Inflation : pressures on wages

“Secondary effects”… here we come.

Prices are rising… therefore wages are supposed to follow (in the mind of people).

It’s exactly what the BCE in Europe for instance wants to avoid… But here in Asia, it’s difficult to challenge this common view.

Of course people do have problems to cope with the inflation of prices… but any salary hikes will be absorbed by further inflation. It’s like adding gasoline onto a fire.

The government is going to increase -again- wages of state’s employees… By ricochet, that’s going to put pressure on private companies. They will have to follow. Their costs will be higher… therefore the temptation to increase their selling prices will be strong.

Ready for another round of inflation ?

State employees’ salaries and minimum wages are expected to be raised across the board soon amid rising fuel and food prices.

Rungson Sriworasart, deputy comptroller-general at the finance ministry, said his department was preparing options for increasing salaries of permanent government employees.

The raise is expected to take effect from October instead of April next year as planned earlier, he said.

Rungson’s comments came after Deputy Finance Minister Ranongrak Suwanchawee had pledged that government employees would be given a pay raise to cope with the rising cost of living.

The Finance Ministry also plans to raise the salary of 2.7 million state officials after the previous Surayud government granted a 4-per-cent raise last October.

State-enterprise employees also got a 4-per-cent wage hike last year.

Meanwhile, blue-collar workers are negotiating with the government and their employers to raise the minimum wage by about 5 per cent next month. (Nation)

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