The island’s private sector is warning that demands for wage increases for public servants are coming at a bad time, when Government is struggling to correct the economy.
A cautious President of the Barbados Private Sector Association (BPSA) Charles Herbert said while state workers might need a pay rise, a hike would only add to Government’s already high expenditure.
The National Union of Public Workers (NUPW) is pressing the Freundel Stuart administration for a 23 per cent wage hike for public servants, arguing they have not had a pay rise since 2008, while the cost of living had been rising.
“Obviously the key issue is that it comes at a time when Government needs to reduce its deficit. If it is going to increase its expenses it is going to have to increase revenue even more to cover that increase in expenses.
“I think that generally . . . it has been very difficult for public sector workers to have no increases for eight years, very, very difficult, and it is going to be something that has to be addressed at some point,” Herbert said.
The BPSA head shared the view with the media on Friday, following a meeting with the business community at the Lloyd Erskine Sandiford Centre, where private sector officials gave a broad overview of the association’s recommendations as part of the two social partnership subcommittees mandated by Stuart last month to recommend answers to dwindling foreign exchange reserves and the high fiscal deficit.
BPSA members were also given an opportunity to provide feedback and put forward further suggestions to help grow the economy.
Herbert said he was satisfied with the recommendations, which included the need for a better tax collection system; the need for transparency; a change in mindset in the public and private sectors; the need for more focus on renewable energy to help save foreign exchange; innovation; and allowing those who can afford, to pay for some social services.
“You can either have less social services or you can have the same social services given to less people. The concept within the private sector is that people who can afford to pay should pay, and we recognize all the difficulties that come with deciding who can afford to pay, but I think it is far more beneficial to give the same services to the people who cannot pay rather than give less services to everyone,” he explained.
He stressed that the country’s economic challenges could not be addressed by simply having economic growth.
“Even if we grew at five per cent a year for the next five year, which would be really exceptional, it would not solve the problem of refinancing our foreign debt.”
In fact, he said one of the biggest challenges that needed to be addressed urgently was the island’s low rating, which was putting pressure on the country’s ability to refinance its external debt.
“We have large loan repayments coming particularly in 2021 and 2022. So it is very important that we improve our credit rating before that time so that we can refinance those loans at reasonable interest rates when they come due. We cannot pay them from our foreign reserves, they are just not big enough,” Herbert said, adding that in order to improve the credit rating, which is currently at junk status, Government had to drive down its large fiscal deficit.
“It is important for Barbados to demonstrate to lenders that it can manage its finances and balance its budget. But Government has to take the decisions it has to take so that can happen. So the key action point is that we need to balance our budget,” he stressed.
Once this was done the country would have no difficulty approaching multilateral agencies to get financing at more competitive rates and with less onerous conditions, he said.
Herbert said since Tuesday’s meeting with Government to discuss the private sector’s recommendations, the administration has given the assurance “that they understood the recommendations and that they have said they intend to take action starting with the Budget coming in May to address the main concerns we have”.