Mrajaa Ghaith to Sada: Salary Reform Must Begin with Reforming the Public Sector; Arbitrary Decisions Will Not Solve the Crisis – Full Details

Former member of the Board of Directors of the Central Bank of Libya, Mrajaa Ghaith, commented to our source on the salary scale prepared by the House of Representatives, which sets the highest salary for holders of sovereign positions at LYD 12,000 and the lowest salary for citizens at LYD 825.

Ghaith questioned the proposed minimum salary, saying: “If the minimum retirement pension is LYD 900, how can the minimum salary be LYD 825? Let us assume someone retires while holding the first employment grade. Under the Social Security Law, they are entitled to 80% of their salary. If 80% of LYD 825 is calculated, it would be lower than the minimum pension of LYD 900. Therefore, the minimum salary should be approximately LYD 1,250 or LYD 1,225.”

Ghaith added that those who prepared the proposal had failed to consider living standards in Libya, inflation, and statistics indicating that the minimum monthly food basket for a Libyan family of five costs between LYD 1,200 and LYD 1,500, for food alone. When other expenses are included, the total reaches approximately LYD 1,875. This means that the minimum salary required for an individual to meet basic living costs, whether in the public or private sector, is LYD 1,875.

Ghaith stressed that the lowest-paid categories are the ones that need salary adjustments and increases. Under current conditions, no salary in Libya below LYD 2,000 is sufficient to cover living expenses.

He also addressed annual salary increases, arguing that they should not be fixed amounts. An increase of LYD 10 might have some value in 2025, but by 2028, its purchasing power could be equivalent to just LYD 5. Instead, annual increases should be linked to inflation. When inflation rises, the salary increase should reflect the difference in inflation rates between the current and previous years.

Inflation, he explained, means a decline in the Libyan dinar’s purchasing power. A person may technically receive LYD 1,800, LYD 1,500, or LYD 2,000, but in real terms, they are receiving less because of inflation.

He continued: “If a salary is restored to LYD 1,500, then that amount should remain constant in terms of purchasing power, not merely as a numerical figure. LYD 1,500 in 2024 should have the same purchasing power as LYD 1,500 in 2030. Otherwise, you are not really paying someone LYD 1,500 in real terms.”

Ghaith said he had previously explained that the proposal should establish a basic salary for everyone, followed by allowances. He rejected the concept of a discriminatory allowance, questioning why some employees should receive an additional 10% while others receive different rates simply because of their positions.

He argued that this approach amounts to discrimination rather than a fair salary structure. If a position carries greater responsibilities, its benefits should reflect the nature of the work, rather than being determined through arbitrary distinctions. The nature of the job, he stressed, should determine the additional benefits.

Ghaith also questioned how the authorities intended to implement a unified salary scale while reducing existing salaries.

“People will not accept having their salaries reduced. Will university faculty members accept it? Will the judicial authorities accept it? Will the police accept it? Who would agree to have their salary cut?”

He argued that employees should retain their existing salaries while any proposed reductions are implemented gradually through a salary adjustment mechanism. He cited the approach adopted in 2015 as an example: if a salary was reduced from LYD 2,000 to LYD 1,500, the employee should continue receiving the LYD 500 difference every month until it is gradually absorbed through future salary adjustments. This would ensure that employees do not suffer an immediate loss of income.

However, he questioned how anyone could be persuaded to accept a salary reduction from LYD 6,000 to LYD 4,000.

He added that, legally, salaries cannot be reduced unless as a disciplinary measure. In this case, employees have committed no disciplinary offence, making such reductions effectively punitive.

Ghaith explained that authorities could abolish certain allowances and benefits if they wished, but the basic salary was different. When employees were recruited, their salaries were agreed upon and established under the applicable terms. Authorities could not simply reverse that agreement and announce that salaries would be reduced.

He further noted that any errors in recruitment, including nepotism and irregular appointments resulting from opening recruitment opportunities without proper controls, should not be borne by ordinary citizens. Responsibility lies with the failed administration, which should be held accountable and replaced for failing to manage the country, public expenditure and revenues, and for failing to resolve the crises.

These crises, he stressed, were foreseeable and were no secret. The authorities should have anticipated them and taken precautionary measures rather than making citizens pay for administrative failures.

Ghaith emphasized that salary reform must begin with reforming the public sector itself. The authorities are currently addressing only the consequences while ignoring the root cause: the excessive expansion of the administrative apparatus to the point where the state can no longer afford to pay its employees.

He also explained that, although nepotism has contributed to the expansion of public employment, another major factor is that the authorities have effectively closed off alternative financing opportunities for citizens.

For example, someone seeking to establish a business cannot obtain a loan from a bank. Following the suspension of interest-based lending, no suitable alternative was introduced. Instead, a worse alternative was put in place, with financing costs reaching 24%.

Furthermore, the closure of the property registration system has prevented people from using their properties as collateral to secure financing, while many do not even own assets that could be pledged.

Ghaith argued that these challenges cannot be resolved through arbitrary decisions. Libya needs strategic experts who are independent of the government and its policies, capable of developing solutions over a period of 10 to 15 years.

Such a strategy must be implemented gradually and should include reforming the education system and its outcomes, as well as restructuring public employment. He called for a ten-year plan that is implemented step by step, consistently and without decisions based on personal preferences or political convenience.

“These are the solutions,” he said.

Concluding his remarks, Ghaith criticized the proposed salary scale, saying that it appeared to have been drafted by bringing ten people together in a room to agree on figures based on personal preferences rather than clear economic or legal criteria.

“On what basis was LYD 825 set as the salary for the first grade? If we paid them that amount, could they actually make a living? Just look at your own circumstances.”

He stressed that such a process should not be rushed. It requires experts with a thorough understanding of economic, social, financial and legal matters to develop a proposal that can gain the acceptance of the majority.

He also emphasized the need to strengthen the dinar’s purchasing power and reduce the exchange rate.