Millions of Iraqis go without government salaries as Hormuz crisis hits households

The Iraqi government has acknowledged difficulties in securing July salaries, which have been delayed for employees for more than a week.

Iraqi families have begun facing a new social reality as they struggle to meet their financial obligations and plan their monthly expenses, amid growing fears that the financial crisis could continue for an unknown period.

As Iraqi officials acknowledged that the country has entered a financial liquidity crisis and salaries are difficult to doll out regularly, families are reviewing how they spend monthly.

They have adopted what can be described as "crisis management" in their daily lives by reducing expenses, delaying non-essential purchases and rearranging priorities while waiting for their salaries.

Millions impacted

Millions of Iraqis directly depend on government salaries for their daily lives, making any disruption to payment schedules profound.

The monthly salaries paid by the state to government employees, retirees and social welfare recipients amount to about 8 trillion Iraqi dinars, equivalent to $5 billion.

Iraq's sharp decline in oil revenues due to the closure of the Strait of Hormuz because of the US-Israeli war on Iran has led to an unprecedented liquidity crisis, amid other critical service challenges, most notably electricity.

Bassem Ali, an employee at the Ministry of Environment in Baghdad, said, "The problem is no longer the delay of the salary for a few days, but the inability to know when it will be received."

He told The New Arab that "the family has become unable to make a monthly plan to cover expenses or obligations".

"All monthly payments, from house rent and electricity generator subscriptions to school instalments and other service bills, were previously arranged according to the salary date," he added. "Today, the family will be forced to postpone some obligations or rely on temporary borrowing from relatives and friends until salaries arrive."

Government employee at the Ministry of Higher Education Maha Karim, a mother of two children, said the salary delay of more than a week and the lack of a specified payment date so far had forced her to completely change her spending habits.

"For the past week, she has only been buying necessities, fearing that the salary delay could last longer Until today, I have not received my salary, which has been delayed for more than a week, and there is no specified date," she told TNA. "The concern is no longer related to the value of the salary, but rather to when it will arrive, because the absence of financial stability directly affects the family's psychological stability and creates a state of continuous tension among its members."

Demand for goods in local markets has noticeably declined over the past 10 days, indicating the impact of the issue on families.

Taha al-Marsoumi, the owner of a shop selling food and household goods in Baghdad, said that "demand for goods has declined significantly, and in recent days there has been no demand except for essential items".

He told The New Arab that "the market used to see a recovery during salary distribution periods, as families would buy goods for an entire month at that time.

"However, the salary shock has affected families, and it has also affected us as shop owners [...] continued salary delays and the lack of a fixed date will put families and us before a serious crisis. This is an issue that requires urgent government solutions," Marsoumi added.

Years of a fixed financial cycle

Iraqis have become accustomed over the years to a "fixed financial cycle", beginning with receiving salaries and ending at the end of the month and created a pattern to manage household budgets.

However, the decline in this regularity is pushing many families to adjust consumption habits, reduce spending and postpone various decisions, including medical treatment, purchasing household needs or even celebrating social occasions.

The consequences of the salary crisis extend beyond financial factors and have impacted social stability.

Social affairs researcher Wafaa al-Mahdawi told TNA that "regular income is one of the most important factors in family stability, and any disruption or delay in salary payments affects education, health, family relationships and even the psychological state of employees."

"Many families have begun living in a state of anxiety due to their inability to meet their financial obligations," she added, and called for "the establishment of clear mechanisms that ensure regular salary payments, or at least the announcement of accurate timetables that allow employees to organise their financial affairs".

These developments occur as the Iraqi government faces increasing financial pressures due to expanding operational spending, alongside declining oil revenues.

This has prompted officials and economic experts in recent days to warn of difficulties in securing regular salary payments and to propose external borrowing as an emergency option to overcome the crisis.

While official discussions focus on securing the funds needed to pay salaries, the deeper impact of the crisis appears to be taking shape inside Iraqi homes.

With the absence of an end to the crisis, thousands of families are entering a period of disruption in managing their daily affairs, a social reality that could leave effects extending beyond the financial crisis itself.

Article translated from Arabic by Afrah Almatwari. To read the original, click here.