“[…] For many decades, T&T’s highly productive energy sector funded disproportionately high standards of living in its non-energy sectors, including the public service. However, production in the energy sector has been in decline since 2010, masked temporarily by extraordinary recent increases in energy prices.
“[…] In such difficult circumstances, governments usually ‘fudge’ a settlement among claimants, dictated in part by perceived political strength and the vociferousness of their claims. The un-sustainability of these settlements is brutally exposed over time…”
The following guest column was penned by former minister of finance and double Olympic medallist Wendell Mottley:
The flashing turn signal was first used in the 1938 Buick motor car. Yet, to pass the Trinidad and Tobago driver’s test in 2022, the student driver must roll down the window and demonstrate competence in hand signalling.
I use this as a metaphor for the long-outmoded systems employed in our Trinidad and Tobago public administration, with resultant low productivity and citizen consumer dissatisfaction. This matters because, ultimately, public sector compensation cannot be separated from issues of productivity.
It is especially relevant now as public servants are understandably and rightfully seeking a living wage.
They expect business as usual in wage negotiations, that is, an increase higher than the rate of inflation during the period covered by the collective agreement. The world, including Trinidad and Tobago, has entered a period of high inflation not experienced for 40 years—estimated locally at approximately 7% per annum.
Any wage increases less than that, say public servants and their unions, would amount to a salary cut!
For many decades, T&T’s highly productive energy sector funded disproportionately high standards of living in its non-energy sectors, including the public service. However, production in the energy sector has been in decline since 2010, masked temporarily by extraordinary recent increases in energy prices. Natural gas prices have shot up from pre-pandemic $2.50 mcf to $8.00 mcf today.
The resultant fiscal windfall has many claimants. For example, neglected road repair, debt repayment (including VAT refunds), cooking gas, transport and electricity subsidies, and increases in public sector pay.
In such difficult circumstances, governments usually ‘fudge’ a settlement among claimants, dictated in part by perceived political strength and the vociferousness of their claims. The un-sustainability of these settlements is brutally exposed over time.
I cite the 1980s—another period of energy sector decline. In the build-up to the 1986 General Election, the Public Services Association (PSA) demanded a 15% salary increase.
By 1987, the country’s economic circumstances were such that the Government was compelled to impose a 10% salary cut. More recently, from 2014-2018, Barbados’ dire fiscal situation dictated that the Government lay off almost 4000 public sector workers—approximately 25%.
It has been proven worldwide that only sustained high productivity growth of the whole economy can insulate against such unsatisfactory outcomes. International comparisons, though not contextualised, can be instructive.
The share of public sector employment as a percentage of the total labour force is 25.9% in T&T, 12.5 % in Brazil, 12% in the Dominican Republic and 11.8% in Mexico.
Internationally, Singapore sets enviable standards for high pay and productivity. Singapore’s public servants are only 4.5% of their total labour force and are very well paid compared with Trinidad and Tobago’s.
The base salary of a Singapore permanent secretary is just under TT$300,000 per month, with additional performance-related pay benefits. A T&T permanent secretary receives, by comparison, a base salary of just under TT$50,000 per month, with minimal performance accountability.
However, there are major productivity differences between these two countries that explain the salary differentials.
In the first instance, Singapore employs 66% fewer public servants per capita than T&T. Moreover, Singapore’s GDP per capita is US$59,000 compared with T&T’s US$18,000.
Further, it should not escape our attention that, over many years of tight finances, the T&T government has stuck to a policy of ‘no retrenchment’ in the public service.
In my own public life, I have witnessed a continuing inability to implement necessary public sector reform. I was a member of Patrick Manning’s first Cabinet in 1991, when the PM led a determined effort at reform.
The management expert, the late Gordon Draper, was recruited into the Cabinet to lead this mission of public service reform. Draper confessed that the remote Public Service Commissions and their constitutional lock undermined his efforts to build accountability into the Service.
Similarly, I witnessed a system in the Ministry of Energy and Energy Industries in which our talented young nationals were recruited on short-term contracts. Inevitably, many of the brightest recruits sought job stability at international firms and their service and expertise are now lost to the country.
The 2020 Road Map Committee Report placed considerable emphasis on the digitisation of public administration (The Estonian Model) to modernise and improve productivity in the public service. Implementation has been steady but too slow to meet the urgency of today.
My main point here is that the forces of fiscal gravity, the need for productivity gains and the demands for higher wages are now in stark confrontation. The present institutional structures were not designed to promote productivity or efficiency in service delivery to the public.
Collective bargaining, conciliation and an Industrial Court serve largely to recycle diminishing petroleum rents. These institutions cannot in the long term guarantee the delivery of a living wage.
A new Industrial Policy is required, made up of several components such as new directions for the economy, with high productivity growth potential, up-skilling of thousands of public servants and national adoption of accountable work practices featuring rewards for performance.
We also need to end elitist privilege whereby, for example, doctors ‘fully’ employed in the public service are also allowed their private practices.
In a few weeks, Trinidad and Tobago will celebrate 60 years of Independence. Surely, that is time enough to re-examine some of the provisions of our Independence Constitution and the related institutional arrangements that shackle success and innovation.
I would like to hope that such a re-examination will be guided by an ethos of sincere collaboration rather than the prevailing posture of hostile confrontation. Such a change in attitude would be worthy of celebration.