Top Saudi officials have hit out at shockingly low productivity in the country’s bloated public sector, as the kingdom – reeling from low oil prices – tries to cut a budget deficit that ran to nearly $100 billion last year.
“The amount worked [among state employees] doesn’t even exceed an hour – and that’s based on studies,” civil service minister Khaled Alaraj said during an official discussion of Saudi Arabia’s economy broadcast at prime time on Wednesday night.
More than two-thirds of all Saudis in employment work for the government – compared to fewer than 20 percent for the US – and last year the kingdom spent about 45 percent of its budget, or $128 billion, to pay their wages.
Prior to recent reforms, even a conscientious Saudi national civil servant had generous perks – a 35-hour working week, almost no prospect of being made redundant, and frequent bonuses, such as two monthly salaries paid to every bureaucrat, when King Salman ascended to the throne in early 2015.
With the economy expected to expand by only 1.2 percent this year, and oil prices hovering at around $50 per barrel, Saudi Arabia vast oil reserves, which still stand at over $500 billion, have been depleting at an alarming rate.
“If we didn’t take any reform measures, and if the global economy stays the same, then we’re doomed for bankruptcy in three to four years,”said Mohamed Al Tuwaijri, the deputy economy minister, at the same meeting.
The government has announced a raft of unprecedented steps to cut costs, some systematic, others haphazard.
As well as introducing sales taxes for the first time, charging for pilgrimage visas at about $530 per entrant, dropping some energy subsides, and levying heavy new road fines, the government has been trying to slash costs in the public sector.
Last month top officials had their salaries reduced by 20 percent, and their car and phone allowances sequestered, while ordinary workers lost 11 days’ pay when the government moved to the Gregorian calendar. Annual leave has been capped at 30 days.
Underperforming civil servants can now be fired after three years, perhaps risible in most states, but a revolution in the kingdom, where many jobs are lifetime sinecures. In several departments throughout the Gulf kingdom, employees are now required to register their presence in the workplace several times a day, by swiping their ID cards.
Yet King Salman is likely to proceed cautiously with any fundamental trims to the size of the public sector. For decades, the generous salaries paid by the state were seen as a form of redistribution of the oil wealth acquired by the country, which in turn paid for the loyalty of its subjects, who did not risk any calls for social or political reform.
Throwing hundreds of thousands onto the streets is likely to endanger social stability, an outcome the House of Saud probably fears more than the depletion of currency reserves.
To strike a compromise, officials have recently attempted to make the private sector more vibrant and attractive to employees, with reforms such as the end of the six-day working week, and reducing hours worked from 48 to 40 per week.
In total, the government hopes that an extra 450,000 new jobs will be created in the private sector by 2020, boosting its size by a nearly one-third.