A noted economist has warned that should Government proceed with suggestions of cutting salaries in the public sector it could face the law courts.
Dr Justin Robinson, dean in the Faculty of Social Science at the University of the West Indies, Cave Hill Campus, said while the idea of cutting salaries across the public sector would be preferred to sending home workers, it was not something that could simply be done.
Since the announcement by Minister of Finance Christopher Sinckler over a week ago that the Government planned to lay off more than 3,000 public sector workers next year, there have been a number of suggestions.
One of those suggestions was to cut the salaries of workers by three per cent.
Robinson said he agreed the Government should focus on closing the fiscal gap by way of cutting its expenditure instead of still trying to raise revenues, saying he did not believe the Government had other good options at this point.
Robinson said, however: “I don’t know if the amount will be sufficient, but it is a question of the fact that there was a constitution amendment passed in Barbados . . . which makes the cutting of the salaries against the constitution. So the actual efficacy of that policy is going to be questionable. If you are trying to go down the road of cutting those salaries you could be walking into a sort of legal quagmire. So I think that would be a concern”.
Robinson told Barbados TODAY while it had been a challenging year for the Freundel Stuart administration, he believed once the fiscal adjustment programmes were implemented and various projects were expedited, then the economy should start seeing some stability.
He said Sandals, Four Seasons, the Pierhead and Cruise Terminal projects were essential to driving economic growth. He also noted that a lot would depend on the tourism industry in the coming months.
Fiscal consolidation was an important part of the growth strategy and if the Government wanted to start those critical projects, then it was important to attract financing and prove that it was able to repay, said Robinson.
In relation to the recent Barbados credit rating downgrade by Moody’s Investment Services, Robinson said it came as no surprise given that Standard & Poor’s also downgraded the economy only a few weeks before.
“I don’t think the downgrades are surprising given the decline in foreign exchange reserves which would have started around March or April this year as well as the continuing challenges with the government deficit especially the revenue challenges that emerged around October/ November,” he added.
Looking back at this year, Robinson said “clearly 2013 was a difficult year”.
The economist said the international business and tourism sectors had some major challenges, which had a negative impact on economic growth as well as the public finances.
“So 2013 has been quite a difficult year,” he said.