25 Aug 2006

Top banker chides Solomons government over massive pay hikes

3:10 pm on 25 August 2006

The Central Bank in Solomon Islands has attacked the government over massive pay rises for politicians.

The Governor of the bank, Rick Hou, says the salary hikes have come at a time when the government's finances and the overall economy are still recovering.

Mr Hou says the government is not only the largest employer but a big player in the economy and anything it does impacts on the economy.

He says the pay rises will put pressure on the private sector.

"Usually what does happen with an increase in pay is that it puts pressure on inflation and on prices. It definitely will put pressure on the private sector in terms of salary and wages and I'm talking mainly about those who are involved in the productive sector."

Mr Hou says that while pay and conditions for public servants are poor the economy can't sustain further pay rises.

The salaries of the prime minister, his ministers, the opposition leader and ordinary MPs have more than doubled.