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By Shwan Zulal:
A rare report mentioning fiscal and employment statistics in the Kurdistan Region has been published by ‘Awena’ newspaper.
The figures show that, in Slemani Province alone, the government employs 249,000 and an additional 77,000 are on the payroll as pensioners. Furthermore, 60,000 are receiving other benefits from the state. The figures showing private sector employment are still not known. However, looking at the size of state payroll, it is clear that it dwarfs the private sector.
These figures are staggering as the report also shows that the unemployment rate has gone down to 14 per cent across the Kurdistan Region and stands at 11.9 per cent in Slemani province. Only last week the Iraqi central government has announced that it expected that inflation would stay in single digit numbers for this year but, observing wage rises and property prices in Kurdistan, the figure could be much higher.
The full details of the report, by the Statistical Office in Slemani (Sulaimaniyah), are not yet out and it is hard to tell how accurate the assumptions and the auditing of the figures are. Nevertheless, the figures published are worth looking at as the job market is a good indicator of the general state of the economy.
‘Awena’ mentions that unemployment in Slemani province in 1992, after the first Gulf War, was around 56 per cent, compared to 11.9 per cent now. Viewing these figures at a first glance, the achievement looks immense. However, looking at the figures closely, they show a different picture.
The Kurdistan Region, like the rest of Iraq, has very little industry left, either through lack of investment or the government policy of depending on oil and gas revenues.
Over-dependence on oil has crippled private enterprise and choked innovation. The agricultural sector and industry has suffered the most. The majority of goods and services in the Kurdistan Region and Iraq are imported and taxation is only about 7 per cent of government income.
The important figures are the size of public sector employment and pension provisions. Although there has been a surge in the number of private enterprises in the region, their overall size is limited. Private sector employment pay is higher on average and productivity levels are higher too. However, the numbers of employees are fewer than those employed by the state and government policy has not encouraged private sector expansion.
It is understandable that the Kurdish government has done a good job by providing people with jobs, pulling many out of poverty. Nevertheless, this policy has consequences – mainly of inflation and a dispirited private sector. While the unemployment rate has come down considerably in the last 20 years, productivity has not increased. Moreover, looking at the state of public services, namely hospitals and municipalities, it becomes apparent that the productivity level of the work force is next to nothing. The government may have good intentions to create jobs for its citizens, but the facts show that either the government is creating these jobs as part of a patronage system to prop itself up, or they do not understand the basics of macro-fiscal policy.
Iraq has challenging security issues and doing businesses there is harder than in Kurdistan. Nevertheless, although the Kurdistan Region has been heaven for new businesses, so far the large corporate companies are few and they are mostly owned or have strong ties with the two main incumbent political parties.
Kurdistan Region president, Mas’ud Barzani, said in March that his government would introduce new legislation to reform competition laws and ban market manipulation. But so far nothing has been done and the few companies which have political ties still control most markets and stifle competition.
Oil revenue is set to continue growing, but the state appears to be growing much faster. At this rate of growth, the public sector is becoming more bloated and government risks going into a deficit within the decade without having spent the money needed on infrastructure and services. By failing to encourage the private sector – and enabling it to contribute to the national income and provide competitive employment alternatives for idle public sector workers – the future fiscal outlook for the region is not as sound as some might think.
The market economy of KRG is a private one; Barzanis’ market in Hawler, and Talabanis’ in Sulaimaniah. These markets are basically fully controlled by these two families. It is incorrect to link the present, lower unemployment to the government’s policies. The unemployment simply went down because the sales of oil went up over the span of the time that has been mentioned. This increase of oil income, consequently, has been the cause of hiring more people and lowering the employment. It is a temporary and dangerous way of reducing employment. What jobs KRG have been creating or trying to create?! Creating jobs is not about hiring more teachers or governmental employees based on oil revenue. That’s not job creation; it is spending more money without thinking ahead. This barbaric system cannot be analysed with regular economic terms. Whenever there’s a price of anything that would bring down or otherwise harm the two families’ income, they order their militiamen to force the price up or down the way they like. That’s not economy; that’s total chaos and lawlessness. The situation is not good.
Balen, u are getting boring Kaka
Balen, you are rubbishing almost everything. I would be interested to see what you propose to do in Kurdistan, apart from the usual pessimism.
If the government has increased public employments, and you say they have no input, who’s policy is brought unemployment down? be it in a wrong way as it has been criticized in the article.
I think just bashing already indignant and stubborn politicians does not convince them to change their ways.
I also believe the piece is a balanced view of what is happening in Kurdistan.
There are different ways to look at things: you may propose ‘B’ to replace ‘A’ because you might see A as problematic. But you can also say ‘A’ was actually not ‘B’ when people are confusingly see it that way; all what I said was ‘A’ was not ‘B’. I do not see anything positive about the situation in south Kurdistan because there’s nothing positive except for the fact that oil is still flowing and has not yet dried up. The way I see it is like this: a bunch of mercenaries, who have been appointed by the two warlords of KDP and PUK, mimic a government. This is really all what there is! This mimicking government is there to ensure two things: 1/ do the necessary paper work for the businesses of the two tribal families i.e. the Barzanis and Talabanis. 2/ ensure that most the money that is coming from the oil revenue from the central government is actually spent, whether directly or indirectly, in the interests of these families. That’s it! There’s your government! So I was basically saying in my previous comment that there was no conventional government to assess with technical, economic terms. This so called government cannot create jobs or plan things based on scientific researches that conventional governments receive from universities and research centres. Regarding a replacement, which is what we hear every now and then from the apologists of the two tribal families, my city, Sulaimani, tried to overthrow these criminals and will do so sooner or later. Nothing else is a remedy; only an overthrow.
Balen, agree that the current government is corrupt and has a large number of thieves and self-serving politicians, but as we found out in march this year, they would do what it takes to protect themselves and they would not hesitate to use guns.
The alternative you talk about would be very ugly and bloodshed would be inevitable.
The question is; are we prepared to shed more blood or we have to find an alternative to combat these tribal leaders.
I am for the latter and not in favour of seeing people getting killed.
Dear Saman, even though I seem to be a pessimist and anti-everything (like some leftists who’s basically anti-everything! I’m not a leftist), I admit that this corrupt tribal system is still far better and preferable than Saddam’s era. But the problem is that the planet is facing new challenges (fresh water problems, global warming, running out of meat and fresh food, etc.) and we are still stuck without a basic democratic government! The current rulers are mostly illiterate, ruling the educated and intellectuals! Most of the top KDP and PUK leaders are over 70 years of age! These people are ruling youths of today with little to no education, expired ideologies, and expired social etiquette! This is a disaster! They will not go away easily, I know that and we have witnessed this fact. But, ultimately, we the intellectual youths of Kurdistan will have to force them out, blood or no blood. For our mother land, the mother Kurdistan, I am very optimistic that we’ll enjoy our total freedom soon in the next decade or so.
I am being realistic and think everyone should chip in and make Kurdistan work. I am not supporting any one individual party and believe Kurds should change their loyalties to the party that serves our nation most and not vote and support parties because of family and tribal ties. I used to rant and criticize KRG but fond out that they did not listen. I believe in soft power now and think we must nudge them to change and not push.
the reason is that the harder we push the more stubborn they become which leads nowhere.
Well, just think about the latest unrest in Kurdistan (it was, in fact, an uprising), was it a nudge? Or a really hard push that almost lead to a total collapse of their empire? Now, think for a moment, did they listen before the unrest? Were there not daily demonstrations before that? Well, the demonstrations before the uprising were more or less nudges, rather than pushes.
Balen, what uprising? Look, please read and study up. An uprising is when at least a quarter of the population rise up. It was an uprising in your head perhaps, your dreams of a civil war in Kurdistan wont come true, sorry