Having just returned from meetings with the International Monetary Fund (IMF) in Washington, followed by a worldwind investor tour of seven European capitals (gauging appetite to replace the US$400 million Eurobond coming due next year), on Thursday Audley Shaw, minister of finance and the public service, informed the Rotary Club of Kingston that “the world was in turmoil”. He remarked at the luncheon meeting, held at The Jamaica Pegasus hotel in New Kingston that immediately after their meeting in Washington, the Chancellor of the Exchequer (the UK’s Minister of Finance) had returned to his country to announce 500,000 job cuts. All over the Eurozone, from France to Greece, Shaw noted, there were signs of stress as workers faced cuts in pay, jobs, or both. In the United States, it was thought that the US job market could take a decade to recover, and poverty had risen to an all time high of 14.3 per cent in the world’s richest country.

It was this global context in which Shaw stated flatly that the Government will have to consider job cuts if they have to pay seven per cent public sector wage increases.

“You cannot have your cake and eat it, you cannot preserve jobs and continue to grant increases when your economy is not growing and when your partners, globally, their economy is not growing.”

He was complimentary about the “new face of the IMF”, as much of the time he spent in Washington was “on how to enhance the social safety net”. However, despite their having agreed to an additional $6.9 billion being spent on road construction to finance the ever growing bill left by tropical storm Nicole (now $12 billion and counting according to Shaw), he clearly did not see them allowing additional “fiscal space” for wage increases. They were not “planning to borrow anymore money”, but were going to access some of the money from the Inter-American Development Bank and the Chinese that was to have been spent next year.

“If we insist that everybody must get their money, then we will have to talk turkey about how we carve out the ability to get that money and we cannot in the process of carving out and getting that money, we cannot ignore the question of job cuts.”

Clearly implying that we look at the international situation, Shaw said the protracted industrial action at this time was “ill-conceived and ill-advised”.

“If we have a situation where our hands are tied and we have a continual insistence by various groups … we have to sit around the table and talk and we have to make some decisions. If you want the seven per cent, let’s start making some decisions as to where we are going to implement the job cuts.”

He noted that the $2.4 billion IMF programme had been a stabilisation programme, not a growth plan, and that Jamaica needed to consider “How we work together for growth?”

For this reason, he had appointed a special team under new PIOJ head Gladstone Hutchinson to work on the issue of growth. He also noted that a number of key projects : roads, US$300 million investment in privatised sugar estates, the US$220 million Falmouth Port project, downtown Kingston (in addition Digicel’s head office, hotel and two government buildings to go up), and LNG were all supposed to start in 2011.

Shaw observed that the Government didn’t want the Jamaican dollar to rise any further, but he was happy that interest rates were still “going in the right direction”, namely down.

However, he still needed the commercial banks to “work with him” in reducing interest rates on loans. He believed that the combination of the recently passed credit reporting bill, and the “modern secured Transactions Bill”, which encourages much wider acceptable loan collateral (inventory, equipment, account receivables, and even livestock), would sharply improve the availability of credit.