Decision-making in time of crisis: cutback management in Estonia

Abstract

The article investigates the Estonian government's response to the fiscal crisis by looking at the dynamics of the decision-making processes during cutback management from 2008 to 2013 from the dichotomy of centralization–decentralization. The study explores the cutback decision-making by pinpointing the main actors and contextual variables shedding light on the management of fiscal crisis. It is demonstrated that, in general, the fiscal crisis contributed to increasing levels of centralization in governmental decision-making. The crisis decision-making was dominated by centralized political decisions and non-inclusion of the opposition and interest groups. Still, achieving urgent solutions was facilitated by decentralized decisions at the ministerial level, the empowerment of budgetary institutions and the intensive engagement of the civil servants. It has been indicated that the initially short-term procedures to enable cuts and resultant changes in decision-making processes are mostly in effect still in 2014 and thereby influence public administration practices in the long run. Points for practitioners The study shows that cutback management may lead to urgency in governmental decision-making, where centralization facilitates quick decisions. It is also demonstrated that a minority government is able to achieve fiscal adjustment even in a context of high political conflict. The crisis context sets new requirements to the competencies of public servants, as cutback management obliges them to cope with new and very complicated tasks. The article indicates that short-term cuts and changes in decision-making processes intended to alleviate the acute phase of crisis may remain in effect considerably longer than initially planned and thereby influence public administration practices in the long run.