Every action has its consequences. If consequences are not correctly identified or their ramifications underestimated, the results can be detrimental with dire implications
The recent announcement of a revision in civil service salaries has been met with differing viewpoints, granted it is overdue by 10 years. The quantum is expected in the region of 13%.
The key question is affordability. It is expected to increase the wage bill, part of the operational expenditure of the country’s budget, by about RM10bil. This is a sizeable amount, given the debt levels that the country is facing.
It is postulated that the revision will improve the productivity and efficiency levels of the government service. This is an expectation but in reality, the stifling bureaucracy of outdated regulations and procedures is what is a bane to the economy. Civil servants are merely a cog in an ill-oiled machinery which has an affinity to pander to political interests.
Economic data has shown a direct correlation between salary revisions and inflation rates. It leads ultimately to interest rate hikes, making debt servicing more expensive.
To aggravate the situation, the leakages in the government revenue either due to corruption (power abuse) or bribery, mainly in "front-line" agencies – namely the customs, immigration and police force – as evidenced by the investigations of the MACC, is a matter of concern!
The tax system. which is a contributor to revenue. has become a political hot potato over the years, seen as an electorate-pleasing tool to woo the ill-advised voter. In 2018, the goods and services tax (GST) was dismantled instead of refined. The current sales and services tax is outdated and inefficient (SST). The tax on high-value items has been shelved.
So is the revision announced a crowd-pleaser, just as the scrapping of GST was? The degree of thought that has gone into funding this revision is being questioned.
Normally, salary revisions, especially at the percentages proposed, are announced when there is a robust outlook on the economy. Currently, the global economy is facing its challenges and Malaysia as an exporting country is dependent on trade patterns.
The continued high oil prices due to global political tensions and the stubbornly high inflation rates (and interest rates) in the US has a detrimental spin-off effect on global growth. Malaysia’s economic health is fragile at best, as we inadvertently “import” inflation given our insufficient food resources.
Initiatives to curb excessive profiteering and dismantling of monopolies to make the supply chain more efficient and targeted initiatives to reduce income inequality as reflected in the Gini coefficient should be key focus areas
Challenging the Opposition to state their stand on salary revision borders on emotionalism. The civil service numbers close to 1.6 million. Political grandstanding to a select group is a path strewn with barbs, given its consequences on the wider economy.
The electorate has long called for a strong Opposition and, since 2018, has seen its effects with the change of three prime ministers, sidelining of certain political parties in long-standing coalitions which have contributed immensely; and new marriages of convenience under the banner of a "unity government".
Those who spoke up on integrity and good governance pre-2018 are now understanding the realities of being the government of the day.
Salary revisions have long-term consequences, as something has to give. Ultimately, development expenditure will be the victim unless more robust sources of revenue are available and leakages are a thing of the past.
What a government does today has roll-on effects in years to come when a different government is in place. The economy can only take so much.
WALTER SANDOSAM
Kuala Lumpur
The writer served as a Senior Fellow at a private university.
