Retirees' Increase in Pay not Funded by Country's Surplus
2022-06-18 - 5:48 am
Bahrain Mirror (Exclusive): The government's amendments to the retirement system made last April linked the annual increase of retirees' pay to the financial surplus.
Given the investment performance of the Social Insurance Authority and Osool Asset Management (the investment arm of the Authority), it can be said that retirees will never receive the annual increase, as the authority has never achieved a surplus.
The retirees' increase should not be limited to the authority's financial performance, especially in light of its deteriorating financial conditions due to the poor investment and depletion of the fund's money by decisions taken by powerful members of the ruling family and the government.
Retirees should not bear the consequences of the authority's mismanagement and government thefts and mistakes.
The government should have financed the annual increase from the state budget, especially since the value of the increase does not exceed 18 million dinars.
Why does the Government fund Gulf Air, which records annual losses of hundreds of millions, but does not fund the retirees' increase, which only costs a few millions?
In financial terms, the Government can finance any project if it wishes to. It has financed failing projects such as Formula 1 with more than 500 million dinars.
What prevents the Government, which is registering surpluses estimated at hundreds of millions in the light of rising oil prices, from allocating part of these surpluses to fund the annual increase of retirees for the next two years at least?
An increase of only 3% of the base salary is a necessary support for retirees to cope with annual price inflation, otherwise they will not be able to cope with the financial burden.
According to figures, Bahrain's inflation rate reached 3.5% last April, but this figure does not represent the magnitude of the real damage done to consumers, including retirees.
Inflation is calculated in a way in which the increase in all sectors is calculated, and if inflation in the entertainment, hotel, transport or telecommunications sector is low, this decline will contribute to reducing the final rate of inflation.
But these sectors are not essential and do not represent a large part of consumers' spendings. On the contrary, there are some sectors that drain the bulk of consumers' incomes, such as food.
Inflation in the food sector in the past two months has reached 10%.
This significant price increase is caused by local VAT increase, and is affected externally by a global wave caused by the Coronavirus pandemic and the Russian-Ukrainian conflict.
This does not in any case mean that Bahrainis should be left to cope with this huge food price inflation. The decision to proceed to give the retirees their increase can be seen as one of the broad decisions that the Government must take to ensure a minimum standard of living for citizens.