HTS to ‘shrink the state’ through privatization and civil servant sackings

Syria’s new Islamist leaders are embarking on a radical overhaul of the country’s economy, including plans to sack a third of public sector workers and privatize state-owned companies that dominated under the Baath Party and the Assad’s.

The first sackings began just weeks after the ouster of Bashar al-Assad on December 8, while the pace of the announced crackdown “against waste and corruption” has triggered protests by government employees, including fears of a “sectarian purge of jobs,” Reuters reported by Riham Alkousaa.

Reuters spoke to five ministers in the interim government formed by Hayat Tahrir al-Sham (HTS), all of whom described the broad scope of plans to “downsize the state.” They said this included the elimination of a large number of “ghost employees” (people who allegedly received salaries for doing little or nothing under Assad).

Reuters lends support to the sectarian narrative, arguing that under Hafez and Bashar al-Assad, Syria was organized as a “militarized, state-led economy that favored an inner circle of allies and family members, with members of the Alawite sect of the family heavily represented in the public sector.”

107 state-owned companies to be divested

HTS’s economy minister, 40-year-old former energy engineer Basil Abdel Hanan, told Reuters that there was a major shift towards a “competitive free market economy.”

The government under “interim president” Abu Mohammed al-Jolani (Ahmed al-Shara) will work to privatize state-owned industrial companies, which Hanan said total 107, most of which are loss-making.

Hanan promised to keep “strategic” energy and transport assets in public hands but did not name the companies to be sold. Syria’s main industries include oil, cement, and steel.

Finance Minister Mohammad Abazeed said in an interview that some state-owned companies existed only to embezzle funds and would be closed down. Abazeed said, “We expected corruption, but not this much.”

Half of the civil servants may be sacked

Abazeed said that based on a preliminary examination, only 900,000 of the 1.3 million people on the state payroll actually showed up for work.

“That means there are 400,000 ghost names. Eliminating them would save considerable resources,” Mr. Abazeed said.

Administrative Development Minister Mohammad Alskaf, who oversees public sector staffing, went further, telling Reuters that the state would need between 550,000 and 600,000 employees, less than half the current number.

Abazeed said that the reforms, which also aim to grant amnesty for penalties and simplify the tax system, aim to remove obstacles and encourage investors to return to Syria.

HTS’s goal is familiar: Reduce bureaucracy, boost exports

“So factories inside the country can serve as a launching pad for global exports,” said Abazeed, who was an economist at Al-Shamal private university before serving as a treasury official in the HTS stronghold of Idlib in 2023.

Since 2017, HTS has been attracting investment and the private sector in Idlib “with less bureaucracy and pressure on hardline religious groups,” according to Reuters.

The new government hopes for a nationwide increase in foreign and domestic investment to create new jobs as Syria rebuilds after 14 years of conflict, three ministers told Reuters.

However, for HTS to replicate the “Idlib model,” it will have to overcome a wide range of challenges, notably international sanctions that severely hamper foreign trade.

The question of the legitimacy of al-Jolani’s government could be raised

Maha Katta, Resilience and Crisis Response Specialist for Arab Countries at the International Labour Organisation, said the economy is currently not in a position to create enough private jobs.

Katta said, “I’m not sure it’s really a wise decision,” adding that restructuring the public sector “makes sense” but questioning whether it should be a top priority for a government that needs to revive the economy first.

While recognizing the imperative for interim leaders to act quickly to get the country under control, some critics see the scale and pace of the planned changes as overreaching.

Aron Lund of the Middle East-focused think tank Century International said, “They talk about a transition, but they are making decisions as if they were a legitimately constituted government.”

Islamist government to administer neoliberal ‘shock therapy’

Economy Minister Hanan said economic policy would be designed to manage the consequences of rapid market reforms to avoid the chaos of recession and unemployment that followed the “shock therapy” imposed on post-Soviet countries in Europe in the 1990s.

Mr. Hanan said, “The aim is to balance private sector growth with support for the most vulnerable.”

The government has announced a 400% increase in civil servant salaries, currently around $25 a month, starting in February. It is also mitigating the impact of layoffs through severance pay or by asking some workers to stay at home while needs are assessed.

Hussein El Khatib, Director of Health Facilities at the Ministry of Health said, “We are saying to the employees who are hired just to get a salary: please take your salary and sit at home, but let us do our job.”

Discontent Among Public Laborers Grows

But discontent among workers is growing. Workers have been showing Reuters lists circulating in the labor and trade ministries, which have scaled back Assad-era employment programs for former soldiers who fought alongside the government in the war.

One of these veterans, Mohammed, told Reuters he was dismissed from his data entry job at the labor ministry on January 23 and given three months’ paid leave. Mohammed said 80 other former fighters had received the same notice, which he shared with Reuters.

Responding to questions from Reuters, the labor ministry said that “due to administrative inefficiencies and implicit unemployment” some employees had been placed on three months’ paid leave to assess their work situation, after which their status would be reviewed.

The plans sparked protests in January in cities such as Daraa in southern Syria and Latakia on the coast.

Daraa Health Directorate employees carried banners reading “No to arbitrary and unjust dismissals” during a demonstration attended by dozens of people.

Demonstrator Adham Abu Al-Alaya said he fears losing his job. He says he supports the elimination of ghost labor but rejects the allegation that he or his colleagues are being paid for doing nothing. He was hired in 2016 to manage records and pay bills.

Abu Al-Alaya said, “My salary helps me meet my basic needs, such as bread and yogurt,” adding that he also works another job to make ends meet.

He said, “If this decision is implemented, unemployment will increase across society, which is something we cannot afford.”