Last week Thursday, Prime Minister Keith Rowley sought to clarify the Government's position with regard to statements made by Finance Minister Colm Imbert at the High Level Caribbean forum of the International Monetary Fund held at the Hyatt Regency hotel last week Wednesday.
The prime minister obviously thought that a clarification was necessary because of the political heat he anticipated would have resulted from Mr Imbert's comments, in which the minister said–in the context of the need for wage restraint–that the Government would offer public servants zero, zero and zero for the period 2017 to 2020.
His statement on this issue was interpreted by this writer to mean a wage freeze–a point that Mr Imbert disputed and clarified at a news conference on Wednesday afternoon in which he said that zero, zero, zero was the beginning of the process of collective bargaining and not the end.
Addressing the post-Cabinet news conference by himself, Dr Rowley said the Government's major objective was to grow the economy, "and it is economic growth that is going to give us the opportunity to improve on our current circumstance and to go beyond where we were when the recent downturn began.
"But before we get to growth we have to cross over those hurdles of the significant loss of revenue and all that attends that."
The prime minister then repeated a statement that he made previously: "There will be no improvement in the emoluments of the members of the Cabinet until there is an increase in the economic circumstance of the country."
So Dr Rowley stated plainly that Cabinet ministers will only enjoy an increase in their compensation when the economy can afford such an increase. In other words, the prime minister is saying that the wages of his ministers, and himself, will be frozen until the economy improves to the point of allowing an increase for them.
In making such an argument, isn't Prime Minister Rowley signalling that his ministers, and himself, will "do more with less," by making do with a wage freeze?
If members of Cabinet (and Members of Parliament) are being paid by taxpayers to undertake duties and responsibilities for, and on behalf of, members of the public, then clearly ministers and MPs must be viewed as public servants.
So, the question is this: if the wages of one group of public servants (ministers of government) are frozen until the state of the economy allows them to receive an increase in their emoluments, why should any other group of public servant be treated differently?
If a wage freeze is appropriate for ministers, then surely it is also appropriate for teachers, civil servants, police officers, fire and prisons officers, members of the judiciary as well as employees of First Citizens and other state entities at which the compensation levels are set by the chief personnel officer?
Just as it would be inappropriate for ministers and judges to receive wage increases at this time, so it would not be appropriate for other public servants to receive higher salaries now or until the economy improves.
Surely, the prime minister could not be arguing that other public servants should receive wage increases in the period 2017 to 2020–which is how long the current downturn is expected to last–while the public servants in his own Cabinet should receive none.
That would be an outrageous and discriminatory argument, which we all know Dr Keith Rowley is simply incapable of making.
The corollary of the prime minister's crystal clear comments is that the public servants who report directly to him (Cabinet ministers) will receive higher emoluments at around the same time as all other groups of public servants–when the economy improves.
It puzzles me that the Minister of Finance would want to resile from saying that the wages of all public servants will be frozen until the economy improves, which would be sound economics, equitable policy and in keeping with Prime Minister Rowley's admirable position that we all have to make do with less.
What Mr Imbert should have said at the Hyatt last week Wednesday is that, based on his revenue projections for the 2017 to 2020 fiscal period, he does not think it would be possible for the Government to afford to pay any public servant higher salaries.
But, Mr Imbert should have added, "if the country's revenue position improves between now and 2020, all public servants will benefit...in equal measure."
Shared sacrifice, shared benefits is such a simple yet elegant concept, one wonders why it has not occurred to our policymakers.
Why T&T can't afford
One of the major issues that the country faces in the remaining four years of its mandate is whether the State should grant higher wages and salaries in negotiations for new collective agreements in the 2017 to 2020 period with trade unions that represent public servants and employees of state-owned enterprises.
Data from the 2016 Review of the Economy and the 2017 Draft Estimates of Expenditure (encapsulated in the table) indicates that the amount of money the Government has spent and will spend on wages and salaries for the public service as a percentage of the T&T government's total expenditure increased by 43.6 per cent between the 2011 and 2017 fiscal years.
As the table shows, wages and salaries accounted for 14.4 per cent of total expenditure in the 2011 fiscal year, but that jumps to an estimate of 18.2 per cent in the current 2017 fiscal year.
And it is noteworthy that the wages and salaries numbers for the 2016 and 2017 fiscal years do not include the arrears (backpay) owed to employees in the public service as a result of the People's Partnership administration's decision to increase compensation to public servants by an average of 14 per cent in 2014 and 2015.
One observation that can be made about the information in the table is that the Government's proposed expenditure on wages and salaries in 2017 is 5.7 per cent higher than the estimated expenditure for compensation in 2016.
Does the additional $562 million in spending on wages and salaries in the 2017 fiscal year envisage higher salaries during the current fiscal year or is that sum an estimate of expenditure on increments and allowances?
The first question that citizens of T&T need to address is whether the Government can afford to increase public service wages and salaries in the context of declining revenue.
In the 2017 budget, Minister of Finance Colm Imbert estimated that the Government would collect $47.4 billion in revenue and would spend $53.4 billion net of capital repayments and sinking fund contribution, which means a fiscal deficit of $6 billion.
Of the $47.4 billion in revenues, the minister estimated that $9.69 billion would be derived from one-off revenue, which includes the sale of assets, dividends from state companies and the repayment of Clico.
That means the Government expects that T&T would generate $37.7 billion in taxes and royalties in recurrent revenue in 2017, that $9.69 billion in revenue would come from the one-off sources (capital revenue) and that a further $6 billion in loans would be needed to pay all the bills for the current fiscal year.
In effect, the Government's $10.3 billion wages and salaries bill for 2017 is being financed by $9.7 billion the State expects to collect from the sale of assets, dividends from state-owned companies and the repayment of Clico debt.
In other words, the $37.7 billion that the Government expects to collect in taxes and royalties during the 2017 fiscal year can be accounted for by:
�2 expenditure on debt servicing–$8.178 billion
�2 current transfers to state bodies–$6.862 billion
�2 current transfers and subsidies–$22.927 billion
TOTAL debt servicing and T&S–$37.967 billion
Looked at this way, the $5.711 billion expenditure on goods and services and the $10.312 billion spending on wages and salaries will not be funded from taxes and royalties but from one-off capital revenue and borrowing.
FiscalYear
Wages& Salaries
Total Spending
W&S%
2011
$7,179
$49,853
14.4%
2012
$7,283
$53,840
13.5%
2013
$9,171
$58,827
15.5%
2014
$8,590
$62,820
13.67%
2015
$10,077
$59,971
16.8%
2016
$9,750
$52,234
18.6%
2017
$10,312
$56,571
18.2%