Not surprisingly, an agreement on wage restraint with public-sector unions is proving to be among the most difficult to accomplish of the prior actions that the Government must undertake if it is to get its US$750-million economic support agreement with the International Monetary Fund (IMF).
In the end, we expect that the unions will come around, for they have little room within which to manoeuvre.
The Government, if it is to get its deal, has to show the IMF a clear path towards reducing the public-sector wage bill, over the next three years, from 11 per cent to nine per cent of gross domestic product. Part of the answer is the growth, nominal and real, in the economy over the period. But this will be insufficient to do the trick.
There are two other options: either public-sector workers acquiesce to wage restraint/freeze, or risk the loss of thousands of jobs. Public-sector unions are as fearful of the latter option as the Government is politically disinclined to it.
Which brings us to two issues that we do not believe have been attended with the seriousness and urgency that they deserve: genuine public-sector reform and creative ways to deal with public-sector compensation and redundancy payments, should it come to this.
First, while this newspaper understands that the cutting of public-sector jobs cannot be an arbitrary exercise, we understand that wage freezes are merely temporary fixes that do not address the fundamental issue of creating a bureaucracy that is entrepreneurial and facilitatory of enterprise.
In that regard, we insist that even as it pursues its present path - on the assumption that a major shedding of public-sector jobs will only deepen Jamaica's recession - the Government get on with the process of public-sector reform.
There are agencies to collapse and/or merge, and others to divest. There is also the need for the recruitment of managerial and technical talent for critical agencies if the debt-reduction/economic-reform project presumed by the IMF agreement is to have a chance at success.
At the same time, we appreciate the concern of workers, including the talented ones who can't find jobs in the private sector, and who have had to endure a series of wage freezes. We understand, too, that the upfront cost of redundancy payments and contract buyouts is a significant issue for any administration contemplating public-sector downsizing. Here is where we believe that there is potential for creative solutions.
Another element of public-sector reform is divestment of state-owned enterprises - partly to cut lossmaking ones and to bring the State back to its core functions, such as the ensuring of law, order and security, and the provision of a handful of basic services.
Governments have no business running commercial enterprises such as, say, petrol stations, which the one in Jamaica does through its Petcom service stations.
In the situation that Jamaica finds itself, the Government might, for instance, do an initial public offer with Petcom, providing public-sector workers with shares in the listed firm in lieu of salary/redundancy payments. The assumption here is that it frees the Government of finding upfront cash, while the listing would provide liquidity to the stocks for those seeking immediate cash.
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