Prices and wages

“Prices between policy and the enforcement”

Dr. Jamal AL SATEL

The lecturer lists the three bodies supervising the Syrian pricing policy since 1969: Economic Committee, The Ministry of Supply, and the Executive Bureaus in Syrian Governorates. This policy has been adopted in 1978 on the basis of the instructions of the presidency of the Council of Ministers. This policy determines the commissions and profit shares for the whole trading and productive transactions with respect to the importance of goods, production costs, industry development, expanding or decreasing the consumption, and motivating the agricultural production.

To insure the success of this policy, many procedures has been taken such as the planning of production costs in the public sector, applying the economic accountancy and fiscal policy, making the prices dependant on incomes and regional and international prices, expanding the public control on wholesale trade and contributing in retail trade, and regulating the private sector activities. Moreover, there was a recommendation to centralize, unify and stabilize the prices.

In the beginning of the 1980s, many obstacles (multiple authorized bodies, and the myriad of imported and manufactured products which make it difficult to determine final prices) deter the enforcement of this policy, especially, in pricing centralization. Pricing bodies faced many difficulties in reaching the real costs:

1. Multiple exchange rates.

2. Diverse import payment systems.

3. Failure of imposing maximum prices.

4. Absence of original import invoices…

Many trials has been conducted to correct the pricing process, particularly, after the prices increase 100% more than wages one since 1980. New orientations have been adopted:

· Keeping the pricing procedures of basic goods (bread, fuel…)

· Fixing the final consumption prices for some products without intervening in the profit margin during the production, commercial and distributive activities.

· All other prices are subject to the market competition.

The lecturer suggests a gradual liberalization of all prices except those of basic goods. Furthermore, the subsidies of rationed goods must be exclusive to people with limited income. The public sector needs to be reformed in order that it would assume a positive role in prices equilibrium.