Civil Service Salaries & The Wages-Price Spiral, Devaluation, Inflation & Livelihood Security RL Vol XII No 345 MMXVIII

Civil Service Salaries &

The Wages-Price Spiral, Devaluation, Inflation & Livelihood Security

Public Lecture Res Publica Litereria – RL Vol XII No 345 MMXVIII

Costantinos Berhutesfa Costantinos, PhD

Professor of Public Policy & Sustainable Institutional Reforms

https://addisababa.academia.edu/CostyCostantinos

Abstract

While the dismal civil service salary has been an Achilles heel in the development of good governance structures, questions have been raised if a civil service salary increment will spin the inflationary pressures out of control (price &wages spiral). On the other hand, the continuous, stealth and surprise devaluations fall short of addressing the problem, which reflects numerous and complex factors. The National Bank can have various instruments to promote price stability and eco­nomic growth, where price stability, growth and export competi­tiveness are all concerns, but it is useful to consider the issue in terms of the monetary conditions index. The banking system must be functioning efficiently - taking care of the money market and hence the credit market needs of private sectors. An efficient and a development-oriented private sector provides the nourishment, which markets require to grow and function effectively. Markets themselves provide the credit ingredients, which the private sector requires to grow, expand and contribute to development. Thus, there is a reciprocal and mutually productive relationship between the private sector and credit and capital markets. Full or partial privatisation of units providing services that would be more efficiently provided in a competitive, multi-channel environment, force account activities, and private sector involvement in provision of major infrastructure and concession arrangements will provide more employment. Progress in information systems on micro-economic behaviour including labour market networks, and the specific requirements of technology transfer and adaptation are all preconditions for sound policy and strategy analysis, formulation and management. Planning and policy-making are characterised by on-going dialogue between government and different groups of economic actors, regular exchange of electronic data and information on specific needs and requirements. Primarily it is important to consider what Ethiopia’s bulk imports (petroleum, food – beer malt, sugar, wheat, etc. fertilizer, machinery, spare parts, raw materials and what Ethiopia exports (Coffee, Sesame, Kat, oil seeds, etc…). What is the wisdom of devaluating the currency when the exports are limited? Do they hurt the populace by a price spiral that goes out of control for citizens? There is simply no alternative to the establishment of sound institutional capacity in government for real-time strategy development, sensitivity analysis, policy coordination, and attention to the details of implementation. Strategic objectives must be clearly defined and specific measures made consistent with overall polices of a good national economic management. Provision of incentives to entrepreneurs must be subject to periodic review, continuation, and expansion made conditional upon perfor­mance criteria established in advance.

Key words: price &wages spiral, devaluation, inflation, monetary conditions index, credit & capital markets, 

See paper here or  http://www.academia.edu/37743956/Civil_Service_Salaries_and_Wages-Price_Spiral_Devaluation_Inflation_and_Livelihood_Security_RL_Vol_XII_No_345_MMXVIII