Bloated government salaries at heart of Iraq’s economicwoes
Politicians handing out state jobs led to threefold increase in workers since 2004
Days of waiting turned to weeks as Qusay AbdulAmma, a graphic designer in Iraq’s health ministry, waited for his monthly salary. He defaulted on rent and other bills.
Qusay uses about half his salary to pay his rent of nearly 450,000 Iraqi dinars a month, roughly $ 400. If he fails to pay twice in a rowhis landlordwill evict him and his family.
Iraq’s government is struggling to pay the salaries of the ever- swelling ranks of public sector employees amid an unprecedented liquidity crisis caused by low oil prices.
September’s salaries were delayed for weeks, and October’s still haven’t been paid.
The government has outlined a vision for a drastic overhaul of Iraq’s economy in
a ‘ white paper’ presented last week to lawmakers and political factions, but there is little political will to execute it fully.
The white paper’s calls for
cutting public sector payrolls and reforming state finances, which would undermine the patronage systems used by the political elite. A major part of that is handing out state jobs in return for support. The result has been a threefold increase in public workers since 2004. The government pays 400 per cent more in salaries than it did 15 years ago.
Iraq relies on oil exports to fund 90 per cent of state revenues. Those revenues have
plunged to an average $ 3.5 billion amonth since oil prices crashed earlier this year.
Iraq also imports nearly all of its food and medicine. With foreign currency reserves at $ 53 billion, theWorld Bank estimates it can sustain these imports for another nine months.
“We’ve ended upwith a low productivity, high- cost public sector that doesn’t really earn its keep,” FinanceMinister Ali Allawi said recently.