The elephant in the room refers to the notion that there is a difficult situation that is so obvious to all, but which no one has yet addressed.
In Libya, The World Bank and Ministry of Labour identify that there is 2.3 million people who actively work in the government public sector. In the public sector it is relatively easy to obtain a job for all Libyans. Most of the employees don’t really do much, sometimes nothing at all but netherless the size of the Libyan public sector has continued to happily balloon.
For instance, when we started to working on supporting new business formation in Libya in 2016 at Tatweer Research, we always said that the main problem in Libya was two-fold:
1. Over 1.5 million people employed in public sector
2. High reliance of the economy on oil and gas exports
Two problems, that have not gone away, and in fact only grown.
In Libya there is a weak private sector economy. Access to finance is poor, the Ease of doing business ranking released by the World Bank every year puts Libya near the bottom of the list. It is hard doing business in Libya even though the country is filled with rich economic opportunities.
Even though there has been a civil war in the country and money from oil exports has been greatly reduced (until recently) the 1.5 million people in the public sector that we talked about in 2016 has continued to grow and has reached 2.3 million people which is surely unsustainable. The problem will not stop there, there seems to be continued pull from the public sector to employ more people in the years to come unless something changes.
Public sector salaries takes up the largest proportion of the country’s budget.
Furthermore, there is a skills gap. People who graduate from education institutes do not usually graduate with the skills required by the private sector. Thus businesses usually have to spend a lot of money on training, or have to hamper their growth prospects as they cannot find the right staff to grow and/or hire foreign staff who are usually more expensive.
For businesses who do identify staff they find that it is hard to retain and motivate staff as most working people in Libya have a government sector job contract. In fact over 80% of the population have a public sector contract.
Many of these people do not attend the public sector location and work elsewhere in the private sector. Thus for the private sector they are usually hiring people who work for them but also have a running government salary contract. This gives many staff a high level of comfort as they know they have a regular stream of income.
This high reliance of the economy on employing into the public sector is a major burdening factor on the Libyan government as vital finances that could be used for country development, infrastructure and improving livelihoods is being wasted on salaries. As the number of public sector employees only increases over time, this burden will only continue to grow unless real action is taken.
The only potential solution is to support the transition from a high reliance of public sector jobs and empower the private sector. A stronger private sector along with, in the long-term, government policy supporting private sector jobs can start to transition many public sector jobs towards the private sector.
Any other economic development activity that does not address the ballooning public sector is, simply, ignoring the elephant in the room.