Enab Baladi – Jana al-Issa

On February 5, Syrian regime president Bashar al-Assad increased salaries for civilian employees, military personnel, and retirees by 50%, coinciding with an increase in the price of a bread bundle by more than 100%.

The salary increase was not, as usual, preceded by hints or promotions. Usually, government talk precedes such decrees about the government’s ability to increase salaries or its budget deficit—all to facilitate an increase that in no way matches the level of needs.

In contrast, the decision to raise bread prices was preceded by intensive groundwork by the government. Days before its approval, the Council of Ministers’ presidency held a special meeting concerning wheat supplies that was followed by official statements addressing the public regarding the government’s substantial support for bread and production costs that “burden” it, creating a state of anticipation for the increase.

Bread price hikes demand salary increases

The situation of raising salaries alongside the prices of essential goods is not new, as a salary increase is often accompanied by rising fuel prices and other essential items. However, what differed this time was the raise in salaries without any government preamble or hints, raising questions specifically about its timing with the bread price increase.

The Syrian regime perceives its relationship with society and citizens as a “clientelistic” negotiation, which has been the case since Hafez al-Assad took power. Raising bread prices, in particular, is often accompanied by a salary increase, according to economic researcher Zaki Mahshi.

The researcher explained to Enab Baladi that the salary increases in this negotiation relationship came to cover the bread price hike since the regime fears a violent public reaction if bread prices are increased without a corresponding salary increase.

In mid-August 2023, al-Assad raised salaries and wages by 100%, which was coupled with a 300% increase in fuel prices. At the time, the decision sparked a significant wave of anger among residents in regime-controlled areas and led to a wave of protests and demonstrations in various southern Syrian provinces, triggered by the deteriorating living and economic conditions and still ongoing, demanding the regime’s downfall in As-Suwayda province.

Spreading the inflation effects

Director of the Syrian program at the Observatory of Political and Economic Networks, Karam Shaar, told Enab Baladi that the government, through its decisions related to salary increases and hikes in prices of basic commodities since 2019, is trying to fund itself through deficit.

The policy of raising both salaries and prices of essential goods aims to redistribute inflationary effects, as the inflationary impact of printing money must be spread evenly among everyone shortly after.

To prevent a significant inflationary impact on a group of essential goods, the government raises both the prices of goods and salaries.

Analyzing the situation in terms of cause and effect, Shaar explained that the government is forced to increase the prices of bread, electricity, or other subsidized goods and services, to match the ongoing inflation and to ensure that the public sector employees’ purchasing power does not decline, salaries are increased.

According to a report issued on August 10, 2023, Syria ranked third globally in inflation levels at 238% annually, after Zimbabwe and Venezuela, according to the Hanke Dashboard for Measuring Economic Inflation in several countries, not based on government statistics.

Per the data, the last official update of the inflation rate in Syria was in September 2019, when it stood at 34.50% on an annual basis.

Fear of resignations

Dr. Karam Shaar believes that the government’s primary fear of raising prices is not from public pressure, as much as it is a governmental policy aimed at retaining employees in the public sector, fearing the numerous resignations that have occurred recently.

Resigning from public sector jobs and looking for better-paying employment in the private sector is often the only solution for residents in regime-controlled areas who rely solely on their income for subsistence.

Economic conditions, including high living costs and salaries that do not meet the simplest living requirements, are the main reasons behind these resignations.

Government sources have previously reported a significant number of resignations in various regions for the same reasons.

Most Syrians resort to relying on more than one income source to balance income and expenses. The most prominent of these sources are financial remittances from expatriates outside of Syria and dependence on secondary jobs. Additionally, families forego essentials in their lives to reduce their spending rate.

“Illusory” support

Before the price of bread was raised, there was a meeting at the presidency of the Council of Ministers to discuss how to manage the wheat supply chain and secure wheat as a commodity, considering the significant financial burden associated with both production and marketing the wheat, on one hand, and baking industry on the other, with the public treasury’s considerable deficit in securing bread and the need to address it gradually to ensure its availability.

The General Establishment for Cereal Processing and Trade (Hoboob) estimated the cost of a ton of imported wheat at the port at $448.07, equivalent to 5.62 million Syrian pounds, according to the exchange rate of 1,256 pounds per dollar.

Adding transportation costs, milling, packaging, and packing, the cost per ton of flour reaches 7.36 million pounds, and the ton is sold to bakeries at a price of 70,000 pounds, equivalent to 1% of the cost for the support to amount to 7.285 million pounds for each ton of flour, according to estimates.

Syria’s daily flour requirements are 5,200 tons, per the Hoboob establishment, indicating that the daily support amount is 37.9 billion Syrian pounds, which equals 13.8 trillion pounds annually.

Dr. Shaar sees that the regime’s government still provides significant support for bread, explaining that these price increases are a response to inflation.

However, researcher Zaki Mahshi disagrees with Dr. Shaar, arguing that the government’s claimed numbers for the cost of a bread bundle, estimated at 7,800 Syrian pounds, are exaggerated and inaccurate, and politically motivated for several reasons.

The most significant reason, according to the researcher, is that the bread production chain is long. The regime’s government collects all the support provided throughout the production chain—from the support given to farmers, millers, electricity, and others—pointing out that due to extensive interconnections between production stages, it is entirely difficult to determine the real support given to bread.

Also, the government does not support all bread as some categories get the product outside the subsidy framework at prices five times higher than the government-supported price, which encourages people to buy it at a free market price.

Researcher Mahshi criticized the government for presenting the support figure per bundle without detailing the full percentages of support for the produced bread, speculating that if the presented number were accurate, then the bread support budget should almost match the state’s general budget.

The budget allocations for the state for the fiscal year 2024 were set at a total amount of 35,500 billion Syrian pounds, representing an increase in the Syrian pound and a decrease in value by 48.6%.

The general budget appropriations for the year 2024 were distributed as 26,500 billion Syrian pounds for current spending, and 9,000 billion Syrian pounds for investment spending.

Meanwhile, the social support mass reached 6,210 billion pounds, including 2,000 billion pounds for the support of petroleum derivatives, and 75 billion pounds to support areas affected by the earthquake.

“Unstudied”, Criticism of salary increases

The minimum wage after the recent increase reached 278,910 Syrian pounds, equivalent to 19.3 US dollars compared to the exchange rate at the time of the report’s release, where the price of the US dollar in Damascus recorded 14,450 Syrian pounds for buying and 14,650 for selling, according to the S-P Today website, which specializes in monitoring gold prices and foreign currencies.

The former dean of the Faculty of Economics in Quneitra province, southern Syria, Rasha Sirop, said in a post on her personal Facebook account that the recent salary and wage increase is the fourth of its kind since 2020, with the increase rate reaching 485% compared to the year 2020 (almost five times the salary in 2020).

Sirop considered that what matters is not the salary but the purchasing power of the salary, which decreased by about two-thirds (61%) between 2020 and March 2024 (the first salary to be received by employees after the increase).

She pointed out that if this increase is not accompanied by price controls that have risen by more than 14 times, then this increase will be nothing but additional income for a small group at the expense of the general population.

The former Minister of Economy, Lamia Assi, said that the salary increase is a good endeavor to bridge the gap between the income and prices, while simultaneously questioning why there must be a persistence that the salary increase should be accompanied by a rise in the prices of basic commodities.

Assi considered the timing of these decisions a “perfect recipe” for achieving more inflation and erosion of both the increase and the salary together.

Meanwhile, the economic researcher Zaki Mahshi told Enab Baladi that the decision to raise salaries is wrong economically, as it will lead to an increase in monetary liquidity, as well as major inflationary effects that will affect all basic commodities due to the increase in the prices of bread and fuels, which may result in greater production stagnation and a collapse of the value of the pound against foreign currencies.