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| Club 500: Successful consolidation also requires reform of local governments |
| Bratislava, 08.05.2026 |
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| If the consolidation of public finances in Slovakia is to be sustainable in the long term, it is impossible to do without intervention in the structure of local government. Public administration has long been facing a structural problem that significantly limits its efficiency. This is the extreme fragmentation of local government. This is highlighted by the 500 Club in the current edition of the Kompas500 analytical review.
"The current model generates unnecessary costs, weakens the efficiency of public spending and fragments decision-making. The discussion on local government reform is therefore not only a question of the overall functioning of public administration, but one of the key prerequisites for the recovery of public finances as a whole," states analyst Diana Motúzová.
The association points to a systemic anomaly in the European and broader OECD context. Approximately 95 percent of all municipalities in Slovakia have fewer than 5,000 inhabitants, while 84 percent of municipalities do not even reach the 2,000-inhabitant threshold. For comparison, within the EU, on average, 47 percent of municipalities have up to 5,000 inhabitants and only 29 percent have up to 2,000 inhabitants. In practice, this means that the performance of public administration is divided between a very large number of small administrative units that cannot effectively use economies of scale.
In a European comparison, Slovakia is on the very edge, the average size of a municipality is several times smaller than the average of EU and OECD countries. While in countries such as Ireland, Denmark, Lithuania, Latvia, Sweden or Greece the average municipality reaches tens of thousands of inhabitants, in Slovakia it is just over 1,860 inhabitants. This is reflected in the costs of administration, the quality of services and the ability to make investments.
Fragmentation also results in a disproportionately high number of elected representatives. Slovakia has approximately three times the number of mayors per 100,000 inhabitants than the EU average. Each municipality has its own administration, which means not only higher wage costs, but also fragmented management and weaker coordination of public policies.
According to the association, its significant weight on the labor market and in public spending also fits into the overall picture of the fragmentation of local government. Local government, which in addition to its own administrative capacities also ensures the delegated performance of the state, especially in the areas of education and partly healthcare, employed more than 205,000 people in 2024 and spent more than 5.1 billion euros on personal expenses. This is one of the largest items of public administration, where the organizational setting has a direct impact on the efficiency of the resources spent.
The structure of spending is key. Cities, municipalities and regions themselves, outside of education, healthcare or transport companies, employed approximately 76,000 people in 2024. Their personal expenses exceeded 1.8 billion euros, of which wages accounted for 1.3 billion euros. “This is where the impact of fragmentation is most evident, as fragmented municipalities maintain their own administrative apparatus, which increases costs and limits economies of scale. In the context of consolidation, this is a significant, but so far insufficiently used, space for efficiency gains,” Motúzová notes.
According to the association, experience from abroad shows that the solution does not necessarily have to mean the administrative abolition of municipalities, which is politically sensitive. Effective steps have been introduced in the past, for example, by Austria. The state did not proceed with the abolition of municipalities, but a joint office will be established for a specified number of municipalities. In the remaining municipalities, municipal offices, the function of mayor and council have been abolished and everything has been centralized into one municipality. This shows that the key is not the number of municipalities as such, but the way in which they are organized.
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Address : Euro-Brew Ltd., Hlboká 22, 917 01 Trnava, Slovakia
Tel. : +421 33 53 418 53, Fax : +421 33 53 418 52, E-mail : info@eurobrew.sk |
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