Aubyn Hill: Civil servants deserve more but first the economy must grow
Jamaica's civil servants have endured an almost palpable set of economic hardships in a composite package, which included a close to 40 per cent depreciation of the Jamaican dollar since they agreed to a wage cap going on six years ago; wealth-depleting inflation during those years; relentlessly increasing taxes of known and unfamiliar varieties; and, on top of all those financial difficulties, they have suffered the indignity of being paid late in some instances.
Those are some of the factors that have depleted the purchasing power of civil servant salaries. These are difficult financial realities with which every civil servant must deal daily, and they have formed the trigger for a wage claim figure that will cause the Government great financial and, probably, political discomfort.
Mind you, in discussing the issue with a prominent and influential private-sector business owner and leader, he swiftly referred me to a litany of hardships which private sector employees face. To him: "The whole country has been suffering and up til now, I daresay, more private-sector workers have lost jobs, cars, houses and wives as a result of same."
This business leader is of the firm view that there should be no encouragement to move outside the public-sector salaries guideline cap of nine per cent of GDP, which the Government agreed with the IMF. He feels that any movement away from that target will cause the resulting additional tax burden to fall disproportionately hard on private-sector businesses and taxpayers. I reminded him that the recent nominal primary surplus target waiver from the IMF was the second such waiver; the first was the nine per cent of GDP salary target.
Somehow that kind of reasoning will add no sugar, or other form of sweetening, to what civil servants view as a poisonous and contemptuous slap of an offer. Many government employees view that five per cent offer over two years by their employer as way beyond bitter medicine.
ACCOUNT FOR THE MESS
On this public wage issue, this is one of those rare times when government employees cannot, reasonably, be blamed. Many of us in the wider society and even officials of their employer have given civil servants a great deal of credit for holding strain for better than five years. They have received many compliments for 'doing their part' in making the IMF deal happen. Any move now to blame them will be out of sync and rather jarring against those repeated kudos.
I am very aware that the IMF makes the recurring claim that they do not get involved in local policymaking and implementation. But is that really credible when Dr Phillips and the Government of which he is a part must follow the IMF playbook? Think of how the co-chair of EPOC and our minister of finance had to publicly beseech the IMF to approve the waiver of the breached nominal primary surplus target - a target which the senior IMF official on the podium with the minister claimed to be "no big deal".
Is the IMF claim still credible when it sends its officials every quarter to see that its student and budding poster child is paying its debts? Is the claim really credible when the Government is so deficient in policymaking and implementation in most every other sector for which it is responsible?
I remember asking sources close to the IMF in the third quarter of 2012, when the External Fund Facility (EFF) agreement was taking form, why the Fund would give the new PNP administration a 'bly' until 2016 to fix the woefully inefficient government apparatus? I was told then, and subsequently, that the IMF and the administration of Prime Minister Portia Simpson Miller had to set priorities.
There was no counter to my observation then that the can was simply being kicked down the road and it will have a very negative effect on economic growth. Economic growth had not been the focus of the partners to the EFF. The road could be coming to a dead end. The Government has wasted almost three and a half years believing that the IMF's fiscal-consolidation plan will bring economic growth.
THE REAL SOLUTION IS ...
At the beginning of its tenure in 2012, the Government was fixated on the IMF deal. Although many of us encouraged them to give thought and emphasis to economic growth, they believed and try to sell the message that the IMF's plan would produce solid economic growth. They received solid, growing and sometimes blind support from a majority of the players in the private sector and media. Well, economic growth, when any has occurred, has been wimpish and weak.
Government has refused to make its activities much more efficient through training, reorganising to include higher standards of efficiency and accountability, and the implementation of its privatisation plans have been very slow. Recurring costs have not been cut nor has loss-making entities been sufficiently pruned.
Notice that no one is talking here about wholesale redundancies. It is timely to remind the nation that between 2009 and 2011, the entire six sugar estates and five factories which were owned by the Government were privatised without jobs being lost. Many will recall that the task was viewed as impossible.
If the health, energy, water and housing sectors had become the very early focus of government enabling and facilitation for economic growth, though the skilful use of legislation, regulation, speedy privatisation, and the sensible, professional and policy-purpose use of National Housing Trust's and other government cash, then we would have had enough money to pay civil servants who have been long-suffering with no pay increase for over five years.
Aubyn Hill is the CEO of Corporate Strategies Ltd and chairman of the Opposition Leader's Economic Advisory Council.