The Tunisian parliament is set to discuss a draft budget that will freeze civil servants’ pay. The proposed austerity budget aimed at tackling the country’s ailing economy has been rejected by the Tunisian General Labour Union (UGTT) that has threatened to react with labor strikes.

The Tunisian parliament is set to discuss a draft budget that will freeze civil servants’ pay. The proposed austerity budget aimed at tackling the country’s ailing economy has been rejected by the Tunisian General Labour Union (UGTT) that has threatened to react with labor strikes.

 “The government’s rejection of wage increases is an abdication of responsibility and is likely to jeopardize its credibility and provoke social tensions that threaten the country’s stability,” UGTT Executive Bureau Member Bu’ali Mubaraki told Correspondents.

The new budget plan, “will overburden ordinary civil servants who have started borrowing every month to make ends meet and cover their children’s tuitions. We do not want to make more sacrifices. The government uses the toiling class to prop up its financial resources instead of combating corruption and tax evaders,” says Suha, an employee of the state electricty and gas company. Suha and her colleague Wiam earn 550 USD per month but say they struggle to cover the costs of basic goods with their wage.

Strikes on horizon

The Tunisian government requested that the UGTT, the largest trade union in the country, put a cap on wages for 12 months but the union rejected the deal and threatened strikes. “The government is continuing to dialogue with the other social groups to find a compromise that satisfies all parties,” says Minister of Finance Lamia Zeribi.

Zeribi adds the government is sticking to its wage freeze policy, however, especially since wages have been raised several times since the revolution. The government’s economic and fiscal space, she says, has become limited.

The civil servant wage bill accounts for approximately 40 percent of the budget, which has further deepened the budget deficit due to rising expenditure and declining productivity. Meanwhile, the state has been obliged to seek foreign loans to pay wages.

Costs soaring

“The government’s new budget imposes unjust taxes and unreasonable increases in the prices of a number of commodities: electricity, water, gas,” says Wiam. Reactions to Prime Minister Youssef Chahed‘s austerity proposals – which inlcude extensive public spending cuts alongside the proposed wage cap – from Tunisia’s approximately 700,000 civil servants have been similarly disgruntled.

Prices have skyrocketed in Tunisia at a time when purchasing power is at a record low due to inflation and the devaluation of the Tunisian dinar. Civil servants Suha and Wiam say the fear the new wage cap will affect the middle classes most.

Minister of Finance Zeribi has expressed hope that the new austere proposals will reduce the budget deficit and invigorate the country’s economy, that is witnessing its worst post-revolution crisis.

Dwindling state revenues

Zeribi attributes the government’s policy to suspend pay raises to declining state resources, especially those generated by taxes, in addition to the sharp decline in revenues of state-owned companies.

Civil servants remain sceptical. “Imposing new taxes must be made against certain conditions where all Tunisians, especially entrepreneurs and affluent classes, should contribute to the government’s efforts to mobilize enough resources in order to reduce borrowing,” says Wiam. She is not confident the government will find a way out.

The UGTT’s Bu’ali Mubaraki argues that civil servants have always supported the government to save the country’s deteriorating economy, and that they have been excruciatingly strained over the past decades. “They can no longer accept to be overburdened with more taxes given their present worsening economic conditions,” Mubaraki told Correspondents.

Observers expect a new wave of labor strikes in all sectors unless an agreement is reached between the government and the UGTT soon.