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Government pay hike likely to spur only mild CPI growth: Premier Lai

2017/09/14 18:54:27

Lai Ching-te (賴清德)

Taipei, Sept. 14 (CNA) The government's 3 percent salary increase next year is expected to contribute no more than an estimated 0.04 percent annual increase in the consumer price index (CPI), Premier Lai Ching-te (賴清德) said Thursday.

Lai made the comment during a news conference after the central government's 2018 budget proposal was approved at a regular Cabinet meeting.

The government will raise salaries by 3 percent for civil servants, public school teachers and military personnel from January 2018, which it said will increase its payroll by an estimated NT$18 billion (US$509.35 million) per year.

The pay hike is aimed at spurring private enterprises to follow suit, stimulating domestic consumption and driving economic growth, while at the same time boosting the morale of public school teachers, civil servants and military officials and encouraging them to work together toward common national goals, Lai said.

He said he has asked all government agencies to improve their performance, which he thinks will boost public support for future government plans.

In response to concerns that the pay raise next year will result in higher commodity prices, Lai said the CPI is unlikely to increase by more than an annual 0.04 percent, based on the government's initial estimates.

If the private sector also hikes pay, however, the CPI might rise by an additional 0.28 percent, he said, citing the Directorate-General of Budget, Accounting and Statistics (DGBAS).

When those estimates are added to the average 0.76 percent annual CPI growth over the past few years, the 2018 CPI growth is forecast at a moderate 1.08 percent, he said.

The 3 percent pay hike will be extended to about 1.15 million civil servants, public school teachers and military personnel at the central and local government levels, which will increase the total payroll at those levels by an estimated NT$24 billion, according to DGBAS head Chu Tzer-ming (朱澤民).

If the private sector also gets on board with the 3 percent increase, its annual payroll will climb by NT$100 billion, he said.

With a total payroll increase of NT$124 billion in the public and private sectors, the country's gross domestic product will grow by an annual 0.6 percent, Chu estimated.

(By Ku Chuan and Evelyn Kao)
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