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No room in private sector for displaced Government workers

Published:Friday | June 5, 2015 | 6:00 AMGary Spaulding
Dennis Chung

Chief Executive Officer of the Private Sector Organisation of Jamaica (PSOJ), Dennis Chung, has warned that there is no place in the sector for displaced, untrained public-sector workers.

"If you look at the options within the context of a private sector that shrank during the recession, which means lower revenues, then the fact is that there is a real inability on the Government's part to pay any increase above inflation," said Chung.

The Gleaner reported Tuesday that the finance and planning ministry calculates that 15,000 public-sector workers, particularly those at the lower end of the salary scale, would lose their jobs if the Government were to grant hefty wage increases.

The total budgeted wage bill for central government ministries, departments and agencies for the current fiscal year is $165.22 billion. This comprises base wages of $154.6 billion, inclusive of approximately $3.8 billion to meet payment of the estimated cost of annual increments.

The Ministry of Finance and Planning said another $10.6 billion has been set aside to meet back pay in respect of agreements, settled in prior financial years for the 2014-2015 tranche of the $25,000 one-off payment, under the 2012-2015 Heads of Agreement. Some of $10.6 billion, the ministry stated, will also go towards back pay for firemen, correctional officers and the judiciary.

Chung told The Gleaner that the country has not recovered from the GDP declines and, therefore, cannot go for more debt or more taxes. He warned that if the Government acceded to the hefty demands of public-sector workers, it would be promising what it can't afford to pay and would have to revert to printing money which means inflation would wipe it out in the next year.

GDP growth necessary

Asserting that the only solution is significant GDP growth and public-sector reform, Chung stressed that skill requirement and trained labour were mismatched, and that accounted, in large measure, for high unemployment levels.

"I don't think there is any place for any untrained persons generally, whether public sector or private sector," said Chung.

He added: "The fact also is that coming out of the recession period and with new taxes and regulatory costs, the private sector has had to become more efficient, which unfortunately has included job cuts."

He suggested that the immediate option was for the workers to accept the Government's offer of five per cent over two years.

He said there should also be a condition that a task force be established immediately, to look at proper reform for the public sector and retraining, to help the transition to own businesses and into private-sector jobs.

"In the medium term, public-sector reform is the number-one priority, as well as focusing on a more facilitative environment for SMEs (small

and medium-sized enterprises), in particular," said Chung. "In other words, we need to focus on growth, particularly in SMEs, and change the culture of just trying to raise revenues to address the fiscal as the primary focus."