Sun | Oct 22, 2017

Editorial: Let the unions make the job cuts

Published:Tuesday | June 23, 2015 | 12:00 AM

By now Horace Dalley, the Government's chief wage negotiator, would have received the teachers' union's formal rejection of the improved seven per cent wage offer and its president, Doran Dixon's, "demand for an urgent meeting to continue these negotiations".

Mr Dixon will enter these new talks, whenever they are held, emboldened to hang tough, to extract more from taxpayers. Seventy-seven per cent of the 315 delegates, representing 24,000 state-paid teachers, voted against the offer. Indeed, the Jamaica Teachers' Association (JTA), by its vote on Saturday, is likely not only to have established the tone for the broader wage negotiations with public-sector unions, and set in train the reversal of the Government's economic reform programmme and Jamaica's long-term stagnation.

Or, to put it bluntly, we fear that the populists are again gaining ascendancy and that, especially with an election cycle on the horizon, sensible people in the Simpson Miller administration will not be able to hold at bay those driven by the instincts of the horde. In other words, politics may well triumph over economics.

Against this background, we urge the finance minister, Peter Phillips, to continue to insist that the Government hold firm to the terms of the agreement with the International Monetary Fund (IMF) and be prepared to leave the Cabinet if fundamental principles are in jeopardy. Further, he and Mr Dalley, a minister in the finance ministry, must continue to articulate clearly the fiscal circumstances facing the Government and the obvious options if teachers, police and other public-sector employees insist on unaffordable pay packages.

In this regard, we have a suggestion for Mr Dalley for his next meeting with Mr Dixon and his team, and for when next he has a session with the Police Federation, which, so far, is the more militant of the unions and the one, along with health workers, whose jobs would be most difficult to cut in a retrenchment. They should be given the estimates of revenue and expenditure and asked which posts and government services should be cut to accommodate their wage demands. This would be an efficient and inclusive way for the Government to move ahead with policy issues with which it has dithered for too long: public sector reform - essentially what the State should look like and the number of people required for it to meet its goals. It would be, too, a lesson in economics.

 

Source of Government's dilemma

The Government's dilemma stems, in part, from its acceptance of what it saw as the soft option of freezes on basic pay, instead of taking a forensic scalpel to the public sector and excising the estimated 15,000 jobs that the public sector can do without and would allow for salary hikes close to 30 per cent being demanded.

This recoil from politically unpleasant undertakings contributed to Jamaica's past unsustainable borrowings, and a debt that reached close to 150 per cent of GDP and 40 years of minuscule growth.

Eventually, the reality of poor economic choices caught up with Jamaica, leading to the IMF agreement and a programme that demands that the Government return a primary surplus of 7.5 per cent of GDP, to begin the reversal of the trajectory of the debt. Gains have been made over the past two years, but are now in jeopardy.