27 July 2014

Ethiopia: Salary Supercycle

Photo: AllAfrica
Addis Ababa (file photo): Government makes salary increment for civil servants.

As usual, the budget proposal by Prime Minister Hailemariam Desalegn to Members of Parliament (MPs) was full of figures. Whereas some represent the achievements of capital projects, others indicate the increment in percentage points, in the different sectors of the economy.

What is shown in the figures is a story expected to be told particularly at this time of the budget year, and above all as election year comes close. But there was nothing more interesting like the hint of the salary increment that attracted interest everywhere in the country.

Salary increment issues are global. They are often forced by labour union strikes and negotiations. And, often, the enforcing powers are usually labour strikes and boycotts.

These creeping but sustainable forces could at times turn turbulent enough to crumble age-old government systems. That was what happend in Ethiopia in 1974. Members of the Second Division stationed at Asmara sparked the ignition.

They pleaded, among other things, a pay rise in the neighbourhood of 20 Br, a request which was met in no time. The civil service members, particularly teachers, noticed the cracks in the government. And they took to the streets of the capital holding their slogans high and shouting their demands loud.

Taxi drivers opposed the 10 cents per litre increment. Angry rioters threw stones and smashed windows of vehicles, including public buses. All those actions became irreversible.

Some military officers elected from the different regiments all over the country, 120 of them to be more precise, came together to form the Dergue. This was supposed to be a political body that had desposed the monarchy and ruled the country for the ensuing 17 years, until this also got chased away by the present party. The rest is history.

The labour union in the mining industry in South Africa could be cited as recent examples of how much labour boycott could affect the national economy.

Salary increment news or even speculations here in Ethiopia have been taken both as welcome news and bad news. For the 1.5 million civil service employees, any additional income is a positive sign, while for the rest of the people outside the salary framework, any news, never mind actual income, means a source of discontent and a reason for despair. This is because speculating traders seize the opportunity to add a nominal amount of money on the price of goods and services.

Prime Minister Hailemariam Desalegn, in his recent press briefing, advised the general public not to subdue to such pressures. The problem is no price tags are practiced.

Any trader or shopkeeper can call any amount of money and strongly argues that this is the price everywhere. He would even go as far as pushing the consumer to go anywhere and report to the Kebele officials, if he wants to do so.

These kinds of arguments are more pronounced at butcheries or daily product shops. The queues and line ups at the doors of bakeries are recent experiences, even if not related to the salary increment news.

There are more than 23,000 shopkeepers, most of which are engaged in retailing business. These are closer to the consuming community and as such any amount of illegal price increase on the goods they sell affects the ongoing price in the market.

The pertinent office kept sending alarming signals to those retailers who do not abide by the rules. But shopkeepers and retailers do not give two pence for these alarms.

It is so simply because these signals are just tigers on papers. This time, for example, some 83 shops have been closed as a starter. Whether the relevant office means business or not is something to be seen.

Under normal circumstances, salary increment budgets are part of recurrent budgets and are passed by parliament after tough debates. This is because the financial implications ought to be examined carefully.

Jobs have to be evaluated professionally. There are cases where we come across instances where some civil servants have no ability to perform what is expected of them.

Not long ago, the monthly salary of a minister was not more than 3,500 Br. But this figure is now peanuts.

Another angle of debate pertains to the implication it has on the market. It obviously creates price inflation, especially if there is a need to print money. This contravenes economic growth.

The other problem related to salary increment is the attitude among employees who tend to assume that it is done indiscriminately. Making up for the increment in cost of living is one thing. But the meritorious increment margin alienates between those who deserve the additional money and those who do not deserve it.

Any salary increment should not ignore the elderly or those who are on pension allowance. Unfortunately, for many of us, the salary sanctions imposed during the Dergue regime has seriously affected us so much so that a retired person who was on a ministerial or department head level is now forced to live by an allowance much less than a sweeper's present day payment.

In an interview with local reporters, Prime Minister Hailemariam Desalegne has said that the planned salary increment assumes no cost to the consumers. In a free market economy, price is determined by the invisible hand of the market or to put it in economic terms, "the law of economics comes into work".

We have detached ourselves from a command economic system, at least in theory. But I am not, in any way, suggesting that free economy needs to be functional at the expense of the poor.

It is interesting that the establishment is well aware of the rising cost of living, which is reflected in the prices of sugar, edible oil or flour. The next price escalation is feared to emanate from the "road passing" tariff that would soon be implemented on the Addis-Adama Road. Any denomination could have cumulative effects on the price of goods and services anywhere in the country. Let God save us all!

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