Sunday, 3 May 2009

Jamaica's Mandatory Wage Freeze and the Global Recession: Was this the Best Government Could Offer?

Below is a post I made on my Face Book page which has generated alot of buzz in that forum. I thought that it would be useful to publish it here, as well in an effort to get the views of an alternate audience. It’s sole intent is to widen the extent of the dialogue about Jamaica’s economic outlook, arising from changes in the world economy which has been on a consistent trend downwards for some time now.

How will Jamaica deal with the fallouts from the ‘Global Financial Crisis/ Meltdown’? These initial views hope to start that conversation, at the very least add another position for consideration.

Jamaica, like several other countries across the world, is feeling the dire effects of the contraction of the world economy and the collapse of the international credit industry, otherwise referred to as the ‘Banking Crisis’. Clearly, global in its scope and destructive in its reach, there is no denying that everyone across the world has come in for some sort of recessionary impact, as a result.

In its own efforts to respond to the crisis, the Jamaican Government has recommended a mandatory wage freeze for the Jamaican Public Sector, after the Prime Minister announced that he was also undertaking to give himself and, presumably, his other ministers of government, a fifteen percent cut in their wages. It is worth noting that, the Prime Minister's salary comes up to well over half a million Jamaican dollars per month which, therefore, means that a fifteen percent salary cut does not go quite as far as those who have had to endure the erosion of the value of their wages over time, due to inflation, as well as the forced wage freeze.

In further justifying his position, one which was not discussed with either the Service or the unions who represent them, the Prime Minister claimed that to give the now due seven percent increase in wages, under the most recent Memorandum of Understanding (MoU) signed in 2008, that he would have to let go in excess of twenty thousand members of the Service. Government is the biggest employer in Jamaica, with just under ninety thousand employees at various levels in the system. The planned letting go of nearly a fifth of the Service population became the benchmark against which the Prime Minister made his decision.

While, not decrying the PM's right to make hard choices, nor necessarily diminishing the basis on which he must do so, especially those concerning Jamaica's economic future, there is need nonetheless to interrogate the current tone of Jamaica's political leadership. Notwithstanding what many have routinely claimed is 'too large' a Public Sector, it behooves us to also ask whether this is the likely, or even best solution?

Indeed, the questioning of the decision made by the PM, which also directly impacts me, has more to do with the style of governance as well as the spirit than with the decision, itself. Hardly a useful distinction, it nonetheless points to the fact that, if we can employ better decision-making processes then it is more likely that, we can arrive at better outcomes, presumably in the interests of all.

Election Promises

Before coming to power in 2007, the then Leader of the Opposition Bruce Golding and his Party made various promises; among them, an assurance that the economy would grow by as much as seven percent, not unlike that of Singapore and other countries on the fast track to development. Other claims made included the very emotive charge that, while we may not all get rich we certainly did not have to be as poor as were, under the previous administration, in particular under then Prime Minister Portia Simpson Miller.

We could not, in effect, afford to take a chance with Mrs. Simpson Miller, the virago, who cares little, if anything for the members of her own constituency. That is, given its then extreme state of disarray. With the upsurge of emotions evoked by that experience, that we must now concede to a mandatory wage freeze is especially curious, if not altogether very distressing.

In addition to a tax on books, salt and other sundry items, the vast majority of which were previously not taxed and which also form a regular part of peoples' daily existence here, does the make point of an apparently unconcerned and uncaring administration. What of the claims about empowerment? Is there any truth to any of them, especially in a context where there is no discussion and no seeming regard for the fact that people are obviously not coping well with the fallouts from the contracting world economy?

Economic Recession

At the risk also of dwelling too much on the bad, it was also this same administration who, when the rest of the Developed World were assembling their various economic crisis response teams claimed that Jamaica is fine and would not be seriously affected (presumably, if at all!). That attitude we now know was also wrong, as much as the apparent lack of regard for the electorate, insofar as refusing to address the nation directly to update us on the status of the economic plans in the current crisis.

To say that we are starved of information, however, would not altogether reflect an accurate position. This is especially in a context where there are enough alternate information sources coming from various points which paint just how serious a crisis we are in, globally. Still, the refusal to engage with Jamaicans on a direct, face-to-face manner is telling insofar as it not only gives the impression that 'nutten naw gwaan', it also reinforces this deep-seated pessimism. Needless to remind that, that and a recession are a deadly concoction when combined together.

Lack of Proper Planning/ Gas Tax

The lack of a visible or even meaningful plan, with of course the exception of the budget whose reading over a week ago seemed to have coincided with flashbacks from a couple years before when the Jamaica Labour Party (JLP), the Party currently in power effectively capitalised on the widespread disenchantment of Jamaicans at the time, at the news of a gas tax. Several days of rioting and media campaigns against the then Government - the People’s National Party (PNP), now members of Opposition, forced what appeared to be an about face. The tax was eventually rolled back.

Ironically, gas is now being taxed and despite concerns or even voiced opposition to this move, there does not appear to be the space for that kind of concession by the new administration. This after assuring rather glibly, as noted above, early on in the Recession last year, that Jamaica would not likely be adversely impacted by the crisis.

There was, as expected, a torrent of criticisms with which the Minister of Finance and the Public Service Audley Shaw's remarks were addressed. However, that storm soon passed. And we were back to 'business as usual'. After all, the popular position in some media here is that, there could at least be tolerance, on some level, given how badly the economy was felt to be mismanaged by the previous administration.

Alternate Strategy: Mass Lay-offs?

I am no economic whiz and I can clearly see the value of having a job. However, if mass firings and layoffs are the appropriate course of action, as is suggested by one of the comments on my mood status (on Face Book, shortly after posting), then it seems to me that there is a real need for more brain power to be added to the Government's economic advisory team than is currently available. It is hardly a viable option, which is not to say it could not happen. Still, it does not justify non-communication and or the evident lack of regard so clearly and contemptuously demonstrated by the apparent lack of any type of coherent or even meaningful plan to drive the economy and limit our dependency on Government to provide employment for the majority of Jamaicans.

Taxation of Basic and Educational Supplies

The seeming lack of concern for a trained and or educated work force, across the length and breadth of the country is also exemplified in the move to tax certain books and other basic supplies, as per the new budget tabled by Mr. Shaw. We can be certain that, by these actions this administration sees little or no value in even attempting to communicate confidence in their abilities and their preparedness to do the job at hand - that is, governing in difficult times. This is especially sad, considering just how much we stand to loose in an increasingly worsening world economy.

The drying up of assistance programmes and funds, as well as competitive loans, will mean further erosion in the value of life here. Those at the base of the structure will obviously feel the effects most readily, but you can rest assured that others will too and none of this augurs well for the crime and violence that we continue to grapple with daily, with little or no success. What too of work to rule and industrial action? How will people respond to freeze on their income with no, apparent, end in sight?

These are interesting and timely questions which require urgent responses.

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