As expenditures for employees in the central government, in local governments expenditures for employees almost doubled in the period from 2002 to 2012. The aim of this study was to analyze the growth by the categories of expenditures for employees and by different types of local government and establish a linear relationship between the employee compensation and the various economic variables of the period. In all units by 2009 high growth rates of employee compensation of almost 10% per year were recorded in certain categories, followed by a period of stagnation and decline wages, with the largest decline in county units. Payment of employee compensation had the same growth tendency as GDP and operating expenses, but after the 2009 the decline of the previous two variables is not accompanied by a decline in employee compensation. Regression analysis confirmed the initial assumption of a positive relationship between the average employee compensation to GDP, population and development index. Among the registered unemployment rate and average compensation there is a negative relationship. Although the residuals resulting models satisfy the Gauss-Markov conditions, in most models the variability of empirical values around the regression line is relatively strong, and much of the adjustment of the linear model is derived from random errors and thus these models are not the most representative in the analysis.