The government has stated that it will not increase the salaries of Kuwaiti public and private employees by KD 50 as it had already given them a KD 120 raise. The government pointed out that increasing the salaries of Kuwaitis by KD 50 would greatly affect the state’s budget and put too much of a burden on Kuwait in the future. A governmental source noted that the MPs who were for the new raise are not thinking of the well-being of Kuwait and are only thinking about their personal interests and about getting elected in the next elections.
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When salaries increase so does the price of everything else. Do you believe that this would hurt the economy of Kuwait? Where does all the money go that Kuwait generates? I know that the Kuwait gov has investments in not only oil I would think that the gov should be pretty well off.
Loca - Your statement is correct, “When salaries increase so does the price of everything else” but in Kuwait this is not the case. An example where a salary increase will raise prices would be a paper company. If a paper company increases employees salaries, the cost of production increases, therefore the paper products sold must increase in price. But, in Kuwait the same model doesnt apply. Giving higher wages doesnt raise inflation in Kuwait because we are not producing a product for sale, nor are we selling a service. The government is just giving the entire working population ‘a raise.’
The government has the funds to give higher wages, its not a problem now, but as the population gets bigger, and the oil reserves get depleted, the worst thing that could happen is that the citizens are heavily dependent on the Government, for example, Today’s average Kuwaiti life.