CHAD: PUBLIC SERVANTS WANT THEIR SHARE OF OIL

UNCLAS SECTION 01 OF 02 NDJAMENA 000160

SIPDIS

SENSITIVE, SIPDIS

LONDON AND PARIS FOR AFRICA WATCHERS

E.O. 12958: N/A
TAGS: EFIN ELAB PGOV CD
SUBJECT: CHAD: PUBLIC SERVANTS WANT THEIR SHARE OF OIL
REVENUE



1. (SBU) Summary: Public expectations have ballooned
with the widespread anticipation of a huge oil tax
"windfall" and the president of Chad's largest labor
federation has warned that failure to increase public
sector wages by at least 50 percent will lead to a
general strike that could exceed the June-August 2006
public sector strike in duration. With the stakes
higher, strikers this year can be expected to be more
militant than in previous years. End Summary


2. (U) PolOffs met with Chad Union of Syndicates (UST)
President Michel Barka February 16 to discuss press
reports that the Chadian government's offer of a two
percent wage increase for 2007 to public sector workers
may lead to a general strike. (Barka is also a member
of the petroleum revenue management body that oversees
the use of Chad's oil royalties for poverty reduction
programs.) Barka's UST is a federation of 30 unions
that include government ministry, health and education
workers. According to Barka, membership in UST unions
totals some 55,000 of which some 30,000 to 40,000 are
on the government payroll.

Unions Seek Minimum Wage Increase of Fifty Percent
-------------- --------------


3. (SBU) According to Barka, UST member unions have
agreed to demand a 50 percent wage increase for 2007
while some non-UST member unions are calling for wage
increases of as much as 250 percent. He said that by
the end of February, the UST and non-UST unions expect
to reach a common bargaining position for presentation
to the GOC. If the government refuses to negotiate
with the unions, a general strike will be called in
early March.


4. (SBU) Barka claimed that the Deby government had
reneged on a promised wage increase of five percent in
2005 and that the five percent retroactive increase
received in 2006 came only after a June through August
strike. He added that part of agreement with the
government that led to the end of the 2006 strike
included an understanding that increased petroleum
revenue would translate to a significant increase in
salaries in 2007.

Sustainability of Wage Increase
--------------


5. (SBU) Queried by PolOff as to the sustainability of
a 50 percent or higher increase in public sector wages
and the implications for wage inflation in the private
sector, Barka responded that the government's current
wage bill was CFA 8 billion (USD 16 million) per month
and that some CFA 300 billion (USD 600 million) that
the Chadian treasury had built up in reserves would
more than accommodate a 50 percent rise of CFA 48
billion (USD 96 million) per year in the wage bill.
Pressed on the unpredictability of future oil earnings,
Barka insisted that with proper financial management
and the elimination of waste, fraud and graft, the wage
increase would be sustainable without oil revenue.

Failure of Chad's Partners to Press for Reform
-------------- -


6. (SBU) Citing the massive siphoning off of customs
and tax revenue by corrupt Chadian officials, Barka
alleged that what is not stolen from government coffers
is given to the Chadian military. Barka claimed that
the Ministry of Finance would not disclose the total
number of persons on the government payroll. He
claimed that large illicit payments were made from
payroll funding.


7. (SBU) Barka accused Chad's international "partners"
of timidity for not challenging the government on
mismanagement and corruption. He implied that the
international financial and development institutions

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cowered in the face of government resistance to
transparency. Chad's bilateral and international
partners "know of the situation, but refuse" to do
anything about it, he insisted.


8. (SBU) Note: According to an N'Djamena-based
European Commission (EC) economist, while there are
some 47,000 people formally on the Chadian government
payroll, there are "tens of thousands" of "agents
publique" (associated with government security) that
are not listed. In addition, the EC economist
indicated that there are some 40,000 on the military
payroll. End note.

COMMENT
--------------

9. (SBU) Despite a projected budget surplus of CFA 200
billion in 2007 (USD 400 million),the Ministry of
Finance argues that the direct and indirect
inflationary impact of a large public service salary
increase would not be sustainable over time. This view
is supported by the World Bank and IMF. At the same
time, public expectations have ballooned with the
widespread anticipation of a huge oil tax "windfall."
Given the gap between the Government's position and
that of the unions, it appears that a strike is
unavoidable.


10. (SBU) Last year's strike was conducted without
incident (other than exacerbating the already
tortuously slow provision of government services).
This time around a greater militancy on the part of the
unions is foreseen. Wall