Iraqi Kurdistan to reduce public sector spending

11 October 2015

Reform plans come amid an ongoing fiscal crisis

  • Pay scales and the allowance system will be re-evaluated
  • Currently the government pays salaries or welfare payments to almost a quarter of the region’s population
  • Studies are currently under way to look at the best way to reform the current system

Iraq’s Kurdistan Regional Government (KRG) is looking to reduce spending in the public sector by reforming the way government workers are paid according to Deputy Prime Minister Qubad Talabani.

“There is definite room to restructure pay scales and restructure the allowance system in a fair way without causing major political unrest,” said the Deputy Prime Minister in an interview with MEED.

“This kind of reform is hard to do when you are comfortable and well off. Now we can sell it to the public: we need to survive and to survive we need to make these reforms.”

Currently the government pays salaries or welfare payments to 1.34 million, almost a quarter of the region’s population.

Of these 683,000 are government employees, 25,000 are government contractors, 222,000 are pensioners and 412,000 are on social benefits programmes.

On top of base salaries there are 43 types of different allowances civil servants receive under the current system. These include housing benefits, geographical location benefits, child benefit and compensation for operating in a dangerous environment.

In 2014, the KRG ran a large budget deficit after Baghdad froze payments to Erbil due to a disagreement over independent oil sales. At the same time, an escalation in the war against the militant group Islamic State in Iraq and Syria (Isis) led to increased spending on defence.

KRG studies are currently under way to look at the best way to reform the current system, according to Talabani.

“We are collating a lot of data, which is something we haven’t really done in the past,” he said.

“We want to know the full economic impact of these decisions. We want to know the feasibility of implementing these decisions. We don’t want to make populist decisions just to show people we are making reforms.”

In May, the KRG cancelled plans to cut the salaries of the region’s top officials by 50 per cent.

Currently there is no time frame for the implementation of the new reforms, according to Talabani.

In the past, the KRG has been criticised for practicing patronage politics where government salaries are paid to buy loyalty and secure votes.

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