Head of Government Faces Opposition Over Potential Austerity Program - Tunisia Live Head of Government Faces Opposition Over Potential Austerity Program - Tunisia Live
Head of Government Faces Opposition Over Potential Austerity Program


Head of Government Faces Opposition Over Potential Austerity Program

Head of Government, Youssef Chahed. Image source: leexpress

Tunisia’s three day old Unity Government already appears to be on collision course with the country’s general labor union over a tranche of economic reforms targeted at the public sector.

The new government of Youssef Chahed officially commenced work today in the face of dire warnings from the country’s trade union body, the UGTT over its proposed economic program.

Chahed addressed many of the issues facing the country in the speech preceding his government’s confidence vote on Friday; the declining rates of investment, the falling Dinar, drops in phosphate production and rocketing unemployment. Acknowledging the gravity of the challenges currently facing Tunisia, Chahed proposed a number of economic reforms that, taken together, potentially amount to an austerity program.

Chahed proposed sweeping reductions in the country’s payroll, which has doubled since 2010 and now accounts for 13.4 billion dinars in government spending, around one third of the state’s budget. The potential austerity program would involve drastic cuts in state expenditure, the dismissal of thousands of public employees, increasing taxation and suspending current investment in infrastructure in an attempt to balance the books while encouraging foreign investment.

The UGTT responded angrily to Chahed’s proposals. A press release issued by the Union was broadly supportive of many of the government’s aims, though remained highly critical of many of its recent cabinet appointments. Specifically, the UGTT stressed its continued support for the public sector’s existing structures and those that work within them.

A report in La Presse, quoted the former Minister of Finance and the former Mentor of Studies and Research Department within the UGTT as saying, “The UGTT seeks to preserve its credibility with the public. It will do anything to oppose austerity measures and its history has shown that the previous government did not have the means to oppose the union. The current government will be no different. It will not ignore the will of the UGTT.”

Speaking to Tunisia Live, Political Analyst, Youssef Cherif said, “The new Government’s priorities are fighting corruption and terrorism, as well as implementing economic reforms, so they’re the same aims as the Essid government had. We’ll see if it will succeed.” He added: “the risk of austerity is very high, and all the indicators are pointing in that direction. The IMF and the World Bank have been lending Tunisia lots of money with repayment scheduled for next year, so the only solution is to implement austerity programs, even if the outcome sounds negative.”

Commenting on the hostile rhetoric of the UGTT, Cherif said that it was unlikely to be welcomed by Chahed, “The state is applying new liberal economic policies, such as firing employees from the public sector, which will lead to a confrontation with UGTT. The question we have to ask is, will Chahed be able to engage meaningful negotiations with the UGTT?”

Zaineb is a journalist in the Tunisia Live newsroom. She speaks Arabic, French and English.