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WIGUT claims to have found $24b hidden in budget for public sector wages

Published:Wednesday | May 6, 2015 | 12:00 AM
Professor Hubert Devonish, chief negotiator for WIGUT.
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When inflation is accounted for, wages fell by a quarter over the last three years, according to West Indies Group of University Teachers (WIGUT).

This calculation is far more aggressive than the Bank of Jamaica's (BOJ's) estimate of a 17 per cent decline in real wages since December 2011.

What's more, the central bank projects that wages - adjusted for price increases - will continue to decline throughout this year.

Consequently, Government's proposed five per cent pay rise for public-sector workers hardly comes close to easing the effects of deteriorating disposable incomes for most employees.

It is likely why the Government's offer has drawn the ire of the public sector's most powerful bargaining groups, including the Jamaica Teachers' Association, which is seeking a 25 per cent salary increase over the next two years, and which is threatening industrial action.

WIGUT believes it has unearthed $24 billion in funds hidden away in the Budget. The union asserts that these funds can be used to accommodate a 15 per cent pay increase in year one alone.

For starters, the $165 billion which has been tabled for wages and salaries in the current fiscal year, FY 2015-16, is $6.5 billion, or four per cent higher than what was actually spent on the public sector wage bill last year.

Furthermore, the $11.2 billion which was tabled for contingencies related to one-off salary payments and settlements for outstanding claims were already included in last year's budget, and thus would be double counted if considered an add-on this year, argued WIGUT.

Similarly, the university group figures that at least $5 billion, or half of the sums earmarked for GCT provision for government purchases and other contingencies can be used for public sector wage increases.

Importantly, the 15 per cent increase in the public sector wage bill would be achievable without derailing the Government's goal of meeting a primary surplus target of 7.5 per cent of GDP. In other words, government revenue would still exceed its non-debt expenditure by more than $126 billion after granting workers such a pay rise.

"In FY 2015-16, a 15 per cent increase in the public sector wage bill is achievable assuming the GOJ's own very conservative GDP growth projections of 1.6 per cent and a 1.5 per cent attrition rate within the public sector," said Professor Hubert Devonish, chief negotiator for WIGUT. "The attrition rate among employees in the public sector has been, in the immediately preceding years 1.5 per cent, and so this assumption is a safe one."

UWI lecturers are not a part of public sector wage negotiations, but their salaries have been tied to wage agreements in the past. WIGUT says that its role in the current talks is to help level the playing field.

"As a part of the negotiating process, the Government has reason not to put all the money on the table because the unions would say they want it," Devonish told Wednesday Business. "Our contribution is to add greater clarity to the issue on where the money is. This gives public sector unions a stronger bargaining position and greater public support. That is, the public sector can get this increase without breaking the IMF agreement."

Still, the Government says it stands firm on its current wage offer. Minister with responsibility for the Public Service Horace Dalley said that the offer would remain unchanged despite protests by some unions.

It is also unclear if the Government's objective is in fact to reduce real wages. The central bank has said that further contraction in real wages is "expected to continue to contribute to downward inflationary pressures", which is BOJ's primary concern. The BOJ is relying on the forecasted expansion in real remittances inflows over the near term to partially offset the effect of declining real wages, according to the latest quarterly monetary policy report.

The International Monetary Fund is firm on the Government meeting its wage bill target of nine per cent of GDP next fiscal year, which runs to March 2017.

Devonish sees these as "separate and distinct actors in this whole affair".

"There is the IMF for whom shrinking the size of the public sector is their ideological mantra," said WIGUT's chief negotiator. "For the GOJ, the motivation might be to deploy funds derived from savings to its own development projects which, otherwise, would not be funded."

He added: "If Parliament is voting on a Budget like this and embedded in it is all this money for public sector wages, albeit hidden in triple counting, then they should get it."

camilo.thame@gleanerjm.com