Government of Jamaica
The Restructuring of Public Sector Compensation
Below are excerpts from a speech by Dr Nigel Clarke to a labour market forum on April 11.
My appointment as minister of finance comes after five years of continuous and successful implementation of economic reform programmes with the IMF (International Monetary Fund) across two political administrations, and 18 months before the likely beginning of yet another post-IMF era. We have been here before. This time, however, the post-IMF era has to be positively different.
In our programme engagements with the IMF in the 1970s, the 1980s and the 1990s, our exits turned out to be short-lived. We exited those programmes only to return the following decade. This period of IMF engagement, however, stands out as distinct.
Jamaica has gained significantly from the steadfast implementation of fiscal, monetary and structural policy reforms across two consecutive administrations. It has to be our ambition, therefore, that when we conclude with the IMF this time, we avoid reversal, and instead, manage our affairs in a thoughtful and disciplined way so that our exit is sustained over time, with no need to return. This must be our goal even as Jamaica, a member institution of the IMF, always retains the option to access the wealth of the IMF’s technical advice capacity over the course of time.
As we consider the journey ahead, therefore, what ought to guide economic policymaking? After all, a variety of interests with sometimes-conflicting agendas seek to influence policy – sectoral interests, labour interests, capital interests and even generational interests. This is normal. Policymaking, therefore, requires a balancing of these interests. But there has to be an overarching vision that frames decision-making.
We cherish the ideals of an open society and a competitive democracy, but as a young country, we do not see these as excluding the possibility of a shared national vision of who we are together and where we are going. Even as we pursue individual dreams, the national project must gain a fresh momentum around the goal of economic independence. Every good institution, whether in government, academia, business, or civil society has a vision that provides the framework for establishing priorities, making decisions, and contextualising choices.
For the Ministry of Finance, in an Andrew Holness administration, the organising principles are the pursuit of economic independence, the expansion of economic opportunity for all, and the protection of the vulnerable. These priorities are sometimes in conflict with each other. Pursuing one can work against the other. As a result, the policy options to support economic expansion have to be balanced by the mandate to secure our economic independence, even as the urgency of economic independence has to be moderated by the need to protect the vulnerable.
What is economic independence? As we all know, independence, in a political sense, is the exercise of sovereignty over a territory by a people who also exercise self-governance over that territory. The people of Jamaica earned political Independence in 1962, and since that time, we, the Jamaican people, have chosen our own governments without external consultation. Political independence, however, does not automatically mean economic independence. And an absence of economic independence ultimately threatens political freedoms.
When a country remains economically dependent for a long time, it loses the space to address its adequately social problems – squatting, crime, low education outcomes and, over time, these together threaten the ability for free political expression for many people.
The more responsibly we manage our financial affairs is the more we will have the ability to put a computer lab at Pembroke Hall Primary and improve the library at Maverley Primary and Junior High. Achieving economic independence requires, among other things, that successive Jamaican governments manage the affairs of Jamaica so as to maintain a sustainable and credible economic path for future generations. This does not imply that we do not borrow, but instead it means we should be mindful of the long-term sustainability of public debt.
The following Jamaican proverb sums its up: ‘A nuh one day monkey waan wife’, which means that things that happen today have an impact on the future. Our decisions today determine what we can have tomorrow. As has been our experience, high levels of national debt compromise our economic independence: threatening our ability to sustain ourselves without external assistance, leading to an overdependence on creditors, and in the process, we lose flexibility and space in the setting of economic priorities. This has been the primary economic lesson for Jamaica since Independence.
One of the guiding principles in economic policy setting and decision-making, therefore, will be an evaluation of the degree to which a policy choice enhances or detracts from our pursuit of, and prospects for, economic independence.
Jamaica finds itself today with a very large number of public bodies – approximately 190 in total, with 190 CEOs and 190 boards of directors, which have to meet. The complexity this introduces is simply unmanageable for a country of our size and resources. Each of these 190 public bodies produces an annual report that finds its way through ministries, to Cabinet, and eventually to Parliament. Let us be honest with ourselves: The sheer number of public bodies compromises the ability for effective parliamentary oversight, reflection and review required for good governance.
Furthermore, to the extent that with thought and imagination we could do with fewer public bodies, it means that we are absorbing resources in time and money that could be deployed elsewhere making our economy more efficient.
Just for sake of comparison, Singapore, with an economy 20 times the size as Jamaica’s, has approximately one-third the number of public bodies or statutory boards that we do. They have 64 in Jamaica. In each decade, we have simply created dozens of additional public bodies. According to data published by the IMF in the first staff review of the precautionary standby facility: in the 1950s, we created 11 public bodies; in the 1960s, we created 21 public bodies; in the 1970s, we created another 32 public bodies; in the 1980s, we created another 26 public bodies; in the 1990s, we created another 31 public bodies; and after 2000, we created yet another 31 public bodies.
There was good reason for all of these at that time. The challenge is that as time passes, technologies, opportunities, threats and priorities change. New laws are needed and new institutions required. But it is not economically viable to continuously add public bodies without the certain means to sustainably fund them. That compromises our economic independence.
To be in a position to add public bodies when necessary, we must rationalise where the possibilities exist. To put it another way, in order to be assured that the Jamaican Government can innovate to provide the services required in the future, we have to ensure that we create space by efficient allocation today.
Published in the Gleaner – April 13, 2018
Dr Nigel Clarke is Minister of Finance and the Public Service and Member of Parliament for St Andrew Northwestern. Send feedback to email@example.com.
The Hon. Nigel Clarke, D.Phil., MP
Minister of Finance and the Public Service
30 National Heroes Circle, Kingston 4
Tel: (876) 932-4656 / 4660 / 4655
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