Damascus- Syrian Finance Minister Muhammad Abazid said, in statements to Al Jazeera over the weekend, that the government will increase the salaries of many public sector employees by 400% next month after completing the administrative restructuring of the ministries to enhance efficiency and accountability.
Abazid estimated the cost of increasing salaries at more than 1.65 trillion Syrian pounds ($127 million) and will be financed from the current state treasury, regional aid and new investments, and through efforts aimed at unfreezing Syrian assets currently located abroad.
And she says noAn employee at a commercial bank Hanadi Diop (41 years old): She is happy with this increase because it came at the right time, as all employees need it. The salary, as it is today (about $20), is completely insufficient to cover the basic and necessary needs of most Syrians.
She added to (Al Jazeera Net): “If this increase is spent, we will be able to meet our basic needs at least, whether it is securing fuel, the prices of which have fallen today, or securing treatment costs for patients. It is true that the increase will not cover everything, but things are likely to improve.” “The current increase is a good first step.”
Increase salaries and decrease prices
For his part, Tariq Baroudi, an employee in the Damascus Governorate garage, says that the increase, no matter how much it is, will “definitely be better than the previous situation,” but at the same time, the 400% increase will not be enough to cover all needs unless prices decrease further, especially Bread and gas.
The fifty-year-old man continues in an interview with Al Jazeera Net: “My family needs 3 million liras ($256) per month for the minimum living expenses. This has not yet taken into account the house rent, health emergencies, and the fuel we need for heating in light of the electricity outage.”
He added: “In general, the previous salary only covered the rent of the apartment, even though I had to pay an additional 15,000 liras on top of my salary of 330,000 to pay the apartment rent of 345,000 ($30). To secure the remaining needs, I resorted to full-time work.” In the evening after the end of my official work day.
The prices of basic commodities and goods in the markets of Damascus and its countryside are witnessing a noticeable decline in parallel with the improvement in the value of the Syrian pound against the dollar, whose exchange rate, yesterday, Tuesday, reached 11,500 liras per dollar instead of 17,000 on December 7, that is, one day before. The fall of the previous regime.
The price of a kilo of sugar, for example, recorded 8,500 liras instead of 18,000 last month, while the price of a kilo of rice reached 18,000 instead of 30,000, while the price of a liter of vegetable oil reached 18,000 instead of 27,000 before the fall of the Syrian regime last month. the past.
This decline in prices also applied to vegetables, whose prices recorded a significant decline, with the price of a kilo of potatoes reaching 3,000 liras instead of 12,000, and the price of tomatoes 8,000 instead of 14,000 at the beginning of last December.
At a time when the price of some basic items has risen, such as a bag of bread, whose price rose from a thousand liras at the beginning of last December to 4,000 liras today, and a domestic gas can, which was 28,000 liras (two dollars), and its price today is 215,000 (18 dollars).
Competitive market
And she says noAccounting affiliated with the Ministry of Culture Amira Hassan, she clearly felt the price difference, and was able to buy many imported foreign goods spread in the markets due to their lower prices compared to local products.
She added: “With the arrival of foreign goods, such as clothes and electrical tools, it became possible to cover ourselves for the winter and buy electric heaters at the lowest costs compared to the past, as the prices of goods in the markets were astronomical and completely disproportionate to salaries.”
Since the first days of the fall of Bashar al-Assad’s regime on December 8, foreign goods imported from Turkey and all European countries have spread in the capital’s squares, streets, and markets at competitive prices, attracting thousands of Syrians for the purpose of shopping, or out of curiosity, as the regime did not allow it. By importing these goods for reasons related to protecting the “national industry,” as former regime officials put it.
Sellers in Damascus markets who were interviewed by Al Jazeera Net confirmed that the entry of foreign goods, the extinction of the phenomenon of royalties imposed by the military checkpoints of the former regime on goods, and the improvement of the exchange rate of the lira, are all factors that significantly affected the value of goods, as the prices of most of them decreased by percentages ranging between 20 and 50. %.
Increase financing
Syrian economist Karam Al-Shaar believes that the increase should have been done in a deliberate manner and in batches, that is, not 4 times at once, but rather in two or three stages. This is to reduce the inflationary effects, and so that the employee can actually benefit from it.
This is supported by the Syrian economist Ayman Abdel Nour, who considered that this increase in the economic sense is “very large,” and will lead to placing huge amounts of cash and liquidity on the market, which will turn on the wheel of the economy, but in turn lead to raising prices and increasing demand for some imported materials. Thus, the value of the Syrian pound decreased.
He added in an interview with (Al Jazeera Net): “Therefore, this increase must be accompanied by a monetary policy based on withdrawing this economic surplus, and creating internal local temptations such as raising interest in order to absorb part of the surplus in the banks.”
Regarding the Syrian government’s financing of this increase, Al-Shaar says to Al-Jazeera Net, “The government is currently waiting for financial support to arrive from abroad, because the Syrian treasury at the present time does not allow financing this increase without it having a significant inflationary impact, so the government needs equivalent foreign exchange to cover it.” Salaries will increase, so financial support will come, and it is only a matter of time.”
But Abdel Nour opposes Al-Shaar on this issue, and points out that the government does not have enough cash or banknotes needed yet to pay these salaries and pensions in such a large proportion.
For his part, the Minister of Finance in the Syrian caretaker government, Muhammad Abazid, indicated in statements a few days ago that the increase will be financed by:
- State treasury.
- Regional aid.
- Investment projects.
- Freeing Syrian assets frozen abroad.
Private sector
Regarding the salaries of employees in the private sector, Al-Shaar confirms that they will rise automatically in response to the increase in the salaries of employees in the public sector. This is “because we are talking about one labor market.”
Ayman Abdel Nour opposes this opinion. Because public sector employees constitute about 30% of employees throughout Syria, and it is likely that it will decrease to 25 or 20% after many employees in the military and security services and others are dismissed or laid off. Therefore, the number of employees in the public sector will decrease compared to the majority of employees remaining in Private sector.
Thus, pressure will be placed on employers to increase the salaries of their employees, and therefore Abdel Nour believes that it is very difficult for the private sector to raise salaries by 400%, and therefore, “we will face a defect in the first months, and we will wait to see how it will be rectified.”
As for the impact of this increase on the economy and the population’s livelihood, Abdel Nour indicates that it will reflect positively on the economy and will move its wheel. Because there will be an injection of large cash masses that will enable people to buy their needs, and this is a positive thing, according to him.
However, according to Abdel Nour’s estimation, this may lead to inflation and an increase in prices, so the matter requires monetary and financial policies to accompany the increase so that people can actually benefit from these wages at their true value.
According to Abdel Nour, the positive impact is not determined by the increase, but rather by other policies accompanying it, “meaning, for example, will interest rates in banks be increased? Will treasury bonds be issued in order to absorb the financial surplus? Will projects be launched? Will the stock market offer shares in order to withdraw… Part of the financial surplus of families?
The Syrian Minister of Finance said, in his statements a few days ago, that this increase is “a first step towards an emergency solution to the economic reality in Syria,” adding that the salaries of public sector employees for last month will be paid this week.
These measures form part of a broader strategy by the caretaker government in Syria to achieve stability in the country’s economy after conflict and sanctions that extended for about 14 years.
Syria has suffered from an economic crisis in recent years resulting from the conflict and strict Western sanctions, in addition to a currency scarcity due to reasons including the financial collapse and the loss of oil fields in the northeast of the country.
The sharp decline in the value of the Syrian pound has pushed most Syrians below the poverty line in light of weak public sector wages and the collapse of a number of industries.
