Cut wages

Economist suggests a reduction in pay to help economy

It’s a recommendation that will not sit well with trade unions here.

However, a noted Caribbean economist is recommending that the Freundel Stuart administration should reduce public sector wages to help deal with the country’s economic problems.

This, according to Marla Dukharan, would be a better alternative to further reducing the workforce.

Presenting an outlook of the Barbados economy in the April 2017 RBC Caribbean Economic Report, Dukharan pointed to the high public service payroll, as well as grants to state agencies and high interest payments as some of the challenges facing Government, which has yet to find an answer to the struggling economy.

Marla Dukharan

However, she recommended that instead of sending home public servants, the administration should find ways to reduce fiscal spending by no less than $600 million, including cutting wages and leasing loss-making state-owned enterprises to the private sector.

“The largest line items in the Government’s spending profile are grants to public institutions, interest payments, and public sector wages. Reductions in these areas are likely to be the most important in reducing overall spending,” Dukharan said.

“But far from cutting its spending, Government is projecting $4.5 billion in spending for the current financial year, up from $4.3 billion last year, with a whopping $1.8 billion set to go towards repayment of principal and interest on outstanding loans.”

The labour movement will likely be pleased with the recommendation to maintain job levels, but are not expected to be happy with the suggestion to reduce wages of public servants, which are protected by the constitution.

The unions have complained that Government workers have not had an increase since 2009 and a pay rise is long overdue.

However, with Government’s home grown austerity programme seemingly failing to have the desired effects, and with the debt rising while foreign exchange reserves continue to fall, Dukharan insisted that cuts were the surest way out of the economic malaise.

Like former Prime Minister Owen Arthur, she recommended that the island would benefit from the implementation of a fiscal responsibility framework “not unlike what Jamaica and Grenada have implemented under their IMF-supported home-grown programmes”.

However, she said while she did not expect the Stuart administration to enter into a programme with the International Monetary Fund ahead of the general election due next year, “that does not mean that they may not resort to one if needed, as suggested by the Prime Minister.

“I believe therefore, that at some point in the not-too-distant future, there will be an IMF programme in Barbados,” Dukharan said.

But unlike those who fear devaluation of the Barbados dollar should the country turn to the IMF for support, the RBC Group economist this was not necessary since the country would have the ability to pick its poison.

She said it was time for “a significant correction of some sort” to the rate of exchange, which stands at BDS$2 to US$1, pointing out that it was unsustainable under the current circumstances, since the current ratio was closer to BB$$7 to US$1.

“But underpinning all these adjustments needed, there must be an effective strategy to ensure that poverty does not rise, and that the already vulnerable are protected. Otherwise an increase in social dislocation could lead to a rise in violent crime, which could affect the most valuable tourism sector, and undermine any economic progress made,” she cautioned.

marlonmadden@barbadostoday.bb

15 Responses to Cut wages

  1. Sharon Taylor
    Sharon Taylor April 10, 2017 at 11:08 pm

    Cut food prices too! When ya say A ya gotta say B……

    Reply
  2. E Jerome Davis
    E Jerome Davis April 10, 2017 at 11:15 pm

    Salaries in some areas are very high.

    Reply
    • Tom April 11, 2017 at 3:46 pm

      I think that a big expenditure item that is ripe for a timely review, is our spend on overseas Embassies and High Commissions abroad. A program of financial and business reform that will lift innovation,efficiency and productivity is called for It should embrace the use of technology beyond the use of a cellular phone. A program that will include rationalisation and streamlining of operations. A program that will see a reduction in unnecessary cost through pay,rations,travelling, office space and living accommodation.
      Again, I think that the trade unions should look at any disposal of loss making government owned entities to see if these entities can be turn around into viable business concerns and if so negotiate with government to purchase them and set up worker cooperatives to run them.I see no reason why government, private sector and union cooperatives cannot be co-creator of wealth and opportunities.

      Reply
  3. Adam Tyler Mallett
    Adam Tyler Mallett April 10, 2017 at 11:25 pm

    Smh

    Reply
  4. John Everatt April 10, 2017 at 11:41 pm

    I think this person makes a lot of sense. This is something that i have thought about for quite some time now. The real value of the Barbados dollar is not 2 for 1 US. I am not sure how long this exchange rate can continue at 2 for 1 US which is really propped up by the Central Bank. Government spending needs to be cut and to do that you either have to send people home or reduce wages. Of course there is always the option of increasing production but that seems unlikely in the short term.

    Reply
  5. Jennifer April 11, 2017 at 2:46 am

    I wonder if MS Duckharan realize that the government increased their pay recently, and that if they had really cared they would start with themselves to CUT that back off. Mind you the opposition barked a bit to appease its yard fouls and since then have gone quiet about it and more that likely have congratulated fundel privately on such a successful outcome. Until we as a people come to grips with who and what is posing the problems we will forever remain sitting ducks to be fired upon. And she got another thing right too, there will be a rise in violent crime.

    Reply
    • Jennifer April 11, 2017 at 10:57 am

      This is high time that this people awake out of sleep. Do you not see what is going on with the USA and that psyc Mr Trump. When that US dollar pops, all countries that is hooked to it will pop too. We better get our fields/arable land into action. Bring out the owners to work too.

      Reply
  6. Thomas April 11, 2017 at 6:17 am

    Poor people don’t have entertainment allowances or laundry allowances and most of the other perks or share in the profits when companies see profit. You should look at cutting their money not the man at the bottom.

    Reply
  7. Sandra April 11, 2017 at 6:37 am

    Cut the cost of living too. You all people don’t have to worry about not having money to buy food or living off the Massy card monthly for gas and groceries. Civil servants haven’t had a raise in almost 10 years. Savings gone and debt high to their throat…think again

    Reply
  8. seagul April 11, 2017 at 11:41 am

    Here we are—‘Emancipated’—free from the hand but not from the control-Still covered from the poison of colonialism—-the lighter against the darker…the darker against the lighter…the rich against the poor and poor against the rich….the educated against the uneducated….those that are privilege against the unprivileged. This is the pollution of plantation historical insanity.
    The economy of the islands with the cost of living is getting higher and higher—the price of fuel, gas food. The educational system is failing our children. This reality as it is only leads to violence. No race can prosper till it learns that there is as much dignity in plowing a field as in writing a poem. And I wonder why they fighting war……Booker..T.

    Reply
    • Jennifer April 11, 2017 at 12:25 pm

      @Seagul – Well said – it is called brainwashing, separatism and ASSIMILATION. Mind you the poor against the rich will not bear any IMPACT unless………………………………..
      Weather truly written or a manufactured letter, Willie lynch did a master piece which is still in effect today. Oh – and IT was all designed to FAIL OUR children too, from the very outset.

      Reply
      • Milli Watt April 11, 2017 at 3:33 pm

        i would appreciate if Marla Dukharan would go on vacation till after this train wreck. Duks i know you mean well but this thing much more personal than wages this has got to do with a stinking culture that has invaded every facet of this society. We going talk after the train wreck but for now leave these clowns…………ALONE. i GOT A FRONT ROW SEAT AND ENJOYING THE SPEED

        Reply
  9. Randolph April 11, 2017 at 12:10 pm

    Former PM wants to know how we got to this situation.Pure unadulterated mismanagement.

    Reply
  10. Trevor Retsof April 11, 2017 at 6:49 pm

    Cut the salaries of the top tiers. Those are the ones that suck up the money.

    Reply
  11. Tony Webster April 11, 2017 at 7:52 pm

    @Milli Watt: Ms. Dukharan is merely doing her job: going by official data, analysing the same, and letting the chips fall where they may. But you offer sound comment regarding those other (few) Seagulls and summuch….folks still living in a self-imposed mental box..not a little ironically..,,firm craftsmen of their fate!! Good thing The Rt. Excellent Errol Walton is not here, to observe the “progress” being touted and spouted by such spineless whiners…experts in finger-pointing, hand-wringing but little else, and progressing this country fast….backwards. It might profit them the more if they joined the “Reparations” Bashment, as right after elections… evahbody gine get US$1 million. Yep, fuh real.

    Reply

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