Prime Minister Golding, we hope, is not merely flattering to deceive. For, as the PM himself recognised in his broadcast Sunday night, the global economic crisis, paradoxically, provides the administration with the circumstance to take the hard decisions from which administrations have too long shied away.
It is in that context that we commend the prime minister for those initiatives he has already announced, including the planned freeze on public-sector wages. We nonetheless look forward to the Budget debate when we expect the unveiling of broader and deeper programmes to ensure long-term fiscal stability and sustained economic growth.
Indeed, this newspaper has long insisted that the Government's wage bill, estimated at $111 billion for the fiscal year just ended, is unsustainable - a point to which the administration has been edging and conceded by Mr Golding in Sunday's broadcast.
Irresponsible
But Mr Golding did more. He highlighted the apparently slap-dash, irresponsible manner in which public policy too often appears to be fashioned. For how else could you describe the Government's undertaking and moves to implement what would have meant a 46 per cent hike in the wage bill in this new fiscal year, compared with two years ago?Public-sectors workers have already received a portion of that increase - a 15 per cent jump for most employees during the fiscal year just ended, as well as part of an adjustment to teachers, ostensibly to bring their salaries to 80 per cent of what applies to similar jobs in the private sector.
But more retroactive pay, however, was outstanding, plus another seven per cent wage hike for public-sector employees, under contracts agreed with trade unions. Were these increases to be implemented, the wage bill for this fiscal year would head past $140 billion.
It would push the fiscal deficit - at around seven per cent of GDP in the past fiscal year, according to Mr Golding, to "unacceptable levels".
"It would require a level of expenditure that cannot be sustained, not in these harsh times," he said.
The prime minister, therefore, signalled his intent to freeze public-sector wages at 2008/2009 levels and, symbolically, cut his own salary by 15 per cent. He has asked other parliamentarians to agree to a 10 per cent cut in their wages.
Pressure
We expect that trade unions to accede to Mr Golding's wish, for they have little choice in the current environment with government revenue under severe pressure because of the decline in the economy and its limited capacity to borrow.But we question whether Mr Golding has gone far enough. Indeed, as previous freeze agreements with unions have shown, temporary caps provide a palliative, but do not fix the fundamental problem. Once the immediate crisis passes, pent-up wage demand comes to the fore. The fundamental solution has to be to bring the public sector to a manageable size, which might mean cutting 20,000 jobs.
Indeed, as Mr Golding is aware, the immediate wage bill is not the only problem. The public sector has an unfunded, non-contribution pension scheme, which will require expenditure of about 20 per cent of the payroll.
For now, we give Mr Golding the benefit of the doubt, assuming that he will take additional tough measures, including an overhaul of a tax system so as to unleash the country's creative enterprise.
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