Comparative analysis of public agencies in Croatia and Sweden

Public administration, as a performer of administrative activities and public services, was created at the same time as the welfare state. This idea transformed the state government into a complex system for social regulation of social processes.

However, in the late 1970s, the welfare state fell into crisis. The administration became overburdened with demands, and the state intervened in too many fields. On the basis of neoliberal ideas, efforts have been made to limit the role of the state and administration. Among other things, the aim was to depoliticize public management and entrust a wider set of public functions to managers. In this way, a larger number of public organizations were created. These organizations are formally in an equal position headed by professional managers. Some tasks, which were traditionally performed by the state until the last quarter of the 20th century, became the responsibility of newly established bodies or even legal entities. These reforms, better known as the New Public Management (NPM) principles, have spread from the UK to the rest of the world.

The term ”agency” comes from the Anglo-Saxon area, while our (Serbian) terminology isbased primarily on Germanic names. In countries where English language is in use, this term refers to entities that perform administrative activities, which we would call administrative bodies (Milkov, 2014, p. 31). The tendency to create agencies and transfer state powers to (partially) bodies in English texts is denoted by the term ”agencification”. In our country, this term is uncritically accepted, so we are talking about ”agency” (Milkov, 2014, 33–34). However, the transfer of jurisdictions to the so-called autonomous bodies is nothing new in political and legal theory. Professor Milkov (2014,

• p. 34) therefore believes that the term “agency in the Serbian language sounds rude and should not be used for what some authors in English mean by that”.

2.    Public agencies in Sweden 2.1.    Agencies in the Swedish administrative system

• 2.2.    Agency autonomy

The ”Next steps” initiative in the UK is often seen as a starting point for ”agency fever” that has affected countries such as Canada, the Netherlands, Japan, New Zealand, Australia, Korea,Portugal, etc. Also, the European Union (EU) followed the trend of creating agencies. The Nordiccountries form small governments, and a large number of state affairs are performed by numerous agencies. Germany and Great Britain keep the model of a large state apparatus with a small numberof agencies. Small EU countries such as Slovakia, Slovenia and the Czech Republic cannot afford a large state apparatus, nor a larger number of independent bodies. However, not all small European countries are responsible, large coalition governments in Serbia, Croatia, Romania and Bulgaria coexist with a large number of agencies.

The Swedish administrative system is taken as a model for the creation of autonomous bodies – agencies and the highest degree of ”agencification” among the Nordic countries, althoughthe reasons and logic for the establishment of public agencies are different compared to other countries. Emerge of public agencies is based on the principles of the rule of law with the aim of limiting the royal encroachment on the rights of citizens, unlike the emergence of agencies in the UK and other countries on the wave of New Public Management (NJM) (2004, p. 203).

Structurally separate and relatively independent bodies coexist with ministries and departments. Relatively small ministries and about 300 agencies coexist. Such a situation, of comparative functioning of ministries and agencies, has existed for two centuries and is based on historical circumstances and political understandings about the neutral status of the administration,the principle of separation of powers and maintaining state continuity (Ibid).

A unique feature of the civil service in Sweden is that government agencies report directly to the government (and not to ministries, as in other countries). Agencies must enforce laws and carry out activities envisaged by the Government. In addition to the general system of rules on financial management and the powers and obligations of agencies, the Government decides on the preconditions for the work of agencies. This is achieved on the one hand by directives and on the other by regulations. The directives set out the goals the agency needs to achieve, how much money it has at its disposal and how to allocate the money. The regulations contain general administrative provisions concerning the way in which agencies should conduct their work.

In Sweden, almost all public services are provided by agencies that enjoy significant autonomy. Although the legal autonomy of agencies is constant, some authors predict changes instructural and financial autonomy.

• 2.3    Control mechanisms

• 2.4.    Reforms from its inception to the present day

  Management was developed in Sweden in the early 1960s, when program budgeting was introduced. The first agencies were tasked with developing new management and accounting techniques. Public administration reforms initiated in the late 1970s represent public agency reforms, as most

  administrative activity takes place in agencies and other decentralized struc-tures(Pierre, 2004). This meant that during the 1980s, the adaptation and acceptance of NPM ideas and techniques went smoothly, as many NPM ideas and techniques already existed and were deeply institutionalized. The NPM tells us that politicians should focus on formulating general goals and leave to public officials to decide how to achieve those goals. Decisions on how to organize agencies, where to locate them, when to recruit, and how to coordinate are seen as a-political decisions. Consequently, these types of decisions were gradually delegated by government and ministries to agencies during the 1980s and 1990s (Jacobsson and Sundström, 2005, p.17).

NPM relies on measurement and accounting techniques which results in constant and detailed control of agencies. Otherwise, there is a chance that their actions will be contrary to thewishes of elected politicians: The government must, through the formulation of goals and requirements for results, specify what each agency should do and achieve over a period of time.

During the 1980s and 1990s, the State Audit Office and the Swedish Public AdministrationAgency worked very hard to implement control systems – just like other countries that developed into an ”audit society”. Today, agencies have their own goals, their own long-term plans, employment policies, etc.

If we want to know the level of autonomy of a public agency, and thus the level of government control, we must analyze the agency’s power in making decisions on management and political issues and the extent to which the government can limit the use of these powers by structural, financial and legal means.

The three factors characteristic of the period during the 1970s and 1980s have weakened in recent years, due to internationalization, changed governance, and a greater media presence. Ways of control and management have become less soft, stronger management systems have beenintroduced, innovation and integrity have declined, and trust has disappeared. These changes are partly a consequence of world reforms. In recent years, European countries have become more internationalized and europeanized, to which EU engagement contributes the most. This is reflected in the increased amount of transnational ideas, contacts, regulations and organizational arrangements. Some scientists argue that these changes have had a limited impact on states and that the most important decisions continue to be made in political processes within states themselves. However, states today are less sovereign, less autonomous and less coherent, thanks to the processes of internationalization and europeanization. In recent decades, the Swedish state has fitted deeply into the European and wider international context. Agencies and ministries in all policy areas and at all levels are under the influence of the EU. Certainly, there are areas that the EU affects more than others. It is obvious that European networks have become an important part of the daily work of Swedish civil servants. Sweden’s membership in the EU (and other international organizations) meant that Swedish ministers were trying to formulate ”what we want as Swedes” more systematically and more often than before: Swedish officials present such ”pointsof view” to the European Union.

In a situation where agencies have their own goals, long-term plans, their own employmentpolicies, etc. it has become natural for agencies to maximize results. This differs from the older view, according to which agencies should work together to solve problems. Managerial reforms express the idea that ministries must control the work of agencies. Reforms send a signal that agencies should only react if politicians delegate unambiguous tasks and clear goals to them, andif they know clearly how their planned activities will contribute to meeting the goals (Ibid).

3.    Public agencies in Croatia 3.1.    Agencies in Croatian administrative system

Most agencies in Croatia were established in the field of economy (11), science and education, health, transport (9 each) and agriculture (8); 60% of agencies were established in economic departments, and 40% in non-economic ones. These agencies are most often establishedaccording to the Law on Public Institutions (1976) (75%), while others are formed as sui generis legal entities (Koprić, 2013, p.13). The parliament appoints the Councils of regulatory agencies, and Management boardsof other agencies are also appointed by the Government. Agencies are obliged to report to the Parliament only if it is provided by law. In some cases, the government may invite agencies to report and it has ability to monitor legality of work, but it cannot influence regulations and decisions made by independent regulatory bodies.

In accordance with European and world trends, regulatory agencies are one of the main features of governance in Croatia. Since mid-1990s, regulatory bodies have been established in various areas for the purpose of regulating specific sectors, ie for smooth functioning of providing public services. (Musa, 2013, p. 118). They are established by a law regulating a certain activity (area of regulation) or by a special law, if regulatory agency is in charge of regulating several specific areas regulated by special laws.

There are two forms of control over the work of regulatory agencies. First form of control is exercised by the Croatian Parliament, and second by the administrative judiciary. The limited number of forms of control is a direct consequence of desire for independence of regulatory agencies (Stančić, 2016, p.70).

Executive agencies, are participants in the implementation phase of public policy, they decide on the rights, status or granting of financial resources. Their tasks include a whole range of tasks, from performing public tasks through resolving individual cases, issuing certificates and licenses, keeping public registers, etc., financing programs and projects, operational tasks, etc. Such agencies have less autonomy, but also a higher level of control that should ensure the implementation of policies. This type of agency operates in both economic and social spheres, it’sorganized according to purpose or users, and their affairs are primarily executive-operational. Given that they perform public affairs on a wider scale and thus regulate social reality, these agencies are necessarily more controlled and are left with less space for autonomy (Musa, 2013, p.189).

Musa (2014) points out that some special forms can be singled out among executive agencies, such as supervisory agencies, operational agencies and development agencies.

The role of supervisory agencies is to ensure implementation of regulations on basis of professional and technical knowledge by issuing certificates or licenses. They are formed mainly in economic sphere and are close to the regulatory type of agencies, due to the public authorities they perform

(supervision, sanction by denial of approval), but also to the expert type of agencies,because they are based on highly professional knowledge.

Operational agencies decide on rights and obligations through administrative proceedings, enter into contracts, etc., and their tasks are indirectly expert.

Development agencies have the role of financing programs and projects in a certainsegment in order to encourage the development of activities or industries, but they also monitorusers, provide professional assistance and information, and operate in economic and social spheres.

Expert agencies are established according to the type of work, which is mostly professional-analytical, mainly in the social sphere. They include agencies that have a role inpreparation and implementation of public policy based on their professional capacity. Their main functions are performing and developing professional activities, making standards, proposing public policies, etc. Among them are those who represent monitoring centers, information centers,coordination agencies. These agencies perform public affairs, sometimes resolving individual cases, keeping registers, and are mostly established in the form of public institutions. Such agencies need a higher level of autonomy, but also a lower level of control, mainly because the highly professional nature of their work requires independence and does not tolerate political interference (Musa, 2014, pp.189–190).

• 3.2.    Autonomy and accountability of agencies

The founder of the agency is the Republic of Croatia. All agencies have freedom to organize and manage their resources and are not subject to internal employment regulations relating to public administration.

Personal autonomy is characterized because of its freedom to employ and manage humanresources within the agency (including salaries). The purpose is to enable agency to accomplish tasks for which it was established. Most regulatory agencies have freedom to hire and determine salaries of employees and in most cases are subject to regulations on salaries in public services, but there are agencies in which the Law on Salaries in Public Services does not apply to employees(2001). System of salaries of employeesin agencies is more flexible than in state administration bodies, in which status of employees is regulated by the Law on Civil Servants and State Employees (2001). Given that salaries of employees in agencies arehigher than salaries of employees in the civil service, performing work in agencies increases levelof costs for performing work of the same complexity (Musa, 2017, p. 57).

Financial independence refers to need to provide adequate resources for work, these resources do not depend on political or other institutions. Agency has resourses to ensure its functioning and realization of its tasks. Independence is based on several elements – source of funding, autonomy in the disposal of surplus income, and in case of own funds it has freedom to determine price of services.

Depending on whether the agencies are financed from state budget or from their own funds,their level of independence will also depend (the highest level of independence from political influence are having agencies that have their own sources of income). At the same time, agencieswith their own income are subjects of the market, which means that any market crisis can affect agency. Lowest level of non-independence refers to case when agency has funds for work providedin the state budget, but these funds are within the funds of the relevant ministry (Musa, 2013, pp.126–127).

Political independence of the agency refers to protection of agencies from political interference and possibility for agencies to act as an independent legal entity within the given legalframework, performing its tasks and fulfilling its own purpose. In that sense, parts of political independence refer to legal regulation of status, tasks and independent decision – making, and participation in creation of public policies, or, in other words, to legal, political and policy autonomy (Musa, 2013, p. 129).

Management independence is reflected in forms of management structure: mixed (with individual leader and collegial body), collegial (in agencies that have only a collegial body (council), with or without a special position of president), individual leadership of the agency (leader as executive director) (Musa, 2014, p. 191).

Political model occurs in more than half of the agencies, and political appointments are based on different criteria depending on whether members are appointed by function (eg ministers,chairmen of parliamentary committees and other state bodies), whether they represent certain stateadministration bodies or experts (Ibid). In the participatory model, members of collegial body are representatives of experts, usually appointed by the government (or minister), at suggestion of stakeholders, mainly in the field of education, science and health. In agencies of the professional management model, the management structure includes only the council, with the president actingas the head of the agency. Such a structure should ensure political independence and expertise. Conditions for appointment are prescribed by law and, in addition to formal education, require expertise, work experience and professional relevance in a field (Ibid).

• 3.3.    Stages of agency development

  According to Professor Anamarija Musa (2014), it is possible to distinguish four periods of agency development in Croatia:

• •    The first period includes agencies established before independence, these are agenciesinherited from the previous system,

• •    The second period includes agencies established during the post-socialist transition (1990-1999).

• •    The third period includes agencies created after 2000. – more than two thirds of all agencies. Since 2005. 43% of all agencies have been established. This data is an indication that intensive establishment of public agencies took place in parallel with the negotiations on Croatia’s accessionto the EU, due to the need for institutional adjustment to the European governance system. An indicator of European pressures for creating agencies is obligation of candidate to establish agencies or reorganize existing organizations into agencies. Over 56% of agencies (42) were subject to preparatory activities for accessing EU. Of that number, 26 agencies (35% of all agencies) were established to meet the criteria for EU membership, while 16 agencies are mentioned in the context of the need to strengthen administrative capacity, expand scope of activities or change internal structure (Musa, 2014, p. 186).

4.    Conclusion

Establishment or restructuring of agencies is formal obligation of candidate countries for membership and fulfillment of conditionsfor EU accession, which indicates effects of model of external incentives in the institutionaliza-tionof agencies. In addition, Europeanization takes place through conditionality, because the closing of negotiation chapters depends on fulfillment of obligations (Staničić, 2016, p. 70).

A newer phase in the processes related to public agencies was marked by a turn from administrative decentralization to centralization, i.e., a decrease in number of agencies. Agencies in Croatia have been criticized for contributing to the non-transparency of administrative system,and are perceived by the public as organizations that spend public money without control and employ according to unclear criteria, while providing poor performance (Musa, 2014, p. 193).

New agencies are mainly established for jobs in field of economy and finance, which shows influence of non-managerial spirit, but also acceptance of agencies as a legitimate form for achieving goals of efficiency and effectiveness. The last phase led to a reduction in the total number of agencies, their enlargement, but also the establishment of new agencies for new jobs (Musa, 2013, p. 194). These data show that process of establishing agencies is not constant and unstoppable, but that it is reversible under certain conditions. These conditions are most often economic or administrative in nature, but also depend on political assessments, which is why administrative decentralization can potentially turn into its opposite.

Taking into account that several European countries are candidates for EU membership, we analyzed the models of public agencies of two EU member states. In this paper, we have shown that intensive establishment of agencies in Croatia took place in parallel with negotiations on EU accession, due to the need for institutional adjustment to the European governance system. An indicator of European pressures in this field is obligation of candidate country to establish agencies or reorganize existing organizations into agencies. From this we conclude that the establishment of agencies is a necessary step in the reorganization of the administration in order to comply with EU rules.

The view that the establishment of agencies is a way to strengthen administration and reduce regulation, proved to be complete opposite. Insufficiently and selectively implemented elements of the NPM in combination with large European administration have blurred the essential function of public agencies and turned these bodies into non-transparent, insufficiently controlled and ”far away” from citizens. Their autonomy, although dependent on chosen model of management and financing, makes them decentralized from administrative system. When we take into account accession of countries to the European administrative space and expansion of the administration due to the growth of the EU administrative apparatus, we get institutions whose purpose is obscured. With the aspirations to join the EU, public agencies are multiplying, and their accelerated development (autonomy) does not follow the development of transparency and accountability, but turns into its opposite.

Škorić Milica

Doktorand na Fakultetu političkih nauka, Univerzitet u Beogradu, Centar za evropske politike, Beograd, Srbija