Part four of the Ministerial Statement delivered by Minister of Finance Chris Sinckler.
Reduction in the Public Sector Employment and Wages and Salaries Bill:
Information supplied by the Ministry of the Civil Service indicates that there are 16 956 Public Sector posts in central government and another 9 000 spread across the various Statutory Corporations. In the general service 15 333 posts are established and I 623 are temporary posts.
Further, there are 5 341 temporary employees in the public service composed of 1 082 in temporary posts and 4 177 in established posts. Some 70 public sector posts are filled with contract workers, another 72 listed as “Apprentice” and 80 persons working on a part-time basis.
In considering the adjustments which we are proposing to reduce government’s overall wages and salaries bill, we had to take a number of factors into consideration. These include but are not limited to:
The total savings we are trying to achieve over the adjustment period and even beyond.
The constraints of the law and the rights granted to all officers in the service including the provisions of the Employment Rights Act.
The limitations imposed by the Constitutional Amendment prohibiting the altering of the salaries and allowances of Public Officers to their disadvantage
The conventions and accepted practices governing separations between the employer and the employee in the Public Service
The costs associated with any proposed layoffs and how these will be handled
The timeframes which we have set ourselves to initiate and complete the process of separation, particularly as it relates to all of the above, including appropriate time for adequate consultations with the workers’ representatives in particular.
The necessary ring fencing of sensitive areas in the delivery of critical public services in health, education, national security and elderly care.
The overall functioning and stability of the public service as we go forward in implementing critical aspects of our economic growth and development agenda.
With these in mind and based on a proposed saving of approximately $143 million dollars in a full financial year or roughly $35 million over the last quarter of the current financial year, we have estimated that it will affect 3 000 employees across the overall public service: central government and statutory entities.
We have agreed that, if possible, there should be an even split in the proposed retrenchments between central government and statutory entities but, if not possible, then a split of 2 000 from the general service and 1 000 from the statutory entities would be imposed.
We further propose that the process of retrenchment be spread over the period January to March 2014, and be front-loaded starting with the first 2 000 job cuts by January 15, 2014, followed by the second tranche no later than March 1, 2014.
Additionally, Cabinet has agreed to institute a strict programme of attrition across the central public service, filling posts only where it is absolutely unavoidable, over the next five years, ending 2018-2019.
This attrition is expected to reduce central government employment levels from approximately 16 970 to 14 612 jobs – a projected loss of 2 358 posts; and savings of $121 million. Over the current 19-month adjustment period public sector employment will be reduced by an additional 501 jobs with a projected savings of 26 million dollars.
We have also agreed that effective January 1, 2014 there shall be enforced a freeze on the payment of increments for the next two years. Appropriate arrangements will be made for this loss of income to be properly factored into the computation of overall pension benefits.
As indicated above, both the Ministry of Finance and Economic Affairs and the Ministry of the Civil Service, including the Personnel Administration Division, have been mandated to continue consultations and negotiations with the workers’ representatives to ensure that all appropriate steps are taken to safeguard the rights of all workers affected by these measures and to craft interventions aimed at mitigating the dislocation which will undoubtedly be caused, including assisting those interested to enter into retraining and redeployment programmes in the private sector.
The Ministry of Finance has also been mandated to work with the Board and Management of the National Insurance Scheme to ensure appropriate provisions are made for timely and full payment of unemployment benefits to workers that are displaced.
Cabinet has also agreed to support following additional measures:
A 10 per cent cut in the salaries of all Ministers, Government MPs, Parliamentary Secretaries, Personal Assistants, and other persons designated as “political appointees” in the employ of the government.
A 50 per cent cut in the external travel budgets of all ministries, and statutory boards.
A freeze on all non-statutory discretionary waivers unrelated to the earning and/or direct saving of foreign exchange for the next three years. It is projected that this measure could save the government at least 100 million dollars over the period.
Additionally Mr Speaker, earlier this year, the Ministry of Finance formally requested technical assistance from the IMF’s (International Monetary Fund) Fiscal Affairs Department in two critical areas of government’s operations: Tax administration, and fiscal/operational reform in the key statutory entities which rely on central government for large transfers for their operations.
For some time now most internal and external examiners have expressed deep concerns about both of these areas as key examples of parts of government’s operations which exhibit unacceptable levels of inefficiency and dis-functionality resulting increasing financial burdens to the state.
I am happy to announce that the Fund has accepted the requests and starting next month, the first team will begin its examination of the fiscal and operational challenges of some of our key statutory entities.
In anticipation of that and in an effort to advance and concretize this work, the Ministry of Finance will assemble a high level task force of senior finance, business and accounting experts to work along with the Fund’s team to finalize a reform agenda for the selected entities to be presented to the Minister before mid-year.
I also anticipate that very shortly the Fund will identify a team of experts to conduct the long overdue comprehensive assessment of the direct and indirect tax systems in Barbados with a view to advising government on major reforms necessary in both tax policy and administration.
Mr Speaker the additional measures which I have just announced, though tough, are designed for the specific purpose of helping Barbados’ economy to accelerate the process of adjustment and fiscal consolidation.
In the end though, Sir, as a country we cannot hope to cut or tax our way out of this economic decline. We must push ahead even more radically with our growth initiatives through greater public and especially private sector investment. As a government the pressure is on us to step up and remove all obstacles to investment in our country whether from domestic or foreign investors. We must work harder and faster and facilitate more.
Our private sector partners must bemoan less and invigorate more. We must together do more to help each other rather than just satisfy ourselves with highlighting every fault that exists on either side.
It is in increasing our levels of productivity, expanding our creativity and innovation that will help us build the efficiencies that will make Barbados more externally competitive and internally dynamic.
In 2014, from the government’s side, we are set to initiate a set of major public sector investments either directly on our own or in PPP (Public Private sector Partnership) arrangements. We are confident that if such investments are matched by investments from our domestic and foreign investors that 2014 will truly begin a substantial turnaround in the Barbados economy. Now is the time to forge ahead with those plans and I encourage our colleagues in business to match us in this regard.
In this way we will create newer more sustainable private sector jobs to assist in redeploying those whom we now have to release from the employ of government to the private sector.
It is never easy for any government or Minister of Finance to have to introduce measures that strike at the heart of a person’s financial and social livelihood. This is tough on all of us over here and it will be on all officers of the governmental system.
We understand and empathize with the anguish which these measures will cause the many people affected by them. They will be your constituents and ours. But having tried our utmost over the past five years and some to avoid this road, the exigencies of the negative impact of the world’s worst recession have dictated that we cannot continue on the course which we have been pursuing.
If there is any relief that we can offer to those likely to be affected Mr. Speaker, we will make that relief available to the fullest extent of our capacities and within the constraints with which we have to contend.
What we would wish to see happen though Sir, is that those who are not affected to the same degree as some of our brothers and sisters, open their hearts and minds and homes and even their financial resources if they can. We have to ensure that we carry our family, friends and former associates and, yes, constituents along this very difficult journey.
The government Sir, working with the Private Sector, Labour Movement, and wider Civil Society, will endeavour to ensure that every effort is made to secure a speedy and sustainable turnaround of the Barbados economy so that we can achieve our national objectives of a country that is socially balanced, economically viable, environmentally sound, and characterized by good governance.
May God continue to richly bless Barbados.
