The government of Montenegro has successfully integrated a total of 37,000 public-sector employees from 413 institutions into a centralized payroll system. This initiative aims to strengthen fiscal oversight over one of the country’s most significant areas of recurring public expenditure.
According to the Finance Ministry, the latest phase of this reform included approximately 2,200 employees from the Ministry of Defence and the armed forces. The rapid expansion of the system is notable; just in October 2023, it covered only 11,133 employees across 147 institutions.
The ministry plans to further extend the system to include around 30 healthcare institutions employing about 10,000 individuals by the end of 2026. This expansion would increase total coverage to roughly 46,500 employees across 450 institutions.
This reform is crucial as public-sector wages constitute a significant portion of Montenegro’s budget, especially amid ongoing discussions regarding potential salary reforms. By implementing a unified payroll platform, the Finance Ministry anticipates improved monitoring of headcount, salary grades, supplements, and other employment-related costs across various institutions.
The centralized payroll system aims to facilitate the identification of discrepancies and enhance the forecasting capabilities regarding the fiscal impacts of future wage increases. However, it should be noted that this system does not inherently reduce public employment or payroll costs.
The primary advantage lies in its ability to provide stronger control, standardization, and visibility over expenditures that were previously managed by multiple entities. This capability becomes increasingly vital as Montenegro prepares for its 2027 budget and deliberates on wage reforms that could lead to substantial increases in labor costs at both central and local government levels.
Furthermore, data generated from the centralized payroll could enhance medium-term budget planning by clarifying how salary decisions affect recurring expenditures. Overall, this reform transitions payroll management from a fragmented approach to a more cohesive system that offers policymakers a comprehensive view of the state’s employment expenses.
