Mon | Feb 19, 2018

Editorial | Reconfigure public-sector pay talks

Published:Monday | December 25, 2017 | 12:06 AM

The Holness administration is quite adroit at the slick and glitz of social-media platforms. It doesn't, however, seem so good at communicating with small stakeholder groups about the grit of hard policy options and why, sacrificing to themselves notwithstanding, they should buy in into them.

At least, that is the sense with which we are left from the Government's ongoing wage negotiations with public-sector unions, which is at an impasse, if not broken down. Not only has the administration, so far, been unable to convince the unions why they should accept its offer of a six per cent hike over the two years of a new contract, it hasn't developed a credible and inclusive narrative to draft public support to its side.

Moreover, from our vantage point, it seems that the Government is using old-time negotiating tactics: essentially keep the same number on the table, but, after each session, move them around a bit in the fashion of a three-card trickster. If that is indeed the case, there is need for a strategic shift, in which event some of the numbers might have to change.

But far more important, that can't be seen as merely wage talks. It has to become transparent national dialogue on economic policy in which public servants are told what is in it for them if they make concessions and when they can collect. And that commitment has to be bankable.

To be fair to the administration, it faces a dilemma. It knows that in dollar terms, Jamaica's public servants do not earn enough, in the sense that theirs, like those of many other Jamaicans, is not a living wage. But from a productivity standpoint, that argument is not sustainable. For, taken as a whole, the public sector, the people paid by the central government, is bloated and inefficient.

For instance, at the start of the current fiscal year, salaries and wages accounted for 10.7 per cent of GDP - it used to be higher - which the IMF is pressing to be lowered to nine per cent of GDP. That would free public funds for capital spending - and without having to borrow as much - which would help to stimulate growth.

For example, the wage bill, which doesn't taken into account pension payments, is J$93 billion, or about 36 per cent of all expected inflows to the Government's coffers and 40 per cent of what it projects to earn from taxes. When meeting the wage bill and paying interest on debt are taken together, the Government will utilise more than 60 per cent of its budget, without having yet repaired an inch of road, fixed a single classroom, or bought equipment for a hospital. So, they go without, or the Government borrows, though less now than before.

 

Hard decisions

 

All this makes it difficult, or rather impossible, for the Government to meet the demand of civil-service unions for doubling salaries, or hire substantially more police officers, which everyone agrees is necessary. Except, that is, you take some hard decisions.

There may be too few police and nurses, but there is much fat among the administrative and support staff, the central bureaucracy, that consumes nearly a fifth of the wage bill. There, in the circumstance, is a good start for some of what is often euphemistically called public-sector reform, over which the Government has been pussyfooting for so long.

We agree that this is not a politically easy undertaking. But it is one potentially workable element in a series of trade-offs. In other words, the wage talks should not be just about wages. They should be also be about broader reform, when everyone talks frankly, with all cards on the deck, without the presence of a shyster intent on playing tricks.