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Huntley Medley, Contributing Editor - Business Big cuts in several areas of the Government's $503.9 billion 2010-2011 budget are on the cards immediately to enable the State to honour a commitment made this month to pay over $500 million to nurses as back pay for allowances. Finance ministry officials are firm that any expenditure for the nurses will have to be accommodated within the overall spending ceiling.
"The instruction that we got in general terms was to look at every single expenditure head and cut, so you can say that every area will be cut," financial secretary Dr Wesley Hughes told the Financial Gleaner.
The finance ministry head did not confirm the precise amount nurses, will be paid, but neither did it contradict the figure of more than $500 million which has emerged as the agreed settlement. The labour ministry, which has been mediating the stand-off between the Government and the nurses, said last week that by the end of October the health workers would be paid allowances owed by the Government since 2008.
Other points of the wage dispute pertaining to an overdue reclassification exercise, are set for further discussions.
"Government has said about $525 million (and) we know (this) is for over 2,000 nurses, university nurses, public-sector nurses and school nurses," Edith Allwood-Anderson, Nurses Association of Jamaica president was quoted as saying last week.
But Hughes said the agreement represents neither new expenditure nor a new-found ability of the Government to pay billions of dollars it owes to several categories of public-sector workers.
"A policy decision was taken to pay the nurses, (and) our duty is to salute smartly and execute that by finding areas in the budget that we have to cut; and that is going to be significant for some areas in order to fund that payment," the financial secretary said.
"It is not that we have suddenly found new resources, we have just simply found new areas to cut," noted the Government's top financial technocrat. Last week, scores of nurses took industrial action, resulting in operations being scaled down at several public hospitals.
The accommodation arrived at with the island's nurses has reinvigorated other public-sector groups such as the police and teachers, who are still owned significant arrears for unpaid salary increases.
Deeper spending cuts
But Dr Hughes has reiterated the Government's position that the payments cannot be made without deeper spending cuts, or the imposition of new taxes by the Government.
"The original budget was extremely tight and we have given a commitment to the IMF (International Monetary Fund) after the first review that we are going to stick to the expenditure targets," the financial secretary said, outlining the fiscal constraint faced by the Government.
He noted that subsequent to that agreement with the international lending agency, some flexibility was built into the budget to deal with new expenditure arising from the west Kingston upheaval earlier this year, as well as for increased spending to counteract the dengue fever outbreak.
But the new decision to find money within the budget to pay nurses cannot be taken as a hopeful signal by other public-sector bargaining groups, the financial secretary has suggested.
"We just don't have additional resources to accommodate new expenditure," he stressed.
He added that the only way new expenditure could be countenanced was with the imposition of new taxes.
"From the Ministry of Finance, at the technical level, we are pointing to a view that we have now reached the taxable limit in the sense that if we impose new taxes, given the depressed state of the economy, it's unlikely that we are going to be able to extract more resources without seriously impairing some sectors, and maybe the economy as a whole."
Dr Hughes said payments of outstanding amounts to other public-sector groups represented what he described as a "tall order" that, if not impossible, was close to being impossible.
"We would have to close down all capital projects," he said, adding that such payments would be unsustainable as the move would not constitute a one-off action, but would become built into the wage bill and lead to the collapse of the country's economic programme.
"The prime minister has given clear instructions that we must not do anything that would jeopardise our programme with the IMF," the financial secretary said.
"It is the only game in town."
Meanwhile, commenting on a proposal by the Public Sector Transformation Task Force to relocate the establishment division, which has responsibility for public-sector wage issues, from the finance ministry to the office of the prime minister, the financial secretary said he had no fundamental difficulty with the suggestion.
"At the end of the day, it is not so much where something is located, what is critical is how the unit executes it task," he said.
Prudent decision
Anywhere within Government the portfolio was located, he noted, there will always be the need for close collaboration with the Ministry of Finance to ensure that decisions are consistent with the budget.
But Dr Hughes made known his personal perspective that it might not be the most prudent decision to locate a unit, which has so much to do with industrial relations matters, so close to the office of the prime minister.
"Much of the rough and tumble and demonstrations are usually at another level of Government," he noted.
With that proposal, he pointed out, the "rough and tumble" would inadvisably start at the prime minister's office, with no higher office for it to be referred to.
huntleymedley@gleanerjm.com
http://jamaica-gleaner.com/gleaner/2...business2.html
"The instruction that we got in general terms was to look at every single expenditure head and cut, so you can say that every area will be cut," financial secretary Dr Wesley Hughes told the Financial Gleaner.
The finance ministry head did not confirm the precise amount nurses, will be paid, but neither did it contradict the figure of more than $500 million which has emerged as the agreed settlement. The labour ministry, which has been mediating the stand-off between the Government and the nurses, said last week that by the end of October the health workers would be paid allowances owed by the Government since 2008.
Other points of the wage dispute pertaining to an overdue reclassification exercise, are set for further discussions.
"Government has said about $525 million (and) we know (this) is for over 2,000 nurses, university nurses, public-sector nurses and school nurses," Edith Allwood-Anderson, Nurses Association of Jamaica president was quoted as saying last week.
But Hughes said the agreement represents neither new expenditure nor a new-found ability of the Government to pay billions of dollars it owes to several categories of public-sector workers.
"A policy decision was taken to pay the nurses, (and) our duty is to salute smartly and execute that by finding areas in the budget that we have to cut; and that is going to be significant for some areas in order to fund that payment," the financial secretary said.
"It is not that we have suddenly found new resources, we have just simply found new areas to cut," noted the Government's top financial technocrat. Last week, scores of nurses took industrial action, resulting in operations being scaled down at several public hospitals.
The accommodation arrived at with the island's nurses has reinvigorated other public-sector groups such as the police and teachers, who are still owned significant arrears for unpaid salary increases.
Deeper spending cuts
But Dr Hughes has reiterated the Government's position that the payments cannot be made without deeper spending cuts, or the imposition of new taxes by the Government.
"The original budget was extremely tight and we have given a commitment to the IMF (International Monetary Fund) after the first review that we are going to stick to the expenditure targets," the financial secretary said, outlining the fiscal constraint faced by the Government.
He noted that subsequent to that agreement with the international lending agency, some flexibility was built into the budget to deal with new expenditure arising from the west Kingston upheaval earlier this year, as well as for increased spending to counteract the dengue fever outbreak.
But the new decision to find money within the budget to pay nurses cannot be taken as a hopeful signal by other public-sector bargaining groups, the financial secretary has suggested.
"We just don't have additional resources to accommodate new expenditure," he stressed.
He added that the only way new expenditure could be countenanced was with the imposition of new taxes.
"From the Ministry of Finance, at the technical level, we are pointing to a view that we have now reached the taxable limit in the sense that if we impose new taxes, given the depressed state of the economy, it's unlikely that we are going to be able to extract more resources without seriously impairing some sectors, and maybe the economy as a whole."
Dr Hughes said payments of outstanding amounts to other public-sector groups represented what he described as a "tall order" that, if not impossible, was close to being impossible.
"We would have to close down all capital projects," he said, adding that such payments would be unsustainable as the move would not constitute a one-off action, but would become built into the wage bill and lead to the collapse of the country's economic programme.
"The prime minister has given clear instructions that we must not do anything that would jeopardise our programme with the IMF," the financial secretary said.
"It is the only game in town."
Meanwhile, commenting on a proposal by the Public Sector Transformation Task Force to relocate the establishment division, which has responsibility for public-sector wage issues, from the finance ministry to the office of the prime minister, the financial secretary said he had no fundamental difficulty with the suggestion.
"At the end of the day, it is not so much where something is located, what is critical is how the unit executes it task," he said.
Prudent decision
Anywhere within Government the portfolio was located, he noted, there will always be the need for close collaboration with the Ministry of Finance to ensure that decisions are consistent with the budget.
But Dr Hughes made known his personal perspective that it might not be the most prudent decision to locate a unit, which has so much to do with industrial relations matters, so close to the office of the prime minister.
"Much of the rough and tumble and demonstrations are usually at another level of Government," he noted.
With that proposal, he pointed out, the "rough and tumble" would inadvisably start at the prime minister's office, with no higher office for it to be referred to.
huntleymedley@gleanerjm.com
http://jamaica-gleaner.com/gleaner/2...business2.html