Economy can’t afford salary hikes

Though the difficult current economic challenges will see many households having to explore alternative financial means to afford continuous increases in food prices, Namibia's economy cannot afford salary increments for public servants.

This was said by Bank of Namibia (BoN) deputy governor Ebson Uanguta at a media briefing last week, where he emphasised that households’ income have been affected and will further be indebted due to this difficult economic stage. The fiscal position of government however cannot afford an increment, he said.

The stagnant wage of public servants for six years has seen an outpour of negotiations that started on 25 February 2021 by the bargaining unions, Namibia National Teachers Union (Nantu) and Namibia Public Workers Union (Napwu) proposing a 10% increase in salaries, 10% in transport allowances below management level; 9% in housing allowance, 25% in the qualifying amount for housing subsidies, as well as a N$7 per kilometre tariff increase.

INFLATION

The deputy governor explained that annual domestic inflation increased by 3.5% during the first 10 months of 2021 compared to 2.2% of the same period in 2020, noting that the increase was mainly driven by inflation of food, transport and housing categories, due to a rise in international oil prices.

“The public servant wages have not been keeping up with the inflation adjustments, but at this point in time of our economic difficulties and looking at the fiscal position of our government it could be the right thing to do, but for the sustainability of the fiscus it is going to be a big challenge,” he said.

Uanguta added that with the current economic status it is better for government to keep people employed and continue maintaining the current wage bill which is maintainable, “instead of increasing the wage bill and realising a couple of months later that you cannot afford it”. - Nampa