Economist and gov’t envoy agree – it’s no time for salary increases

There is little or no wiggle room in the government’s coffers to entertain discussions on public sector salary increases at this time.

PM Mottley’s Special Envoy on Investment and Financial Services Professor Avinash Persaud said the government had spent hundreds of millions to save public sector jobs during the COVID-19 pandemic. He said too that the conflict between Russia and Ukraine would only delay the recovery from an already deep “debt hole” caused by the pandemic.

Similarly, economist Jeremy Stephen believes that while a discussion on salary increases is relevant, such a decision at this time would lead to serious complications in the near future.

At a press conference on Wednesday, the Congress of Trade Unions and Staff Associations of Barbados said the government had been informed of the organisation’s intention to pursue salary increases for public sector workers. Union leaders said this was especially important due to cost-of-living increases brought on by the pandemic instability and the rising cost of oil linked to the European war.

In response, Professor Persaud said the union’s calls were “totally understandable” and stressed that the government was doing its best to reduce costs by freezing the taxes on freight and fuel.

The special envoy added that the government had ignored private sector calls to send home government workers at the height of the pandemic, when revenues had fallen significantly. He said government had racked up tremendous amounts of debt to keep jobs in tact and would only be able to entertain salary increases when its fiscal position had stabilized.

“COVID hit our private sector hard and at one point it was the last week of April and the first week of May [2021]. The private sector had shed 40 per cent of its workforce and that was concentrated in tourism, travel, retail sectors,” Persaud recalled.

“At that point there were calls by the private sector that the government needs to do its best and should be showing that it is tightening its belt as well, in order to get through the crisis. We resisted that pressure. It was never entertained in the government that we would put labour at risk and that we would do whatever to protect labour from a welfare consideration in a time of crisis but also from a macro economic perspective.

“COVID cost us a billion dollars and there are multiple ways in which we could have paid that billion dollars. We could have cut a lot of government expenditure. We chose not to do that and our debt went up and people have complained bitterly about debt going up. But we felt that the debt going up was the one way that we could protect workers,” he added.

Professor Persaud noted that the war had already delayed recovery by at least half a year, but could be further delayed based on how long the conflict continues.

“The unions are doing their jobs in raising the issues that the workers have and what the government has to do is fit it all together and square the circle,” Persaud admitted.

“If it wasn’t for the Ukraine-Russia war, I could have expressed great confidence that by the end of this year, we would have been back to where we were before and then in a better position to contemplate wage rises. The war is not over, we have not fully seen the full effects of it yet and so it is really, really hard to say,” he added.

Meanwhile, Stephen said the points made by CTUSAB are all valid, but he could not agree with their ultimate request.

The economist noted that salary increases given to government workers across the region were all in countries where the economic situation prior to the pandemic was relatively stable.

He added that St Kitts-Nevis has been one of the best-performing regional economies for some time and Jamaica had recorded high levels of growth.

“We have to consider the realities as far as Barbados is concerned and the country had a situation where our debt restructuring had caused some pain in the economy and dampened economic growth leading into covid,” said Stephen.

“Government then had to undertake a lot more debt and although some parts of the sectors did do tremendously well, the government’s tax position was a faltering one.

“At this time, even if the government finds a way to consider the possibility of raising salaries, I know it would be challenging despite the sentiment that the government should be a government for workers.

“I’ll be honest, I don’t see it happening, but the discussion is a warranted discussion that should be had and continue to be had on the tail-end of COVID, with respect to the hardships going forward,” he added.

Stephen said if tourism comes back “roaring”, perhaps a discussion at the level of the social partnership could be commenced.

Other than that, he said government would have to be willing to walk away from IMF commitments to fulfill the unions’ requests. kareemsmith@barbadostoday.bb