Last week's undertaking by the finance minister, Audley Shaw, to introduce a contributory pension scheme for government workers is not a new initiative. It is something that was long on the agenda of Mr Shaw's predecessor, Dr Omar Davies, which he failed to accomplish.

We hope that Mr Shaw can make good on his promise, for the logic of the idea is unassailable. Current circumstances also provide a more accommodating environment, political and otherwise, for its implementation despite the expected residual resistance from trade unions that represent public-sector workers.

Perhaps, therefore, we should interpret Mr Shaw's statement that the introduction of the scheme "is not years away" to mean that it will be among the public-sector reform initiatives which Prime Minister Bruce Golding has promised for the new fiscal year as part of efforts to lighten the weight of wages and salaries on the Government's budget.

Employee-related spending

As Mr Golding reminded Parliament during the debate on the restructured budget for the current fiscal year, employee-related spending will account for $150 billion. This is an approximately 27 per cent expenditure or the equivalent of nearly 11 per cent of Jamaica's annual output of goods and services. That is unsustainable. It is not surprising, therefore, that the International Monetary Fund, from which Jamaica wants to borrow US$1.2 billion, has told Mr Shaw that he should reduce the wage bill to around nine per cent of GDP.

Prime Minister Golding conceded that a cut in the Government's workforce of 117,000 is inevitable, but argued that the requirements of critical sectors such as education, health and security - the largest employers - place limits on the number of government jobs that can be shed.

The circumstances, therefore, demand a comprehensive review of public-sector employment, both in the number of staff and terms of employment, to ensure the best use of resources, financial and otherwise. In this context, a review of the current non-contributory pension and, dangerously, underfunded pension scheme demands urgent change.

Universal practice

The idea of workers contributing to their pension is increasingly universal. The exemption of government employees goes back to the days when there was a wide gap between their salaries and those of people employed in the private sector. The compensation was an assured pension and generous, and expensive, leave entitlement.

In recent years, however, much of that gap has closed between the public- and private-sector employees, via the various adjustments to bring the pay of government workers to the equivalent of or at least 85 per cent of so-called market rates. Recent reconfigurations of the pay of teachers, the current negotiations with nurses and the exercise with the central civil service in 2002/2003 are examples.

Corresponding adjustment

Yet, there has not been a corresponding adjustment in pension arrangements, for which the government this year carries an allocation of $15 billion - a figure that will rise as the population goes grayer and people live longer.

Civil-service unions will remind us that there is a scheme to which some government employees contribute four per cent of their salaries, but that is a specific arrangement that provides a decent pension for spouses and juvenile children of an employee who dies. A rationalisation of this scheme to accommodate a pension plan may be possible. In any event, the current situation can't continue.

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