Yemen resumes salaries to state employees

Yemen resumed its disbursal of salaries to state employees in Sanaa and provinces controlled by the Houthis (Ansarallah) late last month after a four-month stoppage due to the war, government officials told Al-Mashareq.

On January 26th, President Abd Rabbu Mansour Hadi’s government began disbursing salaries to education sector employees and the Ministry of Education's general bureau in Sanaa.

A total of 1.6 billion Yemeni riyals ($6.4 million) was paid out to 21,700 employees, Sanaa governor Abdul Ghani Hafathallah Jameel told local media.

Prime Minister Ahmed Obaid bin Dagher said the government is committed to disbursing the salaries of ministry and state agency employees.

Salaries will be disbursed primarily through al-Kuraimi Exchange Company and the Co-operative and Agricultural Credit Bank (CAC), he said.

Bin Dagher called on the Houthis to "release 300 billion riyals ($1.2 billion) in income tax and customs fees they are withholding that were collected from the institutions under their control".

He demanded that these be "disbursed as salaries to employees because they are state revenues".

Disbursement mechanism

The Ministry of Civil Service has asked government entities in areas controlled by the Houthis to submit their employee payrolls, said Deputy Prime Minister and Minister of Civil Service and Insurance Abdul-Aziz Jabbari.

The disbursement process will be carried out through an accurate mechanism that will ensure they are delivered to the recipients by hand, he said.

"The government is committed to disbursing the salaries of employees of all ministries, agencies and government institutions in all provinces, with the exception of the employees of income-generating institutions that can pay their employee salaries from their revenues," said Minister of Culture Marwan Dammaj.

The ministry has received the payrolls of the General Authority for Antiquities in Sanaa, he told Al-Mashareq, adding that work is under way to complete the procedures of disbursing their salaries and transferring them to Sanaa.

Sanaa school teacher Hatem al-Wasabi, 44, said he and his colleagues had not been paid for four months, even though they continued to fulfill their duties.

"I did not head to an office of the exchange company through which the salaries are disbursed because I could not believe [I will get paid] until I received a call from a colleague telling me he had indeed received his salary," he told Al-Mashareq.

Sufficient cash flow

Al-Kuraimi Exchange Company is the transfer agent for educators’ salaries in Sanaa, while CAC Bank submitted a request to the Prime Minister to disburse employee salaries in all provinces.

"The bank has sufficient liquidity to cover the salaries of all employees," CAC Bank deputy chief operating officer Fares al-Jaadabi told Al-Mashareq.

The bank "has branches in all provinces of the republic, with automated teller machines (ATMs) in city districts and population centres in rural areas to facilitate the process of delivering the salaries to their recipients", he said.

Al-Jaadabi said the bank is in the process of paying the salaries of many state employees through bank accounts in their names, in compliance with the rules and procedures set by the government, to ensure they reach their recipients.

"The disbursement of salaries to employees after a four-month stoppage is an important step towards revitalising [consumer] spending and hence reviving economic activity," said Studies and Economic Media Centre president Mustafa Nasr.

Salaries in Yemen stimulate the economic cycle, he told Al-Mashareq, and accordingly, any suspension of salary disbursement leads to economic paralysis.

Difficult economic situation

While the payment of government salaries in Houthi-held areas has resumed for now, some have expressed concerns about future disbursement issues.

"I do not think the government will be able to continue paying salaries unless a plan is developed to restore the government’s sources of revenue," Nasr said.

This includes resumption of oil and gas exports, absorption of donor aid and improvement of the efficiency of tax and customs revenue collection, he said.

"The disbursement of salaries to all employees in the provinces controlled by the legitimate government, as well as provinces outside its control, is a positive move and fulfillment of the commitment it announced when it moved the Central Bank from Sanaa to Aden ," economist Abdul Jalil Hassan told Al-Mashareq.

"The economic situation is becoming increasingly difficult for the employees and others as the war enters its 22nd month, due to citizens’ living conditions and the humanitarian situation in general getting more critical," he said.

According to the UN, about 14 million Yemenis are in urgent need of food aid, including most state employees, who had been in the low-income segment but fell into poverty with the loss of their income, Hassan said.