Sunday Express - June 03, 2001
By Raffique Shah
FINANCE Minister Gerald Yet Ming sparked fear among public sector workers when he announced last week that given the state of the country's finances, the Government may have to resort to "trim the fat" in the public service in order to meet an increased wages and salaries bill. He said that the two largest elements of expenditure in the annual budget were the public sector salaries and debt servicing. Although he added that he was not "picking on public sector salaries", he felt that cutbacks on jobs were necessary, especially in view of impending increases for public servants.
To add to the woes of public servants and other public sector employees, Prime Minister Basdeo Panday agreed with Yet Ming, comparing the Public Service to a bell. "It has a very large bottom," he said. He argued that it was difficult to raise the salaries of those at the top since the representative trade unions invariably sought to get commensurate increases for their members. That, he said, made the cost of maintaining current levels of employment in the public sector "prohibitive". The former trade union leader, who resisted all attempts by Caroni Limited to cut back on its work force, is now supporting Yet Ming's call for "trimming the fat" in the service.
Yet Ming is not the first finance minister to threaten to make cuts in the Public Service. Many years ago, the late Ronald Williams earned the title of "Chinee Chopper" when he made similar threats in the "dog days" of the recession of the 1980s. And when the PNM government, of which Ronnie was part, was routed by the NAR in 1986, the latter went even further. The NAR actually cut back on public servants' salaries because of low oil prices and the general state of the economy. And so, from government to government, public sector employees have become "soft targets" for reducing the expenditure side of the country's balance sheets.
It is estimated that government employs some 60,000 persons, approximately 10 per cent of the country's overall work force. In 1998, the government spent $3.522 billion on wages and salaries for these employees (and that includes ministers, MPs, consultants, contract workers, etc.) out of a total budgeted expenditure of $10.4 billion. Debt servicing that same year amounted to $1.9 billion, which will have since increased because of increased borrowing by government.
By comparison, Caroni Limited employs some 3,400 regular workers and another 5,000 seasonal and temporary workers (during the harvesting period). Caroni's expenditure in 2000 was $746 million, the bulk of which will have been on wages and salaries. The company's revenue for the same year was slightly under $300 million; this year it will be just over $200 million, what with the steep drop in production of sugar. If we analyse these numbers, what we come up with is that government pays an average annual wage/salary of $58,700 to each public sector employee. In Caroni's case, deduct what is paid to cane farmers (just over $100 million), suppliers and transport contractors, as well as factor in the temporary/seasonal workers' much lower earnings. What we find is that Caroni expends an average of $120,000 a year on each employee-which, I can assure you, in no way reflects the real wages and salaries of managers or workers in the sugar industry.
Public servants are largely responsible for running government's day to day affairs, servicing the public and collecting revenues from different sources for government. In 1998, they were responsible for collecting $7.8 billion in taxes. I have not added to this function services like maintenance of roads and drainage, educating our children, policing the country, keeping vital records, and more, much more. In addition to what they earn, one must remember that, like all persons on fixed incomes, they contribute substantially to the income tax revenue collected by government ($3.38 billion in 1998).
While I am in no position to question the Finance Minister's numbers, I believe he will understand when I say that cost-cutting measures like retrenchment of workers is the first-resort of people who do not know how to run successful businesses. The idea of improving productivity, of upgrading workers' skills so that they may improve benefits to their employers, hardly surfaces when a businessman examines a bleak-looking balance sheet.
Retrenchment carries with it hidden costs that could worsen a bad situation. Besides throwing people on the breadline, hence reducing their purchasing power (less sales of goods and services), it denies the Treasury income taxes and VAT. Retrenching, say, 10,000 public servants and 2,000 sugar workers, could also lead to massive social-and economic-dislocation that will impact negatively on an already bad crime situation. And I have not even mentioned plans to cut back on work forces in the oil sector, the bottoming out of construction activities, and the harsh reality that all these heavy industries government boasts about are automated plants that employ very few people.
In all that I have written here suggesting that retrenchment is not the answer to government's financial woes, I am not a trade unionist who blindly ignores the sins of workers. Public servants have a terrible image of not performing anywhere close to the level of productivity that is expected of them, and some of them are openly hostile to the public, who are their paymasters. These negative attitudes must be changed if they are to resist retrenchment and merit salary increases. I was shocked to learn that Air Traffic Controllers fall in the $3,000-$5,000-a-month salary range. By similar token, it is criminal to pay junior doctors $5,000 a month while some dumbo-of-a-minister who cannot pronounce his name gets $15,000 a month.
Minister Yet Ming should, therefore, look at alternatives to retrenchment. He has pointed out that the collection of VAT is a nightmare. Why not send out an army of public servants to scour the country and corner the culprits? The increased revenue from this source alone may cover what is needed to keep the service fully staffed. Also, ex-Finance Minister Brian Kuei Tung had started an exercise to bring everyone who should be paying income taxes into the net. That remains a major challenge, and if Yet Ming can have that department function at 75 per cent of its capacity, the result would again be greater revenue to the government's coffers.
So there are alternatives to simply retrenching workers en masse. While Yet Ming would want to have the government's balance sheet look good, that goal must not be achieved by expediency. Creativity is the answer, balancing government's economic goals with its social responsibilities.
Copyright © Raffique Shah