Wage-to-GDP ratio could near 11% this year – Duncan
EPOC chairman says finance minister might need to adjust limit
Published:Thursday | July 21, 2022 | 12:09 AMChristopher Thomas/Gleaner Writer
WESTERN BUREAU:
THE ECONOMIC Programme Oversight Committee (EPOC) has projected that with the country’s wage-to-GDP ratio already breaching the-nine-per-cent limit for this fiscal year, the Ministry of Finance will have to make new regulations to accommodate public sector compensation.
EPOC Chairman Keith Duncan made the declaration during the body’s quarterly press briefing on Wednesday as he revealed that the public sector wage bill ended the 2021-22 financial year at 9.6 per cent of gross domestic product.
“What we would like to see included in the overall public-sector compensation structure is the performance-management framework, and also efficiency initiative, that will lead to greater efficiency in the public sector and greater service levels to the people of Jamaica. As a result of this public-sector realignment of compensation, we have projected for the wages to GDP fiscal rule to be breached,” said Duncan.
“It is projected to come in at 10.9 per cent for the current fiscal year. We expect that the minister of finance will have to do amendments to the fiscal rule to allow for this, but we are supportive of public sector transformation because we believe that it is important that our public sector is fairly compensated, such that we can reduce attrition and people are attracted and motivated to serve in the public sector,” Duncan added.
IMF agreement
In 2011, under a loan agreement with the International Monetary Fund (IMF), Jamaica committed to reducing the public sector wage bill to nine per cent of GDP.
Four years later, in 2015, the IMF reported that if Jamaica were to achieve the target, the Government would have to consider policy options, such as job cuts and tax increases.
At that time, Jamaica had signed wage agreements with the Jamaica Confederation of Trade Unions and the Jamaica Teachers’ Association, resulting in the wage bill for the 2015-16 financial year being projected at 10.1 per cent, exceeding the target.
Duncan told Wednesday’s briefing that while public sector workers should get higher compensation packages, they must, in turn, deliver higher-quality service and efficiency to justify the pay increase.
He said, “We need to hold the Government of Jamaica and the public service accountable to delivering greater service levels. Now that we are biting the bullet as a country from our tax revenues to deliver more appropriate compensation levels, we need to demand accountability from our public service.”
In May, Finance Minister Dr Nigel Clarke announced that thousands of workers at the lowest end of the public sector salary scale with annual incomes of up to $600,000, to include office attendants, drivers, and messengers, would benefit from the compensation reform which had got under way at that time.
The 2022-23 budget is prioritising the implementation of a restructured public sector compensation scheme, with plans to complete consultations with unions and other stakeholders and conduct information sessions with employees.