The new Syrian administration is undertaking a sweeping reform of the country’s collapsed economy following the fall of Bashar al-Assad's regime, including plans to dismiss one-third of public sector employees and privatize state-owned enterprises, Reuters reported on Friday.

The pace of the announced crackdown on "waste and corruption"—which has already led to the first wave of worker dismissals just weeks after the regime’s ouster—has sparked protests among government employees and fears of sectarian-based job terminations, the report highlighted.

Ministers in the interim transitional government, formed by the Hay’at Tahrir al-Sham (HTS) group, told Reuters about plans to shrink the size of the state, including eliminating many so-called "ghost employees"—individuals who received salaries for little to no work under the previous regime.

Privatization

Syria’s new Minister of Economy, Basil Abdel Hanan, told Reuters that there is now a major shift toward "a competitive free-market economy."

According to the minister, under transitional President Ahmad al-Sharaa, Syria's interim government will move to privatize state-owned industrial companies, which currently number 107, most of which are operating at a loss.

He did not specify which companies would be sold but pledged to keep "strategic" energy and transport assets in public hands.

Finance Minister Mohammad Abazeed said in an interview that some state-owned companies seem to exist solely for embezzlement and would be shut down.

"We expected corruption, but not to this extent," Abazeed indicated.

He noted, citing an initial audit, that only 900,000 of 1.3 million people on the government payroll actually come to work.

"This means there are 400,000 ghost names," Abazeed said in his office, adding that "removing these will save significant resources."

On his part, Minister of Administrative Development Mohammad Alskaf, who oversees public sector employment, told Reuters that the state will only need between 550,000 and 600,000 workers—less than half of the current workforce.

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Abazeed explained that the goal of these reforms, along with simplifying the tax system through penalty waivers, is to remove obstacles and encourage investors to return to Syria.

"So that their factories within the country can serve as a launchpad" for global exports, he added.

Should privatization be a priority?

Maha Katta, a Senior Resilience and Crisis Response Specialist for Arab States at the International Labour Organization, clarified that Syria's economy was currently in no condition to create enough private jobs.

Restructuring the public sector "makes sense", Katta acknowledged, but she questioned whether it should be a top priority for a government that needs first to revive the economy.

"I'm not sure if this is really a wise decision," she said.

Economy Minister Abdel Hanan stated that economic policy will be structured to mitigate the repercussions of rapid market reforms, aiming to prevent the economic turmoil of recession and unemployment that followed the "shock therapy" imposed on post-Soviet states in Europe during the 1990s.  

"The goal is to balance private sector growth with support for the most vulnerable," he affirmed.

The government has announced a 400% increase in state salaries—currently averaging around $25 per month—effective February. Additionally, it is implementing measures to cushion the impact of layoffs, either by providing severance pay or temporarily placing some workers on leave while employment needs are reassessed.  

Protests against reforms

The reform plans triggered protests in January in several cities, including Daraa in southern Syria and Latakia on the coast.

Employees at the Daraa Health Directorate staged a protest, holding placards that read: "No to arbitrary and unjust dismissal," with around two dozen participants.  

Currently, the administration lacks an accurate and reliable record of government employees. It is in the process of constructing a database of public sector staff, requiring employees to complete an online registration form.

Minister of Administrative Development Alskaf stated that the system is expected to be operational within six months, with a team of 50 personnel working on its implementation.  

Acknowledging the challenges ahead, Labor Minister Fadi al-Qassem pointed out that "renovations are more difficult than new building."  

As part of its modernization efforts, the government also plans to digitize employee records, which are currently stored in approximately 60 neglected and dust-filled rooms containing over a million folders—many of them bound with string and dating back to the Ottoman era, which ended more than a century ago.

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