RIYADH: Cutting Saudi Arabia’s $131 billion public wage bill in half would generate $400-a-month for citizens, a Bloomberg economist has estimated.
Chief Emerging Markets Economist for Bloomberg Economics, Ziad Daoud told Asharq Business that direct monetary support would be a more productive alternative to creating public sector jobs for Gulf states seeking to diversify their economies.
Reducing the number of government jobs would force more people to seek out work in the private sector, he said.
“For example, in Saudi Arabia, the wage bill is worth $131 billion … If reduced to half and redistributed to all Saudi adults, it would provide an equal $400 per month for every Saudi citizen,” he said. “This is a funding mechanism, and there are other funding mechanisms, such as reducing subsidies on goods and services and energy.”
Gulf states are exploring ways to reduce their reliance on crude oil sales while looking at different methods of diversifying their economies and creating more jobs beyond the public sector. Such government jobs are often favored because of the comparatively high salaries on offer as well as better security.
Real economic diversification requires governments to move away from creating jobs in the public sector, which are often characterized by high wages for low productivity, said Daoud.
Instead, governments could consider providing unconditional cash support on a monthly basis to all citizens, he added.
Increasing productivity and reducing wages would result in less government dependence on imports in exchange for increased non-oil exports, he said.
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