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.
