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PETALING JAYA: The government will continue to carry a high wage bill, which occupies a large part of the national budget, and can do nothing about it, economists say.
Ramon Navaratnam, who chairs the Center for Public Policy Studies at the Asian Leadership and Strategy Institute, said the country was “stuck” with its big bill on emoluments and pensions.
“Pensions cannot be reduced and civil servants cannot be fired. So, we are caught up in this, ”the former Under Secretary General of the Treasury told the FMT.
According to the 2021 budget presented by Finance Minister Tengku Zafrul Aziz on Friday, it is estimated that the emoluments of public officials amount to 84.5 billion ringgit, with pensions amounting to 11.7% of the amount.
The government wage bill was RM82.61 billion in 2020 and RM80.53 billion in 2019.
“It all goes back to ‘Ops Isi Penuh’ and it will only continue to grow,” he said, referring to “Ops Isi Penuh,” the government’s utility contracting program in the 1980s.
However, Shankaran Nambiar from the Malaysian Economic Research Institute (MIER) was more optimistic, suggesting that even if nothing could be done about existing commitments, the government should consider reducing its long-term wage spending. term.
“Emoluments alone make up 36% of operating expense and it has increased by RM 1.9 billion as of 2020,” he told FMT.
Shankaran said that while it was good that the budget provided support, such as cash grants to disadvantaged groups, “it relies on supporting small and medium-sized enterprises (SMEs) minus those in the tourism sector or has digitization plans.”
Meanwhile, the executive director of the Center for Market Education Malaysia, Carmelo Ferlito, told FMT that the large allocations for salaries and pensions were no longer really surprising.
“This is more or less in line with previous years,” he said.
He added that there could also be a political strategy for the provision of other incentives by the government for public officials.
Speaking about the overall impact of the budget, Ferlito said the government should have put a greater emphasis on initiatives that could have a more lasting effect on the economy without the need to spend more money.
“I don’t see any real economic recovery strategy in the annual budget allocation. While it includes some good ad-hoc and targeted aid, the budget lacks substantial initiatives to boost the economy, ”he said.
