The Salary and Wages Bill Overwhelms the Palestinian Authority Financially

Exclusive to "SadaNews": The financial crisis of the Palestinian National Authority has taken a dangerous turn, with the head of the Ministry of Finance, Dr. Estephen Salama, classifying the crisis as no longer a deep financial crisis but rather an existential one that threatens the Palestinian Authority.

 The public debt has reached approximately 14.6 billion dollars, exceeding the size of the Palestinian gross domestic product, amid the Palestinian government's failure to meet its obligations fully.

With public employee entitlements, which have not paid full salaries since November 2021, amounting to about 2.61 billion dollars, there is no prospect for a near solution as Israel continues to withhold clearance funds for the seventh consecutive month. Meanwhile, 380 lawsuits filed in Israeli courts, estimated to be worth about 20 billion shekels, threaten to consume all withheld clearance funds estimated at about 13 billion shekels.

In light of this difficult reality, the monthly salaries and near-salaries bill has significantly inflated in recent years, recently amounting to about 1.047 billion shekels (monthly salary bill), as the Palestinian Authority pays salaries and near-salaries monthly to 291,844 beneficiaries, including 120,472 civilian employees and 52,353 military personnel (35,000 actively working in the West Bank), along with pensions for retirees and allocations in the Gaza Strip.

This bill, according to statements from the Ministry of Finance monitored by SadaNews, constitutes about 82% of the total general budget, which is a dangerous indicator as experts believe that the salary bill should not exceed 50-60% of the budget size, as this will increase the burdens on the financially burdened Authority, and on the other hand, salaries come at the expense of providing developmental services that benefit society.

The number of employees in previous years ranged between 141,000 and 153,000, according to previous official statements from the Ministry of Finance, but it has now reached about 172,000 employees, indicating at first glance an increase in the number of employees by at least 30,000 (according to announced figures), taking into account that tens of thousands of employees have been retired in recent years, without the pension fund being able to fulfill its full obligations towards retirees, amid high debt from the government which has borrowed over the years from this fund, either through obtaining funds or failing to transfer employees' monthly contributions to the fund.

 Economic expert Moayad Afana told "SadaNews" that the difference in figures does not mean that the Authority employed tens of thousands, but in interpreting those figures, the number of 172,000 employees includes daily workers, contract employees, employees awaiting appointment, and others, while the official number of settled employees is about 90,000 in the civil sector and about 53,000 military employees, which is approximately 143,000 employees, close to the adopted number. The national authority adopted a zero-employment policy meaning (one hire for one retirement). He adds, "There is a rationing in hiring in all sectors except for the health and education sectors as needed," pointing out that the inflation in the salary bill does not result from new hires but from several other reasons, including agreements with unions that resulted in new allowances and costs, especially in sectors where employees hold a higher relative weight, in addition to legal rights issues such as the increase in the minimum wage, annual administrative allowances under the law, and periodic promotions in the civil and military sectors.

With this inflation in the salary bill, the Palestinian Authority has been struggling to secure this monthly bill without success for over four years, as employees have not received a full salary. The issue has worsened as Israel has increased its deductions from clearance funds, before stopping transfers entirely seven months ago. To secure 60% of salaries and a minimum of 2000 shekels, the Palestinian Authority needs approximately 750 million shekels, whereas this amount was sufficient to pay the full salary bill in previous years.