Govt increases state officials' allowance

Hike in stipend seen as a time-buying technique by Yingluck administration

The Cabinet yesterday approved increased monthly cost-of-living allowances for civil servants and state employees - a time-buying tactic designed to cushion pressure mounting over an election pledge to raise the starting salary of civil servants holding bachelor's degrees to Bt15,000.

The Cabinet assigned the Finance Ministry to study a new salary structure for state officials, but that is considered a long-term plan unlikely to be implemented any time soon.

The Cabinet approved a Finance Ministry proposal to increase the stipend for new graduates holding bachelor's degrees in order to increase their monthly income to Bt15,000, said Deputy Government Spokesperson Anutama Amornvivatanutama.

Unlike increasing the starting salary to Bt15,000, which will require legislative action, increasing the stipend needs only changes to the Finance Ministry's regulations.

Raising the stipend will still require adjustments, albeit minor, to the incomes of other civil servants now getting paid more than Bt15,000 a month. A study on how the higher-paid employees will be paid should be completed before the end of this year.

Those who do not hold bachelor's degree will get at least Bt300 a day or, Bt9,000 a month, Anutama said.

The stipend scheme will cover civil servants, state employees and soldiers, covering 649,923 people. Although the increase will not count legally as the new starting salary pledged by the Pheu Thai Party during the election campaign, it may ease pressure piling up on the government over its election promises.

The stipend scheme is part of the government's efforts to boost the economy by increasing people's purchasing power, Anutama said.

The pay hike will take effect in January next year and will cost the government Bt18.86 billion in the first year.

The Cabinet assigned Deputy Prime Minister Kittiratt Na-Ranong and the Finance Ministry to study an overhaul of the civil-service salary structure, Anutama said, because the government needs to amend the law to increase salaries for everyone.

In a related development, Public Debt Management Office director-general Chakkrit Parapuntakul said yesterday that public debt had increased in July, mainly because the government had borrowed to finance the budget deficit.

Public debt at the end of July was Bt4.3 trillion, equivalent to 40.57 per cent of gross domestic product. The figure rose by Bt16.46 billion from the month before, he said.

Critics blame the government's populist policies for the spiralling public debt, including the wage hike and the first-car buyer and first-home-buyer schemes, tax cuts for which will lead to higher public debt. The critics say fiscal sustainability is under threat, amid the sovereign-debt crises in Europe and the United States.