Government workers’ salaries in Kuwait are a hot topic these days. Parliament members are trying to win the confidence of their voters by increasing their salaries without any thought to the implications. The government is now awarding its employees with certain majors special salary additions. They also increase everybody else’s salary by KD 100 (to be fair).
These actions are causing a huge strain on the government budget. Salary expeditures have grown by 150% in the past 8 years (up from KD 1.7 billion in 2005 to KD 4.4 billion this year). Kuwait’s budget has been in a surplus for the past couple of years due to high oil prices, but as these expenses increase, and the outlook on oil and the global economy remain bearish, Kuwait’s budget outlook seems dim. If the global economy does go into a recession, and oil drops again to $30, then Kuwait would probably receive KD 6 billion less than the budgeted oil revenues (in the budget, oil is forecasted to be at $60), raising the deficit for the year to KD 13 billion, up from the KD 7 billion forecasted.
These salary increases are also having a negative unintended affect on the Private Sector. These increases are negating the effect of the Manpower Government Restructuring Program (the monthly support the government offers to Kuwaitis in the private sector to encourage citizens to work in the private sector).
No comments:
Post a Comment