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Is a state worker paid too much?

Nurul Huda
MANY developing countries are paying higher salaries to their state employees than they can afford, stunting economic growth in(the process. The hitter the .relative government pay rates, the lesser the economic growth attained, according to an Asian Development Bank (ADB) study on 19 Asian. African and Latin American countries.
The least favourable estimates identify Bangladesh as a country with one of the highest relative government pay rates. Economic rents embedded in government pay rates reduce the affordability of government and the coverage of public services essential to eco-
* nomic growth, the ADB study said.
This leads to far less employment in government, and the creation of unemployed labour in search of government employment. These countries, it said, could raise their economic growth by reducing relative pay rates in government and using the budget savings to expand employment.
It needs to be recalled here that the caretaker government (CTG) has expanded social protection schemes, devoting nearly 10% of the current year's budget to social security and welfare, which is in addition to a wide range of employment creation and selfemployment programs
The CTG has also created a new program to generate employment for two million poor for at least 100 days during lean periods when rural employment becomes difficult But the rate of unemployment, which was 35% in 2006, has risen to 45%, reports quoting official sources said. Unofficially, there arc 3- 3.5 crore unemployed people.
Unemployment is a matter of concern, as a good percentage of the unemployed might get involved in crime out of desperation. Even government advisers admit that a section of people cannot afford to purchase daily essentials.
Finance Adviser Dr. A.B. Mirza Azizul Islam said at a meeting of Bay of Bengal Initiative for Multi-Sectoral and Technical and Economic Cooperation (Bimstec): "The dramatic increases in the prifw.of .foed gy^ips. jl^el fertiliser have given rise to ugly inflation. It is well known that inflation hurts the poor most as they are net purchasers of food. Their capacity to meet minimal food requirements is severely constrained as they have hardly any saving to draw on.'
Government employees, who got their last pay hike in 2005, have recently been given 20% dearness allowance so that they can cope with the spiralling prices of daily essentials.
There have been demands for wage hike from different sections of non-government employees, including 1.25 lakh motor launch workers who have already observed a work stoppage program. Similar demands are also being raised by workers in the private sector, including those working in Mongla and Chittagong ports, who also went onawild-caL
The price of rice recorded 60% increase in one year. BR-11 and BR-8, which cost Taka 21 per kg. in July last year, cost Taka 32 per kg. in the first week of July this year. The price of kalijira recorded an increase of 87% in one year, a survey conducted by the Consumer's Association of Bangladesh (CAB) said. The CAB survey showed nearly 53% rise in price of edible oil in one year. The price of wheat increased by 53%.
This piece is, however, not intended to burden the readers with statistics of price index of the daily essentials, but to give a background of the demands raised by working class people for their wage hike.
The demand for pay hike can be attributed to increase in prices compared to other countries, including India. The June 30 issue
of Weekly India Today carried a story on price hike of essentials and its impact on Indians.
In India, the price of rice increased to Rs 19 per kg. on June 12, 2008 from Rs 13 per kg. in June, 2004. The price of gram rose to Rs 34 per kg. from Rs 23 per,kg in June. 2004. The price of wheat rose to Rs 14 per kg. from Rs 9 in June, 2004. A kg. of mustard oil was sold at Rs 84 in June. 2008 as against Rs 77 in June 2004. There have been loud noises in India over price rise of daily essentials, and the UPA government will have to face the consequences in the next elections.
In Bangladesh, the abnormal increase in prices is partially due to disruption in import, which can be attributed to the arrest of some big businessmen. Some businessmen went into hiding while others decided to import in limited quantity.
Nurul Huda is a special correspondent of BSS
Meanwhile, the remarks made by commerce adviser Dr. Hossain Zillur need special mention. He said: "Price of rice did not come down even after the boro harvest this year as farmers are stocking the staple. The government is not familiar with the implication of this new phenomenon, and needs to see what it means and what to do." He, however, hastened to add that the government could not act beyond economic reality. It is now up to the readers to judge the implications of his remarks.
It needs'to bb recalled here that BDR market outlets and Open Market Sale (OMS) had created a favourable impact on prices. But as soon as sale of rice through such outlets was suspended, prices showed upward trend. Some economists feel that BDR market outlets and OMS should continue so that the fixed income groups could procure daily essentials at somewhat tolerable prices. The Trading Corporation of Bangladesh, they said, can be involved in the task.