Aljazeera.net correspondents
Baghdad- With the number of employees in the public sector reaching nearly 4 million employees, and in light of the economic challenges facing the Iraqi state, which require accurate monitoring and effective management of financial resources to achieve the required economic balance, the state ministries suffer from a significant functional slack that hinders production processes, exhausts their treasuries and drains more than half of them, while the government industrial and commercial institutions do not achieve financial returns sufficient to at least secure the salaries of their employees.
$47 billion in salaries
Mazhar Mohammed Salih, the financial advisor to the Prime Minister, confirmed that the operating budget (consumption, which includes salaries of employees and retirees, social welfare, and the food ration card) currently constitutes approximately 65% of the total general budget, and it costs the state treasury annually for salaries alone up to 62 trillion Iraqi dinars (about 47 billion and 334 thousand dollars).
The financial advisor told Al Jazeera Net that “the construction of Iraq’s per capita (rent) income since the 1950s was designed on the basis of the existence of a broad government appointment system,” indicating 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 government employees,” noting that “their average monthly salaries are higher than the average per capita income in the country’s gross domestic product.”
23 million citizens
Saleh explained that “this situation has two positive features: the first is that a large portion of oil revenues goes to the Iraqi people in a relatively fair manner, and the second is that every government employee is responsible for 5 people within the support system, which means that there are more than 23 million Iraqi citizens who provide for their daily living requirements from salaries.”
He explained that “oil revenues are financial assets that must be invested properly, and the state is aware of this matter,” adding, “However, it (the state) is under pressure and it is aware that many laws require the appointment of many categories such as doctors, the armed forces, and others, and therefore changing this situation is difficult and requires a long time.”
Saleh pointed out that “this approach has been fully remedied today through two aspects, the first of which is amending workers’ retirement and social security for workers by establishing a private sector retirement fund in cooperation with several international institutions, including the World Bank, noting that “it was actually legislated in May of last year by the House of Representatives, but it needs to be activated and employed in the labor market, which is something that needs 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 solidarity and interactive manner, where the government has actually started its first programs through the development path,” which includes the construction of industrial and economic cities, “which guarantee the market and provide wide opportunities.”
Saleh stressed that “the more conviction and social protection there is for the private sector, the less pressure there is on the public sector,” stressing that “it is not an easy equation, but there is a will and moves by the government within the approach of transforming the labor market into a production market led by industry.”
Salaries weigh heavily on the budget
Economic expert and consultant Alaa Al-Fahd confirmed that employees’ salaries monthly affect the state treasury by 7 trillion dinars (about 5 billion and 344 thousand dollars), which are very large amounts compared to local productivity. He pointed out that there are efforts being made by the government to “implement the workers’ retirement law” in a way that provides equal opportunities for the private sector with the government sector “in terms of social security and retirement.”
He explained during his interview with Al Jazeera Net that “the government is working during this stage to stimulate the economy in order to absorb the existing unemployment,” noting that “the government’s role will be limited to creating job opportunities for the unemployed, which is part of supporting the private sector and supporting investment projects that could employ a large number of those prepared to enter the labor market.”
He added that “the administrative apparatus cannot accommodate the large numbers of graduates, especially since there are specializations that cannot be absorbed by state institutions,” indicating that “there are measures by the state and the Central Bank to stimulate the private sector in addition to granting small and medium loans to establish projects that could contribute to providing job opportunities.”
He continued, “The World Bank always helps the government in the matter of re-strategizing government spending and salaries, and it appears in its reports with the International Monetary Fund as a negative strategy for the economy in terms of the size of salaries compared to productivity,” noting that “there are huge strategic projects that can be used to create very large job opportunities, such as the development road, the Faw port, and others.”
2023 appointments increase pressure
The head of the Finance Committee in the Iraqi Parliament, Atwan Al-Atwani, stressed that “employee salaries burden the state budget,” indicating that “the appointments adopted by the government during 2023 were the main reason for increasing the operating budget by about 8 trillion dinars per month (about 6 billion and 107 million dollars).”
Al-Atwani said during his interview with Al Jazeera Net, “There is a need to activate the private sector to reduce movement towards the government sector, especially since the private sector’s participation is unfortunately small in supporting the labor market.”
He stressed that “the citizen’s failure to find job opportunities in the market pushes him to look for government jobs due to the private sector’s inability,” noting “the necessity of applying customs tariffs that will give priority to the local product over the imported one in price competition.”
