No double-digit wage hike
Finance Minister Dr Peter Phillips has yet again hinted that public-sector workers will not be getting double-digit increases in salaries, despite five years of wage freeze and their trade union representatives requesting a 30 per cent hike over two years.
Phillips said the lowering of inflation has been making it easier for Jamaicans to survive as the inflation rate in the economy is projected to end up at its lowest in 40 years this month.
"Inflation numbers are significant, and it will take time to work through the system, but we need to recognise that the biggest tax that you really have on somebody is inflation, particularly on the poor in that what it does is that it consumes all that you are earning," the minister said during a forum held at The Gleaner's North Street, Kingston offices on Friday.
"We can now contemplate wage settlements that are in the order of the kind of wage settlements typical of other places that are not double digit," Phillips said.
INFLATION RATE TO FALL
Brian Wynter, governor of the Bank of Jamaica, said that as low as the inflation rate is, as at February, "as we go forward into this fiscal year, we are expecting that inflation rate to fall further still every month".
"By September, annual inflation is likely to be somewhere down about three per cent or below. We are into a period of declining inflation," Wynter said.
"For the year overall, our forecast is somewhat higher ... . We have a low and declining inflation environment in the near term and over the next six months at least," he added.
This is the second time that Phillips has sent the signal that a double-digit increase is unlikely.
"In the context of low inflation, in the context of the payment of increments, we are certainly expecting that the view of what would constitute a reasonable settlement will have to undergo some adjustments as compared with previous years and periods in the history," Phillips said during the sitting of the Standing Finance Committee of Parliament early this month.
During the Standing Finance Committee sitting, Phillips said some $6 billion of the $11 billion set aside as contingency in the 2015-16 Budget represents an amount for back pay and a final tranche of a one-off payment.
"It is important to make the point: one, we are talking about an inflation out-turn of approximately five per cent for the fiscal, and we expect inflation to be substantially lower even in the next fiscal year," Phillips said.
In contributing to the Budget Debate last week, Opposition Spokesman on Finance Audley Shaw noted a statement from trade-unionist Helene Davis-White, who has expressed the desire for a 15 per cent wage increase per year for the next two years, for a total of 30 per cent increase.
"I am going to ask Ms Davis-White to have her analysts look at the wages and salary figures again because even after the PNP administration and the IMF are agreeing to push back getting to the 9 per cent wage-to-GDP until fiscal year 2016/17 instead of fiscal year 2015/16, what is in the budget as a salary increase for this year is at best five to six per cent," Shaw said.
SUPPORT SECURITY FORCES
Opposition Leader Andrew Holness, also contributing to the Budget Debate, said the Government should ensure that they use wage increases as one way to encourage and support the security forces.
"We recognise that the police have not had a pay increase in over five years. Nevertheless, they have continued to serve us under the most challenging conditions. The Government must seek to arrive at an early settlement of a reasonable compensation package with members of the security forces and, indeed, all hardworking and committed public-sector workers," Holness said.
Meanwhile, Phillips said the inflation rate for calendar year 2013 was 9.5 per cent.
"We can now report a significant reduction in the inflation rate for calendar year 2014 to 6.4 per cent. The anticipated improvement in the inflation rate over this fiscal year is even more remarkable. We anticipate a further reduction in the inflation rate for 2014-2015, which is expected to fall to approximately five per cent, or below, compared with the 8.3 per cent that was recorded in the previous fiscal year," the minister said.
"The last fiscal year recording inflation lower than this was 1971-1972, some 43 years ago," Phillips said as he opened the Budget Debate.
Phillips said that when public-sector unions signed up for the wage freeze, their demand was that the country fulfills the economic reform programme being administered by the International Monetary Fund (IMF).
"They said that we want to ensure that Jamaica does not have to run this particular track again," the minister said.