The Government announced a 3% Cost of Living Adjustment for civil servants against a core inflation rate of 9.5%. For hundreds of thousands of Tongans — most of them not civil servants — there was no announcement at all.
Based on the Government of Tonga FY2027 Budget Statement, tabled 18 May 2026
Imagine being told that your salary will rise by 3% this year. You might feel grateful. You might even feel relieved. Then imagine being told — in the same document, on the same pages, by the same government — that the cost of living in your country has risen by 9.5%.
That is not a pay rise. That is a pay cut dressed up in different language.
That is the reality facing every civil servant in the Kingdom of Tonga following the presentation of the FY2026/27 National Budget to Parliament on 18 May 2026. And for the majority of Tongans who are not civil servants — the market vendors, the farmers, the private sector workers, the pensioners, the families in Haʻapai and the Niuas — there was no COLA at all. Just 9.5% core inflation, quietly rising, quietly taking.
| 9.5% Core inflation (Mar 2026, NRBT) | 3% COLA granted to civil servants | 6.5% Real wage loss (the gap) | 0% Rise for non-civil servants |
These four numbers tell the story of where Tonga stands today. The source is not a critic, not an opposition party, not a foreign observer. These numbers come from the Government’s own budget document, drawing on data produced by the National Reserve Bank of Tonga — the Kingdom’s own central bank. The Government disclosed them. Parliament received them. Now the question is: what will be done about them?
UNDERSTANDING THE NUMBERS: WHAT COLA AND CORE INFLATION ACTUALLY MEAN
Before we go further, it is worth explaining clearly what these terms mean — because the gap between them is where the real damage to Tongan households lives.
The Cost of Living Adjustment — COLA — is a periodic increase in government wages designed to help workers keep pace with rising prices. When the government announces a 3% COLA, it is saying: we recognise that things cost more, and we are increasing your pay by 3% to help you cope.
Core inflation, as measured by the National Reserve Bank of Tonga, is the rise in the price of goods and services across the domestic economy after removing volatile food and fuel prices. It is the number that tells you what is happening to rent, school fees, medical costs, transport fares, household goods, and everyday services. As of March 2026, that number was 9.5%.
The arithmetic is simple and brutal. If prices rise 9.5% and your wages rise 3%, you are 6.5% worse off in real terms than you were twelve months ago. Your money buys less. Your family’s standard of living has fallen — not because of anything you did, but because of a policy decision made in a budget document.
| “The Government’s own data shows prices rose 9.5%. The Government’s own response was 3%. The gap between those two numbers is paid for by every Tongan worker, every month.” |
THE REALITY: WHAT THE GAP COSTS EVERY MONTH
This is not abstract economics. This is real money, leaving real families, every single month. The table below shows what the 3% COLA actually means for civil servants at different salary levels — and how far short it falls.
| Role | Monthly salary | After 3% COLA | Needed at 9.5% | Monthly loss |
| Junior civil servant | $800 | $824 | $876 | -$52 |
| Teacher / Nurse | $1,500 | $1,545 | $1,643 | -$98 |
| Senior officer | $2,500 | $2,575 | $2,738 | -$163 |
| Middle manager | $3,500 | $3,605 | $3,833 | -$228 |
Source: Calculations based on NRBT core inflation rate (9.5%) and Government FY2027 COLA (3%) as disclosed in the Budget Statement tabled 18 May 2026.
A teacher or nurse losing $98 every month is losing $1,176 every year. That is school uniforms not bought. Medicine not filled. A roof repair deferred. A child’s school trip declined. These are not statistics — they are decisions that Tongan families are making right now, in homes across this Kingdom, because the COLA did not match the cost of living.
THE GOOD: WHAT THE COLA DOES ACKNOWLEDGE
| ✅ Recognition that inflation is real The 3% COLA, inadequate as it is, represents a formal acknowledgement by the Government that the cost of living has risen and that civil servants deserve some form of compensation. In past budget cycles, COLAs have not always been granted. The fact that one was included at all signals that the Government heard the concern. That acknowledgement matters — even if the amount does not match the scale of the problem. |
| ✅ The electricity subsidy provides parallel relief The $18 million electricity subsidy in the FY2027 budget does provide real cost relief to households — civil servants and non-civil servants alike. Without it, both headline and core inflation would be higher, and the gap created by the inadequate COLA would be even wider. It is not a wage solution, but it partially offsets one of the largest household cost pressures. |
| ✅ Social Welfare Scheme receives a 50% top-up The budget includes a 50% increase to the Social Welfare Scheme payment, which provides some targeted relief to the most vulnerable households. While the base payment was low to begin with and 9.5% inflation erodes purchasing power quickly, the top-up is a genuine step in the right direction for those at the bottom of the income ladder. |
WHY 3% FALLS SHORT
| ⚠️ 3% against 9.5% is a real wage cut of 6.5% There is no diplomatic way to say this. A 3% pay rise in an economy running at 9.5% core inflation is a pay cut. It is smaller than inflation. It does not maintain purchasing power. It does not maintain living standards. It reduces them. Framing it as a cost of living “adjustment” when it does not adjust for the actual cost of living is, at minimum, misleading. |
| ⚠️ It is benchmarked to the wrong number The Government appears to have set the COLA with reference to headline inflation of 4.6% — and even then, did not fully match it. But headline inflation, which includes volatile fuel and food prices affected by the Middle East conflict, is not the right measure for wage policy. Core inflation — 9.5% — is the measure of what is happening to domestic prices that workers actually face day to day. Using the wrong benchmark produces the wrong answer. |
| ⚠️ It accelerates brain drain When a Tongan nurse, teacher, or engineer calculates that their real wage has fallen by 6.5% while New Zealand and Australia offer salaries five to eight times higher, the COLA does not close that gap — it widens it. High core inflation combined with an inadequate COLA is one of the most powerful push factors driving skilled Tongans offshore. The 3% decision will cost more in workforce losses than the full adjustment would have cost in wages. |
| ⚠️ It was decided politically, not systematically There is no automatic mechanism in Tonga that ties COLAs to inflation. Each year, the Government decides what it can afford to announce. This means that the adjustment workers receive depends on political calculations, budget pressures, and what the Government is willing to defend in Parliament — not on what the data says is required. Workers deserve certainty, not annual uncertainty. |
THE MAJORITY WHO GOT NOTHING
The inadequacy of the 3% COLA for civil servants is serious. But it is not the most serious part of this story. The most serious part is what happened to everyone else.
| ❌ Informal and market workers — zero increase Tonga’s informal economy — market vendors, subsistence farmers, domestic workers, small traders — employs a significant portion of the workforce, particularly women and outer island residents. There is no mechanism to give these workers a COLA. Core inflation rose 9.5% and their income did not move. The budget made no specific provision for them. |
| ❌ Private sector employees — at their employer’s mercy Workers in shops, hospitality, construction, and small businesses received whatever their employer chose to give them. Most small and medium businesses in Tonga are themselves being squeezed by rising costs — electricity, freight, imported materials. They cannot afford to raise wages by 9.5%. In many cases, they cannot afford to raise wages at all. These workers are invisible in the budget’s COLA calculation. |
| ❌ Pensioners on fixed incomes — quietly losing ground A retired civil servant or elderly Tongan living on a fixed government pension experienced the same 9.5% rise in core prices as everyone else. Their pension did not increase to match. Every month, the purchasing power of their fixed income shrinks. They cannot take on extra work. They cannot send a family member abroad to earn more remittances. They absorb the loss silently. |
| ❌ Outer island communities — paying a hidden premium Families in Haʻapai, Vavaʻu, and the Niuas already pay a structural premium on imported goods because of shipping costs. The effective inflation rate they experience is higher than the national average. For these communities, 9.5% core inflation is a floor, not a ceiling — and the government’s response offered them nothing specific at all. |
| ❌ Young people and first-time workers — entering a harder economy A young Tongan entering the workforce or completing their education this year faces a job market where real wages are falling, where the cost of renting a room in Nukuʿalofa has risen sharply, and where the prospect of building a life at home is harder than it was for their parents’ generation. The 3% COLA does nothing for them. It does not even apply to them. |
| “For civil servants, 3% against 9.5% is a quiet pay cut. For everyone else — 0%.” |
WHERE DOES THIS LEAVE TONGA?
Taken together, the picture that emerges is one of a country whose government has acknowledged a cost of living crisis in its own budget documents, and then responded with a measure — a 3% COLA for civil servants only — that does not match the scale of the problem it identified.
This has consequences that extend well beyond household budgets.
It puts pressure on the public service workforce at a moment when Tonga can least afford to lose trained people. A nurse who has just seen their real wage fall by 6.5% is closer to the decision to leave for Auckland. A teacher weighing up a job offer in Brisbane has one fewer reason to stay. A young accountant or engineer who just graduated is calculating whether the life they want is achievable in Tonga. The 3% COLA did not change those calculations in the right direction.
It widens the inequality between those inside and outside the civil service. Civil servants at least received something. The market vendor, the plantation worker, the shop assistant, the domestic helper — they received nothing, and they face the same prices. In a country that is already grappling with a 25% poverty rate, that is not a minor oversight.
And it signals something about the Government’s relationship with its own data. The NRBT’s 9.5% core inflation figure was in the budget document. The Government put it there. They knew what it said. The decision to respond with 3% was made with full knowledge of what 9.5% means for household budgets. That decision deserves scrutiny, justification, and a plan.
WHAT THE GOVERNMENT SHOULD DO NOW
Criticism without direction is not enough. Here is what the Government can and should do — both immediately and over the next budget cycle.
1. Conduct an urgent COLA review — The 3% figure should be revisited before the end of this financial year. A mid-year supplementary adjustment, benchmarked to core inflation rather than headline inflation, is both affordable and defensible. The cost of a 7% COLA versus a 3% COLA is real — but so is the cost of losing trained staff to emigration.
2. Legislate an automatic inflation adjustment mechanism — COLAs should be tied automatically to the NRBT’s official core inflation rate, not decided politically each budget cycle. Workers deserve predictability. The Government deserves to be removed from the annual political theatre of deciding what it can announce.
3. Create an emergency cost of living supplement for non-civil-servant households — A targeted, time-limited payment to the most vulnerable households — particularly informal workers, outer island families, and pensioners — would directly address the gap the COLA does not cover. It does not need to be large. It needs to exist.
4. Establish a price monitoring and anti-gouging unit — With limited domestic competition, Tonga’s retail sector can raise prices with few consequences. A formal price monitoring function with the ability to investigate and publicise unjustified price increases would put competitive pressure on the market and give consumers real information.
5. Invest in domestic food production to reduce import inflation — Every vegetable, every root crop, every egg produced in Tonga is one import we do not need to pay for. A structured program connecting fallow land, returning seasonal workers, and agricultural credit is the structural answer to the food price component of core inflation.
THE CONCLUSION: A NUMBER THAT DEMANDS AN ANSWER
The Government of Tonga is to be commended for one thing: honesty. The 9.5% core inflation figure is in the budget. They did not hide it. They put it before Parliament.
But transparency is only the first step. What comes after transparency is accountability. And accountability means Parliament asking the hard question that the 3% COLA demands:
| “You told us prices rose 9.5%. You gave civil servants 3%. You gave everyone else nothing. What is your plan, and when does it start?” |
Tonga is a country of extraordinary resilience. Its people have weathered cyclones, a volcanic eruption, a pandemic, and a fuel crisis with dignity and community spirit. But resilience is not infinite. It is stretched thinner when prices rise and wages do not follow. It is stretched thinner when a government’s response to its own data falls 6.5 percentage points short.
The 3% COLA is not enough. Every Tongan family knows it. Parliament now has the responsibility to say it — loudly, on the record, and with a demand for a plan that matches the scale of what the numbers actually show.
All figures in this article are drawn directly from the Government of Tonga FY2027 Budget Statement tabled before Parliament on 18 May 2026, and from National Reserve Bank of Tonga (NRBT) inflation data cited therein. The COLA figure of 3% is as announced by Prime Minister Lord Fakafānua in his budget presentation. Core inflation of 9.5% is the NRBT’s official figure for March 2026. Salary calculations are illustrative and based on approximate mid-range civil service salary bands.
