A new framework for public wage negotiations could soon be in the making.
This came into sharp focus by the International Monetary Fund (IMF) Mission Chief, Nicole La Frambrase while presenting the Fund’s findings of the fourth review of the Extended Credit Facility (ECF) Supported Programme to the media last week Thursday.
La Frambrase said the IMF Staff place the highest priority in 2016 on reforms designed to improve government’s ability to manage the public sector wage bill.
She told reporters that these reforms should be designed to ensure that there is a system in place that is rationale, objective and sustainable, and one that will permit the government some flexibility within its wage bill to differentiate in terms of wage payments and wage structure.
“This would focus, in particular, on the framework that determines grading, performance-based, remuneration, remuneration also based on market comparators, and just agreeing with labour on the objective parameters for wage negotiations which include cost of living adjustments, inflation,” she said.
La Frambrase indicated that since the beginning of the ECF-supported Programme in June 2014 one of the objectives has always been reform of the public sector.
She said now that they are moving into the last phase of the programme, a high priority is being placed on the reform as some of the success of fiscal consolidation and debt reduction has been containment of government’s expenditures, and containment of the wage bill.
As part of the three-year Structural Adjustment Programme, Public Sector Workers Unions have accepted a wage freeze for the life of the programme, and in addition, government has employed an attrition policy whereby only three persons are hired for every ten who leave the public service.
However, La Frambrase believes that although these two measures have been very helpful, they are not really sustainable.
“They can lead to pent-up wage demands, and dissatisfied workers… So they’re not sustainable,” she stressed.
Grenadian-born economist, Dr. Brian Francis who is a Senior Lecturer in Economics at the University of the West Indies (UWI) is adamant that the Keith Mitchell-led government in St. George’s will have no choice but to engage in retrenchment in order to successfully cut expenditure and address the high monthly wage bill.
Dr. Francis had made a similar prediction in Barbados two years before the Democratic Labour Party (DLP) administration announced that it was sending home 3, 000 workers as part of cost-saving measures.
The IMF Mission Chief stated that the Grenada government needs to review the performance of the public service, look at how resources are allocated as part of the modernisation reform process.
She suggested that what was needed is a public service that has a system that rewards employees based on objective criteria like performance.
Acting Permanent Secretary in the Ministry of Finance, Mike Sylvester said there is no firm commitment by government on what will be done to address the wage bill.
However, Sylvester quickly stated that the issue of retrenchment and layoff by government is not on the table.
“We know that some things will have to be done,” he quipped.