Jalel Harchaoui and Colin Powers
CONCLUSIONS AND
RECOMMENDATIONS
Libya’s public sector, since the 1970s a cornerstone of the national development model and primary channel for redistributing oil wealth, is today struggling to fulfill its historic functions. It is not only failing to deliver quality services and output growth—it also performs poorly as a distributive mechanism, excluding the young and those in peripheral areas while leaving many of those fortunate enough to have a public job unable to cover their bills.
At this stage, a holistic restructuring has become necessary. This should commence with a redefinition of mission. Rather than treat the public sector as a distributive mechanism—it has, at this stage, proven a relatively ineffective one—restructuring should prioritize commitments to performance: Enhancing the quality of public services and the commercial performance of state-owned enterprises need be elevated as primary objectives.
Amongst other things, reform will entail the adoption of meritocratic hiring and promotion practices along with the upgrading of compensation packages for public servants. By definition, it will also entail ending existing arrangements that have allowed political elites to use public sector jobs as a means for purchasing loyalty and building personal power. Success on any of these fronts will assume the advance of genuinely democratic governance.
Without transparency in the conduct of government business and public control of decision making, addressing the corruption that presently corrodes Libya’s public sector will be impossible. Naturally, ending state and institutional partition is sine qua non of reform, too.
So to ensure that the shift in public sector mission does not create adverse social effects, the development of alternative income and wealth distribution mechanisms will be essential. Policies like a universal basic income should be considered, and the state’s role as creditor and investor to local businesses and social ventures should be scaled up.
The state’s presence as a service provider, creditor, and investor must be expanded in peripheral areas of the country especially. Deepening the public health and educational infrastructure in these spaces—and therefore training and hiring more doctors, teachers, social workers, and administrators—should not be foregone simply because of the bloat of the public sector.
To grow demand in the labor market (and thereby reduce reliance on public sector opportunities), efforts to further develop the private sector should also be undertaken. Reforming the legal and regulatory environment will be key, as will buttressing the judicial system. Finding ways to allocate capital resources to small and medium-sized enterprises which can service local markets, particularly in peripheral areas, should be considered a priority.
So too the development of large, export-oriented manufacturing firms: these firms are essential not only for driving labor demand, but for facilitating productivity gains and technological transfer. Lastly, given the recent record, all outsourcing and privatization strategies involving stateowned enterprises should be reassessed, and existing arrangements be subjected to public scrutiny.
In Libya as anywhere else, reforming the public sector and the wider economy will always be matters of politics. Any hope for change ultimately hinges on resolving state partition, challenging the dominance of armed actors and self-serving elites, enhancing transparency, and establishing a truly democratic system with regular pluralistic elections.
As such, the international community clearly has a big role to play going forward: It must actively support a democratic transition, and it must be far less complacent in the face of the large-scale economic crimes committed by Libya’s incumbent rulers. While the current political landscape makes enacting changes difficult, it is the only way to ensure a sustainable future for the majority of Libyans.
******
A holistic restructuring of the Libyan public sector is essential, beginning with a redefinition of its mission.
Rather than treating the public sector primarily as a distributive mechanism, the focus should shift towards enhancing performance and improving the quality of public services.
Elevating the commercial performance of state-owned enterprises must be prioritized as a core objective.
Public sector reform should include the implementation of meritocratic hiring and promotion practices, as well as the upgrading of compensation packages for public servants.
Furthermore, it must end the current arrangements that enable political elites to exploit public sector jobs for purchasing loyalty and consolidating personal power.
A key condition for successful reform is the establishment of democratic governance and transparency.
Additionally, reforming the legal and regulatory environment to support private sector employment is essential for creating decent work opportunities.
In particular, small and medium-sized enterprises in peripheral areas should be actively promoted.
To ensure that the shift in the public sector’s mission does not result in adverse social effects, developing alternative mechanisms for income and wealth distribution will be essential.
Policies such as a universal basic income should be considered, and the state’s role as a creditor and investor in local businesses and social ventures should be expanded.
The state’s presence as a service provider, creditor, and investor must be increased, particularly in peripheral areas of the country, as well as in public health and educational infrastructure.
***
Jalel Harchaoui is a political scientist specializing in North Africa, with a particular focus on Libya. Before joining the Royal United Services Institute as an Associate Fellow in 2022, he worked with the Global Initiative Against Transnational Organized Crime and the Clingendael Institute in The Hague. His research primarily centers on Libya’s security sector and political economy.
Colin Powers is the Scientific Coordinator and Chief Editor of Noria Research’s Middle East and North Africa Program. He earned his doctorate from Johns Hopkins SAIS in 2020 and was a postdoctoral researcher at Sciences Po Paris in 2022. A political economist by training, his work focuses on issues of development, distribution, finance, and power.
___________________
