The Authority employees' salary crisis: grave consequences for the Palestinian political project

By: Omar Shaban

Summary:

The financial crisis of the Palestinian Authority and its inability to pay its employees' salaries have caused negative results on all the aspects of life in Palestinian society: they have affected negatively the popularity of the Palestinian Authority and the state of stability in the Palestinian political system; they have increased the state of congestion and tension the Authority's relation with the citizen witnesses; and they have weakened the Palestinian Authority's position in its competition with the Hamas government in this field, with the great difference in the burdens laid on each of them.

Introduction:

Since the Palestinian division in June 2007 the two governments — Hamas's in Gaza and the Palestinian Authority's in Ramallah — have not ceased competing in many fields, among them the capacity to pay their employees' salaries in an attempt to affirm their good administration. Taking into account the great difference in the number of employees and the value of the monthly bill for each of them. Because of the severe financial crisis the Palestinian Authority has been passing through for two years, it has not been able to be regular in paying its employees' salaries on their date: during the past three months (October / November / December) the Palestinian Authority paid one month's salary in two instalments. Whereas the Hamas government has been able to pay its employees' salaries with greater regularity. The monthly salaries bill the Palestinian Authority bears for its employees in the West Bank and Gaza, who number 160,000, is about 205 million dollars, while the monthly salaries bill for the employees of the Hamas government in Gaza, who number 42,000 employees, is about 37 million dollars monthly. The Palestinian Authority's budget for the year 2012 was about 3.9 billion dollars, while the Hamas government's budget for the year 2013 was estimated at 890 million dollars. While the Hamas government bears no financial responsibilities in the West Bank, the Palestinian Authority continues paying the salaries of its employees abstaining from work in the Gaza Strip, who number 55,000 employees.

1. Political dangers:

The Authority's inability to pay its employees' salaries, in light of the immense rise of prices and the inflation rates unaccompanied by an increase in wages, formed fuel for the popular protests the West Bank witnessed in the past two years. These demonstrations raised doubts about the extent of the Palestinian Authority's capacity to survive and continue its political programme. The demonstrators demanded setting a minimum wage of no less than 400 dollars monthly, while slogans were raised demanding the dissolution of Dr Salam Fayyad's government and the dismantling of the Palestinian Authority itself. Likewise the government's employees in the West Bank carried out many strikes demanding that the government manage its affairs so as to pay its employees' salaries. These demonstrations and strikes were accompanied by accusations of corruption rampant in the Authority's departments and of the Palestinian government's indifference to the seriousness of the crisis and its repercussions.

2. Deterioration of the national indicators and stagnation of economic activity:-

These are the national indicators used in measuring the average growth of states and the extent of the welfare of peoples, among them the gross domestic product. Governmental spending, including the salaries, represents one of the stimulants of growth in the gross domestic product. Therefore governments commit to paying their employees' salaries not only to enable them to confront the increasing costs of life, but in order to stimulate the internal economic movement and encourage families to consume in a way that increases the movement of the markets and creates new job opportunities. And as in the game of dominoes, the diminution of governmental spending reflects negatively on its capacity to settle the bills of education, health, and social services. Likewise it leads to reducing the Palestinian purchases from Israel, which lessens the value of the tax transfers (the clearance) that Israel collects and transfers to the Palestinian Authority.

3. Increase of the levels of poverty and the rates of dependency:

The Palestinian Authority's employees support nearly a million persons — that is, a proportion of 25% of the total population. The salaries crisis has pushed tens of thousands of employees of the lower administrative grades into the pit of poverty because of their losing the sole source of income. The irregularity in paying the salaries has caused an increase in direct dependency in Palestinian society, where it has reached 7:1 — that is, for every person who works with a salary there are 7 persons who do not work of those who are of working age (15-60 years) — as the government's employees have turned from supporters of their families into dependants. The rise of the dependency rates demonstrates the depth of the crisis: in light of the high unemployment rates and in light of the irregularity of paying the salaries of the public-sector employees, there remain in the production cycle only those who work in the private sector and the civil organisations, while the rest of society's sectors stand watching. That causes a destructive disorder to the system of economic and social relations and to the system of values and morals. That requires that whoever receives his salary support directly those close to him and support indirectly the rest of society — and that through funding health services, education, transport, and paying the fees and taxes. This makes everyone feel exhaustion and inability to cope, as the requirements of dependency exceed the capacities of the supporters. Likewise the rates of dropping out of education increase, and the rates of early marriage, especially for girls; the rates of divorce among the married rise and the rates of marriage decline..etc.

4. Weakness of the Palestinian bureaucratic apparatus and the diminution of the sense of belonging:-

The governmental apparatus of any state is one of the sources of its strength and the marks of its sovereignty and its fundamental instrument for realising its development plans. The existence of an organised, active, and qualified governmental apparatus is one of the stipulations for achieving human development. The salaries crisis causes a feeling among the public-sector employees of futility, weakens their desire to go to work, and reduces and limits their capacity to perform their functions. This afflicts the bureaucratic apparatus with the diseases of laziness and absence and deepens the feeling of futility. For the monthly salary the employee obtains does not represent a financial return for his effort and a reward for his experience only, so much as it is a strengthening of his feeling of the usefulness of what he does, an appreciation of his work, and a reward for his qualifications and experience.

5. Deterioration of the level of quality of life:-

Because of the interruption in receiving the salary, families are forced to reshape their basket of purchases and expenses in quantity and kind in a way suiting the new situation. The family resorts at the beginning to dispensing with the unnecessary items such as entertainment and trips, then begins reducing the budgets allocated to reading, buying books, and going to the theatre. Then families are forced to stop educating their children, especially the girls among them. The descent of priorities continues until it reaches the reordering of the priorities of spending on fundamental items that cannot be dispensed with, which are food, clothing, and drink. And despite their necessity for life, these needs too are subject to rationing and ordering: the family relinquishes the consumption of high-cost goods such as meat and fish in favour of other items such as bread, rice, and pulses, which are less costly but of less nutritional usefulness. Resulting from that in the end is a weakness in the levels of public health, a decline in life expectancy, a weakness of the mental and physical structure, an increase of osteoporosis diseases, and the spread of anaemia and malnutrition diseases, especially among children.. etc.

The source: http://www.al-monitor.com/pulse/ar/contents/articles/opinion/2013/02/palestinian-authority-economic-crisis.html