Pay more to fewer people, says Wehby

Published: Monday | September 14, 2009



Wehby

"Just like how you debate the budget, you must have a section in Parliament called public bodies debate carried by the prime minister," Don Wehby suggested in an interview days after ending his two-year tenure in the Bruce Golding-led Cabinet. "He must lay the figures for these bodies - Air Jamaica, Port Authority, etc - and you have a debate on stewardship and gover-nance of these companies."

Of his prescriptions for addressing some of the most pressing problems facing the Government, his suggestions for containing the growing public-sector wage bill is likely to spark the most controversy, face resistance from trade unions and caution from his old boss, who has advocated a more measured approach to public-sector reform.

"I think we need fewer people in the public sector and pay those who are there more based on their productivity," Wehby said.

The Jamaican Government, excluding those who work in state-owned firms, employs nearly 100,000 people. The Government projected wage bill for this fiscal year at $125.7 billion is up nearly 13 per cent on 2008/2009, or just under 11 per cent of gross domestic product (GDP). About the 60 per cent of the wage bill goes to teachers, police and health-sector workers.

But the administration, which instituted a wage freeze as a counter to cutting jobs, faces a dilemma: it being pressured by some of these groups to pay previously negotiated hikes, while it struggles to contain public-sector demand and is being told by the International Monetary Fund (IMF) that the wage bill is too large a proportion of GDP. Wehby, who before he left office in July, led Jamaica's negotiations with the fund for US$1.2 billion in credit, agrees with the IMF. He believes that an adjustment would bring good returns and would perhaps be less traumatic than many suggest.

Impact on GDP

"When I met with the IMF ... it presented a really good paper to us saying that it (the wage bill) should be at 9.5 per cent (of GDP)," Wehby said. "We are talking about 1.3 percentage points off - just about $15 billion in terms of public-sector wages. That's not really massive."

Added Wehby: "However, what is happening is that we have a lot of heads in the public sector(being paid) relatively low wages. We need to pay more money to fewer people and then you are going to see productivity go up ... GDP go up."

Wehby reckoned that such productivity gains could mean the public-sector wage bill falling and could reach "as low as 8.5 per cent" of GDP.