FINANCE Minister Fayval Williams has signalled that productivity-linked salaries for Government workers will replace the decade-old wage cap and said public sector unions have already been notified about the intention ahead of impending salary negotiations.

Williams unveiled the shift Tuesday during her inaugural budget presentation as Jamaica’s first woman finance minister, marking the final phase of Jamaica’s post-IMF overhaul as debt plummets to 68.7 per cent of GDP — less than half the crisis-level 147 per cent that triggered rigid wage controls in 2013. With $495.8 billion earmarked for public sector pay, including back wages for medical consultants and judges, the move aims to balance election-year demands for worker raises against hard-won economic gains. So far, 11 unions have made active claims.

“Madam Speaker, as we approach the start of the new fiscal year, we intend to make significant progress in the implementation of the pay-for-performance element of the new compensation system,” Williams told Parliament. “We have begun the conversations with our union partners because we must continue to transform to provide the framework and tools to improve productivity in the public sector. The pay-for-performance system is a key component in incentivising performance in the public sector.”

But at least one union is having none of it at this time.

St Patrice Ennis, president of the Jamaica Confederation of Trade Unions (JCTU), said he is yet to have conversations about the pay-for-performance system proposed by Williams.

“I don’t know what she means by a performance-based pay because already in the public sector, there are systems to appraise a person’s performance. If a person is not performing there are remedial actions to address the concerns, and persistent non-performance is grounds for dismissal,” Ennis told the Jamaica Observer.

Then he added: “The JCTU advised the former minister three years ago that a merit-based compensation system for public sector workers would not work. We are however willing to entertain the discussion, but before doing so, we want to see evidence of a country where a performance-linked system has worked,” Ennis told Business Observer. He said after three years of waiting, no such evidence has been presented to the union.

“If this new minister has that evidence, we are willing to look at it during the negotiations.”

But then he admits that the “devil is in the details” adding that more will be known when the negotiations start.

The JCTU is one of the 11 unions that have so far submitted claims for wage negotiations to cover compensation for the three years, 2025 to 2028. Jamaica Civil Service Association (JCSA), Jamaica Teachers’ Association (JTA), Police Officers’ Association (POA), and groups within the health sector were identified as other unions submitting claims so far.

“The Government has commenced discussions with the unions/associations for the new contract period. The continued engagement of all stakeholders remains key to the maintenance of harmony in the public sector,” Williams told Parliament.

The push to change from a wage cap which was set at 9 per cent of GDP in 2013, to a performance-based wage system for Government workers, comes with the minister arguing that rules enacted in 2020, requiring the Government to save the equivalent of at least 0.3 per cen to GDP each year, along with the continued pursuit of reducing the debt to no more than 60 per cent of GDP, provided under a Fiscal Balance Rule is “a strong guard rail” for the country’s financial affairs, unlike the wage cap that was hardly ever realised.

“The target was met only once and the cap was criticised for stifling public sector reforms and contributing to attrition in critical services like health care and education,” Williams pointed out.

“It has been proven that by containing our spending by the Fiscal Balance Rule and the Debt/GDP and maintaining that discipline, then our fiscal affairs will remain on a sustainable path. For the public sector, the focus should now be on pay-for-performance, efficiency in service delivery and productivity gains,” she stated.

But this shift comes with a concerning twist: despite promising to keep a small savings buffer — a 0.3 per cent fiscal surplus — in its national chequebook, Jamaica now projects spending more than it earns for three-straight years from 2026/27 to 2028/29 — with deficits of 0.9 per cent for two years and 0.1 per cent in year three — after running a much smaller surplus than has been legislated. At 0.3 per cent, the Government should be saving $10.5 billion in the upcoming fiscal year, but projects that the saving will be only $780 million, as the sums that should be saved are shifted to be spent elsewhere.

The deficits that are projected to follow, as outlined in the Fiscal Policy Paper FY 2025/26, effectively put nearly $74 billion more on the national credit card over that period while simultaneously boosting its $495.8 billion public wage bill to over $550 billion by 2029.