Libya to Lay off 400,000 Civil Servants

Sources:

Libya to Axe Public Sector Staff - BBC.com
Libya to Fire 400,000 Civil Servants - IOL.co.za

The Libyan Prime Minister, Baghdadi Mahmudi, has announced that 400,000 civil servants will be laid off. According to Mahmudi, the number of civil servants has become excessive and a massive cut is needed to free up some of the budget and to stimulate the private sector. Those who will be terminated will either receive three years compensation or a loan to begin their own business.

Mahmudi stated that he hoped that the cut would increase the standard of living for Libyans by 5% and that the cut would help promote productive activities. He also stated that he wanted to improve heath care and education and that he would like the private sector to start producing goods of a high enough quality to compete with imports.

Libya has been criticized for relying too heavily on oil, which is the main source for Libya’s hard currency. The country has also been criticized for being too dependant on foreigners and for relying too heavily on consumer goods imports. Mahmudi hopes that this cut will address some of these criticisms.

Questions:

Will Libya’s cut of 400,000 civil servants help stimulate the country’s economy?