News 11 Mar 14

Kosovo Economists Query Public Sector Pay Hikes

As the Kosovo government announces major rises in public-sector wages, some economists say the focus should be on creating jobs, not raising the pay of those in employment.

Edona Peci

Kosovo's government has announced significant increases to the salaries of over 80,000 people working in the public sector.

Prime Minister Hashim Thaci said on Monday that salaries for employees in the public sector will rise by 25 to 50 per cent by April. “The increases will affect 240,000 families in Kosovo,” he said.

Beneficiaries include teachers, academics, police, the security forces, civil servants and judges and prosecutors. Pensions for war veterans, war invalids and former political prisoners will also rise.

The budget for 2014 is set at 1.58 billion euro and the government forecasts GDP growth of 4.1 per cent.

While civil servants have every reason to feel satisfied, some economic experts have slated the move, saying the government should focus more on cutting the high unemployment rate.

Safet Gerxhaliu, head of the Economic Chamber of Kosovo, told Balkan insight that the government should focus on creating new jobs, not on increasing the salaries of those already in work.

Last October, the Statistics Agency said 30.9 per cent of the population of Kosovo - 135,700 persons - were unemployed. Another 69.1 per cent, 302,844 persons, were in work.

But many experts dispute the figures and maintain that the unemployment rate in Kosovo is far higher than the agency claims.

Ibrahim Rexhepi, an economic expert, told Balkan Insight that the government was having to cut spending in important fields such as education, energy and health issues in order to fund the increased salaries for the public sector.

“We cannot deny the right of those employees to have better salaries, but the government has also to reduce the number of unemployed people and improve conditions for different social categories,” he said.

Gerxhaliu said the needs of politics were coming before those of the economy. “Kosovo is currently in a pre-campaign period and most of the promises and decisions are motivated by the upcoming national elections,” he said.

Kosovo is due to held elections in spring or summer though no official date has been set yet.

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