February 27, 2013 – Ladies and gentlemen, my fellow Saint Lucians, good evening!
Over the past two days, our families and businesses have had to face a measure of disruption in their daily lives and routine. Our children have not been able to attend their schools because the vast majority of their teachers foretold, four days in advance, that they would all fall ill on designated days, Monday and Tuesday of this week and so would not be at work. So too did some civil servants, thus disrupting some of the services provided by the Government.
Of course, there were those who opted to come to work and to manage the daily operations of the Government of Saint Lucia. On behalf of the Government of Saint Lucia, I thank them for their courage, dedication and commitment to the people of Saint Lucia.
As a former Trade Unionist and President of the Saint Lucia Teachers’ Union, in the period leading to independence, that is 1978-1979, I understand the passions of the moment.
But the issue that faces us is not about my past, my history or my position today; it is not about the fact that a Labour Party forms the Government at this time; nor about a former Prime Minister and Minister for Finance, Stephenson King, who, on the onset of turbulent times, awarded public servants a 14.5% increase for his successor to emulate by agreeing to a similar increase in real terms; it is about one thing, one issue, the best interests of the people of Saint Lucia at this time.
A GRAVE SITUATION
I say this because the situation that confronts us is grave. While I have spoken about these facts repeatedly, there are some who choose to ignore our reality and create the illusion that “things” are better than we say.
The Government that I lead inherited an unemployment rate of approximately 24%. The unemployment rate among our young people in the labour force is particularly high, reaching an estimated 45%. It is believed that this rate of unemployment is particularly concentrated among the unskilled.
Growth in our economy in recent years has been subdued, falling, it is estimated, to a low of -0.6% in 2012.
To compound our situation, is the huge fiscal deficit, left behind by the former Government. This deficit stands at 10.7% of our gross domestic product (GDP). It began to get out of control when the Stephenson King Government awarded a 14.5% increase to our public officers. We were forced to do what no government should do: borrow to meet the cost of salaries and other recurrent expenditure.
By the end of March 2013, our debt will increase to 78% of our GDP. Today, for the first time in our fiscal history since independence in 1979, the Caribbean Development Bank has included us among a list of seven countries in the Caribbean with a high and unsustainable debt.
This is the environment, this is the economy in which public sector unions have demanded that the Government of Saint Lucia pay salary increases, initially of 16%, then 12%, later 9.5% and now 6% with stipulated conditions.
As I have explained before, the returns from VAT are below expectations and will not cover the increase in expenditure. We have no option but to borrow this money.
TRADE UNION FEDERATION’S LATEST PROPOSAL
During the last round of negotiations, the Trade Union Federation indicated that they would accept a 6% increase, payable as follows:
Year 1 – 2%;
Year 2 – 2%; and
Year 3 – 2%.
The Trade Union Federation indicated that the 6% was contingent upon the following eight conditions being agreed to:
1. The Government through the Travel and Subsistence Committee would seek to give travelling officers a relief by agreeing to give them a one-off duty free concession on the importation of vehicles;
2. The Government is to put mechanisms in place to address the gap between the Government retirement age and the age at which officers are entitled to an NIC pension. The Federation wants the matter resolved within six months;
3. The Government is to re-implement increments within one year;
4. The Reclassification Exercise is to be completed within one year;
5. Within one year, the Government is to amend the Labour Code to introduce an agency fee. The Trade Union Federation says it will work out the details with the Ministry. This would mean that union dues will be deducted from salaries of all public officers, even those who are not members of a union;
6. The Government is to divest Crown Lands to the unions so that they can sell it to their members;
7. The Government is to invest money into co-operative banks which would facilitate public servants to get loans at reasonable rates of interest; and
8. The Government is to put mechanisms in place to ensure that public servants can get their tax refunds at the earliest.
The Trade Union Federation says that it is prepared to consider allowing the Government to “stagger” the payment of back pay provided that it is tax free.
The Government is unable to agree to a 6% increase in wages and all of the conditions stipulated by the Federation.
THE COST OF GOVERNMENT’S OFFER
The Government has offered the Trade Union Federation a 4% increase in salaries and wages. This 4% increase will cost the Government of Saint Lucia $22.3 million in back pay for the period April 2010 – March 2013. The annual increase will add approximately $13.0 million to the base of the personal emoluments and wages received by public servants.
In addition to the salary increase, the Government has agreed that an additional $4.1 million will be paid in allowances to uniformed persons, that is, to police officers, fire service officers, correctional officers and nurses.
In the case of the police and correctional officers, we have agreed to pay police and correctional officers, a “Risk Allowance.” This is a new allowance without precedent.
In the case of the Teaching Service, the Government has agreed to introduce a new allowance, described as a Teaching Materials Allowance, or in short, “a TMA.” This allowance is intended to assist teachers to purchase teaching materials for their classrooms. The allowance, offered at $500.00 per annum, will be paid in one sum at the commencement of the school year in September.
The Government has also agreed to increase travelling allowances by an additional $1.3 million.
In the case of the daily paid workers represented by the National Workers Union, the NWU, some $1.0 million will be needed to pay them. Of that amount, $600,000 will go to adjusting wages and $400,000 will be paid in back pay.
It therefore means that the GOSL will have to borrow an additional $42 million to settle wage negotiations. This includes back pay of $22.2 million, salary increases of $12.7 million and allowances of $7.2 million.
This amount is separate and apart from that which is necessary for financing the 2013/2014 budget.
The annual adjustment to the wage bill after taking into consideration all allowances, will be approximately $20 million. This annual increase in the wage bill of 4% plus the amount in allowances will translate into an effective increase of 6%.
I now wish to focus on two issues which, despite previous clarification, continue to be used for propaganda effect.
Much has been said and written during these negotiations, almost all of it false, about the salaries of the Prime Minister and the Ministers of Government. Only recently, I heard one member of the public say that Ministers receive a salary of $20,000.00. Others have claimed that Ministers plan to give themselves a 30% increase.
The simple truth is that Ministers last received an increase in salary and allowances in 1999, some fourteen years ago.
Since 1999, the salaries of the Prime Minister, Ministers, Parliamentary Secretaries and the Leader of the Opposition have been set as follows:
The Prime Minister receives a basic salary of $11,404.17, and total allowances of $1,324.00, providing a total monthly emolument of $12,728.17. I should add that the Prime Minister’s utility bills are paid by the state and he is provided with a gardener and a maid.
A Minister receives a basic salary of $7,671.75 and total allowances of $3054.00, providing a total monthly emolument of $10,815.75.
A Parliamentary Secretary receives a basic salary of $5,103.50 and total monthly allowances of $2,217.17, providing a total monthly emolument of $7,330.67.
The Leader of the Opposition receives the equivalent of a Minister’s salary. He receives a basic salary of $7.761.75. The position also benefits from a total monthly allowance of $3054.00, thereby providing a total emolument of $10,815.75 per month.
Other elected members of the House of Assembly receive a monthly salary of $3402.00, allowances totalling $1,551.00, providing a total emolument of $4,953.00.
All of these figures are easily verifiable in the Annual Estimates of Expenditure as approved by Parliament. All of these salaries are subject to taxation.
Over the past 14 years, there has been no revision, change or increase in the salaries of the Prime Minister and the Ministers of Government. However, during that period, the salaries of rank and file Public Officers, those between Grades 1 and 18, have increased by 33.5%.
During the tenure of the Stephenson King Administration, the Salaries Review Commission was, once again, requested to review the salaries of senior management and the political directorate.
The Commission submitted two Interim Reports in 2010, and on the basis of those Reports, the then UWP government awarded an increase of 36.5% to Senior Management in the Public Service, that is Grades 19 to 21, in addition to duty-free allowances for the purchase of motor vehicles. However, it should be noted that these increases were never tabled in Parliament before taking effect, as is required under the Salaries Review Commission Act. Also, in complete contravention of the Act, the Stephenson King Cabinet made adjustments to the recommendations of the Commission and increased the value of the duty-free concession to senior management of the Public Service.
The Prime Minister and Ministers of the Saint Lucia Labour Party Government have not received any increases in salaries and allowances since coming into office in December 2011. I will repeat so that there is no misunderstanding – the Prime Minister and Ministers of the Saint Lucia Labour Party Government have not received any increases in salaries and allowances since coming into office in December 2011. While the Salaries Review Commission has submitted two draft reports to the Government, and it makes recommendations for an increase, the work of the Commission has not finished so there are no reports to be tabled in Parliament.
Therefore, the current situation is that every public officer in Grades 19 to 21, every Deputy Permanent Secretary, every Director, every Ambassador, the Chief Surveyor, the Postmaster General, the Labour Commissioner, the Director of NEMO, not to mention every Permanent Secretary, currently makes or earn more money than a Cabinet Minister. This means that 92 Public Officers are currently earning a bigger salary than the Ministers under whom they serve.
Additionally, there are five (5) Public Officers at Grade 21 who earn more money than the Prime Minister.
As difficult as this situation is for members of the Cabinet, we recognize that this is not the time to accept an increase in salary. Our country simply cannot afford it. The Cabinet of Ministers appreciates that it has to lead from the front and by example. Thus, despite the fact that it has been fourteen (14) years since the last salary increase for Ministers and that Ministers are currently paid significantly less than some senior public officers who work within the Ministries under their purviews, the Cabinet of Ministers agreed that it would not accept any increases in salary until the fiscal situation in the country permits such payments. So, when we asked the public officers to accept a wage freeze and a $1000 lump sum payment, it was with the full understanding that we as a Cabinet would also be accepting a wage freeze, except ours was without any form of lump sum payment or increase in allowances.
DELIBERATE MISINFORMATION ABOUT CONSULTANTS
The other piece of deliberate misinformation that has been placed in the public domain is the notion that this Government has inflated the wage bill by hiring highly-paid consultants and senior management. Again, this is patently false.
When our Government got into office in 2011, we found several consultants all over the Public Service. In the Ministry of Finance alone, I found forty-two (42) officers on contract, with titles ranging from director to analyst to programme manager.
The ranges of the salaries being paid to those officers also varied, with some as high as $20,000 and $16,800 per month. The highest basic salary that is allowed under our current salary scale is $12,831 per month. So the UWP government was paying its consultants basic salaries that were 55% more than what is permissible under our salaries structure.
But that was not the full extent of the consultants under the last administration. In total, there were 141 officers assigned to various projects across the Civil Service who served under the King Administration and who were not appointed by the Public Service Commission. This is the category that suddenly, some have now started to refer to as “consultants” since December 2011. Apparently, when the Stephenson King Administration was busy appointing those persons as consultants across the Public Service, no one cared or chose to see, speak or protest.
The number of persons who have been employed by our Government since assuming office pale in comparison with the astronomical level of hiring under the UWP. Between 2006 and 2011, during the reign of the UWP, the numbers in Senior Management of the Civil Service, which does not include the Police, Fire Service, Prisons, Teachers, Nurses or Doctors; those in Grades 19-21, increased from 54 to 69, an increase of 15, or 28%.
In the time since our Government has been in office, the numbers in Grades 19 to 21 in the Civil Service have increased by four – the Special Advisor on External Affairs, the Permanent Secretary in the Office of the Prime Minister, the Permanent Secretary of the Parastatal Monitoring Department, and the Director of Public Sector Modernisation. The position of Special Advisor on National Security was created by absorbing the position of Director of Special Initiatives, which the Stephenson King Government had created for Ausbert Regis, and which we had to upgrade from Grade 20 to 21 because of the ruling of the Courts that King’s government had acted unlawfully, in contravention of the Constitution when it transferred Ausbert Regis. The net effect was an increase of $36,000 per year.
The position of Permanent Secretary, Planning and National Development was created by abolishing the position of Permanent Secretary, Special Initiatives, which also had been in use by the UWP Government.
Almost every one of the other positions that have been filled outside of the Public Service Commission has been done against existing budgetary allocations for established positions or to replace people whose contracts came to an end. So, in effect, the net cost to the Government of the so-called engagement of consultants by our Government is less than $300,000, which is significantly less than the salaries of the two highest-paid of the several consultants who were hired by the UWP government.
The numbers do not lie.
So once again, we see that the argument of excessive hiring of senior management by our Government may have good propaganda value but is based on deliberate misinformation and untruth.
In any event, the issue that faces us now is this: where do we go from here?
I appreciate that all parties are tired of the negotiating process. The members of the Public Service Unions say that they are tired and that is why they became ill. The members of the private sector and our citizens who require government services on a daily basis are anxious for normalcy to return.
Our country needs peace and stability, not upheaval at this time.
The Government of Saint Lucia cannot and will not go further than the 4% increase in wages it has offered, coupled with the agreed allowances. For the Government the option is clear: its either wage restraint or retrenchment. On the other hand, the members of the Trade Union Federation believe that the Government can meet their demands without causing undue harm to the people of Saint Lucia.
I do not think so. Even with the $42.0 million dollars which will have to be borrowed to meet the payments, there will have to be sacrifices by all of us, whether by way of compulsory reduction of expenditure and/or the gradual reduction of subsidies extended to the population at large.
It seems to me that the parties have arrived at an impasse. In these circumstances, I wish to urge that the matter be resolved peacefully, by arbitration. I propose that the parties appoint a three member arbitration panel, made up of one arbitrator appointed by the Trade Union Federation, a second by the Government, and a third, a chairperson, appointed jointly by the agreement of the parties.
Once the panel is constituted, hearings could be held in full glare of the public. The Government agrees, without reservation or condition, that it would be bound by the decision of the panel. I urge our unions to consider and accept this proposal to bring closure to this unhappy situation.
A BITTER PILL TO SWALLOW
Ladies and gentlemen, I hope all parties can find common ground in the days ahead. I hope sensible, conscientious and realistic discourse will prevail. We cannot afford to lose our country to the perils of economic woe and fiscal laxity. The ideal situation for the state, given the fact that on an annual basis we are spending more than we are collecting, remains a freeze in wages and salaries. Would you in your business increase salaries at a time when your establishment cannot make a profit?
It is thus very likely that we will have to curtail spending in other areas inclusive of subsidies to reduce the impact of this settlement. Otherwise, our borrowing will quickly shoot up. This borrowing is like throwing water onto an already sinking ship.
As I have indicated before, the Government’s priorities in the medium term have been to induce economic growth, create jobs and promote fiscal consolidation. This proposed salary increase will not create any new jobs, nor provide any soothing to our restless youth. This salary increase will not induce economic growth because it is not directly adding value to the country’s economic output. In fact, it means Government must find additional moneys to achieve this. Finally, this salary increase will not promote fiscal consolidation. In fact, it will worsen our fiscal position substantially by raising immediately the debt burden of the country, of you and me, of you and your children. Public servants may believe that they will gain today but ultimately, they will force all of us to pay the price tomorrow.
Under these circumstances, Government believes that its proposed package is fair, especially at this time. This reality is a bitter pill to swallow, but it is our reality.
A TIME FOR NATIONAL PURPOSE
We are travelling through turbulent waters, but we must face our fears with courage and wisdom. This is not a time for unrest. This is a time for us to produce more than before. This is not a time to be divided but rather a time for national purpose. It is not a time to be banal and pedestrian.
Every Saint Lucian must be creative and participate positively in their country. We can do these things freely as an independent state, or we can be led down the road of forced adjustments, the road of harsh reforms and drastic impacts in the way we live.
I hope that you have found clarity in my message to you this evening, for the issues discussed are not merely about Government and the Unions. This is about all of us. I urge that we put aside personalities, we put aside party and we put our country’s future wellbeing as paramount, so that we might progress together as one nation.
May your home find blessings at this time, and a good evening to one and all.