THE Independent Fiscal Commission (IFC) has renewed concerns about the Government’s wage bill, reporting that wages and salaries now consume more than half of all tax revenues collected.

The finding, which saw the figure jump to 54.4 per cent in the 2025-2026 financial year from 47.9 per cent a year earlier, comes as the fiscal watchdog continues to press for stronger controls on public sector compensation, warning that wage growth has consistently outpaced economic output and productivity gains.

According to the IFC’s latest statement on fiscal performance for the financial year 2025-2026 tabled in Parliament recently, wages and salaries exceeded budget projections by $14.9 billion during the financial year.

The latest warning builds on concerns raised by the commission earlier this year. In January, the Jamaica Observer reported that the IFC, in its assessment of the Government’s Fiscal Policy Paper 2025/26-2028/29, cautioned that mounting compensation costs were placing increasing pressure on the country’s fiscal framework and called for the introduction of a wage fiscal rule to help contain future risks.

The commission’s latest report suggests those concerns have not gone away.

In fact, the IFC’s warning comes at a particularly sensitive time for Jamaica’s public finances.

The country is still navigating the economic and fiscal fallout from Hurricane Melissa, which caused an estimated $1.95 trillion in damage and losses and prompted the temporary suspension of Jamaica’s fiscal rules. At the same time, the Government faces growing demands for reconstruction spending, infrastructure investment, and the need for improved public services.

Against that backdrop, the commission argued that the trajectory of the wage bill could create additional fiscal pressures if left unchecked.

The fiscal watchdog is calling for the Government to tie wage growth to GDP.

To address the issue, the watchdog renewed a recommendation it first advanced earlier this year.

“The Government should reintroduce a fiscal rule on wages and salaries linked to GDP [gross domestic product], and align wage negotiations with the budget process to better manage fiscal risks,” the commission said.

The recommendation reflects the IFC’s view that compensation growth should be tied more closely to the country’s economic performance, rather than being determined primarily through wage negotiations.

Over the last several years the Government has implemented major compensation reforms aimed at correcting long-standing disparities within the public service and improving the State’s ability to attract and retain workers.

Those reforms resulted in substantial salary increases across various categories of public sector employees and were widely welcomed by public sector unions and workers.

However, the IFC’s latest findings suggest that the fiscal implications of those adjustments are becoming increasingly significant.

The commission noted that wages and salaries not only exceeded budgeted levels but also consumed a growing share of the Government’s revenue base, reducing the fiscal space available for other priorities.