On my recent trip to Baghdad I met a manager of a state-run naseej factory (معمل نسيج) factories that make cloth material like cotton or wool for clothes, carpets etc. He told me that they had over 5,200 employees at the factory. It sounded impressive. He then told me that they spend nearly 3.5 billion ID (US$3 million) on wages per month. That worked out to around 670,000 ID (US$573) as an average monthly salary.
But the most surprising news was yet to come: 300 million ID. What you might ask is that; the amount they spend on electricity given that it’s a huge factory? The amount they invest every month? No. It was the monthly profit, or value of materials produced. 3.5 billion ID on wages for a measly 300 million ID of products. The factory basically runs at more than a 3,200 million ID loss per month! That’s a loss of 615,000 ID (US$526) per employee per month. So it turns out that the factory is simply a glorified social security cash dispenser.
Then you think, what on earth are the 5,200 employees doing every day? There’s a joke in Iraq about what the average Iraqi working day: you arrive at 9, have breakfast till 10, work for half an hour before having a break for tea and catch up with friends, which also lasts an hour, spend another half an hour on facebook, before preparing yourself for prayer at 12, which somehow also lasts an hour, then leave at 1. Not so funny when you think about it.
Most estimates put government employees at between 60-80% of the Iraqi labour force. It’s difficult to be sure because it’s hard to measure what counts for employment or unemployment in Iraq. People who sell vegetables on a stall, who when asked, believe they are still unemployed.
Worst of all, those who would have looked at the Iraqi budget for 2012, they would have noticed that nearly 75 trillion ID is going to current expenditure (نفقات تشغياية) which is primarily salaries, pensions and security costs. This compared to 67 trillion ID in 2011. If we assume that the state is a company, and use the same assumptions on profit loss ratio as the factory, then Iraq will lose 69 trillion ID in the next year (US$59 billion). That is of course an extreme assumption, but remember, the factory actually produces something. Think of how many civil servants work in areas where results aren’t measurable, and who probably have attendance rates a lot lower than the factory workers.
So what’s the solution? My factory friend seemed to believe that the only option was to sack thousands of employees from the staff. He knew it was a cultural issue developed over years, but only a shock to the system would really begin the process of reform. I recently saw the Iron Lady (worth a watch). Margaret Thatcher’s privatisation policies were no doubt extreme. But maybe its what we need.
Mousa Baraka
Ali Latif
Ali Al-Saffar
Hayder al-Khoei
Guest
oh dear…
Mousa, Mousa, Mousa…invoking Tatcher!….I feel dead inside.
Well written, Mousa. I think the issue is more concerning than simply the amount the gov’t spends on salaries. There needs to be a change in mentality that civil servants have duties, need to be accountable and that they’re not being paid to drink tea and update their FB status. In addition, there needs to be more encouragement for entrepreneurship and other private sector activity. Ultimately Iraqi thinking should change from everyone wanting a gov’t job to simply wanting a productive job so the economy can get off the ground and the country can be rebuilt.
An interesting piece, and whilst I agree with the sentiment that bloated public sectors are largely negative influences in any economy, the invoking of Thatcher style reforms as a possible answer in Iraq seems a little premature (although I’m not suggesting you were advocating this as the only answer). Sacking lots of non-workers in one fell swoop is unlikely to have a positive effect in a country awash with guns and with a recent history of conflict. Of course the solution to the problem is a larger private sector, but contrary to the ultra-capitalist view (much of which Iraq had pushed onto it in 2003), these do not magically appear out of thin air when people are ‘free’.
To set up and run any business, be it a shop or factory, you need the basics i.e. electricity, gas, water etc. You also need roads or trains to transport goods and freight, banks to store your money and offer you credit, good communications to network with trade partners, access to technology and machinery, low levels of government bureaucracy etc. Above all, you need the security to be able to work without fear of being kidnapped for ransom or seeing your investment lost in a terrorist/militia attack. As we know, the Iraqi governments since 2003 have failed abysmally in providing almost any of the above basics. Some mitigation could be put forward that Iraq experienced a chaotic situation post-2003 that was exploited by foreign elements, but frankly that excuse is wearing a bit thin now. So it should come as no surprise that ordinary people see a public sector salary as their route to prosperity, because is there really any alternative? In the meantime, unemployment continues to grow as a problem and the government responds by creating more public sector non-jobs – a vicious and ultimately unsustainable cycle.
I can understand a reluctance to turn every discussion about Iraq into one about politics, but unless the fundamental issue of the unstable political environment and resulting bad governance is addressed, then it’s difficult to see this problem going away.