Al Jazeera Net Correspondents
Baghdad- While the number of public sector employees reaches nearly 4 million, and in light of the economic challenges facing the Iraqi state, which require careful monitoring and effective management of financial resources to achieve the required economic balance, state ministries are suffering from significant difficulties; a functional slowdown that hinders production operations, depletes its cash and drains more than half of it, while government, industrial and commercial institutions fail to obtain sufficient financial income, at least, to guarantee the salaries of their workers.
Salaries amounting to $47 billion
Mazhar Muhammad Saleh, financial advisor to the Prime Minister, confirmed that the operational budget (consumer and includes salaries of employees, retirees, social protection and ration cards) currently constitutes about 65% of the total general budget, and costs the public treasury each year for salaries alone up to 62 trillion Iraqi dinars (about 47.1 billion and 334 thousand dollars).
The financial advisor said in an interview with Al Jazeera Net that “the construction of per capita (rentier) income for Iraq since the 1950s was designed on the basis of the existence of a vast system of government appointments,” noting that “the Iraqi state is the heir to a free system in many sectors, including education, health, public goods and others.
He added that “the number of employees currently in Iraq reaches 4 million civil servants,” noting that “their average monthly salaries are higher than the average per capita income in terms of the country’s gross domestic product.”
23 million citizens
Saleh explained: “There are two positive aspects to this situation, the first being that a large portion of oil imports goes to the Iraqi people in a relatively fair manner, and the second being that each government employee is responsible for 5 people under the support system, which means that more than 23 million Iraqi citizens meet their daily needs through their salaries.
He said that “oil imports are financial assets that must be invested properly and the state is aware of this,” adding: “But it (the state) is under pressure and it is aware that many laws require the appointment of many categories, such as doctors, armed forces and others, and therefore changing this situation is difficult and takes a long time.”
Saleh stressed that “this approach has been fully implemented today through two aspects, the first of which is the amendment of workers’ retirement and workers’ social security through the establishment of a private sector retirement fund in cooperation with many international institutions, including the World Bank,” stressing that “this was actually legislated in May last year by the House of Representatives, but it requires the activation and recruitment of the labor market, which takes time.
He continued: “The other aspect is related to the government’s vision for the economy, which is the partnership between it and the private sector in a supportive and interactive manner, in which the government has effectively launched its first programs through the path of development,” which includes the construction of industrial and economic cities, “which is a guarantor of the market and offers broad opportunities.”
Saleh stressed that “the more social conviction and protection for the private sector, the less pressure there is on public employment,” stressing that “this is not an easy equation, but there is a will and action on the part of the government within the framework of the approach of transforming the private sector labor market into an industry-led production market.
Wages weigh on the budget
Economic expert and consultant Alaa Al-Fahd confirmed that the monthly salaries of employees affect the public treasury by 7 trillion dinars (about 5 billion 344 thousand dollars), which is a very large sum compared to local productivity. He stressed that efforts are underway by the government to “implement the law on workers’ retirement” in order to provide opportunities. The private sector is equal to the public sector “in terms of security and retirement.”
He explained in his speech to Al Jazeera Net that “the government is working during this phase to stimulate the economy in order to absorb existing unemployment,” noting that “the role of the government will be limited to creating job opportunities for the unemployed, which is to support the private sector and support investment projects that can employ a large number of people ready to enter the labor market.
He added that “the administrative apparatus does not accommodate a large number of graduates, especially since there are specializations that cannot be absorbed by state institutions,” stressing that “there are measures from the state and the central bank to stimulate the private sector in addition to the granting of small and medium loans to implement projects that can contribute to creating employment opportunities.”
He continued: “The World Bank always helps the government in the issue of restructuring public spending and salaries, and this appears in its reports with the IMF as a negative strategy for the economy in terms of the size of salaries compared to productivity.” stressing that “there are huge strategic projects that can be used to create employment opportunities.” Very large projects, such as the development road, the Al-Faw port and others.”
Nominations for 2023 have increased pressure
The head of the Finance Committee of the Iraqi Parliament, Atwan Al-Atwani, stressed that “employees’ salaries are a burden on the state budget,” noting that “the appointments adopted by the government during the year 2023 were the main reason for the increase in the operating budget by about 8 trillion dinars per month (about 6 billion and 107 million dollars).
Al-Atwani said in his speech to Al-Jazeera Net: “It is necessary to activate the private sector to reduce the movement towards the government sector, especially since the participation of the private sector, unfortunately, is low to support the labor market.”
He stressed that “the inability of the citizen to find employment opportunities in the market forces him to seek employment in the government due to the inability of the private sector,” stressing “the need to apply a customs tariff that will give priority to the local product over the imported in a context of price competition.