Finance Minister Dr Nigel Clarke has put public sector workers on guard that the compensation review process needs to be wrapped up in time to pay arrears within this budget cycle, as there is no room in the 2023/24 budget to make those payments.
Tabling the first supplementary estimates for this fiscal year in the House of Representatives on Tuesday, Dr Clarke stressed, "It is absolutely imperative that we conclude in sufficient time [so that] the payments that are due for 2022 are made in the fiscal year 2022-23. The Government has been very accommodating in terms of the timeline, but there is a natural limit, because by the end of this month eight months of 2021 would have gone [and] by January 10 months would have gone. Ten months of back pay is a large amount. If it is not paid in this fiscal year, the space to accommodate it in the next fiscal year does not exist."
Clarke said all stakeholders must be aware that if the back payments are to be made within this year, the process must be wrapped up in time to honour those payments.
"The expenditure for the back pay is tens of billions of dollars that we need to get out of the system this year," he stressed.
He noted that representatives of the various public sector groups have all the information pertaining to their members, and have been advising them accordingly.
With respect to parliamentarians and councillors, he advised that the Government wants to pay the wider public sector first.
"Once we have made progress with the citizens we serve, then I give you my undertaking that we will convene at the appropriate forum where we can discuss with parliamentarians, with members of the local authorities, how the public sector compensation affects them. The good news is that we have made significant progress and I'm quite hopeful that before long we will be able to process the payments that [are] due from April first," he stated.
The minister had told Parliament in March, at the opening of the budget debate, that it will cost the Government more than $100 billion to restructure the system of public sector compensation over the next three years.
He said approximately $17 billion of that sum is for certain categories of allowances that, up until the current fiscal year, had been classified in programmes instead of wages. The Government says the restructuring exercise is aimed at overhauling the system of salaries and other emoluments in the public service to make it more equitable.
July was the initial proposed start date for the new salary payments which are expected to subsume dozens of allowances, including motor vehicle concessions, a sore point for many public sector workers who believe they will be left at a disadvantage.
The new compensation system is touted as one in which workers will receive more basic pay, remit more taxes, and take home more substantial net incomes. The rationale is that the current compensation system is too complex, with 325 salary scales and 185 allowances, which make up a large proportion of total compensation for some groups. Some of the issues the Government has pointed out are real and perceived inequities; pressure to manipulate the system in order to increase pay; and a lack of clarity and transparency.