Editorial | Accounting for public-sector reform

DR NIGEL Clarke, the finance and public service minister, may have missed our suggestion a month ago that he should start a national discussion on the review he ordered of public-sector wage levels, through which he intends to bring rationality to the compensation of government employees.

Given the imminence of the Budget that he is to deliver to Parliament for the 2021-2022 fiscal year, the pressures on the fiscal accounts, and the minister’s declared commitment to maintaining the public-sector wage bill to within nine per cent of gross domestic product (GDP), this debate remains not only important, but urgent – especially if Dr Clarke is keen on managing wage expectations in the public sector.

It is relevant, too, in the context of the Government’s long, and ongoing programme of public sector reform, which, we believe, is due for a round of transparent accounting, including an analysis of the efficacy of the exercise. As the saying goes, what gets measured gets done.

OPAQUE REGIME

In 2019, when he announced the hiring of the consultants, EY, to help unravel the salary maze, Dr Clarke disclosed that the Government had 325 distinct employment grades and 185 types of allowances, making for an opaque regime which is good for masking inefficiencies. The aim now is to establish a single job-evaluation system.

What EY has proposed, or the track on which it was headed, is not publicly known. But its final report, unless long delayed, will coincide with what, for the Government, is a confluence of difficult circumstances. For example, at the end of March, a three-year wage agreement with public-sector workers will conclude. Negotiating new contracts will be on the agenda. That is happening with the economy in a COVID-19-induced recession, possibly recording a double-digit decline. The Government’s tax revenue for the current fiscal year will be down by around 12 per cent.

But while the economy has shed more than 130,000 jobs, pushing the unemployment rate back past 12 per cent, public-sector jobs have remained stable. The wage bill still hovers at over J$200 million. Indeed, government services is among the few sectors to have grown, driven mostly by COVID-19-related expenditures.

In the shrunken economy, in which wages will rise as a proportion of GDP, workers may be hard-pressed to demand higher basic wages. Some trade unionists, however, have already signalled that they will be looking towards the EY review for an uptick in pay during the negotiations. Herein lie broader questions about public-sector reform, which has been taking place in some form for at least 30 years, and in its latest iteration for a decade. Is it delivering on its promise, and at a pace fast enough to be worth it?

POORLY PAID

Comparatively, Jamaica’s public-sector workers are poorly paid relative to their developed world colleagues. They also lag behind their counterparts in the domestic private sector. That makes it difficult to attract, and keep, the best talent. But a bloated public sector – there are over 190 government agencies and companies – contribute to the low salaries, while helping to inhibit the development of a highly talented and efficient public bureaucracy.

Indeed, trade unions concur that transformation may require public-sector job cuts, to which they agreed in a 2013 wage agreement, so long as it was “as a result of the implementation of the Public Sector Master Rationalisation Plan accepted by Parliament, or as a result of natural attrition or voluntary separation as per contractual agreement”. Despite the acquiescence of unions, successive governments, clearly with an eye on election voters, have opted for “attrition and voluntary separation”.

This notwithstanding, the Government’s Transformation Implementation Unit reported that it has effected 17 closures, 14 mergers, two divestments, three shared services arrangements, one reorganisation and three cases of integrating the operations of subsidiary bodies into parent ministries. It is not clear what lies behind those numbers. We do not know how they stack up against deliverables and whether Jamaicans should be satisfied with these outcomes for the time spent. In fact, many Jamaicans have begun to suffer from transformation fatigue – not necessarily because of what they see or encounter, but from hearing the phrase for so long. Minister Clarke, therefore, needs to assure taxpayers that they have got, or are on the cusp of really getting, value for money – that a more efficient public sector is in the offing, and that it will happen soon.