Tue | Aug 22, 2017

Editorial: Dire consequences of stalling reform

Published:Sunday | January 3, 2016 | 1:00 AM

The Jamaican Government's dithering on the reform of the pension scheme for the public-sector workforce has delayed key transformations that will help right-size the economy and induce efficiency.

Two things have helped to complicate the action. The holding of a general election, constitutionally due in December, has been a source of distraction, the prime minister toing and froing with the naming of a date before deciding that internal candidacy disputes and government scandals had scuttled the chance of a clear win in 2015.

Last year also featured long-running wage negotiations, but despite much chest-thumping and posturing, union leaders yielded to sobriety and realised that the sacrifices workers have had to make are in the national interest. More than 97 per cent of public-sector employees have signed new wage agreements, paving the way for an honest assessment of the state workforce.

With a new Budget three months away, the Simpson Miller administration must make up its mind whether it will continue to postpone the inevitable. Jamaica's pensions infrastructure has allowed retired public-sector workers to claim billions of dollars without contributing a red cent.

The unthinking cheerleaders will spout off about the decades of service done for the nation and offer that tidy pensions are but a small token of appreciation. But we cannot afford emotional grandstanding at the expense of economic prudence.

The current pension system operates as a welfare programme, which weighs down an already fiscally burdened government whose core ambition must be to realign the economy for growth. As it is, our state pension infrastructure is unsustainable and is in danger of inevitably crumbling.

That is why we have advocated, in these columns, that public-sector workers be made to pay five per cent of their salaries to their pensions. Trade union leaders would be wise to educate their memberships, much the same way in which they conveyed the cogency of acceding to the terms of the recent wage talks, on the good sense of keeping the pension system afloat and viable.

 

TRIMMING THE FAT

 

It is also apparent that the Government has deliberately stalled on the matter of trimming the fat from the bloated bureaucracy because of the political implications of potentially losing votes. But we remind Prime Minister Portia Simpson Miller that the politics of expediency is precisely what put the country in the rut it's in.

Jamaica has been kicking the can down the road - on this and other issues - in the hope that the fundamental fix will be somebody else's problem. This culture of abnegation drove the economy to the brink of collapse with a debt-to-GDP ratio of 150 per cent and a Government that has had to beg and borrow to provide basic services.

Mrs Simpson Miller and her finance minister, Dr Peter Phillips, have embarked on a path of fiscal responsibility with which few leaders in Jamaica's post-Independence history can claim to compare.

But the reforms that have been undertaken, with the imprimatur of the International Monetary Fund (IMF), will be undermined if the Government is unwilling to go the full journey. Half-hearted commitment to the overhaul of the economy will not be as fatal as not taking the first step. The IMF has said that it is concerned about the size of the bureaucracy and that the Government should act.

Part of the rethink of the public-sector workforce is configuring it as a growth driver of the economy, not merely as a mass of departments, agencies and ministries performing routine, paper-pushing tasks.

Too often, public servants fail to understand their role in economic terms - except for when their unions lobby for salary hikes - in facilitating commerce and productivity, particularly in stimulating private-sector enterprise. They also have a part to play in increasing internal efficiency.

This new paradigm should be led in tandem with the Ministry of Labour, which has largely been underutilised as a wage-dispute arbitrator and partner in securing overseas employment. The labour ministry must have a bigger vision of itself.