After seven years of civil war, Yemen’s public service sector is paralyzed and bloated. The salaries of approximately 1.2 million state employees regularly go unpaid and service delivery is sporadic and of poor quality where it exists. Nonetheless, the sector has continued to add unqualified and nonexistent employees to its payroll in a shattered economy whose revenue streams have all but dried up. These imbalances threaten the collapse of the state apparatus under its own weight and present major obstacles to any post-conflict political transition that seeks to rebuild the country. 

Based on interviews with current and former technocrats in Yemen’s public sector, this report highlights the current state of the sector and examines the complex challenges that will confront any post-conflict government that attempts to root out institutional corruption and pay for war damages that the state budget cannot meet.

The report unravels decades-old complexities and corruption that have combined with the current war to create an unsustainable system. In recounting this history, the report recommends solutions that can help mediators and interlocutors understand the nature of the problem and direct negotiations toward solutions that may ease the burdens of the state's financial system, preserve its institutions and achieve political consensus.

Major changes

In the years since the outbreak of the war in September 2014, when the Iran-backed Houthi militia seized control of Yemen’s capital Sana’a and ousted the internationally recognized legitimate government, the latter has attempted to transfer state institutions to non-Houthi-controlled areas and staff them with loyalists. At the same time, the Houthi authorities have consolidated power and appointed followers in the structures of government institutions in areas under their control. Amid a shattered wartime economy, this race for control over the state apparatus has exhausted the resources of public institutions and saddled them with obligations beyond their capacity.

For example, recent estimates of the number of military and security personnel of all warring parties far exceeds figures from 2014, when the last official statistics were published. At that time, national military forces numbered about 365,000 (60,000 officers and 305,000 soldiers), and the number of security forces was about 182,000, including some 13,000 officers.

As of December 2020, the strength of the military forces of the internationally recognized government amounted to 383,000 soldiers and officers. It consists of a large number of pre-war personnel, in addition to recent recruits, most of whom belong to the Fourth Military Region, which numbers 240,000 soldiers and officers. The number of Houthi military forces has reached 200,000 soldiers and officers, about 120,000 of which were recruited during the war.

Estimation of the number of military personnel of all parties in 2014 verse 2020 (Almasdar Online ) 
In addition, the Guardians of the Republic (also known as the National Resistance Forces) affiliated with Brigadier General Tariq Saleh, nephew of the late President Ali Abdullah Saleh, amount to about 32,000 soldiers and officers on Yemen’s Red Sea coast. Many of them were formerly part of the Yemeni army.

In the security sector, the strength of the legitimate government’s forces as of December 2020 amounted to about 115,500, including nearly 50,000 new personnel such as the STC-aligned Security Belt formations and popular committees in Abyan governorate. The strength of the Houthi security forces number approximately 69,300, about 8,000 of whom are officers and virtually all of whom were recruited during the war and attached to the Houthi-run Ministry of Interior. A limited number of existing officers and security forces carry out secondary tasks under the supervision of the Houthis.

Estimation of the number of security personnel of all parties in 2014 verse 2020 (Almasdar Online ) 

Security changes 

The following snapshot shows one aspect of the changes in the security sector, in which the Houthis have deployed more than 69,000 of its security personnel in 21 governorates, including in areas outside of the group’s control, according to sources in the Houthi-run Ministry of Interior in Sana’a. The largest number of Houthi security forces is concentrated in Hodeidah governorate, followed by the capital Sana’a.

On the other hand, the internationally recognized government has deployed about 39,000 of its security forces in the interim capital of Aden, according to sources in the Ministry of Interior there. Of these forces, nearly 20,000 were existing personnel and the remaining 19,000 have been recruited during the war.
 

Deployment of Houthi security forces in Yemeni governorates as they registered in the Houthi-run ministry of interior (Almasdar Online). Source: confidential sources in the Ministry of the Interior in Sana'a

Structural changes in the military sector

The parties to the war have made profound changes to the structure of the military and security institutions, including through emptying them of qualified cadres to create entities parallel to state institutions to enhance control over civilian populations and consolidate political power. The Houthis have made the most sweeping changes.

According to information obtained by Almasdar Online from senior military officials, the changes made by the Houthis are a mix of creating parallel sectarian entities in army and security institutions and units, and merging former security institutions and units into new entities working for the group.

Among the bodies and units established by the Houthis outside of formal army and security institutions are the so-called Special Forces under the supervision of the group’s leader Abdulmalik al-Houthi which consists of 5,000 fighters. The Presidential Protection Brigades were established in Sana'a under the command of Abdulkhaleq al-Houthi (Abdulmalik’s brother). The Ansar Allah Brigades consist of 10 brigades, including the Al-Hadi Brigade, Al-Qasim Brigade, Imam Zaid Brigade, Al-Ayani Brigade and four Nasr Brigades. In addition to the Ansar Allah Brigades, the Houthis organized Logistics and Support battalions and other forces made up of armed tribesmen and commanded by Houthi-aligned tribal sheikhs, according to military sources and others working within institutions under Houthi control. 

In the early years of the war, the internationally recognized government supported the establishment of armed formations called popular resistance forces to confront Houthi military expansion, before later integrating them into the formal army.

Following the Saudi-led military coalition’s launch of Operation Decisive Storm March 26, 2015, aimed at restoring Yemen’s legitimate government to power in Sana’a, the Kingdom began establishing military formations inside Yemen to fight the Houthis. These units included dozens of brigades and battalions along the border between Yemen and Saudi Arabia and led by Salafi preachers and tribal sheikhs. Most of these forces are outside the command and control of Yemen’s national army. 

The UAE, which is the other main partner in the Saudi-led coalition, established military and security formations throughout southern Yemen, including the Security Belt forces, the Shabwani and Hadhrami Elite forces, and the Logistic and Support Brigades, comprising about 90,000 fighters. These forces eventually aligned with the UAE-backed Southern Transitional Council (STC), created in 2017 with the aim of forming an independent southern state. The UAE also armed and trained the Southern Giants Brigades, which consist of about 22,000 fighters among 12 brigades, and the Guardians of the Republic, which consists of 10 brigades based on Yemen’s Red Sea coast. 

YEMEN MILITARY REGIONS MAP (almasdar online)

Civil sector damages

The situation is similar in Yemen’s civil sector, where the parties to the war have sought to reform or create new state institutions in the competition for power.

Former officials in the Ministry of Civil Service told Almasdar Online that a wartime trend that has emerged in the civil service is the substitution of existing employees in order to bypass the presidential decree that froze all civil service hiring in 2013. That means that every newly substituted worker lacks official accreditation in the internationally recognized government’s civil service ministry and their salaries are not factored into the state's general budget, which has not been able to cover payroll throughout the war.

The sources said that most of the employee substitutions have been for people in senior positions and it is difficult to document them due to a lack of oversight of the process.

Yemeni law defines two types of senior civil servant positions: those of higher authority, which include deputy ministers and their superiors up to the president of the republic, and senior administrative positions, which include undersecretaries, assistant undersecretaries and directors of public administration. 

The employment changes have affected the central government and local authorities (governorates and districts) alike. 

According to sources who previously worked on this file, some governorates have witnessed wholesale changes that include all the levels of the administrative structure. For example, in Dhamar governorate, the Houthis have replaced the leadership of civil service departments with its ideological followers, as well as created new positions and departments that did not previously exist in the state structure.

Despite the differences in the legal standing between the legitimate government and the de facto Houthi authorities, new employment on both sides is not recognized by the civil service ministry.

In the absence of formal hiring through the civil service ministry, contracting has also become an alternative way to expand the government payroll. This type of employment is not subject to the civil service wage and salaries regulations in chapter one of the general budget. Instead, contractors are paid from the operating budget of the local authorities. Contracting operations have increased significantly during the war, although it was an existing problem. For example, in the past, some governors would add new hires or create new positions via contracts that had no approval from the civil service ministry. These employees were paid by the governor's office instead of through the state budget. Despite the fact that the employment contracts were not valid or legal, it was common practice for new governors to keep the contractors of their predecessors while hiring new loyalists of their own in this way.

The parties to the war have also created new institutions and structures, whether independent of existing institutions or within them. For example, the STC has created a number of parallel tax-collecting institutions in Aden, while the Houthis have done the same in northern areas through parallel sectarian entities like the supervisor system which monitors all aspects of the official government. These developments carry great financial burdens on the state by diverting public revenues from existing government institutions. The legitimate government, for its part, has established a number of unofficial attachés in its embassies abroad, whose compensation each year since 2015 has amounted to about 9 billion YR.

Growing burdens

Before the war, the salaries of the state’s approximately 1 million military, security and civil employees represented 45 percent of the general budget. Of that portion of the budget, 25 percent paid for civil servant compensation and 20 percent paid for military and security personnel, according to the 2014 databases of the Ministry of Civil Service and the Ministry of Finance.

According to the 2014 budget, Yemen’s total annual revenues amounted to $10.2 billion, while state expenditures amounted to $13.4 billion, nearly half of which paid for these civil service salaries. This means that only 55 percent of Yemen’s budget was dedicated to education, health, infrastructure and other expenditures, according to the final report of the 2014 budget.

In an interview with Almasdar Online, an official at the Ministry of Finance said that the payroll obligations for state employees have increased about 35 percent since 2014. The military and security apparatus will take the largest share of this inflation, the official said. 

The state was unable to carry out its responsibilities and commitments towards citizens even under normal circumstances. During the war, those commitments have greatly increased while revenues have plummeted due to the collapse of the economy. The demands for state services will be immense in the post-war period as the government will be expected to bear much of the burden of rehabilitating the wounded and compensating the families of those killed, injured and otherwise affected by the war.

In other words, the state apparatus faced major challenges before the war due to the scarcity of resources to fund a bloated, inefficient government. Today, it is in a much more difficult situation because conflict has destroyed infrastructure, disrupted services and the state has lost control over the country's revenue sources. “All of this constitutes a heavy burden on the shoulders of the state, especially since most of the state's employees are in unproductive sectors," the official added.

Untrained workers

Officials and specialists interviewed by Almasdar Online indicated that they expect the wartime expansions in the military and security corps, as well as new civil servant appointments outside of the Ministry of Civil Service’s hiring framework, will be the most prominent obstacles to a successful political transition following the conflict. They explained that these increases in employment threaten the survival of state institutions and the continuity of production, constituting a major burden on the salary structure in the state budget, which was in a critical situation before the war and has only worsened over the past seven years. 

In addition to the financial problem, officials said that another upcoming challenge regarding the problem of a bloated civil service workforce is related to the lack of qualifications and training of these new individuals.

In separate conversations with Almasdar Online, two officials, one of whom is a former cabinet official, said that most of these new civil servants were untrained and obtained their jobs through political entitlement. This creates multiple conflicting loyalties within the state apparatus, and thus leads to decreased discipline and productivity, which can be particularly harmful to society in service-providing institutions.

According to the two sources, any transitional government will need to make bold and painful decisions. But they will be necessary to reform the system and ensure the sustainability of the peace process to guarantee rights and protect institutions. Those decisions include revamping wage and salary regulations in line with new economic realities and addressing the challenges that the war has created at all levels.

A legacy of corruption

The civil service system in Yemen has gone through several stages of development, starting with the establishment of the Yemen Arab Republic in the north in 1962 and the defeat of British colonialism in the south in 1967. With the achievement of Yemeni unity in 1990, and the integration of state institutions in the south and north, the civil service was reconfigured by Republican Decree No. 19 of 1991. The public service apparatus of the Ministry of Civil Service includes all state authorities and agencies included in the state's general budget.

The sources that Almasdar Online spoke to indicated that public employees have always been the subject of controversy. An official at the Ministry of Civil Service in Aden attributed the most prominent reason for the public service dysfunction to the weakness of the institutional traditions that accompanied the state-building phase after unity in 1990, especially in the army and security institutions.

"The civil sector [including security and military forces] has turned into something like social welfare, and securing a government job has been used as a means of political gain," he said.

"These practices created grievances and a general feeling of political exclusion among those who did not benefit from them, which culminated in the uprisings of 2011," he said. “This tradition has continued and contributed to the inflation of these sectors and increased burdens on state revenues which were supposed to go toward development."

According to a former governor who worked on this file, the prevailing atmosphere “created a perception among the political parties that they were obligated to distribute public jobs among loyalists to improve their conditions, regardless of merit or efficiency.” New forces in power today consider these to be entitlements after years of suffering from exclusion or marginalization in the past.

The governor, who asked not to be named, expects that this legacy will continue beyond any post-conflict settlement and political transitional phase, as it is a guiding principle for many Yemeni personalities who see power as a means to acquire wealth. He stressed the importance of putting in place measures to curb these phenomena with political pledges from the parties to prevent them from threatening the post-conflict settlement, which by its nature will be fragile during the political transition stage.

Conflict’s effects

In addition to the tradition of dealing with institutions as a means to obtain power and wealth, various military and civil servants interviewed by Almasdar Online pointed to the direct effects of the current conflict on state agencies of all kinds.

On the military side, the sources said that the war has caused deep divisions in the national discourse and the parties to the war see hiring state employees as a way to advance their wartime aims, which deepens these divisions. 

An official in the Central Bank of Aden explained that the war has created fiefdoms within the administrative apparatus amid of the breakdown of state institutions, especially in the revenue-generating sectors. This has opened the way for greater levels of corruption, particularly among party leaders who see an opportunity to loot public money in the absence of oversight.

“This is one of the aspects of the war economy that will remain an obstacle during the transitional phase, as the interests of the conflicting parties will continue to affect the work of state institutions," he said.

The official recommended transferring key positions and institutions from the parties benefiting from the war to technocrats. He stressed the importance of impartiality in certain institutions to ensure the conditions for a lasting peace, the most important of which are the ministries of finance, oil and communications, and the institutions related to sea, land and airports.

The various sources interviewed by Al-Masdar Online unanimously agreed that the political and cultural environment of groups competing for power is the incubator and source of the accumulated problems in the civil service sector. They warned that this environment will greatly influence attempts at reforming the sector.

“Public jobs for local elites are necessarily political jobs, and the future of public institutions will depend on how elite deals change during the transitional phase," one official said, adding that these elites will try to exploit social discontent and hide behind it in order to improve their negotiating positions and obtain privileges.

Challenges and limited resources

Two former civil service ministers and an employee of the Central Bank told Almasdar Online that there is a “zero percent chance” that the state can absorb and pay for the wartime expansion of state employees after the conflict is over. 

Specialists at the Ministry of Finance said that even if the transitional government is able to pay employees’ salaries with only a 5 to 10 percent pay raise to account for inflation (they recommend at least a 25 percent pay increase), as part of a political settlement, it would not meet their needs in light of the declining currency value and the rise in prices. In other words, it would not guarantee the job discipline required to provide basic services to citizens. They noted that there are civil service institutions that also need emergency plans to ensure their ability to fulfill their obligations, including the General Authority for Insurance and Pension Funds.

According to the specialists, priority needs to be placed on radical reforms in which neighboring countries intervene to support the transitional period financially, and open their markets to Yemeni goods and workers. They consider such interventions by Gulf countries to be a "security necessity to ensure stability in the region."

Is reform still possible?

During war, everyone can make decisions to prevent the situation from deteriorating further, but reform is nearly impossible. Reforms will therefore have to take place after the war. According to experts and civil service officials who spoke to Almasdar Online, implementing these reforms will be one of the biggest threats to Yemen's stability and a sustainable peace. To ameliorate these hazards, the transitional government will need to reduce expenditures and restore the confidence of citizens in the state apparatus by agreeing on ways to restore work in line with previously established civil service standards.

This can be accomplished by canceling all decisions that were taken outside the general structure of the state by all parties during the war, as well as canceling decisions to appoint close relatives of ministers and officials and removing attachés that were created in various embassies.

These steps, if taken, would gain broad public support, which would contribute positively to solving other problems.

In this context, some experts suggest forming joint committees to discuss and monitor the details of the solutions, lead the agreed upon job reform efforts and arrange the reintegration of the Central Bank to address monetary issues. Its members should be selected according to precise criteria related to experience and professionalism to ensure the success of the committees’ missions.

In the civil sector, experts say that there will be a need to reinstate employees who have been replaced, as well as to train and integrate qualified new employees in civil service work within the framework of a plan in which relevant state institutions participate.

The sources described reforms of the military and security sector as the most complex challenges. However, efforts can be made now to start identifying the technical and logistical support and expertise necessary to speed up the negotiation mechanism in the future.

According to a former official in the armed forces who participated in discussions of integrating fighters after the wars involving the National Front in the 1970s and early 1980s, careful consideration must be made regarding where to send fighters based on where they are from and who they oppose. He stressed the need to study closely past experiences in Yemen of dealing with armed groups and apply the lessons from those experiences.

Reparations fund

Perhaps one of the most important challenges faced by transitional governments in the past has been the mishandling of the more sensitive and complex files, foremost among which is that which deals with the killed and wounded, followed by the rehabilitation of fighters and their safe integration into society.

Sources told Almasdar Online that there will be a need for consensual solutions based on two pillars. The first concerns caring for victims of the war, including wounded soldiers, while the second concerns the families of unregistered fighters who were killed and civilians caught in the crossfire.

In addition, there will be a problem related to armed groups and fighters that cannot be absorbed into the military and security sectors. To address it, the experts suggested establishing a national fund to run a comprehensive program for the disarmament of the fighters and their rehabilitation and integration into society, functionally and socially, in partnership with the relevant ministries and international partner organizations.

This fund will be necessary because chapter one of the general budget already cannot absorb all military and security forces in light of the huge increases in wage and salary requirements since 2014, and the immense obligations of the post-war phase in areas like reconstruction will stretch thin other parts of the budget. 

Strategic steps

The most prominent challenges that will face any transitional government dealing with the public sector file are not only facilitating mechanisms for the integration of fighters and employees, but providing the balance of wages and salaries that have gone unpaid during the war, according to 15 employees and experts in the Ministry of Civil Service, whose views were polled by Almasdar Online.

Experts said that the adoption of a unified national numbering system to eliminate the duplication of jobs in civil, military and security institutions would shrink the payroll by about 30 to 35 percent.

According to an official at the Ministry of Civil Service in Sana’a, all studies to adopt the national numbering system and the mechanisms for its implementation are complete, and it can be kickstarted by updating the Civil Status Authority database with all current state employees. Such changes will lead to dealing with employees as numbers instead of focusing on titles or names, the official said, which will make the process more transactional.

This step should be followed by urgent and far-reaching reforms of the General Authority for Insurance and Pension Funds. According to two officials, one in the Central Bank’s branch in Aden and the other in the insurance authority, this type of problem is not currently being studied, but it will constitute a great concern in the future.

“The pension fund is currently considered completely bankrupt" and over the next 10 years it is expected to take on an additional 200,000 to 300,000 retirees, the official in the insurance authority said. There are currently about 136,000 retirees.

According to a study prepared by the Ministry of Civil Service in 2019, and reviewed by Almasdar Online, the government will urgently need to conduct an actuarial study to determine the salary caps of various retirees’ pensions, develop an investment policy for the General Authority for Insurance, and restructure the military and security pension funds. It will also need to develop insurance legislation (the Social Insurance Institution and the General Authority for Insurance and Pension Funds) so that they are all merged under one institution, as well as raise the retirement age to 65 years to avoid its collapse.

According to a number of experts interviewed by Almasdar Online, the transitional government will have to give priority to the education and health sectors, and ensure that salaries are available to the employees of these two sectors. Studies of the local labor market will need to be conducted to take stock of scientific disciplines and the number of graduates of community colleges and technical institutes, and ensure their absorption into the civil service based on a joint plan between the Ministry of Civil Service and the Ministry of Education. The Gulf labor markets will also need to be analyzed and plans drawn up regarding the extent to which they can absorb Yemeni labor.

This will need to be accompanied by restructuring the internal regulations of some state institutions and bodies in a way that prevents the duplication of tasks, according to the experts.

Gulf Marshall Plan

A number of specialists and experts indicated that the improvement of the economic situation in Yemen will need a long period of recovery after the war, which has created economic paralysis, low growth, capital flight and distrust.

To fill the budget deficit until then, experts stressed the importance of interventions by neighboring countries, led by Saudi Arabia, to financially support a transitional government.

The experts identified three areas in which these countries can intervene, the first of which is to cover the deficit in the balance of salary and wage requirements during the transitional period. This should be followed by support for reconstruction programs to provide job opportunities to absorb surplus employees and fighters who are not integrated into the army and security institutions or broader workforce. At the same time, Gulf labor markets should be opened to Yemeni workers, whether to absorb the surplus employees, or to support the economic situation of hundreds of thousands of expatriates seeking work.

The backbone of peace

There is no doubt that ironing out the details about the future of public servants may not be a high priority during negotiations to forge a political consensus and persuade the warring parties to sign a peace settlement. However, many officials and experts interviewed by Almasdar Online argued that the way in which civil service issues are handled will determine the success or failure of a post-conflict transition process. They emphasized that the complexities of this file are much more important than politicians currently imagine them to be. 

They stressed the importance of prioritizing this file so that it does not get buried among other files, when much work is needed to reach solutions that guarantee peace and stability in the long run.

Many of those interviewed also stressed the need to avoid relying on international expertise, and instead work with Yemeni experts who understand the complexities of these issues, especially in the military and security sectors. They emphasized the need to take practical steps to incorporate the state employment file into political negotiations and prioritize its implementation during the first year of a post-war transition process.

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Edited by Casey Coombs