Hanoi (VNA) - People, particularly those working in informal sectorsand housewives, are afraid of a possible surge in the prices of goods as soonas the basic salary for civil servants and public employees increases nextmonth.

The monthly basic salary for civil servants, public employees and those workingin the armed forces will be raised to 1.3 million VND (57.2 USD) from July 1,following the Government’s Decree 47/2017/NĐ-CP. The change means an increaseof 90,000 VND (3.96 USD) over current levels.

The new basic salary will be applied to those who working in agencies,organisations and non-production units of the Party, the State,political-social organisations and associations receiving funding from theState budget, along with the armed forces.

Approximately seven million people will benefit from the salary rise.

The basic level is used as the basis for calculating salary, allowances andother payments regulated by the law for the mentioned groups. It will also beused for calculating operating expenses, living expenses in line with legalregulations as well as other deductions and entitlements.

However, people who are not directly affected by the increase experience itsimpacts through the costs of goods. This has been noted previously, with wagerises usually accompanied by a surge in the prices of goods and services.

[Inflation forecast to hit 2.6 percent this year]

Nguyen Thu Hien, 54, a housewife in Hanoi’s Tay Ho district, said that she wasnot a State employee and would not receive a salary bump, but this fact isirrelevant to the sellers at the market she frequents.

“In the past, whenever a salary rise was announced, the sellers usuallypushed up the prices of their products, saying that as salaries rise, so doesthe cost of petrol and power,” she said.

“What worries me is the price of goods rising faster than wages,” she said.

Pham Thu Nguyet, an employee at a State agency in Hanoi said that she hadworked there for seven years.

“Theoretically, I would get additional 270,000 VND monthly thanks to the Julysalary rise,” she said, adding that she could not do much with the modest sum.

“But it is an increase. I appreciate it and I hope the salary increase will notdisappear with the increased prices of daily products and services,” she said.

Dang Duc Anh, Director of Analysis and Forecasts Department of theNational Centre for Socio-economic Information and Forecast (NCIF) under theMinistry of Planning and Investment said that the July salary increase wouldnot have much effect on the prices of goods or the consumer price index (CPI).

“The salary rise is modest and the demand of Vietnam’s economy is weak, thusthe salary increase will not have a significant impact on CPI, but mostly onthe prices of public services,” he said.

“When prices of public services increase, consumers must reduce their expenseson other products and services. The salary rise would help them better coverdaily expenses,” he said.

With more money, it was expected that people would spend more and thus,increase economic growth, he said.

He reassured consumers that it was unlikely that sellers would take advantageof the salary increase to push up prices of products or services because theywere facing low demand and tough competition.

“If they offer higher-priced products, they may lose customers,” he said.

Economist Dinh The Hien said that the scheme for salary increases for civilservants and public employees should be sped up because current salaries did notmatch their workloads.

Another economist Nguyen Minh Phong said that now was a reasonable time for asalary increase.

Previously, salary increases usually led to hiked prices of necessities becausethe country faced modest supply.

ꦗ However, the supply of goods and services is much more abundant, so it is notnecessary to worry about increased prices of goods and services following arise, Phong said.-VNA