THE GENERAL upward movement of prices, pushed by factors largely originating outside the Jamaican economy and beyond the control of the Government, has reduced to shambles projections of single digit inflation this year. Electricity bills are going up. Bus fares are set to increase. And as the price of oil climbs, other goods and services are set to follow. There was already an increase of the General Consumption Tax on a wider range of items. Bank of Jamaica Governor, Derick Latibeaudiere at his quarterly press conference last Wednesday, frankly conceded that "there was absolutely no chance of meeting the single digit inflation target". Even the BoJ's revised projection of an annual inflation rate of 13-15 per cent, at the start of a busy hurricane season, may now be seriously off track. The governor frankly admits that the projection had not taken into account the rise in bus fares.
The break out of inflation has serious implications for wage restraints in the economy. And the trade unions have served notice of bargaining for double digit wage increases. The Memorandum of Understanding between some elements of unionised public sector workers and the Government designed to restrain salary increases as Government struggled to balance the books, was predicated on low inflation. In exchange for the retention of public sector jobs, which would be otherwise cut in the cost-saving exercise, employees and their unions agreed to forego salary increases. It was expected that the maintenance of a low inflation rate would see no significant erosion of spending power.
The MoU appears to be in danger. But the leaders of trade unions representing public sector employees remain acutely aware that the MOU is a trade-off of essentially frozen salaries for job retention. There never was any real question about who holds the handle and who holds the blade in the agreement. The promised restriction of annual inflation rates to single digits was merely a shaky inducement.
Public sector workers watching the progressive erosion of their spending power have been tempted to accuse their union leadership of a sell-out, and the president of the Jamaica Confederation of Trade Unions, Dwight Nelson, has been forced to spend a good deal of his time defending the MoU to the membership. The JCTU, tied to the job-saving MoU, is now devoting time to secure exemption for public sector employees from the bus fare hike, a proposal very difficult to keep away from confusion and corruption.
Ironically, while the Government is locked in an MoU which essentially freezes the salaries of its own employees, the Ministry of Labour is scheduled to open, in a couple of weeks, discussions on increasing the national minimum wage. The inevitable distortion of the labour market by these various contrary interventions by a Government pledged to modernise the market seems to have escaped the policy makers.
While the Government has got itself into a bind over these issues, the implications go way beyond just a dispute between employers and the employed. Every Jamaican has a stake in an amicable resolution. Good sense should prevail al around.
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