IOUs threaten Government wage targets
THE Government could find itself challenged to come up with an additional $22 billion to meet increased payments to its employees in 2013/14, despite the wage freeze agreement with a majority of public sector trade unions.
The information was provided by the Ministry of Finance and Planning to members of the Public Administration and Appropriations Committee (PAAC) of the House of Representatives during meetings last week at Gordon House.
According to Financial Secretary Devon Rowe, one of the features of the 2013/14 budget will be a $10.7-billion addition to meet payments to public sector workers, including a 2.5 per cent performance increment; a one-off $25,000 cash payment to each of the approximately 100,000 public servants affected by the wage freeze; and improvements in travelling allowances to its travelling officers.
But Rowe also pointed out that there is an additional $11.8 billion cost hanging over the ministry's head in its midterm forecasts, to meet the third and fourth tranches of the delayed retroactive wage increase granted in 2008, as well as the long delayed reclassification exercise payments to both teachers and health sector employees, including nurses and doctors.
The previous Government in July 2011 agreed to payment of a seven per cent wage settlement owed from 2009, but which was not implemented because of a 2009-2012 wage freeze agreed with the International Monetary Fund. The Government had agreed to pay the retroactive sums over 26 months, starting in May 2012 and ending in October 2014. The first two tranches have already been paid, and the other four are due in May and October of 2013 and 2014.
The Government at the time owed the public sector workers $30 billion, accumulated over the years,
including reclassification payments owed to teachers. The teachers' reclassification increases are linked to a study of private sector salaries and agreed by the Government prior to 2007.
Before that year, as well, the Government also agreed to a reclassification of nurses, but this was later expanded by the Industrial Disputes Tribunal to involve all public health workers. However, the Government has been having problems meeting the still undisclosed cost of that reclassification and the nurses have been restive since.
Health Minister Dr Fenton Ferguson indicated last year, during the Standing Finance Committee's review of the 2012/13 estimates of expenditure, that this may take some time due to the unavailability of funds.
"It is a reclassification of the entire health sector, not just the nurses," he pointed out, noting that he had never supported a reclassification limited to public nurses, because that would create anomalies. He disclosed that implementation of that reclassification would be determined through an inter-ministerial approach, involving the ministries of health, education, and finance.
In response to a question from former minister of finance Audley Shaw, Rowe said that the 2013/14 budget will include funds to cover increments to all its employees.
Increments are normally paid on the anniversary date of appointment to permanent employees who demonstrate fully satisfactory performance on the job during the previous year. Increments may be paid to persons employed on a temporary basis in positions which are on the establishment and are not vacant, subject to fully satisfactory job performance. But, increments may be withheld as well, as a result of unsatisfactory job performance or as a penalty following a disciplinary procedure.
In terms of the travelling officers, the Government agreed last year to pay them a 22.5 per cent increase in their travelling allowance over two years. The increases took effect on April 1, 2012, and the second portion is to be implemented on April 1, 2013.