Manama: Qatar's government has announced a bonanza for Qatari employees in the form of a quantum hike in salaries.
Gross salaries of all Qatari employees have been raised by 60 per cent with effect from September 1, while the salaries of defence personnel of officer rank have been hiked by 120 per cent, Qatari media reported.
Monthly pensions of retired government employees have also been increased by 60 per cent, while the raise in the pension for retired defence personnel (officers) has been 120 per cent.
The salaries of defence personnel who are not of officer rank have been raised by 50 per cent.
Similarly, the pensions of retired non-officer defence personnel have been raised by 50 per cent, Qatari dailyThe Peninsula said.
Crown Prince Shaikh Tamim Bin Hamad Al Thani issued the decision on Tuesday ordering an increase in basic salary, social allowance and pensions of employees and retirees among Qatari civilians and military personnel working in the public sector.
Under the decision, the increases are of 60 per cent in basic salary and 60 per cent in social allowances for state civil employees and 120 per cent in the basic salary and 120 per cent in social allowances for military persons of officer ranks and 50 per cent in the basic salary and 50 per cent in social allowances for military persons of other ranks.
The decision included an increase of 60 per cent in the total pension for civilian retirees, an increase of 120 per cent for retirees of military personnel of officer rank and 50 per cent for military personnel of other ranks.
According to officials, the total amount of the increase in the basic salary and social allowances will be QR10 billion per year, in addition to QR10 billion to be paid once for pension fund and another QR10 billion to be paid for the retirees' subscriptions ahead of the implementation of the retirement and pension law.
However, the daily reported that economists and businessmen warned of prices rising further due to large-scale salary hike and said the move might prompt private companies to follow suit.
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, they said. Economist and mega investor Abdullah Al Khater cautioned banks to be rational in lending and asked fellow countrymen to shun consumerist habits and turn more to savings.
"Saving is the key to future financial security and reining in inflation," Al Khater said, hinting the banks could top up personal loans undeterred with the salaries of government employees going up. "Qatari households must streamline their budgets and rationally manage their cash flows, learning a lesson from the hardships many of us suffered due to the global financial crisis," he said, quoted by the daily.
Irrational spending by borrowers is sure to push the rate of inflation further up, Al Khater warned. "The banks would do better to focus on recovery taking advantage of the salary increment of borrowers than on lending." Higher prices will also mean more pressure on the private sector to raise the salaries of their employees, experts said.
Prices to shoot up
According to Mohammad Al Musfir, a teacher of political science at Qatar University, "private sector employees are bound to suffer as prices shoot up further due to the state's salary raise move."
Private companies should raise the salaries of their employees, Ahmad Al Khalaf, a businessman and member of the Qatar Chamber of Commerce and Industry (QCCI), said.
The trio welcomed the government's move to raise salaries of its Qatari staff saying that most state employees and their families were entirely dependent on their wages for livelihood, but said it must take immediate steps to check price rise.
"We hope the Consumer Protection Department (of the Ministry of Business and Trade) keeps a close eye on the prices," Al Khater said.
"As for the private sector raising pay packages of their staff, companies are actually watching the situation in the US and Europe and the likely impact of the goings-on there on the Qatari economy."
Private establishments have a breathing time of around six months to take a decision about revising staff salaries and by that time the mega public projects for 2022 would also begin to be kicked off, he said. According to Al Musfir, the government must take effective measures to check inflation by making sure that commercial property and house rents are down.
"The state must also help reduce public transport costs by bringing down fuel prices," he said.
Al Musfir warned that if the government continues to revise upwards the wages of its employees and the private sector does not follow suit, there could be discontent among the latter's employees and that might prompt people to think of illegal ways to make money.