Perspective from Dr Vishnu Bisram
I READ with interest the government’s announcement of seven per cent increase to public servants. There are complaints that it is not substantial, given the rise in the cost of living. Indeed, in my several polls conducted over the last couple of years, voters complained about rising costs of living.
But no country has given workers such a significant wage increase. If government addresses wage concerns of only public servants, what will the other state employees receive in wage and salary increases and how much will remain after wage agreements to address crime, security, social welfare, education, health, infrastructure, local government and agriculture, among other sectors of the economy and workers.
As someone who studied and taught economics (including labour laws) for several decades and as a trade unionist/labour leader myself (having led my union chapter for over a decade in NY), I fully support any argument that government must negotiate in good faith with the union’s leadership for fair wages and working conditions.
I also am of the view that wage increases must keep pace with inflation, so that the working class does not suffer from a loss of purchasing power. All contracts have clauses on settling stalled negotiations that should be adhered to. Were the stalled negotiations or impasse tied to opposition politics? After all, the impacted labour unions are affiliated with an opposition party.
Government workers deserve an increase, especially since they were denied a fair wage increment tied to inflation under the preceding Coalition administration; the general feeling is that workers were treated very badly by the previous administration. The preceding Coalition government (now the opposition) largely ignored labour-union demands and terminated so many workers. Why didn’t the unions take action against their government?
The current PPP-led government is applauded for this generous wage offer, coming in the midst of the raging pandemic when productivity has been down in almost all sectors except mining in the private sector. The spending of the seven per cent would help to boost the economy in the short-term.
As an economist, it is my knowledge that wage increases create their own problems — inflationary pressures on the economy that lead to demand for further wage increases in a never-ending cycle. Is the seven per cent fair? Can government afford it or more? Should wage increment be tied to productivity and inflation? The international trend in contemporary labour negotiations is wage increases are based on productivity.
If the workers are not increasing their productivity, why should they be rewarded with an increase in salary? The last time I was leader of my chapter that included several Guyanese educators, workers were forced into many give backs tied to productivity for wage increases. In NY, educators barely received three per cent a year increase retroactively for some five years, during which period we worked without a contract. In the U.S., the preceding contract remains in force when there is no agreement.
The Guyana Government’s offer of seven per cent increase during very difficult times is significant and welcomed by workers. In no part of the globe have workers gotten such a high increase.
And it is significantly higher than the reported inflation of 5.6 per cent as of end of October. Thus, it will result in a real increase in wages since it is higher than current inflation. Since inflation is transitory, going up and down, workers would benefit enormously if inflation stays at or below seven per cent. It is noted that the seven per cent increase in salary is on top of bonus grants given last year to various sections of the public service.
Aside from the bonuses and seven per cent raise, government provides various subsidies on fuel, utilities, etc. These are savings to working class, resulting in availability of money to spend on other items.
Since public servants got seven per cent increase, other state workers would expect similar increase in what in labour economics is known as pattern bargaining (offers). Sugar workers, educators, and other government employees should also get seven per cent for 2021. In contrast, with the public service, sugar workers’ incomes are tied to real, measured, quantifiable productivity; they bring in treasured foreign exchange. They should get more.
There are legitimate and counter reasons to give government workers a seven per cent increase. But business owners rightly ask, shouldn’t increment be tied to productivity or performance like the sugar workers? It is expected that all workers offered or received an increase would produce more. Will they?
Have all workers been productive? As people in the public tell me, some are productive and some are not. The public and the government expect that workers would produce more.
Settling government employees’ wages is not the only issue facing any government. The current administration also needs to allocate funds to rebuild neglected infrastructure which will put the network in place to increase workers’ and business productivity.
If government does not pay heed to infrastructure and those whose labour generate income and pay taxes, then the requisite revenues from increased productivity would not be forthcoming to meet union demands for wage increases. The government must be applauded for the seven per cent increase.