Thu | Dec 14, 2017

Editorial | Good sense needed in wage negotiations

Published:Friday | August 25, 2017 | 12:00 AM

As Jamaica prepares for the start of the new school year, some dark clouds are discernibly on the horizon. This week, the Jamaica Teachers' Association (JTA), the teachers' union, announced that it had rejected a pay offer from the Government without disclosing what that offer was and what were their own claims,

The JTA's new president, Georgia Waugh Richards, spoke of disgruntlement and a feeling of disrespect among teachers over what we suspect was the Government's opening gambit. "Many of them expressed the feeling that we are valued much more than was offered," she said.

If we were to hazard a guess, it would be that the offer to teachers was for an increase of three per cent in each year of a two-year contract - the same amount offered to the wider public sector via the Jamaica Confederation of Trade Unions (JCTU). That offer, too, will be rejected. Indeed, the JUTC's president, Helene Davis Whyte, has reported that their claim is for a hike of 30 per cent in each year of a 24-month agreement. That's the size of the ball park within which the JTA would perhaps want to play.

The most obvious point here is that the gap between the Government and its employees is wide. The second - which workers won't want to hear - is that they don't have a snowball's chance in hell of getting anything close to what they have asked for. Unless, that is, the Holness administration is willing to engage the pre-2012 style of fiscal irresponsibility that characterised Jamaica. It would also mean a readiness to scuttle the standby agreement with the International Monetary Fund (MF).

Were that to happen, it would be a catastrophe too grave to contemplate. The country has come too far and has gained too much for that.

Six years ago, Jamaica's macroeconomy dangled at a precipice. The country's debt was heading towards 150 per cent of GDP, the Budget deficit was over five per cent of GDP, and the deficit on the current account was in the low teens and rising. A bloated, gourmandising government borrowed so much that little was being left for the private borrower at a rate that made productive investment feasible. Moreover, not only did debt servicing consume more than 40 per cent of the Budget, when its costs were added to the public-sector wage bill, the Government had no more than 20 per cent of all its revenue to pay for all the other things it was required to do.

 

TOUGH DECISIONS

 

Some tough decisions pulled Jamaica back from the brink. The Budget is balanced. The current account deficit is in single digit. The trajectory of the debt has shifted markedly. Jamaicans are beginning to expect macroeconomic stability as the norm.

Still, the country is not out of the woods, as the Holness administration, which has largely maintained fiscal prudence during its 18 months in office, will explain to the trade union.

We appreciate that public-sector workers are just being freed from a lengthy pay freeze and that some may complain that they gained little from an income tax give-back - much of which was clawed back with indirect taxes. However, the administration still has the task of lowering its wage bill a full percentage point to nine per cent of GDP, and while there is growth, it is not yet sufficiently robust to make the Government's coffers flush.

Mrs Davis Whyte doesn't expect the wage negotiations to be "easy", and like her teachers' union counterpart, complains that what the Government has on the table isn't near to "what we consider a reasonable offer". She, however, recognised that negotiations require give-and-take, which requires, especially in this circumstance, an appreciation of the larger picture.