New pay scale: Minority to benefit, sufferings of majority to worsen
November 14, 2009
The pay hike of government employees is going to put heavy pressure on the economy both at the macro and micro levels whose brunt has to be borne by the teeming millions in terms of daily household management.
The pay hike of government employees has earned mixed reaction – the recipients mostly hailing and the experts warning of inflationary pressure on the economy and public life -while others are calling for pay rises for non-government and private sectors.
Implementation of the new pay scale would involve an additional amount of Tk 6,522 crore, when the government is suffering from a revenue shortfall than its budgetary targets.
It was a big jump indeed – from Tk 23,000 to Tk 40,000 – for a government officer sitting on the highest rung of the ladder.
It would be difficult for the government to implement the new pay scale if the revenue earnings continue to show shortfall of the target.
The revenue earning in July marked a sharp decline by 52.41 per cent compared to the earnings in June.
The National Board of Revenue (NBR) collected Tk 3729.76 crore in July, which was Tk 7,836.72 crore in the previous month, sources in the NBR said.
The government would either have to reduce the development expenditure or resort to bank loans, generate funds through savings instruments or ask for multilateral lending agencies to provide budgetary support, they said.
There is also a nagging fear that the current emolument-hike could lead to inflation. If the government has to print money worth Taka 6,522 crore to pay its employees, inflation is inevitable.
If it collects the money by issuing treasury bonds, it will have a negative impact on borrowings for more productive purposes.
Ideally, the government should pay its employees from its revenue income. However, it was not immediately clear how the government would pay for its latest commitment.
The new pay scale for government employees may match the reality of the present market that dictates the cost of living.
But the mismatch between the income level of the larger section of population and the rising cost of living is going to be broadened further.
Consequence of the wholesale pay raise such as inflation and price hike of the daily essentials will certainly hurt people who are already experiencing it in the market.
Executive Director of the Centre for Policy Dialogue Dr Mustafizur Rahman told the New Nation that the government would require a better management of the budget, so that the government need not have to increase its borrowing from the bank for the purpose.
At the same time, the government should put a brake on freewheeling and all kinds of wasteful expenditures. He said the salary hike of the government should keep pace with the growth of the GDP so that the economy can absorb it.
Noted economist Prof Abu Ahmed, however, grossly supported the salary hike saying that it would not create any significant pressure on the economy as the current budget already has allocation for it.
“It is not a big expenditure, as it covers only the 15 per cent of the total government expenditure. Inflationary pressure may also not come from it,” he said.
“Salary in the private sector jobs is higher than the public sector job. So the pay rise was not unexpected,” he also added.
Source: thedailystar.net
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