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BY INGRID BROWN Observer senior reporter browni@jamaicaobserver.com
Tuesday, March 16, 2010
ONLY $2 billion has been allocated in the Government's coffers this year to pay a portion of the $13.4-billion currently owed to public sector workers, some of whom have been very vocal in their demand for what is owed to them.
And the Government is insisting that there is no other option but to pay the remaining $11.4 billion over the next three years as is stipulated under the recently signed International Monetary Fund (IMF) agreement.
State minister in the Ministry of Finance and the Public Service Senator Arthur Williams said failure to arrive at a compromise with the various public sector groups to accept a share of the $2 billion could either result in Jamaica failing the IMF test in the very first quarter or massive job cuts.
While admitting that the Government had a binding agreement to pay these groups, Senator Williams said all this changed when an agreement was reached to secure the US$1.27-billion loan from the IMF.
"We have no option... all that is in the budget therefore to pay outstanding obligations in 2010/2011 is $2 billion," Williams said yesterday. "...So we are in an exceedingly serious position."
Williams, who was addressing the weekly Observer Monday Exchange meeting of reporters and editors at the newspaper's head office in Kingston, said a meeting will be held later this week with the heads of the various groups, in a bid to reach an agreement for new terms of payment for the outstanding obligations.
According to Williams, the decision will rest with Cabinet to determine a breakdown of the $2-billion if every group is to receive an allocation.
Noting that a way will have to be found, Williams said allocating the money proportionately to each group might not be a viable option as one group would get the lion's share.
"If it were to be done proportionate to what each group is due the teachers would get the lion's share because they are owed $4 billion," he said.
Williams said the nurses are owed $1 billion, the Jamaica Defence Force $1.3 billion, and $3.1 billion in general allowances to civil servants.
Providing a breakdown, Williams said $9.4 billion of the $13.4 billion was due to be paid between March and July. Of the remaining $4 billion, $2.5 billion was due in June 2011 and $1.5 billion in April 2012.
"Those commitments were made in good faith, but of course at that time there was no IMF agreement," Williams reiterated.
The IMF agreement, he argued, stipulates that the Government must continue the wage freeze for another two years and that all outstanding obligations of Government be paid over the medium term, which is four years.
"Based on the IMF requirements there is no other option but to pay the $13.4-billion over four years," he said.
According to Williams, if the Government is to pay the $13.4 billion, in addition to the seven per cent wage increase which was already agreed upon and which amounts to $8.6 billion as well as the current health sector reclassification exercise now underway, a whopping $28 billion would be added to the wage bill for the next financial year.
Williams said Government's total wage bill, which was $86.2 billion in 06/07, has ballooned to $126.2 billion for 09/10.
"To find $28 billion in one year you would have to cut 30,000 public sector workers, so you can do the math," he said.
However, Williams argued that by paying the arrears over four years the country will see a one per cent saving in the next financial year as the intent is to move the wage bill from 11 3/4 per cent of Jamaica's Gross Domestic Product to 91/2 per cent in two years.
http://www.jamaicaobserver.com/news/...6-2010_7489894
Tuesday, March 16, 2010
ONLY $2 billion has been allocated in the Government's coffers this year to pay a portion of the $13.4-billion currently owed to public sector workers, some of whom have been very vocal in their demand for what is owed to them.
And the Government is insisting that there is no other option but to pay the remaining $11.4 billion over the next three years as is stipulated under the recently signed International Monetary Fund (IMF) agreement.
State minister in the Ministry of Finance and the Public Service Senator Arthur Williams said failure to arrive at a compromise with the various public sector groups to accept a share of the $2 billion could either result in Jamaica failing the IMF test in the very first quarter or massive job cuts.
While admitting that the Government had a binding agreement to pay these groups, Senator Williams said all this changed when an agreement was reached to secure the US$1.27-billion loan from the IMF.
"We have no option... all that is in the budget therefore to pay outstanding obligations in 2010/2011 is $2 billion," Williams said yesterday. "...So we are in an exceedingly serious position."
Williams, who was addressing the weekly Observer Monday Exchange meeting of reporters and editors at the newspaper's head office in Kingston, said a meeting will be held later this week with the heads of the various groups, in a bid to reach an agreement for new terms of payment for the outstanding obligations.
According to Williams, the decision will rest with Cabinet to determine a breakdown of the $2-billion if every group is to receive an allocation.
Noting that a way will have to be found, Williams said allocating the money proportionately to each group might not be a viable option as one group would get the lion's share.
"If it were to be done proportionate to what each group is due the teachers would get the lion's share because they are owed $4 billion," he said.
Williams said the nurses are owed $1 billion, the Jamaica Defence Force $1.3 billion, and $3.1 billion in general allowances to civil servants.
Providing a breakdown, Williams said $9.4 billion of the $13.4 billion was due to be paid between March and July. Of the remaining $4 billion, $2.5 billion was due in June 2011 and $1.5 billion in April 2012.
"Those commitments were made in good faith, but of course at that time there was no IMF agreement," Williams reiterated.
The IMF agreement, he argued, stipulates that the Government must continue the wage freeze for another two years and that all outstanding obligations of Government be paid over the medium term, which is four years.
"Based on the IMF requirements there is no other option but to pay the $13.4-billion over four years," he said.
According to Williams, if the Government is to pay the $13.4 billion, in addition to the seven per cent wage increase which was already agreed upon and which amounts to $8.6 billion as well as the current health sector reclassification exercise now underway, a whopping $28 billion would be added to the wage bill for the next financial year.
Williams said Government's total wage bill, which was $86.2 billion in 06/07, has ballooned to $126.2 billion for 09/10.
"To find $28 billion in one year you would have to cut 30,000 public sector workers, so you can do the math," he said.
However, Williams argued that by paying the arrears over four years the country will see a one per cent saving in the next financial year as the intent is to move the wage bill from 11 3/4 per cent of Jamaica's Gross Domestic Product to 91/2 per cent in two years.
http://www.jamaicaobserver.com/news/...6-2010_7489894
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