by ASPI.
[7] MUSIL, J. Urbanizace českých zemí a socialismus (Urbanizationof the Czech Lands
and Socialism). In: Horská, P., Maur, E. and Musil, J. Zrod velkoměsta: urbanizace
českých zemí a Evropa (The Birtho fthe Big City: Urbanizationof the Czech Lands
and theEurope). 1st edition Praha (Prague): Paseka, 2002.
[8] POTĚŠIL, L., HEJČ, D., RIGEL, F., M A R E K , D. Správní řád. Komentář
(Administrative Procedure. Comment), Praha (Prague): Publishing C. H. Beck, 2020.
Contact information
prof. RNDr. René Wokoun, CSc.
University of Finance and Administration, Faculty of Law and Public Administration,
Department of Administrative Law and Public Administration
Estonská 500, 101 00 Praha 10, Czech Republic
E-mail: rene@wokoun.cz
JUDr. Petr Čechák, Ph.D.
University of Finance and Administration, Faculty of Law and Public Administration,
Department of Administrative Law and Public Administration
Estonská 500, 101 00 Praha 10, Czech Republic
E-mail: petr.cechak@mail.vsfs.cz
doc. JUDr. Pavel Mates, CSc.
University of Finance and Administration, Faculty of Law and Public Administration,
Department of Administrative Law and Public Administration
Estonská 500, 101 00 Praha 10, Czech Republic
E-mail: pmates@mail.vsfs.cz
466
Analysis of the budget potential of local authorities: on the example of
the Kharkiv region
Valeriya Yesina, Olha Rudachenko, Natalya Bibik, Maksym Kolinko
Abstract: In the context of European integration processes, the issues of developing the budget
potential of local authorities are becoming crucial. In order to increase the efficiency of territorial
development, to implement rational financing of projects at the local level, to guarantee the
purposeful financing of local initiatives, the decentralization reform has been developed and is
being actively implemented in Ukraine. The reform provides for the delegation of a number of
powers, including financial, and part of the state budget revenues to the local communities in
order to increase the efficiency of territorial development, community autonomy of territorial
associations, increase the level of administrative and organizational support at the local level.
The article systematizes the theoretical and methodological aspects of the study of the budget
potential of local government. The rating of eight territorial communities of the Kharkiv region
was carried out on the basis of determining the integrated indicator of budget potential, using the
method of forming capable territorial communities, approved by the Cabinet of Ministers of
Ukraine. The main directions of local authorities budgetary potential development are
highlighted.
Keywords: Budget potential, financial capacity, local government, territorial community
JEL Classification: H20, H61, E49
1 Introduction
The financial management system plays a very important role not only at the state level, but also
at the local level. Finance is part of economic relations and at the same time the main mechanism
for implementing the main directions of state, regional and local policy of the country socioeconomic
development.
Receiving income from various sources is an essential condition for the economic development
of territories, as ensuring economic growth in the tactical and strategic perspective requires the
investment of a significant amount of financial resources. At the beginning of 2014, Ukraine
gradually began the process of increasing the own revenues of local governments and funds
transferred from the state budget. Due to the increase in the revenue side of local governments,
the expenditure side has started to increase as well, which undoubtedly showed the positive
trends of the decentralization process in Ukraine.
The main purpose of financial decentralization in Ukraine is to ensure the financial capacity of
territorial communities, which according to the Law of Ukraine "On Voluntary Association of
Territorial Communities" and the Perspective Plan for the formation of community territories
merged, creating a united territorial community [2]. It is the process of financial decentralization
that has become a powerful stimulus for creating conditions for the development of the budget
potential of territorial communities by providing local authorities with financial autonomy based
on the principles of independence, efficiency, publicity and transparency.
Based on the understanding of the meaning of the term "potential" (set of opportunities, degree
of capacity, etc.), it is proven to talk about budget potential as budget capacity, about some
conditionally achievable amount of revenue to fulfill legislative powers. Thus, the budget
potential is a part of the financial potential of the community, which is the total amount of
467
financial resources (money) that can be attracted from existing sources to the community budget
over time and in the current economic conditions.
2 Material and Methods
Financial decentralization has made local budgets independent from the state budget and has
created opportunities for planning the development of territories, opportunities for the
implementation of real projects. Local budgets, including budgets of territorial communities
(TC), are independent, they are not included in the State Budget of Ukraine and other local
budgets. At the legislative level, the state ensures full budgetary independence and financial
independence of local budgets. The budget of the territorial community is a plan for the formation
(income) and use of financial resources (expenditures) to ensure the tasks and functions
performed by local authorities during the budget period.
Territorial community budget revenues are tax, non-tax and other revenues on a non-refundable
basis, the collection of which is provided by the legislation of Ukraine (including transfers, fees
for administrative services, own revenues of budgetary institutions) [1,6].
Budget revenues are classified as follows [1]:
1) tax revenues;
2) non-tax revenues;
3) income from capital transactions;
4) transfers
Tax revenues include national taxes and fees and local taxes and fees. Non-tax revenues are: 1)
income from property and business activities; administrative fees and charges, income from noncommercial
economic activity; other non-tax revenues. Income from capital transactions is
income from the sale of capital assets (fixed assets, state reserves and reserves, land). Transfers
- funds received from other public authorities, local governments, other states or international
organizations on a gratuitous and non-refundable basis.
Budget expenditures - funds directed to the implementation of programs and activities provided
for in the relevant budget.
The comparison of the budget for 2019 on the example of the following TCs of the Kharkiv
region [3] is presented further:
• Merefyanskaya TC, the area of which is 167.8 km2 and the population as of January 1,
2019 is 25.1 thousand people;
• Malynivska TC, the area of which is 122.5 km2 and the population as of January 1,
2019 is 8.3 thousand people;
• Novovodolazka TC, the area of which is 351.6 km2 and the population as of January 1,
2019 is 16.4 thousand people;
• Chkalivska TC, the area of which is 387 km2 and the population as of January 1, 2019
is 12.2 thousand people;
• Zolochivska TC, the area of which is 917 km2 and the population as of January 1, 2019
is 24.6 thousand people;
• Lozivska TC, the area of which is 1102.40 km2 and the population as of January 1,2019
is 79.1 thousand people .
Figure 1 presents a comparison of budget revenues and expenditures for 2019 presented above
in the TC of the Kharkiv region.
468
Figure 1 - Revenues and expenditures of T C Kharkiv region for 2019, UAH
Source: Created by authors according to official statistic information
SS0S513SS:01 872 087144,57
197742907.2
113008052,3
199938011,7
116317011.6
Budget o:
Merefvanilava
TC
Budget of
ChkaHvila TC
Bwiegto:
Lccivska TC
8957954357 163052J
' 85918600.86
164081517.4
236478942^
230859326.'
Bwiegtof Bwiegtof Bwiegto:
MilynvslaTC NcMNTxioladca Zolochtvsla TC
'Income • Expenses
As for the budgets of Merefyanskaya, Chkalivska and Novovodolazka TCs, in 2019 the budget
of these TCs had significant losses. Figure 1 clearly shows a significant exaggeration of their
expenditure. Thus, it is proposed to consider in more detail the main components of the
expenditure part of these TCs for 2019, table 1.
Table 1 - Analysis of T C expenditures of the Kharkiv region for 2019, UAH
Indexes
Merefyansk
ayaTC
Chkalivs
kaTC
Lozivska
TC
Malynivs
kaTC
Novovodola
zkaTC
Zolochivs
kaTC
National functions
41677551,6
1
2493986
8,73
8000559
6,28
2497002
8
26144084,8
45456947
,94
Public order, security
and the judiciary
94500 0 0 39996,1 49708,8 75036
Economic activity
30382734,0
2
1310157
1
76
989 485,
42
2165312
3
27955610,3
28952761
,47
Environmental
protection
85260 194900
5
015 525,
60
45000 232902
1265530,
56
Utilities
28539654,4
2
6863130,
03
28 930
889,07
6102568 26927405,5
15349320
,17
Health care 0
1771602,
92
114096 3
15,77
915485,9 1110652,76
2721090,
78
Mental and physical
development
6580871,22
4747280,
33
43679
893,34
1683572 6921418,12
9151212,
63
Education
87599269,4
2
6151648
0,26
292
824319,7
3
3002216
8
69781176
12160981
1,2
Social protection and
social security
5028170,96
3182178,
3
230
545119,3
6
486660 4958559,13
6277615,
9
Total lending 0 0
300
000,00
0 0 0
Internal lending 0 0
300
000,00
0 0 0
Source: Created by authors according to official statistic information
469
The analysis showed that in all studied TC the largest part of expenditures is occupied by
expenditures on education. So, for example, in Lozivska TC they made 292824319,73 U A H . In
second place were expenditures related to national functions. For example, in Lozivska TC they
amounted to U A H 80005596.28. Analysis of the expenditure part for each individual TC showed
that most of the expenditures are directed to the maintenance of government agencies. However,
the TC has broad powers and responsibilities to finance community expenditures. In general, the
community spends money on the repair and construction of roads, administrative service centers,
medical and obstetric centers and clinics, schools and kindergartens, water supply and sewerage,
street lighting and more. That is, for everything that allows you to quickly demonstrate the
positive changes from the creation of TC. Currently, a significant number of social infrastructure
facilities are being transferred to the balance of TC, and the burden on the expenditure part is
also important.
Below is an analysis of the revenues of the studied TCs of the Kharkiv region for 2019 (Table
2).
Table 2 - Analysis of revenues of TC Kharkiv region for 2019, UAH [3]
Indexes
Merefyansk
ayaTC
Chkalivs
kaTC
Lozivska
TC
Malynivs
kaTC
Novovodola
zkaTC
Zolochivs
kaTC
Tax revenues
77174467,9
9
55811530
,21
3547690
22,02
46703614 94352661,6
10499425
7,8
Non-tax revenues
13050535,9
5
5579585,
39
3396199
0,58
2465468 4898315,27 8813083,7
Income from capital
transactions
883879,06 0
2620005,
49
0 28337 420341,95
Official transfers
106520225,
2
51616936
,69
4890503
69,92
40410462
1
63767523,7
12225125
8,7
Trust funds 113799 0 450 000 0 0 0
Source: Created by authors according to official statistic information
Most of the income, almost 80% is official transfers. It demonstrates that budget decentralization
measures have had a rather positive impact on the budget potential of TCs. However, the
independence of local governments, which is one of the main ideas of budget decentralization,
is determined not only by the amount of financial resources, but also the reason for their increase.
However, TCs should keep in mind that transfers and other financial assistance from central
authorities are temporary solution provided by the government. Therefore, TC should rely on its
own capabilities in the accumulation of tax and non-tax revenues.
2.1 Model and Data
The purpose of this research is to analyze the budget potential of territorial communities of the
Kharkiv region. The analysis is conducted using official statistics on revenues and expenditures
of local budgets. Also, the rating of eight territorial communities of the Kharkiv region according
to the integrated indicator of budget potential using the Methodology of formation of able
territorial communities was carried out.
The article uses general and special methods of scientific research: analysis and generalization;
dialectical methods and evolutionary laws, system analysis, comparison and synthesis,
mathematical statistics and graphical method.
3 Results and Discussion
A detailed analysis of the budget potential of the community makes it possible to determine its
financial capacity in accordance with the requirements of the "Methodology for the formation of
470
affluent territorial communities", which includes 16 main points [5]. It should be noted that the
formation of capable territorial communities and the development of their budget potential is
carried out considering the following criteria:
• the ability of local governments to address public issues that fall within their
competence to meet the needs of the population of the relevant administrative-territorial
units;
• historical, geographical, socio-economic, natural, ecological, ethnic, cultural features of
the development of the respective administrative-territorial units;
• development of the infrastructure of the relevant administrative-territorial units;
• financial support of the relevant administrative-territorial units;
• labor migration;
• results of preliminary assessment of the level of capacity of affluent territorial
communities;
• optimal networks of social infrastructure and accessibility of public services in relevant
areas.
The formation of capable territorial communities is carried out in the following sequence: 1)
identification of potential administrative centers of capable territorial communities and their
accessibility zones; 2) determination of the list of territorial communities that are part of the
capable territorial communities; 3) assessment of the level of capability.
The assessment of the level of capability is carried out on the basis of criteria that characterize
the main socio-economic indicators that affect the development of the relevant capable territorial
community [6]. These include: the population living permanently in the territory of the capable
territorial community; the number of students receiving education in general secondary
education institutions located on the territory of a capable territorial community; the area of the
territory of the capable territorial community; index of tax capacity of the budget of the capable
territorial community; the share of local taxes and fees in the budget revenues of the capable
territorial community.
The estimated level of capability of territorial communities is determined on the basis of the sum
of numerical values of the criteria for assessing the level of capability:
• low level of capability - from 1.5 to 2.1;
• average level of capability - from 2.2 to 3.8;
• high level of capability - from 3.9 to 5.
In the case of joining a capable territorial community of one or more territorial communities
located in the adjacent area, the boundaries of the area in which the administrative center of the
formed capable territorial community is located are subject to expansion [7].
More powerful are those communities that are constantly increasing their own incomes, using
all the reserves, as well as attracting investment resources. It is also important to implement a
quality personnel policy, as it is professionals who allow communities to both mobilize
additional funds and ensure their effective use.
In general, the assessment of budget potential and financial capacity is based on the results of
monitoring the implementation of local budgets on four main indicators:
• own income per 1 inhabitant;
• level of budget subsidies (share of basic / reverse subsidies in revenues);
• the share of expenditures for the maintenance of the management staff in the TC's own
resources (excluding transfers from the state budget);
• capital expenditures per 1 inhabitant.
471
Below is an analysis of some indicators of the implementation of local budgets of the TC of the
Kharkiv region for 2019 and their overall rating. The indicators, which were used for rating and
financial capacity, included:
Indicator 1 - income of the general fund per 1 inhabitant (excluding transfers) (UAH);
Indicator 2 - expenditures of the general fund per 1 inhabitant (UAH);
Indicator 3 - expenditures for the maintenance of the management staff per 1 inhabitant
(UAH);
Indicator 4 - capital expenditures per 1 inhabitant (UAH);
Indicator 5 - level of budget subsidies (share of basic / reverse subsidies in revenues)
(%);
Indicator 6 - the share of expenditures for the maintenance of the management staff in
the revenues of the general fund (excluding transfers) (%);
Indicator 7 - the share of wages in expenditures of the general fund (%);
Indicator 8 - share of capital expenditures in the total amount of expenditures (general
and special funds), (%).
The indicators of TC of the Kharkiv region for 2019 are presented in Fig.2-9.
Figure 2 - Indicator 1 - income of the general fund per 1 inhabitant (excluding transfers),
U A H
Source: Created by authors according to official statistic information
2000
i
v3
" J *
472
Figure 3 - Indicator 2 - expenditures of the general fund per 1 inhabitant, UAH
Source: Created by authors according to official statistic information
10000
- x .
300C
7000
6000
5000
4000
3000
: x :
100 0
0
J?
2?
i : : r 9
Figure 4 - Indicator 3 - expenses for the maintenance of the management staff per 1
inhabitant, UAH
Source: Created by authors according to official statistic information
lfeOO
1400 1 4 4 5 2
1200
1143.1
lOOO
8*377 fi
_
^ »Tn» ^ 766.5
BOO
-•::
0
^ ° oP-° ^ ^
473
Figure 5 - Indicator 4 - capital expenditures per 1 inhabitant, U A H
Source: Created by authors according to official statistic information
Figure 6 - Indicator 5 - the level of budget subsidies, %
Source: Created by authors according to official statistic information
474
Figure 7 - Indicator 6 - the share of expenditures for the maintenance of the management
staff in the revenues of the general fund (excluding transfers), %
Source: Created by authors according to official statistic information
Figure 8 - Indicator 7 - the share of wages in expenditures of the general fund, %
Source: Created by authors according to official statistic information
475
Figure 9 - Indicator 8 - the share of capital expenditures in total expenditures (general and
special funds), %
Source: Created by authors according to official statistic information
0,4
0.35
0.3
0,25
0,2
0,15
0,1
0,05
0.13
0,2S
0,224 0,222
0,355
For each indicator was created a rating of TGs of the Kharkiv region and 6 TGs were selected
for the research. Rating constructed by ranking i.e the location of the collected data in the
sequence of decreasing values of indicators (the highest figure assigned rank N°l, lowest - rank
JV° max).
Based on the 8 indicators presented in the figures above in table 3, a matrix of ratings of TCs of
the Kharkiv region for 2019 is formed.
Table 3 - Matrix of ratings of T C of the Kharkiv region separately on eight indicators of
2019
Name of TC
Rating accord ing to inc icator
Name of TC
1 2 3 4 5 6 7 8
Lozivska 17 10 15 9 9 15 8 12
Novovodolazka 13 33 63 7 12 19 22 7
Zolochivska 40 43 53 15 30 36 29 16
Merefyanskaya 75 82 50 20 49 72 34 18
Chkalivska 44 42 103 27 53 76 55 25
Malynivska 53 142 223 22 51 108 38 11
Source: Created by authors according to official statistic information
Thus, on the basis of these indicators in table 3 formed the overall rating of financial capacity of
the studied TCs:
• Novovodolazka takes - 7th place;
• Lozivska takes - 9th place;
• Zolochivska takes - 20th place;
• Malynivska takes - 42nd place;
• Chkalivska takes - 43rd place;
• Merefyanskaya ranks 52nd.
Thus, the formed tool for determining the budget potential of the territorial community should
help local authorities to assess and form capable territorial communities.
476
4 Conclusion
The community must be able to provide each resident with appropriate public services in
accordance with defined criteria.
Based on the performed calculations and analysis of the rating identified the main factors in the
development of budgetary potential, namely - the achievement of the financial capability of TC
include:
• sufficient level of own revenues to TC budgets;
• the possibility of using the needs of local loans;
• optimization of intergovernmental transfers;
• formation of TC budget indicators at the allowable level of budget risk, calculated on
the basis of empirical data;
• the presence of institutions that provide public control over the efficiency of spending
TC finances.
The main directions of local government budgetary potential are:
1. Receiving funds within the framework of cooperation with international and domestic
organizations and institutions that take care of the problems of ensuring sustainable regional
development (State Fund for Regional Development and others).
2. Attracting funds from private investors in the implementation of public-private partnership
programs for the implementation of social projects in the field of medicine, education and
culture.
3. Receiving and targeting use of subventions from the state budget - requires careful justification
with the necessary documentation, but the rational use of funds received will lead to their
systematic allocation.
4. Determinizing of uniform rental rates for all village and settlement councils of TC - will lead
to an increase in rental income, but further increase in rental rates is possible only in the case of
high inflation.
5. Revisioning of the system of local taxes with the simultaneous strengthening of control over
the targeted use of funds received - such actions are unpopular, so raising taxes is possible only
in a critical situation.
Acknowledgements
This paper was created within the project: 53-72/19 - Formation of organizational and economic
mechanism of governance budget management of territorial communities in decentralization
conditions. This is the joint project of the Ministry of Education and Science of Ukraine and O.
M . Beketov National University of Urban Economy in Kharkiv.
References
[1] Budget Code of Ukraine, [online], [cit.2021-04-01]. Available from
https://zakon.rada.gov.Ua/laws/show/2456-17#Text.
[2] Law of Ukraine On the Voluntary Establishment of Territorial Communities [online].
[cit.2021-04-01]. Available from https://zakon.rada.gov.Ua/laws/show/157-19#Text
[3] State web portal of the budget for citizens, [online], [cit.2021-04-01]. Available from
https://openbudget.gov.ua
477
[4] Decentralization provides opportunities, [online], [cit.2021-04-01]. Available from
https://decentralization.gov.ua
[5] Resolution of the Cabinet of Ministers of Ukraine of April 8, 2015 J\T° 214 "On
approval of the Methodology for the formation of affluent territorial communities"
[online], [cit.2021-04-01]. Available from https://zakon.rada.gov.ua/laws/show/214-
2015-n
[6] Rudachenko O., Bibik N . , Yesina V . (2019) Theoretical and methodological
principles of financial state management system development in Ukraine.
Proceedings of the 13 th International Scientific Conference Public Economics and
Administration 2019. Ostrava: VSB. Technical University of Ostrava, 2019. pp. 343-
351. [online]. [cit.2021-04-01]. Available from
https://dokumenty.vsb.cz/docs/files/cs/7537439c-c83f-482c-a6a2-6442d8a0cc3a
[7] EiöiicH. B., CcmaB. O., Py^aneHKO O. O. (2020). lH(J)opMauiHHO-aHajiiTHHHi 3aca^H
ynpaßjiiHHH öiOflJKeTyBaHHJiM B oö'e^HaHHx TepHTopiajibHHx rpoMa^ax. Ei3mc
lH(popM. JVoQ. C. 107-116. [online], [cit.2021-04-01]. Available from
https://www.business-inform.net/article/?year=2020&abstract=2020_9_0_107_116
Contact information
Yesina Valeriya, PhD.
O. M . Beketov National University of Urban Economy in Kharkiv, Faculty of Economics and
Management, Department of Economics
17, Marshala Bazhanova St., 61002 Kharkiv, Ukraine
E-mail: vayesina@gmail.com
Olha Rudachenko, PhD.
O. M . Beketov National University of Urban Economy in Kharkiv, Faculty of Economics and
Management, Department of Entrepreneurship & Business Administration
17, Marshala Bazhanova St., 61002 Kharkiv, Ukraine
E-mail: polkin87@ukr.net
Natalya Bibik, PhD.
O. M . Beketov National University of Urban Economy in Kharkiv, Faculty of Economics and
Management, Department of Entrepreneurship & Business Administration
17, Marshala Bazhanova St., 61002 Kharkiv, Ukraine
E-mail: nvbibik@gmail.com
Maksym Kolinko, Ph.D. student
O. M . Beketov National University of Urban Economy in Kharkiv, Faculty of Economics and
Management, Department of Management and Public Administration
17, Marshala Bazhanova St., 61002 Kharkiv, Ukraine
E-mail: mkolinko@ukr.net
478
Tax Solidarity for the Development of a Self-Governing Region in the
Conditions of the Slovak Republic
Elena Žárska
Abstract: The aim of the paper is to declare that the model of financing self-governing regions
is based on solidarity with less developed regions, which leads to higher budgets of tax revenues,
which could be a motivation for higher capital expenditures to eliminate regional differences.
Two hypotheses were formulated for this: 1. The distribution criteria and the adjustment
coefficient for tax revenue is in solidarity with the less developed regions. 2. Higher tax revenues
motivate towards higher investment activity. The research was carried out using the following
indicators: tax strength, self-sufficiency rate, capital expenditures and debt burden of all 8 selfgoverning
regions of the Slovak Republic for the period 2005 to 2019. Methods of processing
from various databases were data analysis and comparison. The results are presented in tabular,
graphical and map views using the QGIS program. Hypothesis 1 was confirmed, hypothesis
2 was not confirmed. The Banská Bystrica Region (less developed) has the highest value of tax
power, but the highest investment activity is in the Trenčín Region (developed) and the Prešov
Region (less developed). While the Trenčín Region uses grants, Prešov increases its debt. From
the level of self-governing regions as public administration bodies, it can be hypothetically stated
that the analysis did not show the leveling of regional differences. The state also uses other tools
and measures, but these have not been analyzed.
Keywords: Regional self-government, tax revenues, capital expenditures
JEL Clasification: G38, H74, R58
1 Introduction
Self-governing regions of the Slovak Republic (higher territorial units) have been on the scene
for 20 years and the model of their financing has been valid for 15 years. The first four years
were financed from the so-called „Comprehensive Financial Plan of Territorial SelfGovernment",
which corresponded to the period when competence decentralization took place municipalities
operating since 1991 and self-governing regions created on 1 January 2002 [Act
no. 302/2001]. Until now, these transferred competencies have been financed by transfers /
subsidies from the state budget (self-governing regions provide secondary education, social care,
regional roads and transport, healthcare). Own or original competencies are financed from taxes
[Halásková, M., Halásková,R.,2018]. The aim of the paper is to demonstrate the solidarity of the
model of financing original competencies based on the analysis of tax revenues and to find out
whether higher tax revenues are a motivation for higher investment activity in order to possibly
eliminate regional differences [Michálek, 2013]. Two hypotheses were set for the goal.
In 2005, two taxes were added to the budgets of self-governing regions: the share of personal
income tax revenue and the motor vehicle tax [Horváth, Cíbik ,Svikruha,2018]. Since 2016, the
motor vehicle tax has been revenue of the state budget. The most important and largest income
is revenue from personal income tax. A model based on 6 criteria was adopted for the distribution
among self-governing regions, and the resulting value was multiplied by the compensation
coefficient which was to compensate and eliminate differences among regions. The model was
thus set on the principle of solidarity - the state distributes the tax revenue not according to the
permanent residence of the taxpayer - a natural person, but by spilling from richer regions to
poorer ones. Furthermore, peculiarities of individual regions (e.g. length of roads, density and
area of the region) and the range of provided competencies derived from the number of specific
population groups to which they were provided (secondary schools, seniors) are respected. This
479
is ensured by the individual criteria. As a result, higher tax revenues per capita went to less
developed regions than to more developed ones. Whether this higher yield motivated less
developed regions also to higher investment activity in the form of capital expenditures in order
to eliminate regional differences is the subject of research [Kutscherauer,2010; Gonos ,Nemec,
2015].
2 Material and Methods
Based on the data of the final accounts of 8 self-governing regions of the Slovak Republic for
the years 2005 to 2019, data on population statistics and other data from the Ministry of Finance
for the personal income tax revenue (daň z príjmu fyzických osôb - DPFO) distribution model
[Act no. 564/2004, Act no. 583/2004, Regulation no. 668/2004] several evaluation indicators
were used for the analysis [Žárska a kol., 2007]:
a) Tax strength = tax revenue + non-tax revenue per capita
b) Self-sufficiency rate = own revenue (tax and non-tax revenue) on total revenue
c) Investment activity = capital expenditure per capita
d) Indebtedness = amount of debt per capita
The basic research methods were data analysis and comparison of the 5 indicators. The data were
obtained from several statistical databases - the final accounts of the regions and the Slovak
Statistical Office database DATAcube. The results are presented in tabular, graphical and map
views using the QGIS program.
The distribution of tax revenue is carried out by a model based on 6 criteria, which are shown
for illustration and argumentation in Table 1. The weight of individual criteria is: number of
inhabitants with permanent residence (15%), number of inhabitants ages 15-18 (15%), number
of inhabitants age 62+ (32%), reverse population density (9%), length of roads of categories II
and III owned by the region (20%), area (9%).
What is more, Table 2 shows the values of the compensation coefficient, and it should be noted
that its value did not change between 2008 and 2014 but the coefficient was adjusted from 2015,
as the motor vehicle tax began to be collected centrally. As a result, self-governing regions with
higher yields now have a higher coefficient.
Table 1 - Baseline statistical data and the share of regional self-governments from DPFO
revenue as of 31 Feb. 2018
Region
Number of
inhabitants
ages 15-18
number of
inhabitants
age 62+
Population
per km2
Cat. II and
III roads
(km)
Area (km2)
Reverse
population
density
Bratislava 18 189 133 649 317 510,05 2 053 0,00322
Trnava 19 900 113 621 136 1 585,218 4 148 0,0074
Trenčín 20 687 125 407 130 1 479,754 4 502 0,00764
Nitra 24 356 144 520 107 2 034,895 6 344 0,00931
Žilina 29 203 128 308 101 1 407,201 6 809 0,00986
Banská Bystrica 25 352 132 732 69 2 440,523 9 455 0,01449
Prešov 39 546 139 281 92 2 435,937 8 973 0,01092
Košice 35 936 143 943 118 1 935,181 6 755 0,00847
Source: Východiskové statistické údaje a rozpočtované podiely obcí a VÚC na výnose z dani z
príjmu FO. Ministry of Finance of the Slovak Republic. Online:
http://wwwl.mfsr.sk/Default.aspx?CatID=10509
480
The coefficient of horizontal compensation of a higher territorial unit serves to avoid a targeted
reduction in the amount of taxes, in order to compensate for differences at the expense of richer
municipalities. This solidarity coefficient therefore serves to reduce financial disparities among
regions.
Table 2 - Coefficient of horizontal compensation
Region 2005 2006 2007 2008-2014 2015 2016 2017 2018 -2019
Bratislava 0,6388 0,7592 0,8796 0,9518 1,39838 1,34979 1,30120 1,25261
Trnava 0,8522 0,9015 0,9507 0,9803 1,01229 1,01676 1,02123 1,02570
Trenčín 1,0095 1,0063 1,0032 1,0013 0,97369 0,97819 0,98268 0,98718
Nitra 0,9637 0,9758 0,9879 0,9952 0,99921 1,00268 1,00815 1,01263
Žilina 1,0892 1,0595 1,0297 1,0119 0,9998 1,00427 1,00874 1,01322
Banská Bystrica 1,1273 1,0849 1,0424 1,0170 0,93111 0,93554 0,92998 0,94442
Prešov 1,1129 1,0753 1,0376 1,0151 0,93001 0,93445 0,92890 0,94334
Košice 1,0186 1,0124 1,0062 1,0025 0,92437 0,92882 0,93327 0,93772
Source: Regulation of the Government of the Slovak Republic no. 668/2004
3 Results and Discussion
The distribution of DPFO on the basis of the set model and until 2015 also the motor vehicle tax
brought the development shown in Figure 1. The percentage of tax revenue for self-governing
regions has changed over the years - since 2016 it has been 30% and the rest 70% goes to
municipalities [Vojtasová, 2021. It can be observed that the regions of Bratislava, Trenčín,
Trnava are below the average level, and thus spill over their yield and are in solidarity with the
self-governing regions of Banská Bystrica, Nitra, Prešov, Košice. Developments in the Žilina
region copy the Slovak average. Banská Bystrica gains the most as a region, which is also due
to the criteria - area, low density, length of roads, but the coefficient of horizontal compensation
certainly has its influence.
481
Figure 1 - Development and composition of tax revenue in the Slovak regions for the years
2005 - 2009 (in mil. €)
% share of regions in DPFO % share of regions in DPFO
2 3 , 5 %
Bratislava region
2 1 , 9 2 9 , 2 % 3 0 %
^ ^N
^ ^^ #
Košice region
140
90
40
-10
ffftfffttáflfllll«T A* rft <v
C V C V C N >
°? n>'
Prešov region
1/ IT r? i / i op n>
Trnava region
2 3 , 5 %
i
Banská Bystrica regijon
140
90
40 WnrllT T r h l i n
• i
2 1 , 9 2 9 , 2 % 3 0 %
-10
£ j$ .á? -CNNN
Nitra region
V CNV tsV C N \ SS* oS^ ^rfo T T T
$ é & <$> & &
Žilina region
ctóN
„ ( S 3
' ^ V
^ N
-V« f f f f ť r f 3
^ # # ^ ^ # ^
Motor vehicle tax Personal income tax Personal income tax (regional average)
•
(SR = approved budget), *Values converted from SK to € at the rate of 1 € = 30.1260 SK.
Source: final accounts of regions, own calculations.
482
How does this translate into tax strength? Why are in particular tax revenues being examined?
The income structure of self-governing regions shows a large dependence of regional incomes
on tax revenues [Pertrušková, Mihóková, 2014]. In 2005, tax revenues accounted for an average
of 49% of total regional revenues, in 2010 it was 44%, in 2015 the share increased to 53% and
in 2019 to 59%. The decline in the share of tax revenues in 2010 was caused by the financial
crisis and the drop in personal income tax. A partial solution to the financial problems of the
regions associated with the crisis brought the possibility of drawing E U funds under operational
programmes, but also taking loans [Žárska, 2013].
Tax revenue per capita is commonly referred to as tax strength. This indicator measures tax
profitability. Tax revenues are important means for the region, because the region independently
decides how to spend them and finances its original competencies with them. The higher the
value of the resulting indicator, the higher the tax autonomy of the region [Cabaleiro,
Buch,Vaamonde, 2012]. The average value of tax revenues in the regions in the first year under
investigation reached € 71.79 per capita. The tax strength of the regions in 2010 averaged €
83.37. The average value in 2010 was € 118.50. In 2019, the average revenue was € 174.80 per
capita. Despite the fact that in 2016 the state also collected a tax on motor vehicles, it also
changed the compensation coefficient in favor of the regions that had the highest numbers of
taxpayers for motor vehicles. The regions of Banská Bystrica (€ 126.72) and Nitra (115, 57 €)
continued to have the highest revenue. The lowest value was reached by the Košice region (€
98.03).
Figure 2 - Average of the indicator of tax strength in the regions of the Slovak Republic
for the whole period of 2005 - 2019 (in €)
92.03 126,72
Source: Final accounts of regions, Slovak Statistical Office - database DATAcube, processed by
Vojtasova, 2021
The results confirmed the following observations: on one hand, the impact of the financing model
based on the distribution of personal income tax according to the 6 criteria was confirmed, which
was to ensure the coverage of the transferred competencies and the introduction of the
compensation coefficient [Tunega, 2019]. The influence of the coefficient with respect to the
483
results of the Košice region cannot be unambiguously confirmed or excluded on the basis of the
analysis. Further analysis documenting the correlation of the individual criteria would be needed.
However, the analysis confirmed the first hypothesis regarding solidarity with less developed
regions.
Tax revenues, which are decisive for the financial autonomy of the region, have grown during
the entire monitored period of 15 years. This could have motivated the regions to create reserves
for investment activities [Fabiánova, 2010]. Tax revenues are also an essential component of the
degree of self-sufficiency in revenue generation. The degree of self-sufficiency in revenue
consists of tax revenue and non-tax revenue. Together they form the region's own revenue. Nontax
revenues were very low and affected overall values (Figure 3). The Banská Bystrica region
had the highest value of 0.65, which was affected by the highest tax revenue.
The dependence of regional budgets on the state budget increases with the volume of transfers
to transferred competencies. In 2005, transfers accounted for an average of 43% of total revenues
in the regions, in 2010 this share increased to 49% and in 2015 and 2019 there was a decrease to
the level of 40% and 34% (Figure 4). These specific years were chosen intentionally - year 2005
(first year of the new model), year 2010 (financial crisis), year 2015 (5-year interval), year 2019
(latest available data from final accounts).
Figure 3 - Average of the indicator of the self-sufficiency rate of revenue in the Slovak
regions for the enire period of 2005 - 2019
Source: Final accounts of the regions, processeed by Vojtasová, 2021
484
Figure 4 - Structure of total revenues in the Slovak regions in 2005,2010,
2015,2019 (in mil. €)
*Values converted from SK to € at the rate of 1 € = 30.1260 SK.
250000000
200000000
150000000
100000000
50000000
f<i t ? ( * ( * i * Ti » 9 .ft . 5 'V O O O O V > V > N?>
^ ^ ^ p 5
^
• Grants and transfers
• Non-tax revenue
• Tax revenue
Total revenue is still growing. The highest level of revenue among the regions in all monitored
years was reached by the Prešov region which is also the largest region in terms of population
(Table 1). Its revenue for 2019 reached the level of 246 mil. €. On the contrary, the lowest level
of revenue in each monitored year was reached by the Trnava region which is also the smallest
regions in terms of population. Its total revenue for 2019 reached 164 mil. €.
The assumption of motivation towards higher investment activity to erase regional differences is
the basis of the analysis of the development of capital expenditures. Sources of capital
expenditures can include: own capital income, current budget surpluses, domestic and foreign
(EU) grants, loans and business activities of the region. Regions also use a reserve fund for capital
expenditures, which they create from the budget surplus, resp. unspent funds from previous year.
The years 2015 to 2019 were economically successful and revenues from personal income tax
were also higher than planned. This allowed the regions to create reserves for investment
activities. Figures 5 and 6 show how capital income and expenditures developed over the whole
period under investigation.
485
Figure 5 - Average capital income per capita in the Slovak regions for the whole period
2005 -2019 (in€)
Source: final accounts of regions, Slovak Statistical Office - database DATAcube, processed by
Vojtasovä, 2021.
6=55 12,23
Figure 6 - Average capital expenditures per capita in the Slovak regions for the entire
period 2005 - 2019 (in €)
Source: final accounts of regions, Slovak Statistical Office - database DATAcube, processed by
Vojtasovä, 2021.
2L35 32,91
486
On average, in 2005 the regions' capital income per capita amounted to € 7.60; in 2010 € 11.73;
in 2015 € 10.69 and finally in 2019 the highest value of € 12.13. The development for the entire
monitored period 2005 - 2019 (Figure 5) documents the capital income of regions per capita in
the average value of € 10.07. Only three regions during the whole monitored period reached a
below-average level of capital income per capita, namely: Bratislava, Trnava and Banská
Bystrica regions.
Capital expenditures intended mainly for financing investment plans and for asset appreciation
were the highest in 2005 and 2010 in the Žilina Region. This amounted to 18% (€ 21 million)
and 19% (€31 million) of the region's total expenditures. In 2015, the Košice region reached the
highest share of 15% (€ 25 million). In 2019, the highest share of capital expenditures from total
expenditures was achieved only by the Prešov Region with a share of 20% (€ 47 million). Figure
6 shows that the Trenčín, Prešov and Žilina regions were above the average (€ 26.70) during the
entire monitored period 2005 - 2019. One can observe that from a longer period perspective the
three regions show the highest capital expenditures. Other regions reached a below the average
level. The Bratislava region had the lowest value in the amount of € 21.35 of capital expenditures
per capita.
This begs a question: from what sources were these expenses covered - from own, grants or
loans? The answer to the question is provided by the last indicator - debt per capita (Figure 7).
At the beginning of the period under investigation (i.e. 2005), the Bratislava, Košice, Prešov and
Trnava regions did not use any repayable sources of financing. In the remaining regions, the
amount of debt per capita reached the value of € 4.9 to € 13.1. In 2010, the impact of the financial
crisis is noticeable, and thus the related decline in tax revenues, which was offset by regions,
especially from other than own sources. Relatively high amounts of debt per capita are in the
Trnava region (€ 97.69), the Trenčín region (€ 84.58) and the Banská Bystrica region (€ 79.09).
In 2015, the Nitra region achieved significantly the lowest debt per capita of € 39.89. This was
due to the positive growth of the Slovak economy and the strong drawdown of E U funds for the
2007-2013 programming period. Other regions achieved debt per capita above € 60. Even in
2019, the Nitra region maintained its place with the lowest debt per capita (€ 25.75) among all
regions. It was followed by the Banská Bystrica region (€ 42.99) and the Košice region (€ 50.68).
Other regions in this year reached a level of debt per capita above € 70, while the highest value
(€ 116.78 per capita) was recorded in the Žilina region.
Figure 7 - Debt per capita in the Slovak regions in 2005, 2010, 2015 and 2019 (in €)
120
Bratislava B.Bystrica Košice Nitra Prešov Trenčín Trnava Žilina
2005 2010 ^ ^ « 2 0 1 5 ^ ^ « 2 0 1 9
487
Source: final accounts of regions, Slovak Statistical Office - database DATAcube, own
calculations.
The results of the analysis have not confirmed the 2nd hypothesis, because the Banská Bystrica
region showed the highest tax revenues during the entire period, but its investment activity was
not the highest. To some extent, this has also led to lower use of loans and probably grants too.
The Prešov and Trenčín regions have had the highest use of grants, and the Žilina region and the
Trnava region use loans more than the other regions - thus increasing their indebtedness.
4 Conclusion
The financing of self-governing regions shows a strong dependence on the state budget, while
the highest income originates from tax revenues distributed to the regions by a model with a
balancing effect. Higher tax revenues go to less developed regions, but do not cause higher
investment activity for their development. Capital expenditures per capita are higher in regions
that do not have higher tax revenues. It cannot be stated from the level of the region that regional
differences are being eliminated. The second hypothesis was not confirmed. The investment
activity of regions, which receive higher tax revenues on the basis of the compensation
coefficient, is lower. However, other funds also go to the regions through local governments and
state institutions [Papcúnová, Hudáková, Štubňová, Urbaníková, 2020]. Their impact on the
elimination of regional differences was not the aim of the paper. However, the region as a selfgoverning
body is only one of the actors in the development of the territory and focuses primarily
on the provision of public services [Dooren, Bouckert, Halligan, 2010]. The important, resp. the
decisive actor is the state which has other mechanisms and tools to address the differences
[Žárska, Rafaj, 2017]. Investigating the impact of other public actors (state, municipalities) is the
subject of further research.
Acknowledgements
The paper was created within the V E G A grant no. 1/0683/21 "Generational exchange and
provision of public services and administration", research period 2021-2023.
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Contact information
prof. Ing. Elena Žárska, CSc.
University of Economics in Bratislava, Faculty of National Economy, Department of Public
Administration and Regional Development
Dolmozemská cesta 1, 835 52 Bratislava, Slovak Republic
E-mail: elena.zarska@euba.sk
490
Author: Collective of authors
Department, Faculty: Department of Public Economics, Faculty of Economics, VSB - Technical
University of Ostrava
Editor: Ivana Vaňková
Title: Proceedings of the 14th
International Scientific Conference Public Economics and
Administration 2021
Place, year, edition: Ostrava, Czech Republic, 2021, 1st
edition
Number of pages: 490
Published: VSB - Technical University of Ostrava, 17. listopadu 2172/15, 708 00 OstravaPoruba,
Czech Republic
Printed: Z E M A N A R T s.r.o., Samaritánská 3192/12, 700 30 Ostrava-Zábřeh
Number of copies: 40
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ISBN 978-80-248-4580-7
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ISSN 1805-9104