ECONOMY WARRANTS SALARY REVIEW AS COST OF LIVING CHOKING - ECONOMIST

MANZINI – The increment offered by government to civil servants will not bring much relief as the inflation is too high, says an economist.

The economist, who gave his scholarly opinion under conditions of anonymity, said the inflation rate had increased drastically, owing to the invasion of Ukraine by Russia and also the impacts of the coronavirus which limited production in some sectors. The economist said government was at this point caught between a rock and a hard surface as it faced fiscal challenges, while there was also the need for employees to be paid adequately in order to be productive. At this instance, he said the economy warranted a salary review as the cost of living was choking even to those who were regarded as high earners in society.

Minimal

Making an example, the economist said the offer extended by government brought minimal items to the civil servants basket as most items had increased on average at 30 per cent. “The hike in crude oil increases all costs. If you look at the impact the hike in fuel has on transport costs, a farmer has to increase his prices to cover the expenditure for all the things he uses and also delivering the produce to shops. Also, the civil servant is already paying extra bus fare due to the increase in fuel for transport and as such it spirals to all sectors,” he said. As a result, the economist supposed that the increments resulted in the employees supplementing employers in keeping alive, as they had to forgo a number of activities as they could barely afford the basics. On the other hand, the economist said government had to improve its social services in order to cushion the populace in general. He said this was necessary as a majority of the population lived on less than E20 per day. He said the increased wage bill would stimulate domestic demand due to increased disposable income. However, this demand was not in line with inflation.

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