BY ALICIA DUNKLEY-WILLIS Observer senior reporter email@example.com
HEAD of the Hugh Lawson Shearer Trade Union Education Institute Danny Roberts has suggested that "the country assess the feasibility of adopting a voluntary incomes policy for two to three years".
"The policy would reflect constraints on both wages and prices, and it need not be extended to other forms of income," Roberts told the Jamaica Observer in an interview yesterday.
Under an incomes policy, government would be expected to regulate escalation in incomes to curb rise in prices (inflation) without increasing unemployment.
Roberts had warned last week that the administration's approach to the current public sector wage negotiations would bear no sustainable benefit if the parties to the negotiations — the government and trade unions — do not seriously examine the development of an incomes policy as a tool to address the current crisis.
Yesterday, he said an incomes policy would prove a useful tool to support the government's broad fiscal and monetary policies, adding that "an incomes policy can play an important role in macroeconomic management".
The trade union institute head further said such a policy would provide for real wage growth by coupling wages to productivity. "This would involve full engagement of the Jamaica Productivity Centre in developing productivity programmes and measurements designed to achieve improvements in total factor productivity," he said.
According to Roberts, improved productivity could increase international competitiveness and he suggested that the existence of such a policy would also "prevent the flow-on effects of collective bargaining outcomes in the private sector... and lead to higher levels of unemployment". Furthermore, he said it would bring about a more equitable distribution of income and help to channel the distribution of income to more socially desirable areas such as health, education, etc".
Said Roberts: "It is certainly an unhealthy macroeconomic environment to have rising prices in the absence of excess demand, generally; IMF's (International Monetary Fund) policies are contractionary and leads to stagflation. An incomes policy among the social partners could be a useful tool, with the above objectives in mind, to increase employment without the inflationary effects."
Finance Minister Peter Phillips, during a special media briefing last week held on the heels of a three-day emergency Cabinet retreat, said public sector wage negotiations would have to be settled to some extent before an agreement is inked with the IMF. He added that the issue was one of several "prior actions" the country will have to settle on to satisfy the requirements of the lending body with whom it has been in negotiations for months, adding that a firm commitment on wage restraint in the public sector was likely to be a prior action requirement of the programme as well.
He also said while the administration would not be cutting jobs it would be "accelerating the Public Sector Transformation Programme which aims at rationalising the entire Public Service for greater efficiency".