Prices and wages

Dr.Fahed AL KHATIB

With the current level of salaries and wages there will be no real economic development. The pricing policy, adopted in 1979, has ended in failure with the Ministry of Supply no longer deciding the price mechanism. Many wrong concepts such like protectionism and the monopoly status of certain goods or sectors prevailed in the past without considering the best way of benefiting from potential resources, while the logic is that all kinds of protectionism should be temporary and all kinds of monopoly should be removed.

Regarding salaries and wages and living standards, we notice the following:

· Living expenses in 2000 were 300% higher than those of 1978 and the purchasing power of minimum wages in 2001 is lower than that of 1987.

· The average living expenses of a Syrian family of 4.1 people (receiving one salary with 2400 calories a day each) is 9840 SP taking into consideration that the official average of individual spending on food is 48 SP a day which means 5904 SP a month for the above mentioned family. Such a sum is higher than the initial salary of a government employee with a doctorate in any field.

· 96% of government salaries fall behind the average living standards and 68% of those salaries do not cover even the average nourishment expenses. To face this terrible price dilemma, urgent procedures are to be taken such like strengthening the purchasing power of the local currency, increasing salaries and wages 25% and declaring the first 5000 SP of the salary tax-free.

As for prices in the public sector, the profits realized in spite of the previously fixed prices, are not a result of real economic factors (production and quality improvement). They are rather a result of the low prices of raw materials. So such fixed prices include all the drawbacks of abnormal production conditions.

The average percentage of profits realized in the public sector is not more than 1% of invested assets. This demonstrates how urgent it is to promote the productivity in this sector.

The over-employment in this sector is not the only cause of the low profitability and huge stocks, the bulk of salaries and wages being just 10-15% of total costs in most public companies. On the other hand, the low productivity does not allow any significant increase in income. In fact, the so called “modern” public factories (Ammonia-Urea, Tractors, Paper, etc.) constructed at a very expensive costs, have a very low technological level. While, other public factories are in bad need of maintenance and restoration.

The establishment of a pricing central body under the direct supervision of the Prime Ministry should be an integral part of the strategic and economic policies of the state, and should be an efficient tool in distributing national income within the framework of balanced development of the national economy.