THE BATTERED public sector Memorandum of Understanding (MoU) got a new lease on life last week with an agreement for a cash injection from the Government. This comes against the background of concerns by trade unions about rising oil prices, increased utility bills and an increase in the GCT which pushed inflation well above levels initially contemplated.
As a result, the Government announced that public sector workers earning between $250,000 and $650,000 are to receive a net payment of $600 per week. Employees earning above $650,000 will be paid $500 per week. In addition public sector employees will be given the option of accepting a moratorium on existing staff loan payments up to March 31, 2006.
Just recently Government responded to increases in bus fares by allocating a number of free rides per week to public sector workers. This small measure did not go far enough in assuaging the public sector workers.
The latest reprieve for the MoU has come at a high price however. The $1.8 billion price tag means the Government will have to revisit its budget figures. Already Junior Finance Minister Fitz Jackson is on record as saying that the new allocation will be funded by a combination of reduced spending and increased revenue collection in an economy where an economic pinch is already being widely felt.
At an even deeper level, there is concern that even if the MoU holds until next March, the unions have made it clear that any new agreement with the Government will not contain any wage controls. If this occurs, a renewed bout of inflation could occur as public sector workers attempt to have their wages adjusted to the changes in price levels.
Despite the distraction which will inevitably result from the country's elections timetable next year, this natural urge to have wages chase prices must be firmly resisted.
What the foregoing illustrates however is that the Government's options are severely limited, having boxed itself into a corner and given the high debt costs it faces. Transparency is essential in letting Jamaicans know precisely how the price will be paid for giving this adjustment to public sector workers. Such transparency will provide the discipline to get through the next year or two without losing our fiscal bearings.
The challenge being faced now is one in which we all have a stake. For if the partnership agreement cannot hold together, hopes for a more positive economic future will evaporate like rain in the tropical sun.
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