EDITORIAL - Watch the big picture, Mr Grant

O'Neil Grant may just have been engaging in a kind of dance of plumage - showing off to his constituency without committing to an actual fight.

But even that is potentially dangerous. For the president of the civil service union, in threatening to head back to the bargaining table, may lift among his members expectations that cannot be satisfied. At least, not without painful consequences all round.

Or, worse, he runs the risk of undermining the difficult and delicate economic-reform programme to which the Government is committed in its agreement with the International Monetary Fund (IMF) and which the Jamaica Civil Service Association (JCSA) undertook to support in exchange for keeping its members employed.

The context in which Mr Grant's union arrived at its initial position is worth recalling.

The Jamaican economy is weighted down by an unsustainable debt of more than J$1.8 trillion, which amounts to nearly one and a half times the value of all the goods and services we produce annually.

The Government ran up that debt because, in the absence of economic growth, it borrowed heavily to maintain the State at a size that its earnings could not afford.

Wages for its employees are the Government's second largest bill. This fiscal year, it is projected to be J$157.25 billion, or nearly a third more than J$119.6 billion of interest costs on the debt. However, when the $196.4 billion is added, the overall debt-servicing cost is J$316 billion, which is approximately 88 per cent of what the Government expects to collect in taxes, or 88 per cent of all revenue.

Borrowing less and spending less and growing the economy, combined, is the only sure formula for lifting Jamaica out its economic quagmire. The first two segments of this strategy are critical to ensuring the third. For less consumption by the Government leaves more capital, at a cheaper cost, with which the private sector can investment.

JOB CUTS THE ALTERNATIVE

This is what Mr Grant's JCSA and other public-sector unions presumably understood when they agreed, ahead of the agreement with the IMF, to a wage freeze. The alternative, which would be a cleaner, but politically more difficult option, would have been for the Government to cut, say, 15,000 public-sector jobs.

In that trade-off, the Government promised to hold inflation this fiscal year to around eight per cent. For the first quarter of its fiscal year, consumer prices rose 1.6 per cent, while for the first seven months of the calendar year, inflation was 4.4 per cent. Inflation, broadly, is in the agreed range.

The inflation out-turn, thus far, is notwithstanding a 17 per cent decline in the value of the Jamaican dollar versus the greenback. But if Mr Grant and other union bosses were paying attention, they would have noted the assessment that the Jamaican dollar was overvalued by between nine per cent and 22 per cent, depending on the method of calculation.

The fundamental point is that the Jamaican economy is being forced to endure a period of difficult and painful adjustment. This is no time for the loss of nerve, or grandstanding.

Mr Grant may have to decide which he prefers: fewer JCSA members in jobs with higher wages, or more of them getting pink slips.

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