Sun | Apr 23, 2017

Editorial: Mr Dalley should do as he says

Published:Thursday | June 4, 2015 | 6:00 AM

The Government is finally telling public-sector unions the truth. But talking about its danger, or holding it above their heads like the sword so feared by Damocles is not the solution. The answer is for the administration to muster the courage to cut away the problem.

Our reference is to the warning by Horace Dalley, the Government's wage negotiator, that there would have to be a cut of up to 15,000 public-sector jobs if the Government were to acquiesce to the wage demands of state employees, some of whom, like the police, have asked for as much as 200 per cent. Most, however, are more modest at around 30 per cent, over two years. The Government's offer is a five per cent hike on basic pay.

Mr Dalley and his boss, Finance Minister Peter Phillips, have correctly placed the matter of the wage negotiations in the context of the economic reform project being undertaken by the Government, with tutelage from the International Monetary Fund. The programme's primary aim is to bring the fiscal accounts into balance and to place the country's unsustainable debt on a downward trajectory. An important benchmark of the programme is for the Government to run a fiscal surplus of 7.5 per of gross domestic product (GDP).

 

ANAEMIC GROWTH

 

The reforms, of course, make sense. For as the sensible often point out, Jamaica's ineptitude at managing its finances contributed to its high levels of borrowing, leading to a ballooning debt that was heading towards 150 per cent of GDP. The Government's gourmandising on debt left little room for private investment in the real economy. The result: anaemic growth.

Adjustments, such as those being undertaken, are neither easy nor painless, to which Jamaicans will readily attest. But the more egregious wrong, over the longer term, would be for the Government to retreat from the project and to raise public-sector salaries without doing more.

 

INEFFICIENT, BLOATED CIVIL SERVICE

 

First, we believe that government workers ought to be paid substantially more, but in the context of an efficient, productive entrepreneurial public sector that functions as a partner with, and facilitator of, the private sector. We do not, however, believe that this can be achieved - that is, better paid, efficient public bureaucracy - with the bloated civil service whose productivity continues to decline at a rate faster than most other categories of Jamaican workers.

Yet, as a group, relative to their performance, public-sector workers cannot claim to have done all that badly. In the past decade, since the 2004-05 fiscal year, the Government's wage bill, minus pension payments, despite two rounds of wage freezes, has risen by 157 per cent, not far (around 10 percentage points) behind the movement in the consumer price index.

Indeed, even at only the projected five per cent increase, the public-sector wage bill would, this fiscal year, consume 36 per cent of the government revenue and 26 per cent of all its projected spend. When interest cost is added to the wage bill, that eats up 65 per cent of the revenue, leaving not much to do little.

We agree with Audley Shaw, the shadow finance minister. Public sector should be paid more. But that can't happen with their bulging numbers. Genuine public-sector reform is urgent, including taking the scalpel to the sector and, with surgical precision, excising the bloat, unnecessary and the wasteful. This, clearly, is not a politically easy task. It is the right one.