Wayne Jones, president of the Civil Service Association and vice-president of the confederation of trade unions, says wage bill incorporates 5 per cent increases negotiated for public sector workers. - file
Lavern Clarke, Business Editor
Government has provided for a $10 billion or 13 per cent increase in wages in the current budget, a recurrent expense that is second only to interest payments on the public debt, according to Financial Gleaner calculations.
Compensation to public sector employees and benefits linked to travel and other subsistence is budgeted at more than $88 billion, a review of the estimates of expenditure shows, the majority of which is earmarked for the police, nurses and doctors, and teachers. Debt servicing costs by contrast top $102 billion.
Wayne Jones, the president of the Jamaica Civil Service Association (JCSA) and a vice-president of the Jamaica Confederation of Trade Unions said the increases would relate to the second period of already negotiated two-year wage contracts.
"These figures refer to year two," he told Financial Gleaner. "We can't say if the sum presents what we would have expected."
Neither finance minsiter Dr Omar Davies nor his financial secretary Collin Bullock were prepared to comment now, said their repective assistants.
That's because the JCTU speaks only for a subset of public sector workers - about 40,000 civil servants and some other groups - for whom a five per cent wage increase was negotiated for the current fiscal year.
What others, such as the army and police negotiated would have had to be extrapolated from these figures, Jones said.
The wage bill for the 2006/07 period will likely round off the year at about $78 billion, an estimate based on the $71.8 billion spent for the first 11 months of the fiscal year plus the projected $6 billion bill for March.
Not only does the growth in the wage bill outstrip the 2.2 per cent hike in the overall budget of $380.4 billion, but 13 per cent hike is more than double inflation of 5.8 per cent for 2006 calendar year and nearly twice the 6.6 per cent hike in prices projected by the Financial Gleaner for 2006/2007 fiscal year that ended on March 31. Moreover, the jump in the wage bill accounts for two-thirds of the $15 billion increase in proposed recurrent spending, estimated at $239.3 billion, compared to $224.6 billion in the period just ended.
Additionally, wage and salaries will account for approximately 36 per cent of the recurrent budget, according to Financial Gleaner estimates, moving to 64 per cent, when debt servicing costs are stripped away from housekeeping expenses.
The government had success in stabilising the wage bill in 2004 and 2005, at $63 billion for each period, but only because of a two-year agreement with public sector unions to froze wages and in a handful of circumstances, limited hikes to three per cent. The trade-off was the saving of more than 15,000 public sector jobs.
Since then the wage bill has grown by $25 billion or nearly 40 per cent, based on the $88 billion projection for the current fiscal year.
Davies had projected a $72 billion spend on salaries forfiscal 2006/07, but was 7.5 per cent off target up to February, because of higher than programmed wage increases, additional staffing in some areas, and high overtime pay.
Part of the minister's problem that while he was able to get the majority of public sector unions, coming off the wage freeze, to accept a 20 per cent hike over two years, a handful of bargaining units, particularly the police, nurses and teachers, held out for more.
Additionally, Davies had to front-load the wage hike, paying out most of it the last fiscal year, rather than a more even distribution over the two years.
The government's wage bill, and its impact on the public sector deficit, which was likely to have been in the range of four per cent of GDP in the past fiscal year and to stay at the level in 2007/2008, will be a matter of concern for the International Monetary Fund, which has been prodding the administration to shed government jobs, a matter it took again in its report after its February Article IV Consultation on Jamaican economy.
In that report the Fund's official noted that the higher than projected wage bill helped to push the fiscal deficit $8 billion off track, to $44.3 billion, as of February.
"After the upcoming elections, the government that takes office will have an important opportunity to unleash Jamaica's full economic potential," said the IMF, championing deep reforms.
"Toward that end, the mission would recommend the following priorities for inclusion in the post-election structural agenda - reform of the tax system and public employment"
Last year, the IMF made a similar recommendation to the government, implying that smaller, better-paid, but a higher-quality public sector would be better than periodic wage freezes, notwithstanding the relative success of the 2004/2006 agreement.
In the current estimates, education has the largest wage bill of $30.3 billion, the police $12.8 billion, followed closely by nurses and doctors $12.2 billion.
The three groups, whose combined numbers represent about38,000 to 40,000 paychecks, account for about two-thirds the public sector payroll.
The JCTU says the unions and government are operating on that assumption that the public sector has about 75,000 to 80,000 workers. An official count that was agreed in 2004 is still pending, despite the parties having signed off on the survey instrument.
The Electoral Office of Jamaica was selected to do the survey, said Jones, but the agency's priority is on general elections that are due by October.
A copy of the Government of Jamaica's 2007/08 Estimates of Expenditure. - Andrew Smith/Photography Editor
The Big Five
Teachers/Educ$30.3 billion
Police$12.8 billion
Nurses/Health$12.2 billion
National Security$5.6 billion
Local Govt$3.3 billion
lavern.clarke@gleanerjm.com
