Editorial | I Public-sector wages and productivity

With some of Jamaica’s top trade unionists posting reminders about the Government’s year-old review of how it prices the jobs state employees do, it might be useful for Finance Minister Dr Nigel Clarke to provide an update of the project, as well as initiate a national conversation on labour productivity before he starts being bombarded with new claims for wage settlements.

It is Dr Clarke’s ministry that negotiates pay agreements for public-sector workers, which places him in the line of sight of workers’ groups that are framing wage claims for contracts to succeed those that expire next March. Most of the current agreements were signed in 2018, under unprecedented, four-year pacts retroactive to 2017. Hitherto, these were mostly two-year contracts, thus keeping the parties on a negotiating treadmill. Usually, they were late.

Any demands on the Government for agreements to commence in April 2021 will happen in unique circumstances. There is the COVID-19 pandemic. It has played havoc with the global economy, not least Jamaica’s. The island’s gross domestic product (GDP) is projected to shrink, in real terms, by as much as 12 per cent in 2020. More than 100,000 people have lost their jobs. The Government’s tax revenue for the fiscal year could be lower by around 14 per cent, compared to 2019-2020.

In these circumstances, the Government will be hard-pressed to countenance big, or increased, wage claims as it struggles to keep on track the fiscal discipline of the last eight years, notwithstanding the elusive target, agreed with the International Monetary Fund, of lowering the public-sector wage bill (still in double digits) to nine per cent of GDP.

LIMITATIONS MUST BE NOTED

The limitations that the environment imposes ought not to be lost on public-sector workers and their unions. They won’t be oblivious to the retrenchments, lay-offs and salary cuts endured by their private-sector counterparts. However, they will be keen to wring what they might from the pay review and other reforms in the public sector, which the Government, a year ago, hired the consultants Ernst & Young (EY) to help sort it out.

At the time, Dr Clarke revealed that there were 325 distinct employment grades in the public sector. One hundred and eighty-five types of allowances were paid to workers. Compensation was opaque and the system inefficient.

“We will be looking towards establishing a single job-evaluation system, where jobs can be evaluated according to a single criterion, rather than using multiple job-evaluation criteria, which we have been using over the past several decades,” the minister said at the time. The consultants should be far along on this project.

Separately, EY was given a job of rationalising public-sector entities, including determining which of them were past their best-by lifespan, or which could share services. In essence, this is going back to – or is forward with? – the decades-old and much-talked-about public-sector reform. There is a habit of sporadically cranking up the idea, only for it to sputter. If something actually happens this time, it might deliver the hoped-for improved public-sector efficiency. But it could also mean job losses.

The latter fact was not addressed by the trade unionists who spoke on the reforms this week. Their focus, primarily, was on the job and pay reclassification exercise. “We are, in fact, as trade unionists, waiting with bated breath for the results of this exercise ... .” said Helene Davis Whyte, president of the Jamaica Confederation of Trade Unions. “It is something we consider to be very important and should be an important feature of the next wage agreement.”

Mrs Davis Whyte’s observation is, to us, not unreasonable. But it cannot be the whole argument.

Those negotiations should also encompass the broader reform of the public sector, including the establishment of benchmarks for labour productivity (output per worker) for government employees. Jamaica, on a whole, has not done well on this front. Although there was an uptick (0.7 per cent) in labour productivity in 2018, it was the first time this had happened in seven years. Between 2014 and 2019, there was an annual average decline of 0.7 per cent. The employed labour force grew at a faster rate than GDP.

Increasing labour productivity might require public-sector employees working harder and smarter, which might also mean the Government having to invest in better tools, including technology, with an impact on total factor productivity. These are the kinds of discussions we expect the unions to have, and is what we hope Kavan Gayle of the Bustamante Industrial Trade Union has in mind. It is Dr Clarke, however, who should begin the dialogue.