Libyan businessman Hosni Bey has warned that raising salaries without comprehensive economic reform will not protect people’s purchasing power. He acknowledged employees’ demands for higher wages after years of rising prices and shrinking incomes. But he stressed that merely increasing nominal salaries does not guarantee a real increase in income.
Bey told “Sada” newspaper that a 10 percent salary increase, while prices and the exchange rate in the parallel market continue to rise, may raise the number on the pay slip but will not actually improve families’ living standards.
He said the issue is not only the size of the increase, but how it is funded. Permanent salary hikes require permanent additional revenue or ongoing reductions in other spending. Otherwise, salary increases create new budget deficits. He warned that financing these deficits by printing new money would increase liquidity, drive up demand for dollars and imports, and put pressure on the exchange rate and prices. This could fuel a cycle of salary hikes, inflation, and further salary demands.
Bey said salary adjustments should be addressed as part of a comprehensive restructuring of the state budget. He noted that official figures do not always show the true burden, given off-the-books and parallel spending, energy costs—both domestic and imported—and development and operational commitments spread across different agencies. He believes the greatest opportunities for reform lie in the way energy and fuel are subsidized.
He clarified that he is not calling for an end to protecting citizens. Instead, he advocates shifting from subsidizing goods to supporting individuals. This could be done by giving people direct cash compensation before or in tandem with phasing out price subsidies, following a transparent plan to protect household incomes and reduce waste, smuggling, and financial burdens.
Bey also said that a unified salary scale might create more fairness among state employees, but it cannot guarantee the real value of wages if the dinar continues to fall and prices keep rising. He called for a package of measures, including stricter control of spending, stopping deficit financing with new money, addressing the exchange rate gap, switching fuel subsidies to cash transfers, reviewing development spending, and tying permanent raises to sustainable resources or savings. He concluded by emphasizing that increasing the number of dinars paid does not itself increase the amount of goods and services available, and that genuine reform must protect the real value of incomes, not just their face value.