Complex Made Simple

Tunisia aims to cut 50,000 public sector jobs, starting this year

* Package of reforms aims to reduce public spending

* Public sector wage bill one of world’s largest

* Tunisia economy not matching political progress

Tunisia plans a programme of voluntary lay-offs for more than 50,000 public sector employees, starting this year, in a drive to cut government spending, a minister told Reuters on Thursday.

Minister of Public Functions Abid Briki said did not say how long the programme, likely to be politically sensitive, would take.

Tunisia is under pressure from multilateral lenders to cut its budget deficit; at 13.5 percent of GDP, its public sector wage bill is one of the highest in the world.

“Our goal is that more 50,000 employees in public jobs will leave voluntarily to reduce the volume of high wages, and this will be very important for Tunisia’s budget,” Briki said in an interview.

The government will give laid-off employees two years’ pay and help them to get bank loans for private-sector projects, he said.

Briki said international lenders strongly supported the reform, which “cannot be delayed any longer”. He said the cost would be announced during the first quarter.

“The burden of costs in the public sector with 650,000 employees has become a major threat for the state budget. This must stop immediately, these costs should go to development projects,” he said.

Tunisia will need $3.7 billion in foreign loans in 2017 to cover its budget deficit, the finance minister said last month.

Since its pro-democracy uprising in 2011, Tunisia has been backed by foreign partners and multilateral lenders keen to see its transition succeed. But economic reforms to tackle joblessness and high public spending have lagged behind political changes.

Briki said there were also plans to urge public servants to take early retirement three years before the statutory retirement age of 60.

“Our hope is to reduce the number of employees in the public sector in 2020 to about 450,000,” he said.

He also said the government planned to restructure around 107 struggling state-owned firms and potentially cut staff in an attempt to make them profitable.

Sources close to the government have said the sale of some companies has become an option, though Briki did not mention this.

Since autocrat Zine El-Abidine Ben Ali was overthrown in 2011, Tunisia has managed free elections, introduced a new constitution and harnessed a spirit of compromise between secular and Islamist parties to become a model of political change for the region.

But popular protests over the lack of jobs, labour union resistance and political squabbling have held back plans to cut back state spending and improve the legal framework for banking and investment.