V-sep strategy to cut gov’t employees — Byles
Co-Chair of the Economic Programme Oversight Committee (EPOC) Richard Byles disclosed the Government is working through numbers for the voluntary separation and early retirement of its employees, as it seeks to reach the 9 per cent public sector wage bill target set by the IMF for 2017.
Speaking at a press briefing on Tuesday, Byles said that the Government is paying close attention to the cost implications of the planned initiatives and is exploring ways to fund the job cuts with the help of the International Monetary Fund (IMF).
“My understanding of what is planned is that there will be a V-sep, a voluntary separation programme where persons can say ‘I want to be separated’, and the government will have the opportunity to decide who it accepts,” the co-chair stated.
“There probably will be a voluntary early retirement programme too. So they are hoping the whole of that voluntary stuff will take care of some of the costs. But there are costs associated with separation and I think that it is an issue that they are paying some attention to now.”
He added that if the Government does nothing to change the amount of the wage bill, and the country experiences five per cent inflation which ultimately affects gross domestic product (GDP) and real growth which also affects GDP, the country will end up at a projected 9.6 per cent at the end of March.
Last year, the salary/GDP ratio was estimated at 9.8 per cent. A Fiscal Policy Paper (FFP) also tabled in February said that it was 10.1 per cent in 2014/15 and should fall to nine per cent in 2017 to meet IMF standards.
Byles noted that the public sector wage bill is, however, not a must-do target which determines the success or failure of the IMF programme. Still, it is a commitment that the IMF expects the Government to fulfil.
“It’s not a critical criterion like the NIR or the primary balance where, if you fail, you either have to seek a waiver or the programme is stopped. This is not of that nature,” he said.
Jamaica continued to pull better revenues than projected Government budgets for the fiscal year, exceeding the primary balance by $5.3 billion from the set $50.5 billion and Net International Reserves (NIR) of US$800 million from the IMF’s December target of US$1.64 billion.
The improvement puts Jamaica in a strong position to pass the 11th IMF quarterly tests, said Byles.