By Robert Hart, Staff ReporterFUTURE WAGE increases within the public sector are under threat as the Government struggles to put a stranglehold on the nation's ballooning financial crisis.
Dr. Omar Davies, Minister of Finance and Planning, says the overall wage cost in the public sector is one of three areas on which the Government will have to focus, as it attempts to balance the national budget by March 2006. The other issues of concern are the financial sector's negligence in engaging in "real banking" as well as unsustainable interest costs.
"If you look at the rate of growth (in the wage bill)... it's not feasible for us to continue. We have to look at whether there's a trade-off between employment and rate of growth in terms of salaries," Dr. Davies said during yesterday's PanCaribbean breakfast at the Terra Nova Hotel, St. Andrew. He was making a presentation to members of the business community, on the state of the country's fiscal accounts.
WAGE PAYMENTS
During his presentation, the Finance Minister pointed out that, since the 1999/2000 fiscal year, wage payments in the public sector have increased by a whopping 61 per cent. At the same time, the Consumer Price Index (CPI), which measures the cost of a basket of goods, has moved by 32 per cent, he said.
In an interview with The Gleaner in November last year, Dennis Townsend, director of the Compensation Unit of the Ministry of Finance, said the Government would spend an additional $1 billion on wages over a four-year period. The projected growth in the wage bill was linked to a commitment by Government to bring the salaries of civil servants up to 80 per cent of those paid in the private sector by 2005.
"The idea of a poorly paid public sector is one which we have nurtured and carried on for years," Dr. Davies claimed yesterday, noting that many employees within the embattled Ministry of Health are "not paid badly at all".
The reference to the Health Ministry came in the wake of Tuesday's revelation at a sitting of Parliament's Public Accounts Committee (PAC) that the Ministry was facing a $3 billion debt, in addition to needing $1.5 billion more than it was allotted in the budget, to meet its obligations for the 2003/2004 fiscal year.
MAJOR SOURCE OF THE
MINISTRY'S PROBLEMS
Grace Allen-Young, Permanent Secretary in the Health Ministry, told the PAC this week that a major source of the Ministry's problems came from the increase in its wage bill from 57 per cent to 85 per cent. Partially as a result of the increase, she said, shortfalls were created and the Ministry was forced to hold off on making payments to several of its creditors.
Yesterday, Dr. Davies also implored financial institutions to start looking for more "real" projects to support. He said that "the notion of simply lending money to Government is not sustainable in the long-term."
Dr. Davies admitted, however, that the Government has been part of the problem because of its willingness to borrow.
The Finance Minister noted that the capital budget had been trimmed from $9 billion to $6 billion and that adjustments were necessary on the recurrent side. Noting that "diets are not a bad thing" he also said that all ministries have to realise that the fiscal situation is very tight and that the country will have to make sacrifices.
"All ministries will have to learn that it is not business as usual. People will just have to make fewer cellular calls. People will have to make fewer trips, and we will manage. We have been through it before and we will go through it again," he said.
The Minister also told his audience that its $450 million debt to contractors, owed up to October, will be paid by the Government.
