Last week's set­tle­ment by the Gov­ern­ment of the col­lec­tive agree­ment for some 25,000 pub­lic ser­vants for the pe­ri­od 2011 to 2013 at a 14 per cent salary in­crease is a sig­nal achieve­ment for both the Peo­ple's Part­ner­ship ad­min­is­tra­tion and the Pub­lic Ser­vices As­so­ci­a­tion (PSA), the trade union rep­re­sent­ing most pub­lic ser­vants.For the Gov­ern­ment, it brings to a close a wage ne­go­ti­a­tion with the largest sin­gle block of em­ploy­ees in the coun­try, just months be­fore the 2015 gen­er­al elec­tion, on terms that are clear­ly meant to be po­lit­i­cal­ly en­tic­ing.

For the PSA and its mem­bers, it pro­vides a dou­ble-dig­it wage in­crease over the three-year pe­ri­od and, more im­por­tant­ly for them, the prospect of a bil­lion-dol­lar back­pay with­in the next three months.The set­tle­ment al­so al­lows PSA pres­i­dent Wat­son Duke to fi­nal­ly rinse his mouth of the bit­ter taste that was left the last time he sat around the ta­ble with the Chief Per­son­nel Of­fi­cer Stephanie Lewis.

In the sec­ond quar­ter of 2011, Mr Duke had to push back his chair grudg­ing­ly af­ter set­tling for a salary in­crease of five per cent for the pe­ri­od 2008 to 2010, with the ac­cu­sa­tion of sell­ing out the in­ter­ests of pub­lic ser­vants ring­ing loud­ly in his ears.That set­tle­ment was lat­er ad­just­ed up­ward by an­oth­er four per cent, and was orig­i­nal­ly jus­ti­fied by the then min­is­ter of fi­nance, Win­ston Dook­er­an, as be­ing in keep­ing with the frag­ile econ­o­my at the time.

But in April 2011, ac­cord­ing to the Re­view of the Econ­o­my for the 2011 fi­nan­cial year, the av­er­age West Texas In­ter­me­di­ate price of oil reached US$109.53 a bar­rel and for the pe­ri­od Oc­to­ber 2010 to Ju­ly 2011, the WTI price av­er­aged US$93.99 a bar­rel.

In that same pe­ri­od in which pub­lic ser­vants were forced to ac­cept a five per cent wage hike, "the po­lit­i­cal up­heavals in the Mid­dle East cou­pled with the in­cip­i­ent glob­al eco­nom­ic re­cov­ery, drove up the prices of T&T's ma­jor en­er­gy ex­ports, while the Hen­ry Hub price of nat­ur­al gas fluc­tu­at­ed dur­ing the pe­ri­od and in more re­cent months be­gan drift­ing up­wards," again ac­cord­ing to the 2011 Re­view of the Econ­o­my.

In the cur­rent pe­ri­od, when the Gov­ern­ment's set­tle­ment of­fer is near­ly three times the pre­vi­ous one, the T&T econ­o­my is strug­gling with an oil price that has been be­low US$50 a bar­rel for most of 2015 and with nat­ur­al gas prices that have soft­ened to much near­er to the US$2.75 per unit orig­i­nal bud­get price, ac­cord­ing to gov­ern­ment spokes­men.

While the non-pub­lic ser­vice pop­u­la­tion of T&T cel­e­brates with the pub­lic ser­vants at their gen­er­ous wage hike, the more dis­cern­ing would ob­vi­ous­ly want to find out from Min­is­ter Howai whether the set­tle­ment is fi­nan­cial­ly and eco­nom­i­cal­ly pru­dent.

The first is­sue is the im­pact that the set­tle­ment will have on the Gov­ern­ment's fis­cal bal­ances, which Prime Min­is­ter Kam­la Per­sad-Bisses­sar said in her state of the econ­o­my ad­dress on Jan­u­ary 8 would need to ad­just to an es­ti­mat­ed de­cline in rev­enues of $7.4 bil­lion as a re­sult of the ex­pect­ed sharp re­duc­tion in en­er­gy tax­es caused by glob­al forces.In that speech, the Prime Min­is­ter said that the re­view of T&T's cap­i­tal ex­pen­di­ture pro­gramme and of re­cur­rent spend­ing was ex­pect­ed to yield $4.5 bil­lion in sav­ings.

Yet rather than at­tempt­ing to hold pub­lic sec­tor wages–which are a sig­nif­i­cant as­pect of re­cur­rent ex­pen­di­ture–at 2014 lev­els, the Min­is­ter of Fi­nance has agreed to the im­po­si­tion of over $1 bil­lion in ad­di­tion­al costs in the form of back­pay and high­er salaries.On the is­sue of the im­pact of these added ex­pens­es on the T&T econ­o­my, the Min­is­ter of Fi­nance needs to dis­close the ex­pect­ed im­pact of the Gov­ern­ment's gen­eros­i­ty on the coun­try's rate of in­fla­tion and on its draw­down of the na­tion's for­eign re­serves.

T&T de­serves to know all of the im­pli­ca­tions of this wage set­tle­ment.