Millions of retiring Arab civil servants need not be replaced
AT A MUNICIPAL parking garage in Cairo, a row of freshly painted machines wait to dispense tickets to drivers. But the machines are turned off. Attendants stand next to them and hand out tickets manually. It is one of many useless government jobs in the Egyptian capital. Stamping passports at the airport can be a three-person affair. Offices are full of functionaries who make photocopies or brew tea (few do both). More than 5m Egyptians work in the civil service. Each serves fewer than 20 citizens, if “serves” is the right word. Other developing countries get by with a far less populous public sector.
The president, Abdel-Fattah al-Sisi, thinks little of his workforce. At a conference in May he suggested that 1m employees could do the work now accomplished by 5m. (Anyone who has dealt with Egyptian bureaucracy would probably agree.) He worries that firing them would cause unrest, however. Instead, his government has a better solution: do nothing and let the bureaucracy shrink itself. About 2.2m of Egypt’s civil servants are in the top two pay brackets, which usually require decades of service to reach. The prime minister, Mustafa Madbouly, wagers that at least 35% of the workforce will retire within a decade.
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That would reduce a wage bill that consumes 27% of government revenue, freeing billions for badly needed investment. Many of these jobs plainly do not need to be filled. Egypt is dragging itself into the digital age. Citizens can renew their national ID cards online, and other documents will be available later this year. The state is installing new electricity meters that can be recharged via smart cards. Even the notoriously archaic courts are buying computers. All of this will reduce the need for cadres to collect bills and scribble notes in ledgers.
Many Arab countries are in a similar situation. Cushy state sinecures were once seen as a birthright. Anwar Sadat and Hosni Mubarak bloated Egypt’s public sector to keep the middle class loyal. Gulf governments started a long hiring spree during the oil boom of the 1970s. For a generation, though, public-sector hiring has not kept pace with population growth. Though Egypt’s workforce has swollen by 7.7m since 2005, the bureaucracy registered a net increase of just 190,000.
Hiring has slowed in Saudi Arabia too, but a whopping 45% of citizens still work for the state (in the OECD, a club of mostly rich countries, the average is 18%). As in Egypt they skew old, with 31% aged 45 and over versus just 7% under 30. The crown prince wants to steer young Saudis into the private sector, but few firms want to hire them on the cushy terms they demand. Over 30% of under-30s are jobless.
Unemployed young people scare autocrats: they start protests. If economies stay sluggish, governments will be loth to cut their payroll, despite the cost. For every young Arab keen to start a tech firm or a small business, another is happy to accept a make-work job. A poll in 2016 by Asda’a Burson-Marsteller, a PR firm, found that half of Arab youth want government gigs. In the Gulf the figure rises to 70%. State jobs are seen as more secure, more lucrative and less demanding than private ones. Public-sector pay is 39% higher in Saudi Arabia and 60% higher in Egypt.
In Egypt the wave of retirements may also create a different problem. The public-pension law stipulates a maximum payout of 30% of a worker’s final salary. With average wages of 5,000 pounds ($289) per month, a typical pension would appear to be a paltry 1,500 pounds. Even that figure is misleading, because base salaries make up a small fraction of public-sector pay; the bulk of it comes from regular bonuses.
Millions of workers may soon head into their sunset years with only the minimum pension of 750 pounds per month, 38% below the public-sector minimum wage. Pensions are not linked to inflation. Though parliament raised them by 15% last summer, subsidy cuts and high inflation immediately gobbled up the increase. Civil servants have long been a loyal constituency. That may soon change. Mr Sisi will have to hope they approach protesting with as much zeal as they did their jobs.