The Private Sector Organisation of Jamaica (PSOJ) has assured that it will be holding the Government accountable to its promise of fiscal prudence, having removed the nine per cent wage-to-gross domestic product (GDP) fiscal rule from legislation that governs the country’s fiscal responsibility framework.

Parliament last week voted to repeal the fiscal rule, one of three, on the premise that the remaining fiscal rules — the fiscal balance formula and the debt to GDP rule of 60 per cent by March 2028 — are sufficient to restrict spending and ensure consistency with legislative debt targets.

“I want to make sure that we maintain the fiscal responsibility and at this point the Government has shown no likelihood of not so doing, so once they stick to that — and we will be there to ensure that they do — I would take [them] at their word for right now and accept that the remaining provisions are enough to ensure that we don’t,” PSOJ President Metry Seaga told the Jamaica Observer on Monday.

At the same time, Seaga said while the nine per cent was a fair target, what is needed is bigger growth in the economy to make that nine per cent more significant in dollar terms.

“It is important that we, as a country, realise that we need to grow our economy, because eight per cent or nine per cent of GDP being our public sector wages is fine, but we need nine per cent of a bigger economy, because we need nurses and we need more police and we need to pay them better. It is critically important that we grow the economy, that is absolutely the key. What we need is for that nine per cent to be more money,” he stressed.

Last Friday, Opposition Senator Lambert Brown raised a similar concern in the Upper House as legislators debated the amendment to the Financial Administration and Audit Act. He argued that the focus should be to grow the economy, not repeal the wage-to-GDP provision.

“The real way to fix the wage issue is not a mere repeal of the ratio through the laws. The real fix is increasing productivity, increasing growth, and providing respect and consultation with the workers,” he told the Senate.

Brown also questioned, in the context of the repeal of the wage-to-GDP ratio rule, the discontinuation of incremental increases, which, he said, public sector workers usually receive, even in the “worst of times”.

Brown stressed that unions have not agreed to removal of the incremental increases.

“I call upon the Government of Jamaica to restore the increments to public sector workers, which they have unilaterally removed. There is no document, no verbal agreement between the unions and the Government,” he insisted.

Further, Government Senator Kavan Gayle said the confederation of trade unions had agreed that the removal of incremental increases was not in favour of public sector workers. However, he pointed to the advent of the compensation review, with workers having endured a “dark period of sacrifice” through the wage restraints of the mid-2000s when the fiscal rules were implemented, followed by incremental movement in wages.

“This compensation review has changed that, and public sector workers, in my mind, are at a better place. If we were to continue on the trajectory of continuing this nine per cent of GDP, what would happen is that we would be competing with our capital expenditure,” he argued, adding that in pursuing the growth agenda and the fiscal rules, inflation must be managed as best as is possible, which will put the labour force in a better position.

Tabling the Bill in the Senate on Friday, leader of government business Senator Kamina Johnson Smith said the economic experiences over the past 13 years and additional changes to the fiscal framework between 2014 and 2020 indicate that the wage-to-GDP ratio target was not detrimental to fiscal prudence and the debt reduction objective. At the same time, she promised that the Government had no intention of returning the country to a situation of unsustainable spending.