Dawn RitchTHE PRIVATE sector-sponsored 'Partnership for Progress' is feverishly working behind the scenes to help the Government reduce and defer its burdensome interest charges. While these initiatives are going on, the Government refuses to take the necessary measures to curb its runaway wage bill, and reduce the size of Government. The credibility of both parties is at stake.
Interest rates are supposed to fluctuate from time to time, and are currently trending down. On the other hand, wages and salaries only go in one direction. Up. But belatedly Finance Minister Dr. Omar Davies has announced that there will be a wage freeze over the next two years. We will have to see whether or not this is yet another meaningless official announcement.
SALARIES AND WAGES JUMPED
In this regard it should be noted that the Ministry of Finance's Web site on Novem-ber's expenditures shows that salaries and wages jumped from $4.5 billion last October to $7.8 billion in November. That's an increase of $3.3 billion month over month, or nearly 70 per cent more.
The taxpayers are owed an explanation for this increase, although as usual none will be forthcoming. We are constantly reminded to pay our taxes. When we are unable to do so, we are assessed punitive charges that push many businesses to the brink of bankruptcy. In this regard it is interesting to note that Mr. Seaga's company's charges and penalties are five times what is owed.
Mr. Alice in Wonderland, the Finance Minister, said in a JIS News interview reported in this newspaper on January 28, that there will be no large-scale cutbacks in public sector employment and services, nor would there be any massive increase in taxes. This, he said, revealingly, would be contrary to the objectives of the Government and union leaders. Dr. Davies also said that "...interest cost and wages are the two major components of the (government's) expenditure."
I understand that what is being proposed by 'Partner-ship for Progress' is that the holders of Government of Jamaica securities will be asked to defer the interest they would normally receive. These payments would instead be made two or three years down the road.
This will have the effect of immediately reducing the deficit to GDP numbers. It should be noted however, that whichever administration is running the country in three years time, will be faced with the awesome task of finding cash to pay this deferred interest.
The Jamaica Labour Party is correct therefore, to say that they're not prepared to sign to this agreement, until they see what the Government is prepared to give up in return for this ballooning debt. Moreover this is a debt repayment which in all likelihood is to be faced by a probable JLP Government, and not a PNP one.
WASTE AND CORRUPTION
Unless the current PNP Government fixes its runaway expenditures, waste and corruption, no consensus with the private sector can work. There has to be a quid pro quo.
From as early as 1995 public sector reform had come to a halt. It came to a halt the instant the Government negotiated with the unions, and agreed that there should be no lay-offs.
It is pure politics behind the Government's refusal to deal with its mushrooming wage bill. The public service is the only place in Jamaica where you can get four weeks holiday every year, take the holiday, and then accumulate departmental, sick, special and study leave and get outstanding leave for a year. There's even a case of a lady working in government for eight years, who took time off to do her MBA, and is now entitled to ten months' vacation leave.
We taxpayers are paying government workers not to be at work. If all these special leave entitlements were eliminated, the Government could significantly reduce the numbers of people in its workforce.
This kind of rubbish does not occur in the private sector. In the private sector when we don't have it, we don't continue to make promises to employees. We cut salaries and retrench labour. The Government cannot continue to pile up losses, then don't pay the street sweeper for three weeks, and have the nerve to dock her theoretical pay if she misses a day. But unfortunately the Government is a law into itself. Under these circumstances it is impossible for them to negotiate with the private sector in good faith.
GENUINE CONCESSION
Equally, if there were any genuine concessions regarding how to reduce debt servicing costs, then any agreement made between the Government and the private sector would have to be for a long period. At least 10 to 15 years and not three. Then there would be a realistic period in which to service the debt, instead of expecting the country to be able to afford to do so in the short term. Unless it's for a long period, we will find ourselves in even greater problems. Anything less is unrealistic and a samfie proposal, accepted and endorsed by a hypocritical Government.
As it is, the Government itself is unwilling to make any concessions. It is bound and determined to increase public sector wages and salaries to 80 per cent of market rate. Essentially to pay people to sit in posts, and provide no service to the public because there's no money left over to fund the particular service itself.
ADVERTISING PLACEMENT
For example, the Jamaica Tourist Board has just cut its advertising placement in Europe, the very people whose currency is so strong that they're anxious to spend it as tourists. Actions like these give the distinct impression that the Government remains unconvinced that Jamaica desperately needs foreign exchange and income, and would rather borrow money than earn it.
Then there is the Education Ministry where 95 per cent of the budget goes on salaries. There's no money left over for desks and toilets, much less to maintain the schools themselves, with the result that the whole educational system has become ramshackle and everybody has to take extra-lessons.
Well, this year and next will be our last hurrah. At some point in 2004 the U.S. Federal Reserve will be obliged to begin increasing interest rates when inflation rises. Then interest rates in the international capital market will go up. Already the much-applauded euro loan raised by Dr. Davies has an interest rate attached of over 10 per cent. International loans will only be available at rates even higher still. Then local rates will trend up again, as they indeed have been known to do.
This is the Government's last hurrah. So they better get it right in 2004.
