Editorial | Apply Beckles' idea to public-sector wages
Hilary Beckles, the vice-chancellor of the University of the West Indies (UWI), has a creative idea of how Caribbean governments can clear their debts to the university that they own and which their grants account for 46 per cent of annual income.
“If they don’t have the cash, we say, ‘Well, give us assets, give us performing assets,” Professor Beckles said at a meeting of the council of the university’s open campus in Antigua and Barbuda. “Give us land, give us treasury bills, give us bonds, give us whatever combination is available to you so that we can clear down this obligation and restore the financial health of the institution.”
The report from St John's suggested that the outstanding debt by governments is more than US$200 million. But according to the UWI’s annual financial statement for the year ended July 2016 – the last one that is publicly available –the UWI listed among its long-term receivables BDS$77 million of contributions owed by governments for over three years, an increase of 15 per cent over the previous year. The outstanding debt would, at Barbados’ fixed exchange rate to the greenback, be equivalent to US$38.8 million.
The US$200-million figure may, therefore, includes write-offs, and the cost of impairment of the more current obligations.
We need not, though, be detained by the specific numbers. It is the idea that counts.
What is implied in Professor Beckles’ proposal is the confidence of the university that it can extract value, at least to the amount that it is owed, from any “performing assets” that governments may wish to use to clear their arrears. We would have wished that the vice-chancellor had not placed so sharp a caveat that he would accept.
For, while we appreciate the preference of managers for acquiring assets that already provide returns to their owners, the more talented, without being imprudent or doing violence to their fiduciary responsibilities, will also recognise that may be underperforming or non-performing, but from which they can elicit strong returns.
Obviously, it is not a university’s core function to operate enterprises, but many, especially in the developed world, are quite adept at maximising profits from their endowments. And with regard to the UWI, Professor Beckles’ idea, if it came to fruition, could be a live laboratory for its students in business and entrepreneurship.
Our other significant interest in the idea is that it broadly mirrors - and in a way further legitimises - a proposal this newspaper has pitched on several occasions to the Jamaican Government to deal with the problem of undercompensated public-sector employees. The matter is live at this time with the unsettled wage dispute with teachers and police officers, who turned down the administration’s offer of a pay hike of 16 per cent spread over four years.
The Government, in light of Jamaica’s fiscal constraints and its obligation to the International Monetary Fund to lower the public sector’s pay bill to nine per cent of GDP, has very credibly argued an inability to do better. What we have felt that the Government has not been is creative.
It need not, we believe, bust the budget, or the fiscal-reform project, to, once the case is properly made, satisfy some of the demands of public-seector employees. The administration ought to energise its largely moribund divestment programme, including fast-tracking IPOs of some of its better entities.
Equity in these ventures can be allocated to public-sector workers in lieu of cash. Employees could decide whether they will immediately sell these shares expecting to realise capital gains, or hold them hoping for both such gains and dividend income. Such a scheme would have the added advantage of expanding the share-owning class, which would be good for the economy.