Nigeria has lessons to learn from Saudi Arabia’s austerity measures
BLOOMBERG appropriately tagged the story: “Saudi king cuts once untouchable wage bill to save money”. Prior to now, wages and bonuses used to be sacrosanct in Saudi Arabia; but no more — no thanks to the plummeting crude prices which have necessitated the need to shore up the country’s revenue.
A cabinet statement and royal decree broadcast on state-run Ekhbariya TV on Monday said ministers’ salaries would be cut by 20 per cent and those of members of a legislative body that advises the monarchy would be reduced by 15 per cent. Similarly, the government would scale back financial perks for public sector employees, in what is seen as one of the most drastic measures by the energy-rich kingdom to save money.
The employees that make up two-thirds of working Saudis must have been taken aback by the decisions, which are part of the wide-ranging measures to cut public sector wages to 40 per cent of spending by 2020, from its current 45 per cent, under the Vision 2030 plan by Prince Mohammed, the king’s son and second-in-command to the rich oil country’s throne. “The cabinet has decided to stop and cancel some bonuses and financial benefits,” read a line of the text on Ekhbariya. The only exception will be for troops involved in combat along the country’s southern border and abroad. The measures take effect October 1.
But the steps should not be surprising, given that they only represent a continuation of earlier measures taken by the government to address the declining revenue. The cabinet has had to raise some government fees, including visa charges and fines for some traffic violations. Indeed, subsidies for power and water were also cut last December with the minister in charge of water sacked over public outcry against the way the tariffs were implemented.
There is no doubt that a country with about $100billion budget deficit, the highest among the world’s 20 biggest economies, must take some unusual measures if it is to successfully weather the economic storm. This may not be popular but it is inevitable. That explains the opposition of some civil servants and teachers to the austerity measures. Indeed, some Saudis are already complaining about the development, and speaking nostalgically about their ‘glorious’ past. One of them, Rayan al-Shamri, said on Twitter that the measures boded ill for the future: “God be with the citizens, we are back to the time of poverty.” But is that exactly so?
That, however, is human nature, which should not deter government from taking decisions in the long-term interest of the people whenever it is convinced that is the way to go. The lesson for Nigeria is that, “if gold rusts, what would iron do”? If Saudi Arabia could feel threatened by declining crude prices, to the extent of reducing once thought to be untouchable wage bill, including those of its ministers and other high ranking citizens, then Nigeria has no choice but to follow suit, to shed the weight, particularly of its political appointees and overfed legislators.
It is a matter for regret that our legislators, especially in the National Assembly, have continued to behave like the dog destined for perdition that will therefore not heed the hunter’s whistle, on their obscene pay. Saudi Arabia is by all accounts much more comfortable than Nigeria. A 2014 figure puts its population at 30,770,375. The country’s Gross Domestic Product (GDP) per capita is about $53,624; Nigeria’s GDP per capita is about $5,360 with a population of abut 160 million. It is by far comfortable than Nigeria in other economic indices. Yet, the country is waking up to the reality of diversifying from its oil-dependent economy and in the mean time slashing salaries and bonuses.
We need no one to tell us that the present perks for especially the legislators and their aides are unsustainable. The same applies to other areas of waste, including the civil service, with its teeming ghost workers. The earlier reforms came from above, the better.