New pay scale may put pressure on market, public life amid economic challenges: Mujary

The implementation of the new government pay scale could fuel inflation, push up commodity prices and increase pressure on businesses and households at a time when the country’s economy is already facing multiple challenges, said noted economist Mustofa K Mujary.

Speaking exclusively to The Daily Observer on Monday, the economist said the pay scale could increase government expenditure, triggering demands for higher wages in the private sector if it contributes to a further rise in the cost of living.

The new pay scale had been under consideration for a long time and was approved during interim regime, and the interim government could not implement it because the prevailing economic situation was not conducive to such a move at that time, he noted.

The current elected government, after lengthy deliberations and taking various factors into consideration, has now begun steps to implement the pay scale gradually, he said.

According to him, a sense of dissatisfaction had been building among government officials and employees due to the prolonged delay in implementing the pay scale.

As the interim government had approved the pay scale, the present political government had limited scope to reconsider it. Although the current economic situation is not entirely favourable for its implementation, the government has been compelled to move ahead with the process amid stressing pressures and obligations, he pointed out.

Mustofa K Mujary said the implementation of the new pay scale will place additional pressure on government expenditure and public funds.

He added: Around 20 lakh government employees and pensioners are expected to benefit from the new pay structure; however, a large section of the country’s workforce is employed in the private sector or engaged in other professions.

If the pay scale contributes to a further rise in the cost of living, private-sector employees may also demand higher wages, creating additional pressures on businesses and further complicating the country’s economic situation, he observed.

Mustofa K Mujary expressed concern that the new pay scale could have an adverse impact on commodity prices, particularly at a time when inflation is already high and the country is facing energy-related challenges.

There have been instances in the past when the implementation of new pay scales was followed by increased pressure on markets and higher prices of various goods and services, he said.

“Inflation is already at a high level, while fuel shortages and other supply-side constraints are disrupting production. In this situation, the implementation of the pay scale may create additional pressure on prices, whether directly or indirectly,” he said.

The general public is already facing considerable pressure due to rising commodity prices and the ongoing energy crisis, he added.

The economist further said the government should remain vigilant so that unscrupulous traders cannot use the implementation of the new pay scale as an excuse to raise prices of essential goods.

He stressed the need to strengthen market monitoring and enforcement measures to contain unscrupulous traders and other opportunistic groups from exploiting the situation for their own interests.