Montenegro’s State Companies Face Scrutiny Over Hiring Practices

State-owned enterprises in Montenegro have experienced significant growth in employee numbers over the past year, despite financial indicators suggesting otherwise. According to findings from the Balkan Investigative Reporting Network (BIRN), the current ruling structures have exploited more flexible hiring practices within these enterprises to accommodate party loyalists, often without the necessary qualifications and contrary to principles of meritocracy.

Vuk Maraš, Executive Director of BIRN, stated in an interview that the abuse of state resources has persisted even after the change of government in 2020. He noted that promises regarding the professionalization of management and merit-based hiring have not materialized, with party quotas and political loyalty still overshadowing qualifications and experience.

Employment Growth Amid Financial Strain

Maraš highlighted that the escalating salaries in state enterprises have resulted in declining profitability. Despite poor business performance, many companies continue to hire. BIRN has monitored about twenty state-owned enterprises and institutions with a high degree of autonomy, revealing a substantial increase in employment, particularly in the energy and transportation sectors.

“It is much easier to hire someone in a public enterprise than in a ministry, and this has been adeptly utilized for patronage purposes,” Maraš remarked. He emphasized that there is no substantial justification for the excessive hiring trends observed.

Financial analyses conducted by BIRN show that the flow of funds towards salaries has drastically increased, which does not correspond with profit levels. In some cases, companies are operating at a loss, yet their leadership remains unaffected by economic realities.

Calls for Accountability and EU Compliance

Maraš pointed out that public statements from company leadership often manipulate the narrative, claiming that increased hiring is a necessity. In reality, he asserts, these practices contribute to long-term declines in productivity and profitability, ultimately costing citizens who are the rightful owners of these enterprises.

The lack of a strategic development plan for these companies further exacerbates the situation, leaving citizens at a disadvantage. Maraš believes that real change will likely come from external pressures, such as the obligations Montenegro would face as a member of the European Union.

“With EU accession, both political elites and citizens would be required to adhere to rules that apply to all member states. There are institutions that oversee spending and operational systems, which could prevent the current exploitative practices by public officials,” he added.

Maraš has criticized the current government for adopting the clientelistic model of its predecessor, where one employee translates to four votes, a practice he describes as unsustainable in the long run. He expressed concern over the current administration’s reluctance to make necessary cuts to the bloated public sector.

Additionally, he condemned the current governance model, which largely relies on online platforms for decision-making, viewing it as a form of humiliation for the citizens of Montenegro. This method, he argues, has led to a lack of accountability and transparency in government operations.

Maraš concluded by expressing that media professionals and the civil sector remain the only effective watchdogs in a country where the opposition is entangled in similar scandals from its time in power. He emphasized the urgent need for the application of laws and European standards to halt the misuse of public funds.