November 13, 2023
BANGKOK – A top economist has advised the government to put its plan to raise salaries for government officials on hold as the current economic situation does not permit it.
Assoc Prof Dr Somchai Phagaphasvivat was on Sunday commenting on the government’s decision to increase the salaries for civil servants and other state officials.
Somchai said he realised that most civil servants’ salaries were low on average, but giving them raises now would require a large budget. Also, he said, spending a large part of the national budget on these raises would hit the government with liabilities in the future.
The economist said he does not believe the country’s economic standing is strong enough to allow the government to carry too many financial liabilities.
He said that though the government needs to keep its election promises, it should also consider two factors: economic growth and fiscal restrictions that do not allow higher spending.
Somchai explained that the current investment budget ratio stands at just 20% of the GDP, while a healthy ratio is 30% of the GDP.
He noted that while the investment ratio was dropping, fixed expenditure was rising to about 77% of the GDP, and this would rise further if the government grants raises.
Also, he said, the low investment ratio would result in a low growth rate.
“With low growth, the government will have low income from tax,” Somchai added.
He said Thailand has had the lowest economic growth among ASEAN nations over the past 10 years.
He also warned that the government would have to shoulder a bigger burden in the future due to an ageing population.
Currently, people in the working age of 15 to 59 constitute 65% of the population, but their ratio would fall to 55% in the next 10 years.
“Hence, the current economic situation poses restrictions to salary increases,” Somchai said.
Instead, he said, the government should focus on reskilling civil servants who will be hit by the adoption of artificial intelligence.
“I believe after the salaries are increased, the government will need to reduce the number of civil servants in the future,” Somchai said.
“The government should wait for a while for the economy to recover first.”
Another thing the government can do to keep its election promise, he said, is by raising the salaries of junior-level officers first, and increasing the pay for middle- and high-ranking officials later.