Muhamet Mustafa: The new wage law worsens the budget situation

The decision to suspend the Wage Law by the Constitutional Court does not resolve the consequences of the very high cost of this law, which worsens the budgetary situation, as well as prohibits public investments or puts the country in public debt.

This was said in the debate: "Wages in the public sector in Kosovo and the possible implications for macro-fiscal stability and cohesion", organized by the "Riinvest" institute.

Muhamet Mustafa from "Riinvest" said that the new Wage Law worsens the budgetary situation, therefore it has an impact on the trend of increasing public debt that could create problems in macro-fiscal stability. He said that the new Government will have precisely this problem of wages.

"The situation with salaries in the public sector is bad beyond the limits even without the new law, while the new law has many problems that have no comparative analysis. It has created unreasonable demands for salary increases, which is against the rules of good governance," said Mustafa.

Alban Hashani, executive director of "Riinvest", said that decisions to increase salaries have created large differences with private sector salaries and there is no basis for "same work - similar salary".

Hashani said that over 40 percent is the difference between the average salary in the public sector and that of the private sector. He raised his concern about the high salaries of Kosovo MPs. Hashani also mentioned the statistics on the implications of this law for macro-fiscal stability.

"This law will affect the amount of salary increase judged according to the Medium-Term Expenditure Framework in 2020, they will increase between 5,4 percent and 11,2 percent, and in the extreme case, if the salary amount reaches 730 million euros, the increase will be 17,7 percent compared to the previous year. This will reduce the space for increasing the budget for other purposes, in particular for capital investments, investments in education, health and increasing the competitiveness of the economy", said Hashani.

Berat Thaçi from the GAP Institute stressed that increasing wages risks increasing taxes and the cost of living of those who are at the poverty level.

The recommendation from the debate was that the Assembly and the Government should accurately assess the effects of the new Wage Law and take the necessary measures to avoid its impact.