Friday , November 17 2017

‘Fuel subsidy cuts will harm low income, migrant workers’ – Wage reforms needed

KUWAIT CITY, Sept 23: In this week’s Arab Times online poll, readers weighed in on the issue of fuel subsidy reform in Kuwait with the majority of voters expressing concern that it would severely affect low income and migrant workers.

In 2014, close to KD 4 billion, that constitutes 18% of government expenditures, accounts for 15% of oil revenues and 7.5 — 8 % of GDP, was spent on subsidies.

But 35% of voters were not in favour of a fuel subsidy reform as it would lay a heavy burden on low income and migrant workers and another 20% voiced concerns that the increase in fuel prices would have a big impact on inflation.

“The cost of living in Kuwait is high today even for expatriate families that have double incomes because rents have escalated, commodity prices have increased and expense for even essential services has soared. I can’t imagine the effect raising the price of petrol would have on the disposable income of families here”, a voter shared. “I think the government should work towards wage reform if they want to remove fuel subsidy. Otherwise, how will low income workers cope with this?”, another reader commented.

Another 15% felt that the removal of the fuel subsidy is not logical because government itself is a major producer and 10% of respondents felt that the government should explore alternative sources of energy that are more sustainable in the long run. “I think the government should be exploring alternative energy sources now, the air quality in Kuwait is really appalling. We need a energy solution with low carbon emissions”, a respondent shared.

Only 8% were in favour of subsidy reform, pointing to the fall in oil prices. Several projections indicate that the price of oil will stay below $70 for the next five years and there are fears that Kuwait’s national budget, after accounting for transfers to the Fund for Future Generations, will move into a substantial deficit and the current account surplus will decline sharply.

5% hoped that it would curb overconsumption and increase efficiency. Petrol prices in Kuwait are 66% below US prices before taxes in 2015 and below the GCC average by 20%. The per capita consumption amounts to 10 tonnes of oil equivalent, while the world average is 4 tonnes.

Kuwait is thus the 6th largest consumer on the per capita basis in a survey of 67 countries. Moreover, the growth of energy consumption is close to 1% per annum while in most developed countries, it is negative. “If you look at Kuwaiti society at both individual and industrial levels, there is over consumption’s of resources, be it gas, electricity or water. We aren’t driving cars that are fuel efficient, we are not using production processes that are efficient. There is a lot of waste and we need to change our attitude”, a concerned individual shared.

Another 7% of voters were dismissive of fuel subsidy reform as there was no guarantee that the money will not be used inefficiently or exploited by corrupt leaders. “I think removing the fuel subsidy will create a lot of resentment among the people in Kuwait because there is no assurance that the revenues gained from removing the subsidy would not be misused”, a reader pointed out

By Cinatra Fernandes Arab Times Staff

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