Tying hikes to GDP, inflation freezes public servants' share of cake - arbitration tribunal report By Courtney Jones Stabroek News September 10, 1999 The public service arbitration tribunal which recently awarded substantial salary increases to public servants has listed as one of its primary considerations for the award, the fact that government recognised that public servants were poorly paid. A majority decision by the three-man arbitration tribunal headed by management consultant Dr Aubrey Armstrong awarded a 31.06% pay hike for this year and a 26.67% hike for 2000. "Over the years they [the government] have done the best they could but were constrained by the ability to pay," the report said. But the report noted that despite laudable efforts to raise the level of compensation of public servants, if future payments were increased only to a maximum of the sum of the rate of inflation and GDP (Gross Domestic Product), this would "more or less freeze their share of the distribution of the national cake." The majority tribunal also took into consideration the need to make a credible award which would not be a source of further contention between employees/employer leading to industrial unrest during next year when national elections are scheduled. Dr Gobind Ganga, the government's representative on the arbitration tribunal, who distanced himself from the award was particularly harsh in his comments about this consideration calling it an idea of how Armstrong and Dr Clive Thomas, the union's representative, took irrelevant matters into account in coming up with the award. The tribunal also felt that from an industrial relations standpoint, it would be infeasible to start from any other position than from the current pay out now received by public servants as the base from which it should contemplate its award. Armstrong and Thomas also spoke about the decline in the numbers of public servants employed through attrition and the non-filling of vacancies which it said had made past pay increases "somewhat easier for government absorb." In making the award, the majority tribunal also said it took into account the fact that public service unions expressed unreserved commitment and support for public sector reform, retraining and voluntary severance. Another consideration taken into account by the tribunal in giving the award was what is described as the historic gap between the cost of living increases and minimum wages, created by long periods of inflation and the lag in public sector pay increases over the years. "As presented to us [by the unions] this commitment seems contingent on an award which they and their members can live with. This we believe is an important opportunity to take the nettle in hand, and to seek to arrive at an enduring solution," the tribunal said. The tribunal said, and as stipulated by the Terms of Resumption after the 55-day public service strike, that it did not take into account any agreements entered into by the Government of Guyana and third parties which frustrate the objective of collective bargaining. "We note that the IMF review [of April, 1999] presents a way out, through the stipulation that this could be done, if the necessary revenue adjustments are made to maintain the desired revenue/GDP ratio." The tribunal said that in making its award it was not "altogether convinced" about the stringency of the budget numbers presented to it in the government's case. It said it believed that government could create space by making accommodation in its expenditure programme, which would turn out to be proportionally small adjustments, 1-2% each in the capital revenue expenditure profile, interest payments on the domestic debt and the monetary programme. The tribunal also said that it saw merit in the unions' arguments that there was a number of areas through which government could garner revenue to pay for the increases and that this was contingent on it taking initiatives and adopting systems to facilitate such additional funds. These include improved collection of duties and taxes especially from hinterland areas, increased revenue collection due to the rationalisation and improvement of tax collection especially as it relates to broadening the net to include tax evasion and improved collection for services provided by government--building permits, customs and health services. In this context, the tribunal also included the rationalisation and improvement of the central tender board process "to eliminate corruption and waste" and a careful review of "contracts" and "temporary" employment costs in the employment costs of public service employees. Another consideration taken into account by the tribunal in giving the award was what it described as the historic gap between the cost of living increases and minimum wages, created by long periods of inflation and the lag in public sector pay increases over the years. The award also recognised the link between low wages and productivity and government's manifest intention to bring technical, professional and managerial grades up to within ten percent of the corresponding median in the private sector; and the link between wages, nutrition, productivity and reproductive health in an economy which "is crying out for skilled human resources." It also took into account the links between improved wages and growth, where both money inflation and import leakages can be controlled. Armstrong and Thomas said the award also paid attention to the delay by government in putting in place a wages policy, the inability of public servants as a category to access poverty alleviation funding and the fact that wage payments which fall below the official poverty line could not be a socially acceptable basis for paying public servants. The chairman and Thomas felt too that "development built on social and economic sacrifices of the working class and the public servants in particular, will one day exact its own political price. "We treat Year 2000 as the year in which a binding agreement must be reached on public service reform and the wages/salary profile for public servants to year 2003. To achieve this, the award should not add to worker dissatisfaction". The quantum of the award was also determined by the large gap between the unions' demand and the government offer and the fact that government was committed to make a payment of $85 million to the key and critical persons in the public service in 1999. "Although there have been major contributions in the form of technical and financial assistance by IFIs (international financial institutions) to bring Guyana out of the crisis of the 1970s and 1980s and towards sustainable growth, it should be noted that the model tends to exclude the unions from the discussions." The tribunal also said that its decision to grant the award was also based on the fact that Guyana faced a human resources problem and there was a need for technical/social sector reform and adequate remuneration to retain and attract skilled and professional workers. A © page from: Guyana: Land of Six Peoples