Kuwait City: The Cabinet of Ministers assigned the Public Authority for Manpower (PAM) to conduct a study on whether they should cut salary subsidies (allowances) for people above the age of 60 years working in the private sector, a local newspaper reported.
This comes shortly after the government announced it was studying the likelihood of stopping salary subsidies (in Arabic known as Daam Al Amala) for those that make over 3,000 Kuwaiti dinars in the private sector.
To incentivise Kuwaitis to work in the private sector, the government pays a monthly salary subsidy. This is also done as wages in the private sector are usually lower than those in the public sector.
Many have argued that cutting salary subsidies, a huge bonus for Kuwaitis working in the private sector, will turn more people away towards the public sector and weaken the already frail private sector.
Around 70 per cent of Kuwaitis work in government jobs, as the pay is usually higher, working hours are shorter and they cannot be fired.
Amidst the government’s efforts to cut spending, last month, the Minister of Finance, Khalifa Hamada, submitted his resignation to the Prime Minister. While he did not give a reason for his intended departure, his announcement came two days after the Cabinet announced that they will be putting in place measures aimed at reducing government expenditure.
Kuwait is already witnessing a liquidity crunch, with oil prices dropping and a steep increase in government spending due to the COVID-19 pandemic. For the 2020-2021 fiscal year, Kuwait recorded a 10.8 billion Kuwaiti dinar deficit, the highest to date.