Posted on October 1, 2016 by Editorial Staff in Economy, Industry
People in Sulaimani Bazzar, Iraqi Kurdistan. Photo: virtualtourist.com
HEWLÊR-Erbil, Iraq’s Kurdistan region,— Iraq’s Kurdistan Regional Government (KRG) aims to reduce the size of the public sector, which is double what it should be according to international standards, in a new plan launched with the World Bank that looks to strengthen the private sector.
“According to international rates, 6% of the Kurdish population should be in the public sector,” Zagros Fatah, head of investment at the Ministry of Planning, told Rudaw. “But now more than 12% of the population is employed by the government.”
Kurdistan’s public sector is one of the largest in the world in terms of proportion of the population, the Ministry of Planning noted in a report in May.
“The strategy of the Ministry of Planning is we will try to reduce that number in order first not to affect the budget in such times when we cannot pay employees’ salaries,” and also, he added, to give youth in the private sector more opportunities where they will be more productive.
Part of the KRG’s plan to reduce the number of public sector employees is to conduct a review of employment in government departments. The government is looking to shift 200,000 employees to the private sector.
As the government is instituting austerity measures and delaying payment of wages in an effort to manage the financial crisis, it is urging public sector employees to look for opportunities in the private sector.
But the move comes at a time when the private sector is also hard hit by the economic crisis and many companies are reducing their employees as well.
“As a private sector company, because of the financial crisis, our business has slowed. Therefore, we could do the work with just half of the employees we have now,” Mohammed Shafiq, an administration manager at a company in Erbil told Rudaw. “But because they have been working with us for a long time, we did not fire any employees.”
“But we cannot hire any new employees at this stage,” he added.
Before the financial crisis, KRG allocated 850 billion Iraqi dinars monthly for public sector employees’ salaries. But since the beginning of this year, after implementing austerity measures, the KRG is spending 450 billion dinars monthly on salaries.
The KRG’s Ministry of Planning announced a three-year reform plan in partnership with the World Bank in May to reboot the economy and overcome a severe financial crisis that has gripped the region for more than two years.
The three year strategic plan involves a boost to the private sector as the majority of the Kurdistan Region population relies on the public sector for an income. However, recent reports by Rudaw English revealed that red tape and lack of institutional support has hampered development within the private sector, young entrepreneurs especially.