Look beyond subsidies to fund civil servant raises - Economist
Economist foresees economic growth from increased consumer spending due to civil servant salary hikes
SHAH ALAM - Economist Dr Baayah Baba stressed that the government should diversify its funding sources beyond subsidies to cover additional salaries for civil servants.
She said this is because the realisation of the subsidy will follow the current government and the future leadership may not see it as a necessity.
"So the government today should find other sources to increase in terms of finances.
"It could be obtained through investment by multinational companies or business taxes to cover the salary increase of civil servants.
"Every salary increase will have implications for the government's finances and I am sure they have a way to get funds," she said during the 'Salary Increases: What Kind of Productivity?' segment of Wacana Sinar, edition 439 yesterday.
While discussing the economic implications of salary increments, Dr. Baayah highlighted the positive impact such increases could have on the national economy.
"Raising salaries for civil servants injects money into the economy.
"When people have more disposable income, they tend to spend more. This increased spending benefits businesses, potentially leading to job creation," she added.
She also noted that increased consumer spending could stimulate economic growth, as individuals are likely to invest a significant portion of their additional income back into the economy.
"Typically, when people receive salary hikes, they don't save the entire increment.
"Instead, they tend to spend a large portion of it, which can have significant benefits for the national economy," she added.
