Qatar announces dramatic salary increases for govt employees, prompting inflation fears

By Verysomenotes (ar.wikipedia.org) [Public domain], via Wikimedia Commons

In a move certain to squelch any iota of revolutionary sentiment in the country – and spur inflation – Qatar has raised salaries for all nationals in the public sector by 60 percent.

Military personnel will see a hike of 120 percent, effectively retroactively as of Sept. 1 in accordance with Emiri decree, QNA reports.

The astounding raise, courtesy of Deputy Emir and Heir Apparent Sheikh Tamim bin Hamad Al Thani, will also include a hike in employee pensions and social allowances.

In total, the new salaries and benefits will cost Qatar some $8.2 billion, or QR30 billion, QNA states.

The decree, while generous, already has some business analysts concerned about the rising cost of living in Qatar.

The Peninsula reports:

Higher salaries mean an increase in people’s purchasing power which is sure to further mount inflationary pressures, especially as nationals lack a culture of savings…

And the more the prices go up the more the pressure on the private sector to raise the salaries of their employees, experts said.

“Private sector employees are bound to suffer as prices shoot up further due to the state’s salary raise move,” said Dr Mohamed Al Musfir, who teaches political science at Qatar University.

When that happens, either the private sector will raise salaries, pushing inflation even higher, or maintain the status quo, which could foment discontent and “prompt people to think of illegal ways to make money,” one analyst said.

What do you guys think of the pay hike?

What role, if any, should the government play in making sure the economy continues to run smoothly?

Credit: Graphic by Verysomenotes (ar.wikipedia.org) [Public domain], via Wikimedia Commons

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