Wednesday, September 20, 2017

Everyday people fear inflation with budget

Economists and everyday people say they are concerned about rising prices resulting from a large planned civil servant salary increase, as members of parliament spoke in favour of planned pay raises during parliamentary sessions on March 26.

The large increase planned for civil servants may fuel rising consumer prices, which are already increasing partly due to kyat depreciation against the US dollar – the currency in which many imports are denominated.

Experts have said the planned salary increase for civil servants risks increasing the amount of money in circulation, fueling inflation further.

“To some extent, increasing salaries will be a benefit for civil servants, but it will also increase the inflation rate and then commodity prices will rise,” said economist U Khin Maung Nyo.

The plan revealed on March 26 calls for minimum civil servant salaries to increase from K75,000 to K120,000 per month (US$72.50 to $121). The maximum salaries will double from K250,000 to K500,000.

Salary increases are expected for some 2 million government employees, from teachers to postal clerks to senior officials such as director generals and also members of the armed forces.

Independent experts have said inflation is likely to increase in the next year, partly on the back of the plan to increase public salaries.

The Asian Development Bank last week said current inflation of about 6 percent compared year-on-year is likely to increase to about 8.4pc in the coming fiscal year.

Some local people also say they are aware of the debate, questioning why government workers may receive salary bumps that result in hardships for others. “We worry that the basic price of commodities will increase,” said taxi driver Ko Maung Hla. “We are already living a hand-to-mouth existence. We can’t find extra money for increasing prices of basic commodities.”

Roadside vendor Daw Tin Win said it is hard for local people to make ends meet. “I don’t understand why the government raises civil servant salaries frequently, because after increasing salaries, commodity prices are on the rise,” she said.

Those that stand to benefit directly say they support the increase.

Primary school teacher Ma Ei Thandar Win said it good news for educational professionals. “Maybe commodity prices will increase a little, but I don’t think it will be by that much,” she said. “Increasing salaries is better than not increasing them.”