Either a Job or a Salary!
The Kuwaiti public opinion stands firmly against abolishing, or even reducing, the accumulated perks and benefits enjoyed by the citizens. The logic presented is pretty strong and, unless a major catastrophe befalls the country, it is difficult to counter. Additionally, the masses have made it vocally clear, that they do not see a catastrophe in the horizon – even though one may be slowly brewing.
All this turbulence stems from the fact that the Government is responsible, through its ministries and agencies, for the management of the economy, and hence it bears the burden of balancing the declining oil revenues with the mushrooming expenditures. This, indeed, is a difficult and dangerous task and is a classical Catch-22 situation.
The Government has, so far, been unable to shrink its expenses nor raise revenues – it may not know how to do so, as all its experience is in giving, not taking! This may be a reflection of the Government’s love for its people – but, love is not cashable at the bank, when you need to buy bread.
The easiest option for the Government may be to borrow from the financial markets to cover its budget deficits, while shirking to introduce real changes in its spending habits. This will not only speed up the arrival of the “catastrophe”, but could exaggerate it to point that knocks us back to poverty. At the other end of the spectrum, the most difficult option is to transfer the onus of reducing the deficit onto the citizens’ shoulders. The outcome of such an attempt is not guaranteed, and is very likely to increase the already sizzling public dissent – as well as increase the animosity between social classes. Even a midway option is unlikely to be successful, as it may only deliver the negatives of both previous methods, without any of their pluses.
The real problem is that the citizens have become totally dependent upon the state, and find it difficult to break free – especially in the short term. Most citizens are Government employees, or work for the private sector which relies on government projects and purchases for its revenues, or receive stipends, financial support, bonuses, gifts, etc. on a monthly basis from the Government. How on earth can one abruptly stop this? Or even reduce it? It is easier said than done, especially for those “experts” who rely on Excel for their financial planning. The problem of Excel is that it willingly accepts your unrealistic or wrong assumptions, and then spits out neat answers, that are totally wrong.
Our situation is similar to that of a lion reared as a cub in a home, and on reaching adulthood, is set free in the jungle to fend for itself. It doesn’t know how to hunt to feed itself, nor does it know how to fight to defend itself against the other carnivorous jungle beasts. In reality, a huge disfavor has been done to this lion, despite all the good intentions and the happy early life provided.
Nevertheless, lions possess great power and an ability to adapt, they only need to be switch-on. So how do we do that?
The first step in switching-on the power and abilities of the Kuwaitis (and possibly the other GCC citizens) is by gradually training them to rely on themselves, without pulling the rug from underneath them – without depriving them of a reasonable standard of living and social security. The objective is to encourage them to independently seek out income sources that provide them with a sustainable and comfortable livelihood. On this basis, serious consideration should be given to the following recommendations:
1) Freeze Benefits: Benefits, subsidies, bonuses, giveaways, etc. have to be frozen and a ceiling set. While they shouldn’t be stopped, they shouldn’t be allowed to rise above their present level. Delaying this freeze will only aggravate the problem down the road, and allow it to grow exponentially. The youth component in the Kuwaiti (and GCC) population demographic structure will guarantee that it eventually breaks the camel’s financial back.
2) Civil Service Freeze: Halt all hiring in the civil service, with the exception of the military. This may ensure that the new generation is well trained in the military and equipped with skills that empower the youth to seek productive occupations and livelihoods.
3) Nominal Unemployment Salaries: Grant new job applicants the choice of a job (in the military) or staying at home and receiving a nominal salary that meets their basic subsistence needs. They may then elect to work independently, or seek employment in the private sector, while keeping the nominal salary.
4) Reduce Disguised Unemployment: Reassign all the surplus civil service staff to the military for retraining and acquisition of new skill sets.
Of course, the above is only one aspect of the tasks needed to reduce Government expenses, and it only addresses such items as salaries, benefits, bonuses, subsidies, etc., which the citizens presently enjoy. There remain many other reductions of the superfluous expenses, which, if done, will not negatively impact the public sector operation – On the contrary, such a reduction may actually improve the speed and quality of services. As for the revenues side of the problem, well, that is an entirely different story, and requires a new set of ideas, premises and assumptions – not just a simple hike in rates and slapping taxes on.