Bloated public salaries at heart of Iraq’s economic woes (excerpts)
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 as the government tries to borrow once again from Iraq’s currency reserves.
The crisis has fueled fears of instability ahead of mass demonstrations this week.
The white paper’s calls for cutting public sector payrolls and reforming state finances would undermine the patronage systems that the political elite have used to entrench their power.
A major part of that patronage 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% more in salaries than it did 15 years ago.
Around three quarters of the state’s expenditures in 2020 go to paying for the public sector — a massive drain on dwindling finances.
Poor productivity of public workers is the heart of the issue, Allawi said.
“We’ve ended up with a low productivity, high-cost public sector that doesn’t really earn its keep,” he said. “In one way or another this issue has to be tackled by either reducing numbers, which is politically difficult, reducing salaries ... or increasing productivity.”