Sunday, February 22, 2009

We Really Can’t Afford to Hike Salaries

Translated from Dhivehi article by Moosa Latheef

Before writing this column I asked an economic expert, “I was trying to guess what would be cut from my salary, but the government is increasing salaries. Won’t ordinary people think like me?”

He replied that most ordinary people won’t think that way. That’s because Maldivians have never been known to live within their means, and further the government has been hesitant to explain to the people the reality of the economic situation. Because of this, salaries have been increased even though it is not feasible. This has confused the public, he said.

It’s worth recalling that we are today in a very different economic scenario. As Salah Shihab, a tourism and agriculture entrepreneur and a high official in the government of former President Gayoom, has said, no one under 50 years of age would have experienced an economic crisis of this magnitude. This means nobody born after 1959 would have seen such a thing. In fact, the current crisis is perhaps graver than the great depression of the 1930s.

The reality of the current situation is that we can’t afford to increase government salaries by even one rufiyaa. According to economic experts, if salaries are increased it would increase money supply. Maldivian rufiyaa will be chasing the dollar, the expert said. Even now most people say the dollar sells for over Rf. 13.50 in the black market.

It is the practice abroad to go for a deficit budget in times of economic crisis. However, in the Maldives caution is necessary. One must also consider whether the increased salary will have any real benefit. When the dollar sells for a rate higher than the fixed exchange rate, it would increase the prices of goods. In view of this inflation, economic experts are not of the opinion that the increased salary will benefit the overall economy.

The need of the hour is for everybody to accept the reality –everybody including the government and its employees, the traders and their customers. However, even now certain employees like teachers are claiming that they have not got a fair increase in their salaries. They believe this because perhaps they are not aware of the situation. Thus the government must explain the economic status to everyone. Whatever the political challenges, the details of the economy must be revealed. Whether the employees agree or not the government is not in a situation to increase salaries. If such a decision has been taken it is not a wise decision.

This year I will not request my office to increase my salary by even one year. Instead, if I want to see my company survive I must see what could be reduced from my salary. And if I have the guts I must ask them to reduce that much. If one thinks this way, we should not be considering salary increase, but contemplating how we will get in the next one and half years, what we are getting today.

Even while shedding a tear, there is no other choice but to accept the situation. According to the expert who talked to me, it is unlikely that the government will accept this reality before the Majlis elections. But that is the reality.

11 comments:

Anonymous said...

This may be the reality. One point about the teachers that you noted, they have been fighting for increase in salaries for a long time, meanwhile atoll and island councillors are getting high salaries while the teachers are working hard and these people spending money on elections.

How can it be asked of them to say nothing, when the government is not held accountable for increasing the salaries of these politically selected councillors.

Through the grapevine heard that the teachers salaries which they were fighting for was increased and accepted to budget, but now its being paid for the councillors and all these state ministers keep increasing day by day.

If the top level government does not act responsbly why would others.

Would you be willing to work for no salary in an economic crisis while people at the top, there salaries keep increasing?

Anonymous said...

Gayoom left Anni with a lot of money. He can build flats, he can give 2000 rufiya to over 65 year olds,he can increase government employee wages,he can hire more ministers at high salaries,he can appoint loads of councillors(councillors in islands, in atolls in offices and in embassies),he can go foreign countries with 50 officials, he can party with his cronies in Italy. He can do more. There is lots of money in the Treasury. Thank you former President Gayoom for keeping so much money in coffers. Thank you again.

Anonymous said...

Dr. Waheed Sir, I noticed that you have repeatedly quoted an anonymous expert in this post. While I appreciate and agree with all that you have talked about here, I think the anonymity of the expert makes the entire post almost futile.

Salam -raajetherey soru

Shiham said...

True!
Most of us are oblivion to these facts and largely remain naive. We can not think govt increasing civil wages will do any better. If money suppply increases, then inflation. The value decreases. Govt has borrowed huge sums of money from MMA for last couple of months and we are subjected to more and more debt day by day.

Would i be wrong to think, may be govt is not informing public or involving in the crisis in a conventional manner is, we wouldn't simply get it. What do you expect to the response would be from the islands. Do they even know what is a depression?
BUT may be its time, we teach them and inform all public. include in Friday sermon, that we are headed for a bad time and instead of acting in favour of economy, govt, has, or had to do otherwise for polotical reasons.

Anonymous said...

im abdulla waheed. i dont want to increase my salary to a single coin this year. I have a house in Male and I can manage economic affairs even with a low salary of 3000 a month. I am a fortunate person and i also had lot of advantages in the perevious government.

Anonymous said...

The problem is not that we don`t understand the way out of any crisis, rather its all about being unfair to one tier of the society while the other tier is more privileged. under every difficult circumstance it is the lower level of the society who are been pushed to the limit and asked to bear all the sufferings and miseries of any given situation while the upper layer gets fatter and fatter and benifits from every inches of the blessings of the government. looking at the salaries of MPs, Auditor general,President,V.pres. and political apointees it doesn`t appear at all that this nation is in a financial crisis. but when it come to increase the salaries of ordinary pple like teachers who have sacrificed their entire life in building this nation are been victimised for beieng teachers due to the so called finaincial crisis.It seems that the government is deliberately prevaricating the financial situation of the country.

Anonymous said...

Solah Shihab, tourism and agriculture enterepreneur who got his wealth through squeezing Maldivian blood cannot say anything against maumoon is still trying to bring back maumoon to power so that he and his partner champa afeef can own the balance uninhabited islands as his resorts. Even though I wasn't a 9th grade dropout and from nowhere existed as an economist, I was hoping any government to pump money from the reserve. Thats the purpose of a reserve and the government. If not, why should we elect a government and give all our money to them to manage. talk sense. we spend our money for your educaation to have a better future for us. I know Solah Shihab as a person who travels with wife in economy class and him self in business class. Firsly i want him to justify this action before making any shit about our economy.

Abdullah Waheed's Blog said...

Kindly note that this is simply a translation of an article written in Haveeru by Moosa Latheef. While I share many of his ideas, I cannot answer some of the questions raised in the comments.

Anonymous said...

a good article. but when viewed in a different perspective the reality is something entirely different.come 26th February and when the civil servants of this country get their salary there will be a big out cry. especially from the professionals like college lecturers, doctors and nurses etc.because when teachers have threatened to go on strike their salary is increased. and salaries of some of the non professional civil servants got increased by 100% while salaries of these people are increased, salaries of most professionals and a few others are remaining the same, or decreased or increased by only 1 to 2%. this type of discrimination should not happen even though there is a financial crisis or economic recession.a cut in salary of even RF 100 also will be a huge loss for some who have been managing their daily needs based on the salary they were used to get, especially during this time when cost of everything under the sun is going up.but who cares? government has the money to pay for any number of island counselors , state ministers and other political posts that they are creating.and the MPs get 65000 RF and trips to singapore as medical benefits

Anonymous said...

Looks like you have a politically correct "no comment" to the questions raised, no opinion to express to yourself and no understanding or empathy for what teachers and others are going through! Thats a nice positivist stand!

Anonymous said...

Solah Shihab,Buruma Gasim.Champa Afeef,Sun Shiyam. Lolly Jabir. Jangiya Nazim.Asrafee Book shop owners Adam Ibrahim and his partner and many more became rich millionaires under Gayoom and his 30 year old policies. Now they crticize Maumoon's policies.If not for Gayoom's policies these people will never be the millionaires they are.