New pay scale logical, parallel measures needed to contain inflation: Mustafizur

The government’s decision to approve a new pay scale for public servants is a logical and bold step, said Prof Dr Mustafizur Rahman, Distinguished Fellow at the Centre for Policy Dialogue (CPD).

Public servants have not had their salaries reviewed for 11 years, while inflation has nearly doubled during the period, eroding their real incomes, purchasing power and living standards, he said.

“The government certainly has limitations. Considering 

to contain inflation: Mustafizur those limitations, I think it has taken a bold step,” he said in an exclusive interview with the Daily Observer on Monday.

Asked whether the new pay scale could have any negative impact on the economy and the people, Dr Mustafizur said the move was “very logical” given the prolonged erosion of public servants’ real incomes.

He, however, said implementing the new pay scale would put additional pressure on government expenditure. The implementation mechanism should therefore be designed in a way that allows the government to manage the added burden, he said.

“At the same time, we expect the government to ensure that public institutions engaged in business and trade, investment and providing services to the people are also strengthened in parallel,” he said.

Strengthening the institutional capacity of government agencies, particularly those responsible for revenue mobilisation, would help ease the fiscal pressure created by the pay hike, he said.

“There are public servants who are involved in revenue mobilisation, aren’t there? If they increase revenue collection by enhancing institutional capacity, it will make the pressure on the government much more manageable,” he said.

Dr Mustafizur also stressed the need to strengthen accountability and institutional capacity in agencies responsible for revenue collection, economic management, business and trade, and investment promotion.

Such measures would improve macroeconomic management and help the government absorb the additional pressure arising from the new pay scale, he said.

On concerns that the pay hike could fuel further increases in commodity prices and deepen hardship for ordinary people, Dr Mustafizur disagreed.

“Commodity prices depend on many factors. Inflation increased significantly over the last four or five years even without the government increasing the salaries of public servants. Did the government increase their salaries then?” he asked.

Inflation is driven by a range of factors and cannot be attributed solely to higher salaries for public servants, he said.