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Current Distributional Structures

Public Employment

Public employment has been a critical tool of wealth distribution across the Arab world since independence. Populist-authoritarian republics in particular—such as Egypt, Syria and Algeria—have historically tried to guarantee government jobs for all nationals. This ambition has been scaled back since the 1970s, as the share of public employment has been stagnating and real public sector wages have declined. Yet in international comparison, most countries on which we have data retain a quite high proportion of government jobs to total employment (Figure 5.1).

Morocco is a conspicuous exception and is also, as we will see, the Arab country with the smallest subsidy provision. Among core Maghreb and Mashreq countries, Morocco stands out in having been less ambitious in both distribution and public service provision and in relying more strongly on private- driven development. As Figure 5.2 shows, however, public salaries represent a large share of the gross domestic product (gdp), which seems to reflect a concentration of resources on smaller cadres of better-paid public servants. In Egypt, by contrast, salaries are spread thin among a much larger government workforce. Altogether, however, Arab public salary expenditure—just like

Public employment shares in international comparison

figure 5.1 Public employment shares in international comparison

source: author, calculated from ilo, world bank development indicators, AND national DATA.

Note: gcc countries are left out of this graph, as the large-scale presence of foreign workers in the private sector makes a direct comparison of private and public employment problematic. We know however that in all cases bar Bahrain, more than half of citizens are employed by the respective governments (Hertog, 2014a).

employment numbers—lies above international averages (the exception of Lebanon in Figure 5.2 will be briefly discussed below).[1]

Although available data are patchy, in the cases where we have data, salaries in government, long-term stagnation notwithstanding, typically are higher than in the private sector, especially compared to the informal sector (Bodor, 2010; Yousef, 2004).[2]

Public salary expenses in international comparison

figure 5.2 Public salary expenses in international comparison

SOURCE: AUTHOR, CALCULATED FROM ILO AND WORLD BANK DEVELOPMENT INDIcATORs Data.

Figure 5.3 shows that government subsidies and transfers, to the extent that they are recorded as government expenditure, also tend to be somewhat above the average for countries with similar incomes.

As accounting rules for subsidies are often unclear, and energy subsidies in particular are often under-reported, one can dispute how meaningful these figures are (energy subsidies are discussed separately below using International Monetary Fund (imf) data). It is clear however that this budget item for the most part does not comprise conventional social safety systems in mena, the volume of which is only estimated to be 0.7 per cent of gdp (Levin, Silva, and Morgandi, 2012).

  • [1] In Egypt, the relatively low numbers might also be explained by the lack of accounting foremployment costs in state-owned enterprises and potentially in the large military sector. Ingcc countries, the low shares in gdp are an artefact of the large share of the oil sector in gdp(where few are employed); their share in non-oil gdp is much higher.
  • [2] Another piece of evidence comes from the 2010-14 wave of the World Values Survey, whichincluded 12 Arab countries, and which asked respondents both about their income and theiremployment status. While government employment appears to be on average better paid allover the world, wvs data shows that the average gap in the Arab world is twice as large aselsewhere.
 
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