VZCZCXRO6954
PP RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMA RUEHMR RUEHPA RUEHRN RUEHTRO
DE RUEHYD #0518/01 1511127
ZNR UUUUU ZZH
P 301127Z MAY 08
FM AMEMBASSY YAOUNDE
TO RUEHC/SECSTATE WASHDC PRIORITY 8900
INFO RUEHZO/AFRICAN UNION COLLECTIVE 0153

UNCLAS SECTION 01 OF 02 YAOUNDE 000518 
 
SENSITIVE 
SIPDIS 
 
DEPT ALSO FOR AF/C, AF/EX and AF/FO 
DEPT ALSO FOR HR/OE 
PARIS AND LONDON FOR AFRICA WATCHER 
 
E.O. 12958: n/a 
TAGS: ECON EFIN AMGT APER CM
SUBJECT:  CAMEROON HIKES PUBLIC SECTOR SALARIES: WHAT IMPACT FOR 
US? 
 
REF:  Yaounde 428 
 
¶1.  (U)  Summary:  The pay raise that President Biya promised 
Cameroonian civil servants in the wake of February riots took effect 
on April 25, when an estimated 170,000 officials saw their salaries 
rise by 15 percent and their lodging benefits rise to 20 percent of 
their base salaries.  The United Nations and some international 
organizations are planning to match the raises in their own payroll, 
but private sector contacts believe their already elevated pay 
scales will insulate them from additional wage pressure.  The 
Mission's locally engaged staff, however, has not received such 
year-to-year plus ups; their wage stagnation, exacerbated by rising 
costs of living, threatens to pose post management problems in the 
short to medium term.  End Summary 
 
Money in the Pocket 
------------------- 
 
¶2.  (U)  As part of his response to civil unrest in February, 
President Biya promised a pay raise for Cameroonian civil servants 
and military personnel, which took effect on April 25.  The Ministry 
of Finance's new benefits package includes a 15 percent increase in 
base pay and an increase in lodging allowance from 8 to 20 percent 
of base pay.  According to the Ministry of Finance, the monthly wage 
burden now totals about 50 billion CFA (about $120 million) per 
month.  The affected workers--about 170,000 in total--include, inter 
alia, diplomats, judges, teachers, police and security officials. 
Acknowledging the challenge of funding the pay raise at the same 
time the President has temporarily suspended taxes on many 
commodities, Finance Minister Essimi Menye told the press: "We can 
pay the April salaries this month, but to keep the pay raise 
sustainable, we will need to work hard to increase receipts and cut 
back expenditures." 
 
What Impact on the Private Sector? 
---------------------------------- 
 
¶3.  (SBU)  The head of GICAM, Cameroon's most important business 
chamber, told Poloff on April 25 that their members would not feel 
pressure to match the government's price hike because they had 
already been increasing salaries annually and negotiating 
sector-wide salary scales through collective agreements.  Similarly, 
the head of a large American company with its regional headquarters 
in Cameroon told Poloff on April 25 that the private sector would 
feel pressure but that larger companies would be "immune" because 
their salary scales are already so superior to those of the public 
service. 
 
¶4.  (SBU)  The head of a leading private sector bank (and one of the 
Embassy's salary comparators) predicted that banking sector unions 
would use the public service pay hike to take a tougher line in 
negotiations with the employers and that the private sector in 
general would feel pressure to match the government's 15 percent 
raise.  Nevertheless, he too felt he and his comparators would be 
relatively more insulated since they had given more substantial 
annual increases and were thus on a higher pay scale than the 
government. 
 
¶5.  (SBU)  The heads of the United Nations system (another 
comparator for the Embassy's pay scale) and the German development 
agency GTZ told Poloff that their agencies would automatically match 
the civil service hike. 
 
Government Views 
---------------- 
 
¶6.  (SBU)  Minister of Commerce Luc Antangana recently told Pol/Econ 
Chief that the Ministry of Labor is in negotiations to increase the 
minimum wage (SMIC) of 23,000 fcfa set in 1996.  This needs to 
increase, he said, and once it does, it will have broad impact, 
especially among agricultural workers.  He thought that in response 
to the recent public sector salary increase, some private sector 
managers would increase salaries, but he opined that only the 
educated management level would benefit ("through tricks they will 
get richer"), not impacting directly the salaries of the blue 
collar/agricultural workers. 
 
The Inflation Outlook 
--------------------- 
 
¶7.  (SBU)  Atangana predicted that inflation would not erode too 
much of the 15 percent pay raise.  The IMF projects inflation will 
top 2.9 percent in 2008.  However, most economists believe inflation 
is actually substantially higher.  Anecdotal evidence from the food 
markets suggests that prices for basic commodities continue to rise, 
despite the government's suspension of taxes and pressure on 
traders.  The government has announced measures to increase 
 
YAOUNDE 00000518  002.2 OF 002 
 
 
production (reftel), but there is no evidence that supply will catch 
up with demand (especially regional demand from oil and cash-rich 
Chad and Equatorial Guinea) in the short or medium terms. 
 
Comment: Adding Pressure to LE Staff Salaries 
--------------------------------------------- 
 
¶8.  (SBU)  At first blush it seems inevitable that the substantial 
civil service benefit raise will place pressure on private sector 
wages as well.  As the interlocutors argued, however, the private 
sector has already been providing superior wage scales for many 
years-and topping up those salaries with regular adjustments for 
inflation.  Furthermore, the President's decision was widely seen as 
long overdue; it was the first public sector wage increase since 
public sector salaries were cut by 50% in 1993 (which was further 
exacerbated by a 50 percent currency devaluation in 1994).  In this 
context, many viewed this raise as a correction rather than 
indicative of a broader need to realign wages.  Additionally, many 
highly skilled and well-educated Cameroonians are without work, so 
there should be ample labor supply to dampen employee demands for 
higher wages.  Employees seeking to pressure their bosses will 
likely have to leverage Cameroon's labor code and mass action to 
push their point home. 
 
¶9.  (SBU)  Unfortunately, the Embassy does not enjoy the same status 
as the private sector firms: Embassy salaries have failed to keep 
pace with comparators for more than five years.  LE staff have 
recently raised with post management the public sector salary 
increase as a reason to review their stagnant salary structure. 
While we do not expect our LE Staff to be tempted away en masse in 
the short term (because there is a lack of other options), the 
rising pressure on their purchasing power, increasing frustration 
with the stagnation of Embassy wages, and the allure of growing 
benefits elsewhere will inevitably take a toll if remedial action is 
not taken in the short or medium term.  GARVEY.