Either a Job or a Salary!

Either a Job or a Salary!

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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.

6 thoughts on “Either a Job or a Salary!”

  1. An added solution to the points above would be to implement a tax system. Taxes on income , property , Value Added, fuel consumption, etc.. But in return, accountability and responsibility on the usage of these funds generated are a must in order for everyone to participate and agree to such taxes.

    With a proper tax system, cheap independent freelancers who flood the market with cheap offerings and services wont exist. As an example the contracting industry, which is a lucrative industry that is being sabotaged by cheap foreign labor who operate without a business licence, office,etc. Therefore, they operate with extremely low operating cost and provide contracting services that a local can not compete with because of the overheads associated with running such business properly (office rent, labor salaries, etc.)

    I hope I was able to covey the message and provide a more insight on a solution to help our beloved Kuwait.
    Regards,

  2. أجدت فى تشخيص المشكله واقتراح حلولها. ويمكننى إضافة عامل آخر ينعكس هو الاخر اقتصادياً. ففى جو هذا التسيّب الأدارى العام الذى ينخر حتى فى المؤسسات الفنيه الحساسه من عدم الرقابه الحقه واختلال نظم العمل وضعف الوصف الوظيفى وتحصين الموظف ضد الفصل والعقوبه وغيرها . كل هذه مجتمعه لن تنتج الا فوضى إداريه تسهم فى تسرب جزء كبير من مواردنا الماليه

  3. A very interesting and timely article. After working for almost 20 years as a management consultant in Arab countries, I think that the main problem is simply getting people to work harder, and not just in the Kuwaiti public sector but in all Arab countries. My last assignment in Saudi Arabia was with a relatively young public agency. Its employees are literally pampered with high salaries, generous bonuses, and frequent training programs overseas. However, their work behavior did not differ significantly from other less fortunate public employees: high rates of tardiness, absenteeism, and grievances and low productivity. Although many of them were highly qualified and experienced, they relied heavily on outsourcing to do simple tasks such as preparing a job description. And as the case in all public agencies it was addicted to creation of new units and jobs. They simply could not have enough of jobs. More employees means higher status and prestige for the agency and its general manager. As a result, the agency’s expenditures rose from Saudi Riyal 57 million in 2001 to SR 800 million in 2014 without contributing much in terms of services or revenues.
    As for conscripting graduates and some public employees, this policy was practiced in Iraq under the Bath regime, Syria and Egypt. It served to delay entry into public employment but failed to provide draftees with any useful skills.

    1. Absolutely true… organizations always had, have and will continue to grow unnecessarily and aimlessly, if left without wise direction by a senior management/leadership that has vision and experience. This is evident in both the public as well as private sectors.

      Also, it is a reflection of the panic the Arab leadership feels, when overwhelmed by the rapid increase of their populations, without being able to provide them with useful and sustained employment, thus fermenting social unrest. So, they shovel them into unproductive jobs that do not teach them any useful skills. This only serves to aggravate the problem and inflate it to a size difficult to tackle by succeeding governments – a case of slyly “passing the buck, to the future”.

      What I am proposing is to:
      1) Shrink public organizations to their optimum level i.e. minimum cost maximum output. This can be easily achieved by restructuring, via “Work Studies” to analyze and redraw work flow processes.
      2) Not firing the surplus staff, but shifting them to a single entity, the non-combat military, to be retrained and given new skills. The military will itself be required to redefine its role, to deliver a better quality of skills development.
      3) Freezing all public sector appointments until a real demand materializes, and even then, filling it from the retrained surplus available at the military.
      4) Introduce more vocational training programs, which can start supplying the markets with skilled technicians who can either work for the private sector or setup shop independently.
      5) Introduce wise economic policies that not only trigger economic growth, but also, encourage the growth of small enterprises that are manned by citizens.

      A simple practical formula? Or a simplistic daydream? Or an impossibly difficult task? Call it what you wish, but what is the alternative? The youthful demographic structure of the Arab populations and their inevitable demand for jobs, is a time-bomb that has the capability of destroying our societies in a few short years.

  4. نسيت عامل مهم جداً و هو وجود قوة عمل مستورده تبلغ أكثر من مليون ونصف ممكن الإستغناء عن نصفها على الأقل و ما يصاحب ذلك من إيجاد فرص عمل مجزيه للكويتيين و تقليص مصاريف الخدمات المقدمه للعاملين المستوردين

    1. شكراً على تعليقك… ما ذكرته صحيح تماماً ، وهو آتٍ عاجلاً أم آجلاً… ولكن ما نسيته وذكرته ضمن مقالات الحلول الاقتصادية العامة للبلد في مارس 2016 وكذلك في أغسطس 2016… ويمكن الاطلاع عليها فيما يلي:

      المقالة بعنوان: حلول العجز كثيرة – هل النرويج أحدها؟
      “…المشاكل الحقيقية التي تحتاج معالجة هي مصاريف الدولة الضخمة ، بالإضافة إلى إيجاد موارد إيرادات حقيقية ومنتجة غير النفط. أما بالنسبة للعمالة الوافدة ، فهي موجودة لأداء عمل محدد واضح وبالتالي تحصل على رزقها ولقمة عيشها. إن كنا قادرين على تنفيذ هذه المهام والأعمال فمن الطبيعي عندئذٍ أن تغادر العمالة الوافدة تلقائياً…”

      المقالة بعنوان: حلول لأزمة تقلص إيرادات النفط – هيكل الحل (1 من 2)
      “… 3) تقليص حجم العمالة الوافدة: خصوصاً غير الماهرة وغير عالية التخصص. وهذا يحدث من خلال:
      أ‌) المكننة وإحلال المكائن والمعدات والنظم الآلية في أعمال مثل المناولة ، وتنظيف الطرق ، والبناء ، مواقف السيارات…إلخ.
      ب‌) إحلال المواطنين في الوظائف مثل قيادة وتشغيل الشاحنات والمعدات المختلفة ، وفي وظائف ميكانيكية وكهربائية والكترونية وغيرها حتى ولو كانت رواتبهم أضعاف رواتب الوافدين ، فغالبيتها لا تتسرب خارج الدورة.
      ت‌) إحلال المواطنين في جميع الوظائف الكتابية والإدارية البسيطة والمتوسطة. وكذلك العليا إذا توفرت الكفاءة والقدرات.
      ث‌) إحلال المواطنين في جميع الوظائف المبيعات والدكاكين. فقد جرت العادة في جميع بلدان العالم بأن صاحب الدكان أو المحل أو حتى المطعم هو الذي يعمل فيه وإن لزم ساعدته عائلته المباشرة في التشغيل. أما لدينا فقد تحول الأمر إلى توظيف وافدين ذوي مهارات محدودة.
      ج‌) نظرية تشجيع المشروعات الصغيرة مبنية على أساس أنها أكبر موظف لقوى العمل في المجتمع وبالتالي تنشط الاقتصاد. ولكن الأمر لدينا عكس ذلك ، إذ يبدو أن المشروعات الصغيرة تتجه نحو تأسيس المشروع ومنحه قروض ميسرة ودعمه من جميع النواحي ولكنه ينتهي بتوظيف كم جديد وكبير من العمالة الوافدة! يجب تدارك الأمر قبل التمادي بهذا الأسلوب الخاطئ والمضر…”

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