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| Volume No. 1 Issue No. 40 - Wednesday April 02, 2003 |
Decisive Leadership Needed
 by: A Concerned Dominican
The ��negotiations�� between the Government Task Force and the Public Service Union on measures to contain the wage bill (personal emoluments consisting of salaries, wages and allowances) was a waste of time and yet another glaring example of the failure (or, if you prefer, bankruptcy) of the national leadership (and this is not confined to the politicians).
The political directorate had not taken a position on the recommendations and kept referring to them as the ideas of the technicians in the Ministry of Finance. The Union called a strike even before it had begun earnest discussions with the Task Force. (Should we refer to the talks as ��negotiations�� in the true sense of the word?).
The description that the series of talks were a waste of time and bereft of high seriousness is epitomised by the way it ended. Both parties�after having met at least five times and having brought in mediators into the talks�agreed to the establishment of another task force that would essentially seek to do what the Government reps and the Union were expected to settle.
The problem is a structural one, but it has a clear-cut, common sense solution. For every dollar the Government collects more than fifty cents go to pay personal emoluments. This has been the case for a long time.
In Financial Year 2000/2001, fifty-seven cents went to pay personal emoluments and eighteen cents were expended on servicing the interest payments on Government�s debts.
This leaves twenty-five cents to pay the principal on the debt stock, to buy goods and services, to pay retirement benefits, to help village and urban councils, to provide alms to the poor and the host of other things people are clamouring Government to do. Where is the money to grow the economy?
If we continue along this trend, this is what will happen: Government will continue to resort to taxation to pay salaries. High tax burden will deter private investments. Government will not be able to pick up the slack.
Falling levels of investments will lead to a decline in output. National income will shrink to such an extent that most of the population will fall below the poverty line. Already, the incidence of poverty in Dominica is very high among the countries of Latin American and the Caribbean.
The current approach to managing the adjustment programme is unsustainable. Imposing additional taxes and pick pocketing the salaries of public servants whenever a fiscal target is not met does not deal with the structural problem.
It undermines the credibility of the government and the programme. It gives the impression that the government does not know what it is doing.
The public servant, the general public, the ECCB, the regional governments and the donor community lose confidence in the government with the ensuing attendant implications for the country.
It is clear that the wage bill has to be contained and the effective way for doing so is to cut the number of employees. We all agree that the productivity of the public service is far below its potential.
The approach that the Government should have taken in June 2002 should have basically comprised the following elements:
1. An announcement in the 2002/2003 Budget that the Government intends to make redundancies in the public service since the current trends in public finances are untenable and undermine the stability and therefore prospects of the economy;
2. That these redundancies are expected to take effect commencing December 2002;
3. The six-month period would allow for
a. the conduct of value for money audits in various government departments with the assistance of donors. Work had already begun with DFID-sponsored audits of the Ministry of Health and the Establishment, Personnel and Training Department. The purpose of these audits would be to identify areas where cost efficiency could be enhanced without compromising the quality of services offered.
b. The conduct of cost-benefit analysis of privatizing government services where there is scope for doing so.
c. The design of packages of assistance for those who will be affected by redundancy. These packages could include, among others, severance payments, affordable credit for generating alternative employment, grants for training and re-tooling, and land for those who want to go into agriculture.
These incentives would be made available to those who are laid-off and as well to those who choose to retire early. Donors, who have already expressed their support for a programme of adjustment, would be asked to provide both technical and financial assistance.
The offer of a package to retiring public servants would go a long way to buying the support of the unions. The PSU has expressed its support in principle of staff layoffs providing that this measure be informed by an audit of the public service.
d. Furthermore, the six-month period would allow public servants to psychologically (and to some extent financially) prepare themselves for early retirement from the public sector.
All of these elements would have been included in the Letter of Intent to the IMF.
The core elements of this approach still remain applicable. The only thing that is not relevant now is the timing. The ball, as it has always been the case, is in the court of the decision-makers�the politicians.
The Executive of this country cannot continue or ought not to continue to dither about major decisions affecting the country. It has a mandate. It has a duty. It has a moral responsibility.
It must cease shirking from its responsibilities by passing the buck to irrelevant committees and task forces. Since the coalition government came into power, it has eschewed taking decisive action on important matters by referring them to an endless proliferation of useless committees.
The challenges and the problems facing this nation demand that those who govern and lead bring a high level of seriousness to the conduct of the nation�s business. It is an imperative.
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