Wednesday, May 23, 2007

Pay Rise for Govt Servants, what about the rest of us?

I am happy for Govt servants, the police and the army personnel. When did they have general salary increase? Well I dont remember, thats how long ago since the last salary increase. If they count on annual performance salary increase, that is hardly make up for inflation.
I have relations, ie brother, sister, inlaws and uncles/auntie in the Govt service. Quite a few of my old friends are in the teaching profession.
Their monthly salary are just enough or less. I remember a friend who had to supplement his income by selling Amway, and another friend who work part time every night for RM3 per hour at Makro Shah Alam. Another man sold nasi lemak every night at Puduraya.
Yet they continue on working as Govt servant during the day, because their salary make the bulk of their income, and they want to keep their pension from the Govt in later years. I admire them for their tenacity.

Some people say that the cost of this increase in salary is RM8billions per year. I dont make calculation, too much hassle.
In Keynesian terms, this increase in Govt purchase of RM8billions will push the economic equilibrium upward. If curently the GDP is sitting at RM100billions, the economic equilibrium after this would be more than RM108billions, the final figure will depend on marginal propensity of consumption (MPC). So assuming that all Govt servants purchases is done locally, no imported stuff, and MPC of 0.8 (savings rate 20%) then we can expect the new economic equilibrium at around RM130billions.
Who cares about such detail anyway, the important thing is that there will be economic growth for a few years to come.
With this new impetus for economic growth, there will be hundreds of thousands of new jobs created by the expanding economy. You see as the Govt servants spends of a little bit extras on goods and services, more jobs would be created, and this will have a flow on effect. If the unemployment is high, this will lower the unemployment rate, but if the unemployment is low, say below 2% like today, this would create upward pressure of wages.
I am okay with increasing wages for the low income workers. I am also happy with highly productive workers getting their due rewards.
But I am concerned with low income workers who dont have proper representation and denied wage increase that is due to them. For this I blame the Govt for NOT allowing them to join national unions who can fight for their cases.
Also the benefit of our nation prosperity should be shared among us all. Very soon, in about a years' time, if all going well, we would start to have a shortage of workers.
I suggest that the Govt start formulating and push Minimum Wage Law through Parliament. With Minimum Wage in place, our economic planner could reallocate our labour resources from not profitable sector to a more profitable one. For this I support MTUC in calling for pay review for the private sector.
Lets call for RM5 per hour wage rate.
22/05: Where the money will go
Category: General Posted by: Raja Petra
The Straits Times

Breakdown of the pay rises for Malaysia's one million or so civil servants from July 1:

35 per cent pay hike for the lowest-paid staff in the civil service's support sector, including cooks, gardeners, clerical staff and drivers. These number 319,336.

Police and military personnel in the same tier will get a 42 per cent pay hike overall because their duties are more critical and challenging.

25 per cent pay rise for all other staff in the support sector, or 434,899 civil servants. (30 per cent for police and military personnel in this tier.)

15 per cent pay rise for those in the management and professional group, or 246,202 civil servants. (17 per cent for police and military personnel in this tier.)

7.5 per cent pay rise for the highest-ranking civil servants, including secretaries-general of ministries, their deputies, university professors and heads of government agencies. These number 1,603 civil servants. (9 per cent for top-ranking police and military personnel in this tier.)

100 per cent increase in the civil service's Cost of Living Allowance (known as Cola) across the board.


Pleasegobacktoschool said...

I bet you were not paying attention during Economics class while you were in school. Your explanation on the increase in GDP due to the increase in salary is WRONG. If that is the case, the government should just increase salary expenditure every single year. The extra expenditure of RM8 billion a year needs to be funded by debt. Or, the RM 8 billion used to build highways, hospitals, roads, schools or mosques will have to be stopped. Money don't grow on trees.

nooryahaya said...

sure money does grow on trees, just grow tree that produce stuff, like fruit that you can sell. you can also be print money if you are gomen. another thing, has gomen publish last year and this year's operating expenditure surplus/deficit? I bet if gomen build that oil pipeline, the budget will go into deficit big time, yet they will explain as development expenditure even though it has little or no benefit to the rakyat. while if they increase salary to some, they could use the money.
why, do you prefer gomen to cut spending and cut salary? that will start an economic contraction in a stagnant economy. rule: only cut pending in a booming economy.