MINISTER of Finance and the Public Service Dr Nigel Clarke told Parliament's Standing Finance Committee on Thursday that the Government is committed to keeping the wage bill within a reasonable level.
Clarke's assurance is in response to Opposition committee member Julian Robinson's concern that the wage to gross domestic product (GDP) ratio in the Third Supplementary Estimates increased to 11.4 per cent and whether there is a commitment to getting that figure back to nine per cent.
"I believe over the medium term we can't have that [11.4 per cent] grow much further, and it's going to need to come back into line over the medium term," Dr Clarke said.
The Standing Finance Committee was reviewing the Third Supplementary Estimates of $24.5 billion which was tabled by Dr Clarke on Tuesday and reviewed by the Public Administration and Appropriations Accounts Committee on Wednesday. It was approved in the House on Thursday.
Dr Clarke argued that a high wage bill introduces rigidity to budgetary expenditure "because you can't easily adjust that figure in times of crisis and it threatens crowding out investments in human capital development, social and physical infrastructure".
The finance minister told committee members that, in future, calculations of the wage-to-GDP ratio and certain allowances would have to be included that previously would have been in the programme's side of budgetary expenditure.
"Those allowances total about one per cent of GDP. So pre-pandemic we get down to 9.2, but if you add some of those allowances that were in programmes lines it would really be about 10 to 11.4 [per cent]," he said.
Dr Clarke noted, however, that before making pronouncements on what the Government wants the target to be, "I would want to have consultations with the unions, with yourselves [the Opposition] and so forth," he said.
"It wouldn't be nine, because a like for like comparison would definitely be 10 or 10.2 or thereabout, but it's a conversation that we would need to have," he said, adding that he plans to say more on the matter in due course.
Increased allocations in the Third Supplementary Estimates Fiscal Year 2022/2023 will primarily facilitate payments under the compensation restructure which accounts for $23.7 billion of the supplementary amount.
— Alecia Smith
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