A Tunisian government delegation visited Washington last week for talks with the IMF on a possible $ 4 billion loan and reforms to eliminate subsidies and reduce the massive public sector wage bill.

Tunisia has pledged to reduce its public sector wage bill and replace subsidies with direct support to the needy, according to a government reform proposal drafted to support negotiations with the International Monetary Fund.

The proposal also envisages eliminating all general subsidies by 2024 and reducing the wage bill to 15% of GDP by 2022 from 17.4% last year, in part through early retirement and reduction of working time.

The IMF has previously called on Tunisia to adopt economic reforms to reduce chronic budget deficits and large public sector debt, including by reducing its wage bill, subsidies and transfers to state-owned enterprises.

Spending cuts are very noticeable in the young democracy, where growing frustration with the economy and poor public services fueled protests in January, and where powerful unions seek to protect workers’ wages.

The payroll reduction proposals include encouraging voluntary dismissal at 25% of salary, early retirement packages and offering staff part-time work at 50% of full salary.

The plan says that it is “essential to rethink the remuneration system in consultation with the social partners”, a reference to unions, in particular by establishing rules for salary increases and bonuses that reflect both inflation and performances.

The powerful Tunisian general union (UGTT) has already expressed strong objections to many reforms, said one of its top officials.

The UGTT has over a million members and has proven to be able to mobilize significant opposition to previous governments through strikes, sit-ins and pressure on political parties.

“These are unilateral measures which we did not discuss with the government and we were surprised when we read the details,” UGTT Deputy Secretary General Sami Tahri said last week.

Tahri added that the government should focus on increasing revenues by targeting tax evasion rather than measures that he said would target state employees and renewed a demand from the UGTT to start negotiations. on another public sector pay hike. He rejected the idea that the Tunisian civil service must be reduced. “We would need to recruit around 50,000 new employees for the health and education sectors,” he said.