The 14 per cent wage increase the Public Services Association (PSA) settled for on Wednesday should be matched by increased productivity or else it could lead to inflation, Dr Roger Hosein, senior lecturer at the University of the West Indies (UWI), said yesterday."Wage increases that are unmatched by a corresponding improvement in productivity will lead to some degree of inflation. The challenge here is to get a corresponding increase in productivity from the benefitting members of the PSA," Hosein told the T&T Guardian yesterday.
PSA has signed off on a new collective agreement with Chief Personnel Officer (CPO) Stephanie Lewis for the 14 per cent salary increase which covers the period 2011 to 2014.
Commenting on that development Hosein said: "Two associated challenges would be worker absenteeism and worker ethic. The increase in salaries has to come with an increased element of monitoring and accountability. I am not sure what measures have been laid with the wage settlement by way of proportionally changing worker productivity and addressing issues associated with work ethic but I am assuming that it is a similar proportional change to the wage increase," he said.He said that is more urgent during economically trying times.
"If output per worker in the economy continues to fall, as has occurred since 2007, and wages increase, the real effective exchange rate will take a further hit and it is already about 50 per cent over valued. These are trying times and the hands of the next government will be filled with managing these various issues."Daphne Barlett, president of the San Fernando Business Association, said the fact that Government can afford to pay public servants a 14 per cent salary increase over three years means the T&T economy is not as bad as it seems.
"The fact that the Government as the largest employer can do this shows that the Treasury can handle this," she said.Bartlett expressed concern that this higher wage level may not be be sustainable in the long run."If the oil prices continues like this into the next fiscal year, the Government may have to look at job cuts and other decisions that could affect the economy negatively like a devaluation. Remember, this is an election year," she said.
However, labour consultant Robert Giuseppi does not believe the wage settlement will cause inflation."A couple negotiations ago, the PSA settled for nine per cent and the other state agencies had settled for more as they held out for more during their negotiations. The PSA has been lagging. Only now PSA is filling the gap between their union wages and those other state agencies," the retired trade unionist said.He said he wants to see how the 14 per cent salary increase and other benefits will be divided among the different grades of the public service.
"When they get their retroactive payments and other benefits I hope the higher paid grades of the public service do not get more than those of the bottom," Giuseppe said, adding that he does not see the outcome of the PSA negotiations impacting on other wage talks currently taking place."This will not impact on the labour market as as each sector has its own circumstances and must negotiate on their own terms," he said.He advised trade unions and employers to take into account the current state of the economy and do what is best.
"The oil prices are playing tricks now and each party must give and take during the negotiations but must also do what is best for the country so that the economy will not suffer. Negotiations must be constructive," he said.