Thu | Aug 16, 2018

International Monetary Fund hopeful wage talk outcome will not affect reforms

Published:Wednesday | June 3, 2015 | 12:00 AMMcPherse Thompson
File Chairman of the Jamaica Police Federation, Sergeant Raymond Wilson has led the charge for better wages and working conditions for rank-and-file police.

The International Monetary Fund (IMF) has expressed confidence that public-sector wage negotiations currently under way will lead to an outcome that will be supportive of the ongoing reforms under its four-year economic programme with Jamaica.

Some public-sector workers, among them teachers, members of the Jamaica Constabulary Force and the health sector, have expressed dissatisfaction with the five per cent increase the Government has offered on wages for the two fiscal years ending March 2017.

This followed a five-year wage freeze, the last three signed as a necessary precondition for the May 2013 deal with the IMF.

social cohesion, support

Asked what Jamaica would have to forego to offer a better package to public-sector workers in order to maintain the society's cooperativeness with the reforms, outgoing IMF mission chief Dr Jan Kees Martijn did not say, but agreed that social cohesion and broad support for reform have been very important elements behind the success of the programme, which is now in its third year.

"We realise that many stakeholders in Jamaica have been involved and have made sacrifices to make this programme work. And, going forward, it will remain important that this broad support stays in place," said Dr Martijn, who was speaking in Kingston recently.

"Right now, as there are negotiations on a wage agreement, it is inevitable that there will be some discussions that we at the IMF will not be involved in because this is not a negotiation for us, but rather the authorities and the unions," he said.

"We have every confidence that these discussions will lead to an outcome that will be supportive of ongoing success in implementing the programme, including meeting the fiscal parameters going forward," said Dr Martijn.

Incoming mission chief Uma Ramakrishnan agreed that social cohesion remained "completely important for the programme", noting that the fiscal parameters and the constraints were also clear.

"The discussions would have to take those into consideration in delivering the outcomes which are ongoing," she said of the wage negotiations.

Finance and Planning Minister Dr Peter Phillips, who spoke at the same function at the ministry's Heroes Circle, Kingston office during the recent visit by an IMF mission for the eighth review, said "we still face a very restrictive fiscal environment in the country".

He added that "we have been able to extend the target of nine per cent wages to GDP (gross domestic product) for completion in fiscal year 2016-17, but it remains a target because we have to be able to ensure that our budgetary resources can be spent to a greater degree on the capital side" as well as on growth-inducing measures "as we reduce the debt also".

Dr Phillips said the Government continued the negotiations "in good faith in that context, recognising, ultimately, that any expenditure above what was targeted will have to be compensated for by reductions elsewhere".

new wage agreement

According to the March 2015 memorandum of economic and financial policies submitted to the IMF, the Jamaican Government has initiated discussions on a new wage agreement for the period after March 2015, to maintain a path of public-sector wages consistent with a reduction in the wage bill to nine per cent of GDP in 2016-17 and firmly placing the ratio of public debt to GDP on a downward path over the medium term.

The Government said it would continue to reduce the size of the public sector over the period 2014 to 2016 through the elimination of posts and an attrition programme.

To ensure that the Government's overall wage ceiling of nine per cent of GDP by 2016-17 is met, the filling of vacant positions will be constrained as needed, and guided subject to the need to preserve capacity in a limited number of priority areas.

It has also requested technical assistance to help identify sustainable reform options to support its efforts at containing the wage bill.