government

Tunisia-IMF-Reforms: Gov't commits to cut wage bill to around 15% of GDP by 2022

May 9, 2021

TAP)- The Tunisian government undertakes as part of a reform plan presented to the International Monetary Fund (IMF) to implement a set of measures, which, in addition to the freeze on salary increases in 2021, will help cut the wage bill to around 15% of GDP in 2022, compared to 17.4% of GDP in 2020.

The reform of the wage bill is in fact, one of the key components of this plan presented by the Tunisian government delegation to the international donor during its five-day visit to Washington on May 3-8).

The current government acknowledges in the 'authorities' document on the reforms to be implemented as part of the additional programme with the IMF' that 'if deep and innovative reforms are not implemented, the wage bill trend will be detrimental to budgetary balances.'

A voluntary retirement programme for civil servants

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The Tunisian authorities are proposing in this regard, a number of reforms aimed at cutting the wage bill, including mainly the introduction of a voluntary retirement programme allowing civil servants to keep 25% of their net salaries (plus social security contributions) in order to engage in another occupation, including a paid activity (other than in the public sector and public enterprises).

They also consider adopting a new programme of early retirement with the State granting the pension differential paid at the legal retirement age and encouraging part-time work at 50% of working time or one day per week in exchange for an equivalent part of the salary.

'These measures will encourage a reduction in the number of employees and will have an immediate impact on the wage bill and will not affect the civil servants' rights and advantages,' the authorities consider.

The reform plan also provides for the encouragement of entrepreneurship by granting civil servants the possibility to benefit from a leave of absence for setting up a business for a period of 5 years, renewable with a reported system and with the possibility of returning to the civil service on condition that a notification is sent at least 6 months before the return date.

Reconsidering the pay system in consultation with the social partners

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The government agrees that it is essential to reconsider the pay system in consultation with the social partners by introducing a rule for adjusting salaries and bonuses that takes into account growth and productivity performance and the inflation rate, extending the period of automatic promotion to the next grade from six months to two years, and capping the number of promotions per corps or per ministry.

In this reform plan, the Tunisian authorities undertake to remobilise the civil service through a shift from human resources management to competence management through training plans and mobility programmes, in order to encourage the redeployment of staff.

In this regard, they consider encouraging mobility between the central administration and local authorities by keeping the salary paid by the State and granting an additional bonus paid by the local authority as an incentive to civil servants.

'This should help reinforce the territorial civil service, in order to provide a more efficient service to users and to fill the gaps in the administrations that are understaffed, putting in place a job description with the objectives to be achieved, which would help mainstream individual evaluation and make the work of civil servants more efficient.'

The Tunisian authorities are also planning to introduce a pay system based partly on performance for the senior administration, which would allow better recognition of individual merit.

To manage these measures, they intend to merge three directorates, namely the Directorate General (DG) of Administrative Services and the Civil Service, the DG of Training and Competence Development and the DG of the Organisation of Public Services, into a single authority: The General Authority of the Civil Service.

In Tunisia, the wage bill was projected at 19 030 million dinars in 2020, accounting for 60.6% of budgetary resources (excluding grants and loans) compared to an average of 52.2% during the 2010-2019 period.

The Tunisian authorities point in this connection to 'a critical situation of public finances' which requires specific consideration in order to avoid a drift in the trajectory of the wage bill with harmful consequences on the sustainability of the public debt.

The measures adopted during the second programme with the IMF to control the wage bill (voluntary retirement, early retirement, recruitment freeze, etc.) 'were not enough,' the Tunisian authorities acknowledged in the above-mentioned document.

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