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WAGE DAMPER

BOJ’s advice against hefty pay rise puts thousands of workers in a bind

Published:Tuesday | August 29, 2023 | 12:11 AMKimone Francis/Senior Staff Reporter
BOJ Governor Richard Byles.
BOJ Governor Richard Byles.
Senator Kavan Gayle, BITU president.
Senator Kavan Gayle, BITU president.
Vincent Morrison, president of the Union of Clerical, Administrative and Supervisory Employees.
Vincent Morrison, president of the Union of Clerical, Administrative and Supervisory Employees.
National Workers Union General Secretary Granville Valentine.
National Workers Union General Secretary Granville Valentine.
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More than 40,000 private sector employees represented by three of the country’s bargaining unions could be negatively impacted by the Bank of Jamaica’s (BOJ) recent caution to businesses to temper any significant increase in wages amid current...

More than 40,000 private sector employees represented by three of the country’s bargaining unions could be negatively impacted by the Bank of Jamaica’s (BOJ) recent caution to businesses to temper any significant increase in wages amid current inflation.

Already, “a few” companies negotiating salaries with the Bustamante Industrial Trade Union (BITU) have referenced the statement made by BOJ Governor Richard Byles in discussions, President Kavan Gayle told The Gleaner on Monday.

He said that Byles’ statement, which came during the central bank’s quarterly monetary policy report press briefing last week, will encourage or sway some employers in the private sector to be cautious as he has suggested.

“And so what we would have seen, in a few instances, is that there are some employers who would have been in some negotiation with us who would have suggested that they are taking guidance from the statement made by the governor without any reason and without any explanation,” said Gayle.

He said that those employers’ postures have changed and noted that they are now operating differently than in the engaging manner they were previously.

The BITU represents a wide cross-section of the private sector, inclusive of approximately 90 per cent of workers across the financial sector, workers in the tourism sector, production, and agriculture, among other industries.

Gayle puts the number of workers represented by the union in excess of 10,000.

“So, we would be one of those unions that that rubric of representation, based on the suggestion, would impact,” he said, though adding that the position has not yet caused any impact.

Gayle, a government senator, said that this is because of the union’s approach to negotiations by seeking to restore the purchasing power of the employee, ensuring competitive compensation, and efforts to apply the value of the job.

A greater level of compensation based on performance has also been promoted, he said.

But most significant is the employers’ ability to pay, he added.

He said that performance pay and incentive-type rewards and investments must be looked at for the country’s labour force to promote increased productivity.

He suggested removing the tax implication for companies that want to prescribe and support productivity-based incentive schemes, arguing that this will create further growth in the economy, fuelling efficiency and productivity.

“That is where we would have anticipated that the governor would have further directed and employers would not have hung on to this thing about not paying high increases,” Gayle said.

Byles, a week ago, cautioned the private sector against any massive wage increases, warning that a significant jump in salaries could have a negative effect on inflation.

“If we do get large wage increases and those translate into increased prices, then we are going to have a new cost-push effect on inflation. If those wage increases are not that substantial, or accompanied by increased productivity, then the impact on price increases should be nominal and not so much of a threat,” Byles said.

But Vincent Morrison, president of the Union of Clerical, Administrative and Supervisory Employees (UCASE), has argued that Jamaica has never had a price spiral issue as a result of higher wages.

He expressed concern that the BOJ’s position will have a negative impact on private-sector wage negotiations.

UCASE represents approximately 9,000 employees in the private sector, including the bauxite and alumina sector and companies such as the Jamaica Public Service, Island Dairies, Caribbean Cement Company, and Petrojam.

Morrison said Byles’ statement suggested that in order to contain inflation between four and six per cent, wage settlements must be within that range.

He questioned whether employees are to be paid “a paltry four per cent” in the face of high productivity and profits of some businesses.

“The fact of the matter is it is only wages that are being regulated and controlled in Jamaica … . So the statement that the governor made is very unfortunate,” he told The Gleaner.

He said that apart from the senior executives of companies, very few employees in the country’s workforce of 1.4 million are earning a liveable wage.

“There are security guards who have to decide whether to have lunch or save the bus fare. They can’t afford it and that is an example of what is happening right across the board,” Morrison said.

“Why are so many of our professionals leaving the country? Because they are unable to make ends meet … . When somebody as influential as the governor of the Bank of Jamaica makes the statement that he did, it will have a negative ripple effect across the industrial relations landscape and that is where I have a problem,” he added.

National Workers Union (NWU) General Secretary Granville Valentine, too, told The Gleaner that the BOJ’s position is impacting negotiations.

He said the statement is being treated by companies as a policy of government at the negotiation table.

NWU represents approximately 25,000 private sector workers.

“We are having a chaotic situation, where some management are of the view that they should hold and use the excuse that it will impact inflation and affect the economy. This is a convenient argument when the workers are being paid less than the value of the work they are doing,” he said.

“That’s a strong position he has taken and we are asking those powerbrokers not to interfere and leave statements out there hanging that can confuse and disturb working relationships. We, as a union, will stand our ground and it drives down productivity because people are demotivated the longer it takes for negotiations to be settled,” Valentine said.

kimone.francis@gleanerjm.com