Thursday, February 08, 2007

Government employees to receive 20% pay increase :: Gulf News

Link to GN.

I presume the pay increase is for two reasons: (1) to compensate for inflation which is running in the double digits, and (2) to share the windfall of higher oil prices.

A problem created is that this makes it ever more difficult to attract nationals into the private sector where wages currently are not keeping up with inflation.

The wage increase is retroactive to the start of 2007. The practice of giving retroactive pay increases poses a further barrier to attracting nationals to the private sector -- the private sector does not follow this practice.

The government has said it is concerned that so few nationals work in the private sector. Suggestion to the government: Allocate more welfare benefits through direct cash grants to nationals rather than through paying greater-than-market rates for working in the government sector.

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