Two leading economists are forecasting huge cuts ahead for the Mia Mottley Government and the enterprises it owns, broadly hinting that public sector job losses may now be unavoidable as the administration pursues economic restructuring.
Given the massive burden of wages and salaries on the public purse, cuts are the “inevitable” next phase, the economists said Sunday on the Starcom Radio Network.
“That [public sector] is where I think the bulk of the next phase of the cuts has to come from,” Caribbean economist Marla Dukharan said on the public affairs discussion, Down to Brass Tacks Sunday.
She said that it made no sense that the public sector here and in the rest of the English-speaking Caribbean had not undertaken any major reforms in the last half-century.
Dukharan would not be drawn into describing the precise form the projected cuts would take but suggested the Mottley administration’s wage bill was an inevitable target.
“I don’t know if it will come from a cut in wages or layoffs, but I am saying that is one of the largest line items in the fiscal budget and I can’t see how you are going to escape a restructuring of the whole economy without addressing that cost,” she said.
Mottley, who is also Minister of Finance, has already given assurances that there would be no “grim reaper” approach to rightsizing the public service, insisting that cuts would be a last resort.
Dukharan proposed a transition to e-government as one way to lower the cost of government but maintained there would still be a need for a new “shock” diet of reform.
“It is as though for ten years we have been drinking rum and eating fried foods and ice cream and cake and then you had a stroke and the doctor says to you, you must only eat vegetables and fruits and drink only water. Obviously, your system is going to go into shock, but in the longer term you will recover,” she said.
Meantime, head of the Barbados Economic Society (BES) Shane Lowe is eyeing cuts in social services as the likely fallout of Government’s cuts in transfers and subsidies to statutory corporations, in keeping with an International Money Fund (IMF) prescription.
While Lowe, too, was reluctant to state directly whether job losses in the public sector were inevitable, he counted on the business community to pick up the pace of job creation.
“If there is a reduction of labour, then the private sector needs to grow quickly, maybe not immediately, but overtime to absorb that labour because the ultimate objective of all of this is to ensure that more people are employed and that people can benefit from the economy more than they were able to before,” he said.
Barbadians have to prepare to pay user fees for such services or buy them from the private sector, Lowe warned.
“You either have to reduce the amount these entities are spending or you have to ensure they earn the amount of revenue that they need to earn, so they have to be restructured,” the BES president said.