Economists say federal pay rise unlikely to fuel inflation
Economists have commented on the Federal Government’s recent pay increase for some public sector workers, saying it is too small to trigger inflation. Dr Muda Yusuf and Dr Ayo Teriba both emphasized that the wage adjustment affects only a segment of the public service and does not represent a significant rise in money supply. They argue that the increase is more likely to help relieve poverty among affected workers rather than cause price hikes. The experts also advise that any wage changes should be clearly justified and communicated.
TLDR
- Dr Muda Yusuf stated that the pay rise is too limited in scope and amount to impact inflation.
- The increase applies only to workers under specific salary structures, not the entire public sector.
- Dr Yusuf explained that inflation is driven by large-scale increases in money supply, which this adjustment does not represent.
- Dr Ayo Teriba said the raise may help ease poverty among public workers due to their low wages.
- Dr Teriba cautioned that any wage adjustment should be temporary if linked to external shocks and should be clearly justified.
