Sierra Leoneans do not feel comfortable to disclose their salaries. They like to estimate what they earn per month. This is not just about people working in the civil service but also individuals in the private sector. It all has to do with the image individuals want to portray of themselves. Whatever they want the public to see about their earning capacity, the real value of their salaries have dropped with the continuous depreciation of the Leone to major currencies especially the US Dollar. The real value is the number of things and services people can pay for now compared to this same salary a year ago or even a month ago.
Their take home pay after tax and all other deductions remains the same, if they earn below Le2 million, since the last increment to their salaries. But, the number of things and services they can pay for is reducing. Very many people employed by the government fall below the Le2 million a month bracket. In the private sector, the same stories resonate.
On 2nd July 2015, the buying rate of the Dollar was Le4,823.74 according to the Bank of Sierra Leone weekly foreign exchange rate.
In the first week of July 2016 the buying rate was Le 6,102.39. The 21 percent depreciation in the Leone over that period of one year shows the real value of the money those paid in Leones earn.
This usually plays out in the prices of goods and payment for services. Rice the staple food is a major commodity in the consumer pricing index to determine the inflation. A 50 kilogram bag of rice was selling Le140,000 around July 2015. In July 2016 it was selling for Le200,000. The same applies to essential commodities like sugar, floor etc. The retail price of fuel a major determinant of prices has however remained constant. Inflation moved from single digit last year and is now in double digits. Business owners that provide the private sector jobs have their own experiences in getting the materials, machinery and services they import.
For those earning above Le2 million, the 5 percent increase in income tax has increased the tax from 30 to 35 percent. This means their net salaries have dropped. For people in this income bracket, they face a double shock of a drop in both their nominal and real value of their monthly salaries.
The economy is projected to grow by 4.3 percent, a positive indication that the economy is recovering from a -21.5 percent growth. But this beautiful outlook is yet to reflect in the real value of what people earn. Le1 million earned a year ago valued at $200 even on the black market. Today, that same amount is just about $150.
For those depending on remittances, they are getting more Leones for the Dollars, Euro and Pounds they receive. But it is largely at the nominal level as prices shift upwards most often depending on the exchange rate.
The country has certainly moved away from recession but individual pockets and purses are overheating.
Monday August 08, 2016