Economic diversification and implementing social and economic reforms to ensure long-term sustainability of the welfare state and well-being of citizens, are core pillars in the government’s work agenda presented to parliament last week. Tabling the manifesto in the National Assembly on 6 February, Deputy Prime Minister and Minister of State for Cabinet Affairs Shareeda Al-Mousherji said that improving the standard of living of citizens is a main item in the work plan.
A day earlier, His Highness the Prime Minister Sheikh Dr. Mohammad Sabah Al-Salem, while discussing elements of the work-plan with editors-in-chief of local dailies, had also reiterated the government’s commitment to promote economic diversification and implement reforms required to sustain and preserve the country’s welfare state.
Elucidating the government’s work program to media chiefs, the prime minister stated that the government was “entering a new era, one marked by an overflowing of determination, optimism and national responsibility”. He added that the executive would exert all efforts to enhance constructive cooperation with the legislative wing, and redouble efforts in the service of the country to embody the hopes and aspirations of citizens.”
Stressing on the need for urgent reforms, the premier added that delay in implementing much-needed economic, financial, and administrative reforms will only exacerbate the situation and make it all the more difficult to address in future. This, he warned, could have severe and painful impact on the economy, as well as on sustaining the welfare state, and in providing for the prosperity of citizens.
Turning to specifics of the work agenda, the premier explained that the government manifesto is anchored in provisions of Article 20 of the Constitution that calls for the national economy to be based on social justice, and founded on fair cooperation between public and private activities, with the aim of developing the economy, increasing productivity, improving the standard of living, and achieving prosperity for citizens, all within the limits of the law.
In line with this constitutional mandate, the government agenda aims to achieve a balance in the structure of the national economy by introducing necessary economic and administrative reforms that aim to wean the economy away from its overreliance on hydrocarbon revenues, reduce the role of publicsector in economic activities, and encourage greater private sector participation.
In addition, the premier stressed on the need to rationalize the distribution of subsidies by ensuring that its allocation is tailored to the capabilities and needs of recipients. He also noted the need to solve existing disparity in wages among public sector employees, and said, “The government’s Strategic Alternative program aims to solve the problem of wage inequality fairly, and without prejudice to the rights of national employees.”
The agenda also aims to expand investment opportunities to enable the private sector to create productive job opportunities and working conditions that attract young nationals; Pointing to the pivotal role played by small and medium enterprises (SMEs) in helping countries overcome unemployment challenges, the premier said the government is keen to support the development of these enterprises.
He noted that with more than 300,000 young citizens expected to enter the labor market over the next decade, and with the public sector unable to absorb all this influx, it was crucial to involve the SMEs in addressing unemployment issues. Initiatives to optimize the management of economic resources so as to achieve sustainable economic growth, and to reinforce internal and external security, as well as food and cybersecurity, are other key elements in the work plan.
The government manifesto also identifies a series of targets to be achieved within the first 100 days in office, including rolling out a digital platform that streamlines the processes involved in obtaining company and trade licenses; amending the law to include housewives in the health insurance beneficiaries list; and curbing price hikes of essential commodities.
Other priorities include repricing certain government services; reevaluating rents for state properties; conducting a reassessment to determine those who deserve subsidies;; preparing the draft law on corporate tax; and undertaking financial, economic and technical feasibility studies for the railway link between Kuwait and Saudi Arabia.
The action plan also specifies a series of draft legislations that will require prior parliamentary approval in order to introduce it during the 17th legislative term of the National Assembly. These include, among others, the draft law on establishing and developing the Northern Economic Zone; the draft law on public-sector wages (Strategic Alternative); draft law on amending residency of expatriates; and a draft law on establishing an independent entity for electricity and water.
By diversifying revenue resources, reducing reliance on oil revenues, decreasing the public sector’s overbearing influence on the economy, increasing private sector participation, in particular by empowering SMEs, encouraging foreign direct investments (FDI), and fostering competitiveness locally and regionally, the government manifesto attempts to proactively address potential future challenges.
If implemented in its entirety, the work plan is expected to fortify the country’s financial standing, enhance its international competitiveness, and offer significant opportunities for private sector involvement. But the manifesto also warns that unless corrective measures are urgently undertaken the current budget deficit of around KD3 billion is expected to rise to KD13 billion by 2033. And, while the oil price needed to balance the budget this year is US$78 a barrel, by 2033 this could increase to over $100 a barrel.
A recent overarching analysis of Kuwait’s economy by analysts at the World Bank found that a major obstacle hindering the country from realizing its full economic and social potential was a largely enervated public sector. The government sector, where productivity is a rarity, siphons-off nearly three-quarters of the annual budget outlays in the form of wages, bonuses, subsidies and transfers.
The humongous annual wage bill constrains the budget from allocating sufficient resources for more productive purposes, including for vital infrastructure projects. To its credit, the government has acknowledged that improving productivity and performance of the public sector are crucial to enable the sector to take stewardship of the economy and steer it more efficiently and efficaciously.
Interestingly, in 2022, Kuwait’s General Secretariat for the Supreme Council for Planning and Development collaborated with the World Bank on an initiative to measure public sector capacity to support building a knowledge economy, and to formulate a Knowledge Index for the Public Sector (KIPS). The aim was to assess knowledge management (KM) practices in the public sector, and to identify the challenges in diversifying the oil-dependent economy to a knowledge-based one.
Results from the KIPS initiative indicated that although there are public entities, especially in financial and oil sectors which have adopted world-class KM practices, by and large knowledge management in the public sector remains non-existent. The index also revealed that women and youth are often neglected in the drive to improve KM, and women hold less favorable views on their working environment, training opportunities, and promotion prospects.
Additionally, the index showed that younger staff were both more tech-savvy than their older counterparts and willing to share their knowledge. Given that women constitute the majority of government employees, prioritizing a shift towards gender-equitable KM practices, empowering women’s capabilities, and utilizing the skills and talent of youth, as well as involving both in decision-making processes could help create a more productive knowledge-based government ecosystem.
Introducing KM processes will still require concerted government engagement to set policies, priorities and to drive its implementation. Although the authorities concede the criticality of improving public sector performance, the fact that it has not been adequately addressed so far is a glaring omission that needs to be urgently resolved.