- Libyan authorities in their preparations for this year's national budget have decided to lay off more than one third of the country's civil servants within the next few years. In a bid to ease budgetary strains and encourage private sector investments, authorities nevertheless offer to pay three years of salaries.
The decision to lay off an estimated 400,000 state employees and army staff was presented during the 2007 budget works this weekend. Libya has more than one million civil servants, totally dominating the national workforce in a country of only 6.5 million inhabitants.
The Secretary of the General People's Committee - or Libya's Prime Minister, as he is usually referred to - announced the plan on national television during the weekend. PM Al-Baghdadi Ali al-Mahmoudi said it was necessary to cut back on the dinar 4 billion (euro 2.5 billion) spent on salaries over the national budget each year.
While the radical reform would have a quick effect on the composition of Libya's workforce, budget spending on salaries would not diminish within short. PM Al-Mahmoudi promised that authorities would be generous with the many affected of the labour cut-backs.
The Prime Minister in his speech emphasised that those thrown out of the government workforce "will be paid their full salaries for three years until they can ensure their own businesses without being funded by the Public Treasury," Libyan state media reported. "They also can get loans to create their own economic business where each loan reaches up to 50,000 dinars," (euro 32,000) he added.
According to the budget committee, the programme not only was aimed at cutting Libya's galloping public wage bill. It is also a conscious attempt at diversifying the Libyan economy, which still is totally dependent on oil revenues.
PM Al-Mahmoudi in his speech made it clear that government preferred the 400,000 to-be-sacked civil servants to establish small and medium-sized companies rather than going in search of other employment. He assured that "building materials" were being supplied throughout Libya to make sure that new enterprises could be established and built.
Indeed, for the many Libyan that will lose their formerly safe and secure government jobs, there is little hope on the small private employment market. Official figures put the unemployment rate in Libya at 17 percent, but the real figure is believed to be much higher.
Official sources were not able to inform how the dramatic downsizing of the civil servant corps was to be carried out in practical terms - such as who would be asked to leave and on which criteria and when they would be ordered out of office. Libyan workers have close to no labour rights and there does not exist any independent trade union in the country that would dear challenging a public employer.
The decision to fire a quarter of the public workforce is believed to have been encouraged by Libyan leader Muammar Ghaddafi. Mr Ghaddafi has on several occasions said that the national economy needs to diversify and that the private sector needs to grow at the public sector's expense to secure further economic development in the North African country.
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