The electoral campaign has started although the elections themselves are at least 8 months away. Parties are rallying up supporters with their typical and tedious ‘youngster becoming new members’ events and with party meetings handing tasks to MPs and minister to cover specific regions. The length of campaign has been increasing also in the western developed countries with independent analysts and scholars decrying this length for it takes away focus and energy from decision-making, policy implementation and the undertaking of reforms. Despite these sound arguments it is a lost battle, nothing trumps the desire to be re-elected or reposted to power. However, the early start of the campaign can produce sometimes risky developments that soon translate into long term costs.
Therefore two decisions, of the government and of the largely government-run electrical distribution company OSHEE, should be examined in this respect whether they are being undertaken for electoral purposes or due to careful economic consideration.
The first decision is the raise of wages in the public sector and the raise of the minimum taxable wage in the private one. The planned wage increase for the public sector is 10 percent while the minimum wage is expected to be around 30.000 lek, 35 percent larger than the previous one which hovers around 22.000 lek. These plans are not formal, nor does any written draft exist in the public domain however they are being uttered frequently by the key figures in the executive.
The second decision, more welcomed than the first, is the creation by OSHEE of facilities and amnesties for debtors of energy bills so that their debt returning installments are more affordable and some of their fines are forgiven. The content of the decision is the right one whereas the timing of it is suspicious. Measures such as this could have alleviated the first negative reaction from the poorest strata or the most indebted families and avoid needless dramatic responses that sadly characterized the start of the action. However they weren’t done. The government, and many believe rightly so, showed steel muscles in making everyone pay their due in a campaign done for the right reasons but sometimes with an undesirable degree of aggression. The fact that this kind of social accommodating approach is coming much after the action and only 8 months before elections then can raise suspicions about the genuine reasons behind it.
While the second decision might not affect the frail, yet improved, financial outlook of OSHEE (here the assumption is that it has been studied carefully) the first one merits closer inspection. What is the real purpose behind this move? The raise of public wages does not address the levels of poverty since they are more connected to unemployed individuals or families subsiding on welfare and agriculture. Furthermore the raise if financed by raising taxes to the private sector will have zero effect on consumption and growth. It will weigh on the most productive sector while making the public one just more conformable and more inclined to be ‘motivated’ for the elections. If the raise will be financed through debt it is then a very impulsive move for a government which has trodden dangerous waters increasing debt by around 10 points despite having promised to be fiscally prudent.
The current administration has changed its mind about many things since its promising start, the law for waste imports being the most public and controversial one. Therefore another change would not be surprising. However it would be even more disappointing if it has changed approach for the managing of public finances in order to smooth the electoral chances then it is commuting a grave error. Changes like this produce long term economic effects and mistakes that are too costly to correct. Having inherited such poor and problematic finances from the previous government, this one should simply know better.
