Iraq's Kurdish region has announced it will pay only partial salaries to all government employees except security personnel as it struggles with an economic crisis due to low oil prices.

The autonomous region in northern Iraq, like the rest of the country, has been suffering from the huge drop in oil prices since mid-2014.

Kurdish leader Massud Barzani this week called for a referendum on independence, but economic challenges effectively rule out a viable Iraqi Kurdish state for now.

The salaries decision was taken "in order to ensure the continued distribution of part of the monthly salaries and allowances," the region's government said in a statement late Wednesday.

The unpaid portion of the salaries going forward, as well as previously unpaid wages from last year, will be considered "loans remaining with the government, and will be returned later," the statement said.

The new measures will affect higher salaries more than lower, it said.

The region's cabinet approved other measures aimed at cutting costs and raising revenues, including public auctions of oil and oil products not exported via pipeline, and making employees responsible for expenses associated with government-provided vehicles.

Public employees said the new measures would hit them hard.

Kadhim Ismail said he and his wife are both teachers and that "after the reduction in salaries, we don't know how we will manage the rent" along with expenses for their four children.

Midia Hassan, a 35-year-old government employee who has three children, was worried after the family had gone into debt to furnish their home.

"We are still paying, and we don't know how we will get by with the reduction in salaries," Hassan said.

Iraqi Kurdistan has been independently exporting crude via Turkey since a deal between it and Baghdad on oil and revenue sharing collapsed last year.

Plunging prices have made a major dent in the oil revenues on which the region relies for the vast majority of its funds.

Salaries for some Kurdish government employees have fallen months in arrears, and some have gone on strike to protest unpaid wages.

The announcement about salaries came after Barzani, who has remained in power despite the expiration of his term as president, called for a referendum on independence.

"The time has come and the conditions are now suitable for the people to make a decision through a referendum on their future," Barzani said, adding that a yes vote "would not necessarily lead to (an) immediate declaration of statehood."

But Barzani's call was likely primarily an appeal to nationalism ahead of the bad news on salaries, or an attempt to otherwise aid himself politically.