Economic Ministry says with the civil servant's minimum wage set, government salaries and wages are expected to increase by 13 percent next year.
The ministry had today announced the minimum wage for the public sector and private sector with MVR 7,000 set as a minimum wage for civil servants.
The Ministry had explained that while setting minimum wage will have economic benefits, it would also pose several challenges as well as cause an impact on the country's economy.
It said that the Ministry expects the economy to experience short-term inflation but said that once employers start to absorb the costs, prices are expected to settle in the near term.
As for the public finance impact, the Ministry highlighted that with the increase in civil service salaries along with pay harmonization, Government salaries and wages are expected to increase by 13 percent in 2022.
The Ministry pointed out that on the positive side, higher-income would increase consumption and higher revenue for the government.
It also said that employers are also expected to yield significant savings in the future through lower recruitment costs, re-training and re-staffing cost
