# **1. Introduction**

**Almost four years after the Arab spring was sparked in Tunisia on January 14, 2011, the country has undergone a remarkable democratic transition** . After months-long multi-party negotiations in 2013, the new Constitution was approved by the National Constituent Assembly on January 26, 2014. The country witnessed largely peaceful parliamentary elections on October 26, and presidential elections on November 23, 2014 and December 21, 2104.

**Despite the success of Tunisia’s consensual democracy, the Post-Revolution period has presented the country with important socioeconomic challenges** . GDP growth fell from 2.6 percent in 2010 to -1.9 percent in 2011, before rising again to 2.6 percent in 2013. Direct foreign investment declined from 3 percent of GDP in 2010 to 0.9 percent in 2011 before bouncing back to 2.2 percent in 2013. The unemployment rate, which was already high before the Revolution, has increased and now exceeds 15 percent overall and reaches 30 percent among university graduates (IMF 2014). These social pressures have led to a period of social protest. Since the Revolution, demonstrations have become an almost daily occurrence in Tunisia, with teachers demanding an increase in allowances,<sup>3</sup> contract teachers demanding to be hired on a permanent basis,<sup>4</sup> and dismissed public employees demanding to be reinstated.<sup>5</sup>

**To face these challenges, the Tunisian government presented itself as an employer of last resort and has significantly increased the size of the public sector** . Over 90,000 new employees joined the public sector in 2011 and 2012, the majority of them through the regularization of contract workers (INSAF 2014). This meant a doubling of annual recruitment numbers and an increase of total staff to 616,000 employees (excluding public companies). Along with promotions and salary increases, the recruitment drive led to a 44 percent increase in the wage bill between 2010 and 2014, much higher than the 28 percent increase between 2006 and 2009. The increase in Tunisia’s public sector wage bill, combined with high subsidy payments and stagnating revenues, has caused macro-economic imbalances. The central government deficit reached 5.7 percent of GDP in 2012 and, according to projections, could exceed 6.7 percent at the end of 2014 (IMF 2014).

**This paper analyzes public sector size and performance management in post-Revolution Tunisia, illustrating how weaknesses in the performance management system are associated with public sector growth** . Our findings draw on a descriptive empirical analysis of trends in the public sector staff size and wage bill; an analysis of the legal framework for public sector performance management and its application in practice, as illustrated by anecdotal evidence and semi-structured interviews with public employees; and a review of the history of public sector reform attempts over the last 20 years. The analysis of performance incentives covers all aspects of a career in the public sector, that is, recruitment, evaluation, promotion and compensation.

> 3 http://www.lapresse.tn/17072014/65019/une-cascade-de-greves-en-perspective.html, http://www.lapresse.tn/17072014/58565/la-greve-et-apres.html, July 18, 2014.

> 4 http://www.businessnews.com.tn/manifestation-des-enseignants-contractuels--le-ministere-de-lenseignement-superieurexplique,520,45057,3, July18, 2014. 5 http://www.lapresse.tn/17072014/78926/ils-entament-une-greve-de-la-faim-aujourdhui.html, July 18, 2014.

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