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Wage freeze an option
Economists are saying the Government may have no choice but to freeze public servants’ salaries given the economic situation in the country where its revenues have declined significantly.
But President of the Public Services Association Watson Duke is warning that if there is a wage freeze there will be “some kind of action.”
In their request recently for a meeting with Prime Minister Dr Keith Rowley, the trade union leaders had accused Government of implementing austerity measures through a wage freeze and mass retrenchment, particularly in the public sector.
But in response Rowley assured that there have been no lay-offs of public servants. He told labour leaders that what exists now is a situation where Government had to decide how much they can afford to pay and what they can do to preserve jobs.
The PM lamented that the Finance Minister’s hardest task every month is ensuring there is money to pay public servants. He said it is difficult to talk about increases now when Government is borrowing to pay salaries.
The public sector wage bill currently stands in the region of $12 billion annually or $1 billion per month.
Speaking about the ramifications of the situation, former finance minister Conrad Enill said the message the PM was essentially sending to trade unions is that while they have borrowed to keep the jobs of public servants “if I am borrowing to keep the salary basically paid then the whole question of coming to me for increases on that is not on. So I think he is saying to the unions we are going to maintain what we have to try to keep jobs rather than increase the cost and make it sustainable.”
It is, Enill said, a signal of a wage freeze because “in the current circumstances, if he does not have the money and is borrowing money to pay salaries then he cannot increase the cost.” He said what the PM was doing was putting on the table his understanding of the situation as told to him by the Minister of Finance, “that in a real sense the Minister does not have money on a monthly basis to pay for all the expenditure, so in many cases the Minister will have had to borrow to pay public servants and that is a statement of fact. The last administration in the last couple of months had the same challenge.”
While he could speak to the financial projections for revenue from the energy sector, he said: “You will recall energy sector companies were given capital allowances for the expansion of production and that has come to an end and therefore it means the state will be getting more revenues from the energy companies. Prices have also basically improved a little bit but more than that, depending on the jurisdiction in which gas is sold, you could get more for your products. So the state might be getting more revenues and if the state gets more revenue it means that the gap becomes smaller depending on those numbers, it means he will be in a position possibly to manage without a lot of pain.”
Economist Dr Ralph Henry also admitted it is a “challenging situation that the Government faces.” He explained that normally the Government will borrow to invest in infrastructure and to expand capacity, but if they are now borrowing “just to pay salaries” then it becomes a challenge.
He said: “Normally you expect recurrent revenue will take care of the recurrent expenditure, but certainly if you borrowing to deal with recurrent expenditure you kind of putting a hold on capital expenditure and capital expenditure is what is the basis for the expansion of the economy.”
Henry said it is well known that Government’s revenues had declined significantly because of the fall in the price of oil and gas and the quantum of exports of the two products.
“A substantial share of revenue came from that source and as a result its revenue base has declined precipitously in the order of 40 per cent as I understand it f rom that source.”
He said if that decline continues and “we don’t have other goods and services being exported or other activities on a scale to take care of that drop, it means that the Government revenue will decline substantially.” In this scenario, he said there is need for either wage freeze or job cuts or a combination of both.
Henry warned that if the Government’s revenue is not adequate to maintain expenditure, “it has very little recourse, either to reduce the workforce or there might be a wage freeze because there is no way to increase salaries if you don’t have the money. You might need to have some belt tightening. Public servants might ask that some belts be tightened, elsewhere equitable treatment. It is something that has to be managed.”
Economist Valmiki Arjoon also told the T&T Guardian that borrowing to pay salaries is not sustainable and “the best thing is a wage freeze because you don’t want to cut workers’ jobs at this point in time.”
But Arjoon said Government should also look at “re-evaluating payments and perks to members of boards in state enterprises” and also reducing the numbers of people on those boards. He cautioned that “no attempt to save expenditure should be done via cutting jobs and terminating the contracts of workers.”
Arjoon also feels there is need for “better synergy between the private sector, the state and trade unions” in the current scenario.
Efforts to contact Finance minister Colm Imbert and Labour Minister Jennifer Baptiste Primus were unsuccessful as they did not answer calls.
UNIONS WANT DIALOGUE FIRST
General Secretary of the OilfieldsWorkers’ Trade Union Ozzie Warwick,who attended the meetingwith the Prime Minister, said theunion has always advocated theneed for “consensus on how weshare the burden of adjustment.”
He said any decision on a wagefreeze or a zero per cent offer “cannotbe done without dialogue andthese unilateral positions imposedon workers.”
However, Warwick said the union “did not get a sense there would be a wage freeze” when they met with the PM. But he was concerned that “any hint of wage freeze will suggest implementation of austerity measures” and it that happens “there will be a response.”
He said both the private and state sector had been retrenching workers and there has been no conversation on how to treat with this period and share the burden of adjustment.
Warwick said the PM asked the labour movement to return to the National Tripartite Advisory Council (NTAC) but he said the unions were clear they will not do so until there is a “halt to mass retrenchment.”
Days after the talks he said “now we have the issue with CNMG that was never hinted to at the meeting.”
He said had this conversation started a year ago, “we would have been in a better place today.”
Warwick said it is for this reason “leadership is required and it cannot be in the form of austerity.”
“It is the role of the PM himself to bring the social partners together and talk about how do we all pitch in to help on this current economic situation.”
Declaring that we cannot “cut our way out of this crisis” Warwick said the discussion has to be “how do we grow the economy.”
Also contacted on the issue, Public Services Association Watson Duke says he was not part of the meeting with trade unions and the PM “because I believe that any meeting with the Prime Minister is a waste of time.” But he accused Rowley of “being economical with the truth.”
Duke said when Rowley told the trade union leaders Government’s policy had been to maintain the workforce “he is painting a picture that he is a benevolent leader trying to save workers’ jobs, but in reality he is mashing up the public sector which includes teachers, fire officers, public officers prison officers and police officers.”
He said the Government had not been filling vacancies but could not say what is the current size of the public service.
Duke said the union had written to the Chief Personnel Officer on the outstanding negotiation period of 2014 to 2016 and the current period 2017 to 2019 but had received no response.
He said if the Government does not budge from the position as outlined by Rowley, which is that there will be no increases, “there will be a lot of pain for families to maintain a basic standard of living and more people will be thrown on the poverty line.” He said the zero position will be met with “a course of action that will be determined by the public officers.”
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