These things will immediately have an impact on the private sector. One of the problems in the private sector is that there are laws now in Iraq and in Kurdistan that make it compulsory for private sector companies to pay pensions for their staff, but no one does it. They don’t report how many staff they have, or what their profits are. There’s no proper auditing and the local Iraqi auditors will sign anything the company requests.
We’ve come across this in Kurdistan where a company trained up a particular graduate accountant, give him one year’s training and invested time and effort into him. As soon as he had the right skills he jumped right into the public sector and took a pay cut, ultimately so that he will be guaranteed a pension when he retires.
So that’s the problem, when you’re not guaranteed a pension, you want to work for the public sector for security. You can have a good salary and live at a reasonable level but you can’t really progress or save for your long term future.
We need to enforce change and make medium and large companies pay into the pension pots for their staff.
There’s a queue outside the ministries. Everyone working for a private company, unless you are a shareholder with a large amount of money -- and that’s a very very tiny minority-- you’d want to work for the public sector, purely for the pensions and job security. You need action from the top. If the right action is taken then within a couple of years things will change. If no action is taken there will be an ongoing imbalance in the economy.
RT: An oversized public sector is now a strategic threat to the budget of the Kurdish region and in Iraq as a whole.
The KRG spend approximately 750 million US dollars on salaries every month, that’s a huge amount of money for a country of three provinces that are quite small in number. It’s a huge amount of money and this can cause long term problems. The Iraqi population has grown fairly rapidly and in 2025 there will be around 40 million people, in 2050 or 2060 it will be around 50 million.
Although Iraqi oil output will grow and be able to produce 9-10 MPBD of oil, there’s no guarantee it will be at $100 per barrel. And even if it rises to that amount, it’s not going to be enough. We’ll have to employ everyone. This is not Kuwait, this is not the Emirates, it’s a large country with a large population.
RT: In terms of the economy, obviously there’s been a long term dispute between Erbil and Baghdad over oil revenues. We sometimes hear people say that the Kurdish region has had a bit of a head start in the sense that they were effectively freed from Saddam's regime in ‘91. They had their own disputes in the mid 1990s which didn’t help anything, but after that time the Kurdish region has prospered towards the end of the 90s.
Now if you look to southern Iraq at the end of the 90s, Basra or Nasiriyah or Al Amarah, those towns were going through a miserable situation under the sanctions and Saddam's regime. So there’s a sense maybe that the Kurds might have had little bit of a head start. It’s an interesting question: why things in Sulay or Erbil have generally looked a bit more organised than in the south.
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