ABU DHABI, 21 November 2007 — The UAE Cabinet approved the 2008 federal budget yesterday and announced a 70-percent salary hike for all government employees beginning next year, the state news agency WAM reported.
The Cabinet approved the 2008 federal budget of 34.9 billion dirhams, which is an increase of 6.7 billion dirhams over the 2007 budget.
Cabinet sources said the 2008 budget is the biggest and has the highest increase from the previous year in the history of the federation.
Many federal government employees have expressed their happiness over the pay hike announcement, but those in the private sector fear this could help increase the cost of living in the Emirates.
“Dubai is becoming a city for rich people,” said K.K. Kumar, a longtime resident of Dubai. “I work in the private sector and my monthly salary is 12,000 dirhams — not enough to afford a flat, children’s education and other bills. At present, I am not saving a single dirham.”
Mahmoud, a Pakistani engineer based in Dubai, said he had to send his family back home to make ends meet. “My wife was also working,” he said. “Our salaries are stagnant and increased house rents have made the situation bitter.”
According to experts, rising inflation and an undervalued dirham work as a tax for the average expatriate living in UAE. “Everything has shot up,” said Basheerudheen, a resident of Dubai. “Rent, petrol, water and electricity, education, bread. Salaries are stagnant and a decent life is only a dream nowadays.”
Since Nov. 1, exchange houses in the UAE have increased their service charge on remittances to 15 dirhams.
It is noticeable that, on Monday, the minister of economy was criticized by the Federal National Council (FNC) for failing to protect consumers against the escalation of prices during the opening session of the house.
FNC member Abdullah Balhn Al-Shehi of Ras Al-Khaimah, questioned what the Economic Ministry has done to stop the increase in fuel prices and rents, which he blamed for inflation.
According to the Ministry of Economy, the inflation rate was 9.3 percent in 2006.
The International Monetary Fund said last month that inflation in the UAE, where housing costs have surged, is expected to drop to 8.0 percent in 2007 and 6.4 percent the following year because more housing would be made available by then.
