Nov 27, 2021 Letters
The amount of attention that the recently announced public service salary increase of 7% has received was surely not unexpected. However, I believe that we are missing some key points in the public discourse, and that is, we seem to be going down an anti-poor, inequality promoting development pathway. And I say this based on the following points:
1) The announced 7% is not actually yielding the full benefit due to the fact that the retroactive lump sum is now taxable, as opposed to previous years’ increases being non-taxable. So for example, for the month of December, where a person earning $100,000 gross salary, would’ve taken home $86,168 (post NIS/tax salary) + $84,000 (7% non-taxable retro for the full year) = $170,168; with a taxable 7% retro, the take home for December now becomes $143,261, the retro amount amounting to just 5.7%. This is clearly below the inflation rate reported from the Bureau of Statistics, recognising that across the world, official inflation is generally accepted to be underreported and actual inflation significantly higher.
2) An across-the-board increase is a regressive policy action in that it serves to widen inequities in society. The simple way to put this is that a 7% increase for a senior minister earning a salary of $900,000 per month, would put their new salary at $963,000. Whereas a teacher earning $120,000 per month, would have a new salary of $128,400. You can clearly see that the gap widens between the elite and the average individuals. Across the board increases do this – it is common sense economics. This is why the tiered or scaling system is preferable to ensure that the poor do not get left even further behind.
3) I refer to a press conference by the Vice President (reported here https://demerarawaves.com/2021/11/01/oil-money-govt-to-balance-pay-increases-with-improving-quality-of-life-jagdeo/). In sum, he is suggesting that due to issues of sustainability, public servants shouldn’t expect steep increases. It is in my view that this is a disingenuous message. While private sector investments are being signed and new business ventures being facilitated by the government, it is completely off-putting to suggest that “steep” increases are not feasible. Due to the principle of compound interest, a 50% increase by the end of the government’s 5-year term would have certainly required less than 10% per year increase.
Increases were given nearly every year since 2015 to 2019 with inflation remaining low and no issues of sustainability arising. Inflation is shooting up due to supply constraints and the middle class and the poor and feeling the brunt of it. Notwithstanding subsidies and programmes for the very poor, the lack of inflation cushioning policies for the middle class will only serve to widen the gap between the middle class and the upper class. Do we really want our middle class to become poorer and the poor to fall further behind (in real terms)? It has been agreed to world around that trickle-down economics does not work. The economies that propelled into sustainable development were based on societies that invested meaningfully and effectively in human capital development.
4) I make minor reference to my previous point. While I applaud the excitement of the private sector and frequent reports in the media of new hotels here there and everywhere. I shudder at the thought that we may not be adequately prepared to protect our people during these times of transformation. Have we adapted best practices for Occupational Health and Safety and strengthened our related authorities? Have we updated/prepared comprehensive building codes (referencing the multiple fires during the year) and enforcement mechanisms? Have we set up systems for ensuring sufficient child care and family benefits for expectant parents? Why has the minimum wage increase for the private sector stalled? I dare anyone to research the development of the states of the Arabian peninsula, and tell us what you find regarding the state of the lives of average labourers.
5) I refer to the rant by a certain Junior Minister a few weeks ago in retort to the public backlash about the 7% public service wage increases. In sum, her position to the public was (and this is me paraphrasing) “why are you complaining? you shouldn’t complain. Imagine if you didn’t get all the things we already gave you, you’d have been even more miserable.” The level of condescension in her message was vomit-inducing. For a public leader to take such an apathetic position is indicative of the state of our country. Again, it reminds me of the fact that those who have, don’t care about those who do not. The inequalities and elitism will continue to persist and this is evidence that the resource curse has already hit our collective mind.
Editor, these past few weeks have been traumatic. I implore all those concerned to exert a higher level of empathy, to not rely solely on trickle down economics, to focus on the things that will improve the quality of life for all, not just the private sector. Right now, I’m led to believe that the Government is a government, first and foremost, for the private sector, and not the people. I’m not in any way against the private sector as an engine of growth, their flourishing is of utmost importance, but so is the flourishing of all our people at the individual level.
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