Would the new pay scale stoke inflation?
Wednesday, 25 November 2009
Md Masum Billah
FOR the government employees the compensation package has been hiked by almost eighty per cent. It is a good news for one million plus people who work for government and its development projects. The Pay Commission was appointed by the caretaker government.
The pay hike was necessitated by inflation. Ideally, there should be a permanent Pay Commission to recommend pay adjustments from time to time in keeping with the movement of prices. The practice is in vogue in many countries, for salary to match essential prices.
The new pay-hike, many people fear could prompt inflation. If the government has to print money -- more money -- to pay its employees, inflation is inevitable, as economists predict. For more citizens, not in salaried work or for whom there would be no increase in wages, the pay-hike for government employees would bring an extra burden of expenditure without the corresponding benefits.
They would be forced to spend more for everything one buys with incomes remaining unchanged. To meet the additional expenditure, the government will either have to print paper or borrow from the banking system. In either case it will increase inflation.
Ideally, the government should be able to pay its employees from its revenue earnings. It is yet to make it clear how it would meet the extra expenditure.
The new pay scale took effect from July 01. The new pay scale would involve an additional expenditure of Tk 62.22 billion, including Tk 35.70 billion on increased basic pay paid from July 01, 2009. The allowances, including the arrears, will be paid from next year.
From the next fiscal the government would need to spend Tk 26.52 billion more to pay the allowances.
The government would need an additional Tk 3.0 billion a year to pay the enhanced salary of officials and employees of its development projects.
The government announced the new pay scale at a time when essential prices were otherwise stable.
The nurses' pay has been structured according to qualification. Special allowances for police and other security forces have been increased by 30 per cent of basic pay. MPO teachers also will get new pay scale.
The discrepancy in pay between graduate and diploma nurses has been removed.
Pension allowance has been increased by 40 per cent. For those who retire at 65 years in age, pension has been increased by 50 per cent. Income tax for government employees will continue to be given by the government.
Education allowance has been introduced for the first time. All employees will get a minimum education allowance of Taka 200 and a maximum of Tk 3000 with monthly pay. All the 424,285 pensioners will get the benefit.
Only one per cent of the population would be direct beneficiaries. The majority of the population, who are not government employees, would benefit in no way. The new pay scale resulted in 'hilsha' price going up.
For the common citizen, there is no option but to wait and see how the government meets the extra expenditure and how it tackles the consequent rise in inflation.
A senior manager of BRAC Education Programme, PACE, the writer can be reached at e-mail: mmbillah2000@yahoo.com
FOR the government employees the compensation package has been hiked by almost eighty per cent. It is a good news for one million plus people who work for government and its development projects. The Pay Commission was appointed by the caretaker government.
The pay hike was necessitated by inflation. Ideally, there should be a permanent Pay Commission to recommend pay adjustments from time to time in keeping with the movement of prices. The practice is in vogue in many countries, for salary to match essential prices.
The new pay-hike, many people fear could prompt inflation. If the government has to print money -- more money -- to pay its employees, inflation is inevitable, as economists predict. For more citizens, not in salaried work or for whom there would be no increase in wages, the pay-hike for government employees would bring an extra burden of expenditure without the corresponding benefits.
They would be forced to spend more for everything one buys with incomes remaining unchanged. To meet the additional expenditure, the government will either have to print paper or borrow from the banking system. In either case it will increase inflation.
Ideally, the government should be able to pay its employees from its revenue earnings. It is yet to make it clear how it would meet the extra expenditure.
The new pay scale took effect from July 01. The new pay scale would involve an additional expenditure of Tk 62.22 billion, including Tk 35.70 billion on increased basic pay paid from July 01, 2009. The allowances, including the arrears, will be paid from next year.
From the next fiscal the government would need to spend Tk 26.52 billion more to pay the allowances.
The government would need an additional Tk 3.0 billion a year to pay the enhanced salary of officials and employees of its development projects.
The government announced the new pay scale at a time when essential prices were otherwise stable.
The nurses' pay has been structured according to qualification. Special allowances for police and other security forces have been increased by 30 per cent of basic pay. MPO teachers also will get new pay scale.
The discrepancy in pay between graduate and diploma nurses has been removed.
Pension allowance has been increased by 40 per cent. For those who retire at 65 years in age, pension has been increased by 50 per cent. Income tax for government employees will continue to be given by the government.
Education allowance has been introduced for the first time. All employees will get a minimum education allowance of Taka 200 and a maximum of Tk 3000 with monthly pay. All the 424,285 pensioners will get the benefit.
Only one per cent of the population would be direct beneficiaries. The majority of the population, who are not government employees, would benefit in no way. The new pay scale resulted in 'hilsha' price going up.
For the common citizen, there is no option but to wait and see how the government meets the extra expenditure and how it tackles the consequent rise in inflation.
A senior manager of BRAC Education Programme, PACE, the writer can be reached at e-mail: mmbillah2000@yahoo.com