Govt says in ‘dire financial straits’

Three per cent all it can afford
Stabroek News
October 19, 2002
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The government says its 3% wage hike offer to public servants is all it can afford right now since it is in dire financial straits.

Another meeting was held yesterday with the Guyana Public Service Union (GPSU) in the conciliation process to break the deadlock on wage negotiations.

According to a Public Service Ministry release, the government... “is in dire financial straits having borne a fiscal deficit of half a billion dollars in excess of budget, with the second half of the year promising to be equally challenging.”

The release indicated that the GPSU is demanding an increase in the minimum wage from $20,045 to $32,832 (64%).

“In their justification the union sought to paint a picture that a substantial increase is necessary to allow the workers to improve their living standards and that the increased emoluments will motivate public servants and end “the spiralling underperformance and an exodus of its trained and skilled public servants,” the release said.

The union has over the last few meetings sought to justify that increase over the 2001 figure.

“It is worthy to note that in their Memorandum of Demands for the year 2002 a 28% increase was sought and 35% for the year 2001.” The ministry pointed out.

“Further the GPSU argued that if the massive increase sought is not granted the relationship of the GPSU with the PPP/Civic administration will continue to be strained,” government said.

The government has always given priority since taking office in 1992 to constantly increasing wages for public servants in the real sense.

Wages had moved from $3,137 per month in 1992 to $20,045 per month by the end of 2001, it said.

At the same time inflation was said to have been drastically reduced, “creating a real expression in the improvement of wages to workers in the real sense.”

Over the last four years it was revealed that while increases in inflation hovered around 25%, in corresponding terms, the percentage of increases offered amounted to 93.22%.

“It is important to note that last year inflation which was projected at 6% was restricted to 2.6%.

Moreover, despite the economic upheavals of the first half of 2002, with some increases in electricity, telephone and water tariffs the government was able to restrict inflation to the barest of minimums,” the release added.

To emphasize its point, government told the conciliation meeting that for the first six months of this year, there was real growth in GDP by 2.9%, mainly due to increases in the agricultural sector.

According to the PSM, “In seeking to increase wages of workers be they in the private or public sector, while it is always good to reach a level that can be considered a decent living wage, it is not always prudent to effect these increases for several factors. The first has to do with the ability to pay.

The second has to do with curbing inflation. The third has to do with comparative analyses of wage increases and the fourth, opportunity cost.

In dealing with these issues we have to recognise government’s abiding interest also in improving social services throughout the country and not to discriminate in any one area. Consideration has to be given to health, education, water, sea defence and especially regional and community development as well as wages and salaries.” The release alluded to increases in budgetary spending in the above-mentioned areas while during the same period there had been a marked decrease in poverty and inflation levels.

The release noted that the government did achieve the projected revenue collection of $22.2B for the first half of 2002 but there was a shortfall in the consumption tax of $648M and the large amounts of tax arrears collected could not be considered as they were not sustainable.

On the expenditure side, total expenditure was said to have been pegged at $28.5B as against the targeted figure of $27.9B said to be due to employment costs exceeding target by $101M, and the purchase of goods and services exceeding its target by $404M.

Government also saw as significant its transfer to the Linden Mining Enterprise (LINMINE) of an amount which exceeded its target by $195.9M.

“Business activity continues to be depressed as a result of criminal activities ....equally the response of the private sector to these activities is having a telling effect on the economy. Consequently, more emphasis will have to be placed on curbing crime, which will see a significant outlay of unanticipated expenditure.

In addition the domestic economy will reflect in the second half of the year, other large shocks including the impacts of the difficulties facing the Bauxite industry,” government also said.