Fri | May 26, 2017

Editorial: Fix public-sector pension scheme

Published:Monday | August 31, 2015 | 8:00 AM

We sympathise with Ronnie Thwaites' concern over the newly rigid enforcement of the retirement age for teachers and its potential impact on the quality of pedagogy in Jamaican schools. But the issue highlights the larger need for an overhaul of the island's public sector, including the authority of his own ministry over the people it pays, as well as the pension entitlements for government employees. Fix public-sector pension scheme

Indeed, it is a matter requiring urgent attention and one which we hope the administration is now ready to seriously address, having nearly completed its wage negotiations with government workers.

In his intervention at a forum hosted by this newspaper, the education minister spoke in the context of his drive to improve Jamaica's relatively poor education outcomes and the resources, including human, required to get the job done.

Said he: "Very often, teachers are at the height of their career and competence at 60 and they have to go the next day because of that rule (of mandatory retirement). If we had more flexibility in respect of discipline (and) in respect to the assignment of teachers, we might be able to avoid that level of haemorrhaging."

There is the other critical context that Mr Thwaites did not spell out, but which informs the rigidities that Mr Thwaites has to endure: more than 40 years of bad economic and labour-market practices by Jamaican governments, which, under the guidance of the International Monetary Fund (IMF), are now being put right.

The Government is borrowing less, spending less, while running a large enough surplus for its creditors. It is, in part, the need to fulfil these obligations why teachers, and other public-sector workers, on reaching retirement age, have to go. Indeed, wages represent the largest single component of government spending; it consumes 37 per cent of non-debt revenue and 40 per cent of recurrent expenditure as well as represents nearly 11 per cent of gross domestic product.

But the estimated J$168 billion the Government will spend on wages this year doesn't tell the full story about the impact of government employment, past and present, on the national treasury. Another J$25 billion will be spent on pensions, for a scheme to which the bulk of its members do not contribute and which is unfunded.

No amounts are set aside from which the guaranteed pensions of retired public-sector employees are paid. So, future pension payments are a liability on the Government, with implications for the national debt. The system is insistent of reform, including raising the age at which government employees retire - which, when it happens, will deal with one of Mr Thwaites' concerns - and demanding that they contribute to their pensions.

Dealing with the causes of Mr Thwaites' other frustration demands urgent changes to the laws that regulate the education system. It is not so much that retirement leaves a shortage of teachers, rather than it is not easy to deploy them where they are needed. For example, teachers, although they are paid by the central ministry, are employed to individual schools, overseen by their specific board of governors. So, transferring a teacher can be a complex and fraught process. And like employees in the central civil service, teachers enjoy overgenerous and economically unsustainable leave entitlements.