Sat | Aug 8, 2020

Editorial | Give more on EY’s terms of reference

Published:Monday | December 9, 2019 | 12:00 AM

Finance Minister Nigel Clarke perhaps needs to explain more about the near J$1-billion contract awarded to consulting firm EY, (formerly known as Ernst and Young), to sort out the Government’s byzantine pay structure and help bring greater efficiency to its operations so that the public is assured that this won’t be a short-term palliative and of the efficacy of lumping parliamentarians into this review.

According to Dr Clarke, there are 325 different salary scales, as well as nearly 200 allowances in the public sector, which makes for a complex and opaque system that doesn’t necessarily deliver fairness.

“One of our primary aims is achieving … internal equity, which is to ensure that relative compensation reflects relative job-evaluation score so that there is some internal consistency to public-sector compensation,” the minister said.

We agree with Dr Clarke’s analysis of the situation and the end he hopes to achieve. But the further, and larger, question is whether the streamlined salary structure to be presented by EY, if implemented, will be sustained and by what mechanism. Or, put another way, the EY analysis and recommendations can’t be separate from a robust programme of public-sector transformation, around which Jamaican governments have tip-toed for decades.

As Dr Clarke knows, those 325 salary bands and 200 types of allowances did not happen overnight and weren’t developed without logic. They are the result of a mission creep that allowed workers and policymakers to work around rigidities in the public sector’s employment/compensation mechanism and the unwillingness of politicians to take really tough decisions.

It began with pricing public-sector jobs too cheaply so that Government is at a disadvantage to the private sector when competing for talent and skills. Further, without a streamlined pay structure and the periodic imposition of salary freezes as part of fiscal-containment strategies, public-sector managers would make concessions to wage negotiators who could either shout the loudest or had the potential to be most disruptive. Some of these might be hidden as allowances and perquisites rather than base salary.

REMOVE THE BLOAT

A better strategy would have been to take a long, hard look at the public sector and decide on the number of workers, and in what sectors, who would be required to efficiently operate a State that delivers agreed critical services. In other words, bloat would be removed from the public sector. At the end of the exercise, and with the ratio of public-sector wage bill to gross domestic product (GDP) unchanged, those workers would be better paid but required to perform at levels commensurate with their improved remuneration.

Unfortunately, a national conversation on these issues has, at best, been sporadic rather than sustained. In the circumstances, there is no consensus on such a strategy. Our fear, then, is that in the aftermath of the EY report, the proposed bands, with a public sector of the proposed size, especially if there is not robust growth, will be unimplementable.

Dr Clarke, therefore, should tell whether EY has been asked to prescribe, or advise on, the optimum size of the public sector, even though that, ultimately, is determined by what is expected of the State, which, in part, is a political decision informed by philosophy and ideological disposition.

With regard to EY pronouncing on members of parliaments’ pay, the terms of reference for this analysis are important and ought to be public, given that the job of a parliamentarian, or the expectation thereof, is not readily, or easily, related to those of other public servants, which raises the question of comparable bands in which parliamentarians would fall.