Paid to do nothing A ghost army of workers in the Gulf
Huge public wage bills a delicate dilemma for Arab rulers
● Show up, swipe in. The routine is familiar to office workers everywhere. In Kuwait, it proved too much to ask.
Last year, trying to trim a wage bill that eats up more than half its budget, the government required public employees to check in on a biometric reader every day. The next quarter, 5 000 quit. Many of them rarely if ever turned up, and feared they’d be caught under the new rule, according to Khalifa Hamada, the undersecretary at Kuwait’s Finance Ministry.
All Persian Gulf monarchies have some version of this problem. Government is the employer of first resort — even when it has nothing much for its employees to do. That’s part of a tacit agreement: citizens may not get a say in how their countries are run, but at least the ruling families look after them.
Now, after years of lower crude prices, and aware that the oil will run out one day, rulers are seeking to repair public finances. The wage bill is an obvious place to start. But it’s become a kind of third rail, only approached at high political risk.
The historical guarantee of government jobs “is becoming untenable”, said Steffen Hertog, a professor at the London School of Economics. At the same time, he said, “touching the public payroll means tinkering with the core of the Gulf social contract”.
The dilemma is especially acute in Saudi Arabia. The government, which employs about two-thirds of citizens who work, is chipping away at a budget deficit that ballooned to almost 16% of GDP after the oil shock of 2014.
About 70% of Saudis are below the age of 30 and some 1.2 million will have joined the workforce by 2022. Under Crown Prince Mohammed Bin Salman’s post-oil plan, job creation should fall to the private sector.
Like other Gulf rulers, he began his costcutting drive by scaling back investment projects. Next were subsidies for fuel and utilities, while VAT was also imposed. But when he took aim at state-employee allowances, he had to make a U-turn a few months later. He gave them a monthly $266 (about R3 650) cost-of-living award — erasing savings achieved elsewhere.
And those Saudi civil servants aren’t necessarily busier than their Kuwaiti peers.
One employee at a Saudi ministry, who asked not to be named, says her boss has been on an unofficial three-day week for years, and didn’t change that even when swiping-in was mandated.
When a minister visited her department, several people she’d never seen before turned up for work.
Tracking technologies like fingerprinting, swipe-cards and cameras can identify these “ghost workers”. But such methods won’t help eliminate jobs whose holders are fine to show up every day — but have little to do. Nor will they address the fundamental distortions in Gulf labour markets.
Many graduates have been happy to rebuff private companies and wait for a government opening, while lower-paid, private jobs are mostly taken by foreigners.
Gulf governments have been trying to change this. The Saudis, for example, have forced companies to employ more locals, banned expat workers in some industries, and introduced taxes on them and their dependants. But pushing foreigners out could just result in lower employment. Many businesses would go bust if they had to take on a local, at pay rates competitive with government work, to replace each foreigner.
What’s more, belt-tightening by governments — especially on investment projects —
Touching the public payroll means tinkering with the social contract
Steffen Hertog
Professor at the London School of Economics
has slowed job creation in private sectors that are still largely state-driven (Dubai is a partial exception).
Nader Kabbani, director of research at the Brookings Doha Centre in Qatar, said these regimes needed to “allow citizens to access the countries’ wealth in ways other than jobs”. He cited Alaska, where a state fund distributes oil profits among residents.
Proposals for a universal basic income have gained ground even in countries like Italy that don’t have energy riches to finance it. In the Gulf, Kabbani said, Kuwait — the most democratic of the monarchies — would be the best place to start. “The problem is, this conversation isn’t happening.”