Be fair to poor and cut public sector

By Nicholas Scott, Guest Columnist

In response to the global economic crisis and our deplorable fiscal condition, both the Jamaica Labour Party (JLP) and People's National Party (PNP) governments have taken unprecedented decisions.

The JLP, often accused of pandering to wealthy business interests, unilaterally rewrote thousands of contracts with its creditors. In so doing, it lowered the amount of money earned by the most powerful moneyed interests in the country.

The PNP, often accused of populism, recently introduced taxes that increased the amount of money that poor Jamaicans have to pay on a range of items, with no increases in the social safety net.

I cite these examples not to accuse either party of hypocrisy but to demonstrate the great lengths to which both parties have gone, even against the interests of their base, to meet Jamaica's massive fiscal challenges.

Remarkably, despite these great sacrifices, one group is unscathed: public-sector workers. While tens of millions of workers have lost their jobs internationally, and tens of thousands of private-sector workers have lost their jobs locally - not one public-sector worker has been sent home. Instead, aggregate compensation, which includes salaries and pensions, has increased, even during the worst global recession in 80 years! This is patently unfair.

We simply cannot afford the public sector we now have. The public-sector wage bill is 11 per cent of GDP. Pensions paid to current retirees are another two per cent of GDP. Together, about one-seventh of our economy is spent annually in providing compensation to public-sector workers.

The public-sector workforce, on the other hand, makes up only 130,000 people, or just 1/20th of our population. In light of the sacrifices we've made, tearing up contracts and making poor people pay more for beef patties, it's just not fair to continue to give five per cent of our population 13 per cent of our economy each year.

Massive inequity

"They are never going to do that." That is the refrain I hear from political and private-sector leaders when I point out this massive inequity. Virtually none argue that the status quo is acceptable. Rather, the consensus is that it's politically impossible to take on public-sector workers. The political calculus of continuing to hurt 2.47 million people, most of them poor, to help 130,000 people, most of them firmly middle class, should not be compelling in a democracy.

This is particularly true when such a democracy is led by a popular leader, with a super majority in Parliament and the unquestioned support of the poor; a leader who can blame it all on her predecessors and the International Monetary Fund a full five years before the next election. If such a leader can't outflank the public sector to deliver relief to the poor under such circumstances, who can?

Continuing to provide de facto employment insurance to the public sector at the expense of the masses can only be a smart political decision if we concede that we have a system in which a minority is able to use special access to get their way, even at the expense of the greater good.

The press and civil society would not tolerate this if that minority was the business community. Our society should not, and cannot, tolerate it now when that minority is the public sector.

Most public-sector workers are decent hard-working people. My father-in-law is one of them. On a case-by-case basis, it's hard to argue that they are compensated too much for the work they perform. Nevertheless, the costs of the entire system are gargantuan and unaffordable. Given our fiscal constraints, any decision will be extremely painful.

That said, before we impose more taxes on the most vulnerable among us or inch towards the precipice of default, let us simply impose on the public sector the same terms and conditions of employment as the rest of us.

Nicholas A. Scott is a vice-president of the Private Sector Organisation of Jamaica. Email feedback to columns@gleanerjm.com and nscott@faceycommodity.com.