A senior University of the West Indies (UWI) economist is warning this island’s largest public sector union that now is not the time to be making any pay demands on the Freundel Stuart administration.
In fact, Head of the Department of Economics at the UWI’s Cave Hill Campus Dr Winston Moore believes such demands could only spell two things — more layoffs in the Government service and/or an increase in levies.
Without disclosing its precise demands, the National Union of Public Workers (NUPW) has served notice that it will be going after a pay increase for public officers this year, with General Secretary Roslyn Smith suggesting that it would be in the double digits.
However, Moore argued that even though the union may be justified in going after higher wages and salaries for its members, he could not see how Government could afford a pay hike at this time.
He acknowledged that public sector workers had not received a wage increase for six years, but pointed out that this was largely due to the financial constraints faced by Government.
“Unfortunately, Government’s financial situation has not improved significantly, as there still remains a financing gap,” said Moore, contending that “while there is some justification for a wage increase for public sector workers due to the reduction in purchasing power they would have faced over the last six years, it is difficult to see how Government would be able to accommodate such an increase at this point in time.”
The senior economist further warned that areas identified by the ruling Democratic Labour Party for reform in the short to medium term, particularly restructuring of State enterprises, were unlikely to produce enough savings to support an across-the-board pay hike.
“If I was looking at it from [the standpoint of] a policymaker in Government, I would say the only way that we can support such wage increases is if we also identify cutting other areas to finance such an increase. It could include job cuts, but you could also eliminate some types of activities that the public sector is doing now that it may not want to do in the future.
“It [a pay hike] might also mean changing the fees that some public sector agencies charge for providing services,” Moore said, while contending that higher taxes would not be feasible at this stage.
“There is not just the economics of it, there is the political economy side of it. So I am not sure how a further tax increase would go down from a political economy perspective . . . because, at the end of the day, politicians do have to take into account the views of the electorate and I think the electorate has indicated that maybe they feel like they are overtaxed,” he said.
“My fundamental thing is, there is still this large financial gap in Government . . . and Government simply can’t afford [a] pay [rise],” he stressed, while suggesting that one of the things that needs to be placed on the front burner is a payment scheme, which rewards workers based on productivity.