Fri | Dec 14, 2018

Lack of wage settlements poses risks to economic reform programme - IMF

Published:Saturday | December 8, 2018 | 12:00 AM
Dr Uma Ramakrishnan, IMF mission chief to Jamaica.

Dr Uma Ramakrishnan, International Monetary Fund (IMF) mission chief to Jamaica, has warned that protracted wage negotiations between the Government and "the unsettled groups" in the public sector pose risks to positive developments in Jamaica's economic reform programme.

These risks, she indicated, could create budgetary uncertainty.

"This could weigh against efforts to reallocate resources away from the wage bill and towards priority spending areas such as crime, social protection, and disaster resilience," she said.

Ramakrishnan's comments followed the visit of an IMF team to Jamaica from December 3-7 to review Jamaica's economic reform programme supported by the fund's Stand-By Arrangement.

On Thursday, the Police Federation said it was grossly dissatisfied with the "lack of due regard and attention being demonstrated by the Government" as the parties held another meeting to reach a wage settlement.

The federation accused finance and the public service minister Dr Nigel Clarke of abandoning the negotiations "at this critical stage" and handing over to his technocrats, "who communicated the offer on behalf of the principal".

Ramakrishnan said that more fundamental reforms to the compensation framework for public-sector employees and a streamlining of government functions would be necessary to sustainably reduce the wage bill.

 

ALL-TIME LOW EMPLOYMENT RATE

 

The IMF mission chief said that the unemployment rate in Jamaica is at an all-time low of 8.4 per cent, with significant gains among women and younger workers.

Inflation is in the Bank of Jamaica's target range of four to six per cent. Gross international reserves were at US$3.4 billion at the end of November. Growth for this fiscal year is expected to be one and a half to two per cent.

Looking ahead, lower global oil prices, if sustained, should support a narrower current-account deficit and support domestic demand, said Ramakrishnan.

"Continued buoyancy in tax revenue is supporting more capital spending, helping economic activity and living standards. Public debt is expected to fall below 100 per cent of GDP (gross domestic product) by the end of this fiscal year for the first time since financial year 2000-01," she said.