The Grenada Government is again warning that failure on the part of trade unions to agree to a wage freeze over the next three years will leave the administration with no other choice than to proceed with the signing of the letter of intent with the International Monetary Fund (IMF).
Minister for Education, Anthony Boatswain and Minister for Economic Development, Trade, Planning and Cooperatives, Oliver Joseph sat with the media during last Tuesday’s post-Cabinet Briefing to explain the status of the impending homegrown Structural Adjustment Programme (SAP) with the fund.
Minister Boatswain said that if the unions fail to sign the agreement then government would have to signal to the IMF its intention to raise revenue from other means or cut back on expenditure.
He also said that the government might be forced to increase taxes or cut back on expenditure through a programme of retrenchment.
Boatswain said the one-year old New National Party (NNP) administration is reluctant to embark on these measures, but if forced it will have to do so as a last resort.
According to the senior government minister, while refusal to sign by the unions cannot stop the signing of the letter of intent with the IMF, the government prefers consensus and to get their support for the programme.
“We are not making any threat to the unions, we are not threatening anybody, we are not pressuring anyone. It is not our intention to intimidate anyone, but what we are expressing is just pure facts … the alternative will be total chaos….”, he said.
“…If we do not go through with this programme, the alternative will be total chaos because it means you have a country you cannot govern because you don’t have the resources,” he added.
The Grenada Union of Teachers (GUT) has been meeting with its membership to get feedback on the SAP while the Public Workers Union (PWU) and the Technical & Allied Workers Union (TAWU) have arrived at a nine-point agenda based on certain assurances to be given by government before agreeing to the wage freeze proposal.
Minister Boatswain pointed out that the call by government for sacrifice from Grenadians is short-term and should result in tremendous benefits coming to the country.
He referred to the possible unleashing of serious financial resources from the European Union, World Bank and the Caribbean Development Bank.
He said these resources would be used to stimulate growth, housing, as well as create credit facilities, improve infrastructure and agriculture among other things.
The Minister for Economic Development told the media that the letter of intent which is expected to be signed later this month will indicate what are the intentions of Government to raise revenue and cut expenditure as it seeks to stisfy the conditions of the IMF.
Minister Joseph identified the sticking point to the signing of the letter of intent as the reaching of an agreement with the public sector unions on the wage freeze issue.
He said the government has already informed the unions that 70% of its recurrent revenue goes to paying salaries and wages and if the problem is to be resolved then this high 70% needed to be addressed.
He added that the stark reality of the situation is that the remaining 30% of the collected revenue has to be used to upkeep social services, health and other services.
Minister Joseph said government has informed the unions that in light of the situation it will be irresponsible of the administration to agree to any further increase to the wage bill.
He stated that it is with this in mind government introduced some measures to cut expenditure and increase revenue in an attempt to close the recurrent deficit of $15 million every month on the budget.
He lamented that government collects an average of $35 million monthly and spends $50 million, which is not a sustainable position and that measures have to be taken to correct the fiscal imbalance.
According to the senior government minister, the one-year old regime has been holding meetings with the unions to try and get them to agree to a wage freeze for the next three years, with the understanding
that if the economy performs well and the fiscal gap is closed then discussions on benefits for workers can be entertained.
He warned that the Keith Mitchell-led government in St. George’s has a timeframe to sign the letter of intent with the IMF and if there is no agreement wit the unions then it will have to proceed and sign onto the document with the fund so that “the resources we were promised would start coming”.
Joseph said that when the letter of intent is signed it will be made known to the Grenadian people as it cannot be disclosed before the deal is struck.
He maintained that if the unions co-operate with government and accept the wage freeze during the tenure of the programme, there would be no retrenchment of public workers.
Former Permanent Secretary in the Ministry of Finance, Dr. Brian Francis who is now a Senior Lecturer in Economics at the University of the West Indies is predicting lay-offs in the civil service in the face of the severe fiscal situation Grenada has now found itself in.