Al -Jazeera Net Correspondents
Over the course of 15 years, the salary spending bill in Libya has escalated at an unprecedented pace. Since 2009, the wage bill jumped from 9 billion dinars (1.84 billion dollars) to 67.6 billion dinars (approximately 14 billion dollars) during the year 2024, according to the Central Bank of Libya.
In light of a rentier economy and an unproductive market, employees may be happy with these wages, but they will soon face a different reality when heading to the markets, when they discover that what they received from an increase quickly dissolves in exchange for the high prices, especially after the Minister of Finance in the Unity Government, Khaled Al -Mabrouk, expected that spending on salaries exceed the barrier of 100 billion dinars (20.8 billion dollars).
Is the expansion of spending due to a real wage increase? What is its effect on purchasing power and price enlargement? And what repercussions on the labor market?
Income erosion
“The value of salaries is no longer to keep pace with the high prices and the high cost of living,” thus the employee in the public sector, Osama Al -Warfalli, responds in an interview with Al -Jazeera Net.
“No matter how much my salary increases, my purchasing power is declining, because the dinar collapses and the prices rise” and I refer the reason to the employment policy that he described as randomness that made salaries more like a monthly aid, stressing that this unusual equation weakened productivity and turned the citizen into a dependent on the state instead of being part of an effective economic cycle, he said.
The employee in the private sector, Sundus Saad, reviews her experience in her interview with Al -Jazeera Net, saying, “My career in the private sector started with a salary of 500 dinars (about 102 dollars) and today I receive a thousand dinars (205 dollars) and despite this increase, the high prices had a significant impact on my purchasing power, and the salary is no longer sufficient to cover my basic needs such as transportation, study, and personal supplies.”
The former Undersecretary of the Ministry of Finance, Ghaith’s references, explained in his interview with Al -Jazeera Net that the policy of “random employment” contributed to the exacerbation of inflation, which in turn presses the financial sustainability and monetary policy.
He says, “The citizen spends his salary on consumer goods, not on investment or saving, so the inevitable result is the high rate of inflation and the high prices.”
Ghaith notes that the Central Bank of Libya announced at the beginning of the year 2025 that the amount of spending on the salary item reached 67 billion dinars in the year 2024. However, these numbers not only reflect the value of salaries, but also include 11 items within the first chapter, indicating that other items in this section represent about 20% of spending, and include special advantages for officials such as discriminatory bonuses, housing, health insurance, and other other Privileges.
Sorrow
Economy professor Dr. Youssef Yakhlef considered that the expansion of government employment without real productivity reflects the failure of economic policies in creating sustainable job opportunities, stressing that pumping these funds into an unproductive market leads to new inflationary waves, which devour any wages, which makes improving purchasing power almost impossible.
In his speech to Al -Jazeera Net, Yakhleh was expected to be a spectacular spending on salaries:
The first scenario: increased spending on salaries due to employment
- This affects the stability of public finances through the exacerbation of the financial deficit, and the download of public finances additional burdens without a real increase in productivity or effectiveness in the public sector.
- The Central Bank of Libya resorted to financing the financial deficit through internal borrowing or printing money to confront liquidity pressures, due to the increase in ineffective government spending.
The second scenario: increased spending on salaries due to raising wages and late financial settlements
- Increased wages spending if not associated with a real improvement in public or productive revenues; It will lead to a long -term fiscal deterioration.
- This will increase inflation rates, increase the prices of goods and services, and deplete cash reserves, and this increases the risk of local currency value fluctuations and exacerbates the liquidity crisis.
In terms of the impact of increased wages on the purchasing power and consumption size, the head of the Chamber of Commerce and Industry in Tobruk Ibrahim Al -Jarari stressed that the increase in consumer expenses without support for production leads to pumping large quantities of liquidity into the market, and this in turn leads to high prices and increased cash inflation.
In his interview with Al -Jazeera Net, Al -Jarari added that this style of spending puts the Central Bank of Libya in front of complex challenges, as it is forced to print more money or resort to foreign exchange reserves, which increases the deepening of the crisis, he said.
Economic structure
Economic analyst Mohamed Dreammish tells Al -Jazeera Net that the Libyan economy faces structural imbalances, most notably the decline in job opportunities, a decrease in per capita income, in addition to the housing crisis, high inflation rates, and the deterioration of public services, and attributed this to the economic policies that he described as unworthy, the last of which was the reduction of the value of the Libyan dinar by 70%, and this led to:
- Public budget enlargement.
- Several small and medium enterprises come out of the market.
- Increased dependence on the public sector.
All of these reasons combined – according to Dreamsh – contributed to raising salaries to keep up with inflation.
Dreammish recommended adopting policies to stimulate the business and business environment, and to stay away from decisions that serve narrow interests at the expense of the local economy and the living of the citizen.
