Reducing the percentage of public sector employment

According to a World Bank report, the public sector employs half of Jordanian workers. This is a significant and concerning indicator that needs action. According to the International Labour Organisation, the share of public employment in developed market-economy countries is close to 22 per cent of total employment, while the figure is around 40 per cent in countries in transition and varies from 8 per cent to 30 per cent in developing countries. Jordan exceeds the globally acceptable range for developed countries to fall within for public sector employment.

Throughout this piece we will go through how transitioning public sector employees to the private sector would affect current unemployment figures, how we could get private sector buy in, how reinvesting savings can create more jobs as well as navigating public sector employees’ transition through this process.

Several countries have successfully reduced the percentage of public sector employees, some through encouraging public sector employees to transition towards entrepreneurship while providing them with training programs and funds to do. Other countries have reduced the percentage of public sector employees through strategic reforms and upskilling programs that helped build the capacities of public sector employees to transition to the private sector. The Malaysian government has helped public sector employees shift to private companies, particularly in high-demand industries like technology and finance.

Reducing dependance on the public sector can free up government funds allowing them to be redirected towards projects that can encourage economic growth. “Reallocation of Resources,” ensures operational costs can be redirected towards productive purposes, such public infrastructure (roads, bridges, public transit, technology hubs and digital services) which would act as a “Multiplier effect” ensuring these savings turned investments lead to job creation, stimulating the market.

For this transition to be successful, the private sector needs to be encouraged to take in these transitioned public sector employees. Savings from freed up government funds can be channeled to subsidise small and medium-sized enterprises (SMEs) equipping them with the resources needed to absorb these transitioning employees. Tax breaks to these companies can also act as an incentive that could encourage businesses to integrate former public sector employees into their operations.

Despite these potential benefits, public sector employees could still be unsure about this transition. Addressing these concerns requires a combination of financial support such as compensation or bonuses for agreeing to transition to the private sector and temporary social security to ensure they have financial support for a period while they transition to other jobs. Transitional support networks for employees to network and share opportunities and experiences is vital, in addition to skill development programmes which are necessary for a smooth transition.

Skill gaps must be taken into consideration and reduced through long-term training programmes broken up into stages to ensure gradual skill acquisition. Experienced public sector workers could be transitioned into specialised roles in the private sector where their skills and expertise fill critical leadership roles, while entry-level employees should be redirected to industries with high growth potential such as technology, coupled with structured training and mentorship programs.

To prevent labour market disruptions, job pools should be differentiated to ensure the hiring of transitioned public employees does not overlap with recruitment channels for unemployed youth by targeting specific industries or roles. This process must be long-term and gradual; spanning five to ten years to ensure that transitioned employees do not displace unemployed youth or oversaturate specific job markets.

This transformation requires collaboration with the international community who can help fund, offer guidance and training programs through this process.

Delaying this transition will only create increased financial strain. This bold move is not just an economic necessity but an opportunity to recuperate creating a lighter and more efficient public sector, a self-sufficient economy and added private sector projects.