May 2017 Financial News

Pay rises unaffordable at this time, warns Central Bank (Barbados)

May 10, 2017

The Central Bank of Barbados has given more than just a strong hint that it is against increases in wages for public servants at this time, saying any rise would put additional strain on Government’s already burdened fiscal position.

In fact, Acting Governor Cleviston Haynes Tuesday warned that if Government were to grant pay rises, it would be forced to introduce other measures to “compensate” for the additional expenditure.

The National Union of Public Workers (NUPW), which represents the majority of civil servants here, has been pressing for a 23 per cent wage hike for Government workers, while the Barbados Workers’ Union (BWU) is demanding a 15 per cent increase for its members. The Freundel Stuart administration has not budged on either request.

It was a back in February during a televised economic forum hosted by the Central Bank that then Governor Dr DeLisle Worrell had argued that in order not to “cause a disaster in the economy” the Central Bank was forced to come up with $50 million every month to pay public workers because the Barbados Revenue Authority was not earning enough to cover the monthly bills.

While Haynes avoided that issue Tuesday, he stopped just short of saying the Central Bank will not support a pay increase at this time, when asked if the financial institution had factored into its projections for this year any pay hike for public sector workers.

“We have talked a lot about fiscal adjustment and reducing the size of the deficit. Therefore it is difficult to support at this time, measures which are likely to increase the size of that deficit. Once you take those measures to increase the size of the deficit, you have to also look for the compensating measures that are going to offset that increase because there is a fundamental issue that we have to address, which is, ‘how are we are going to finance the deficits that we have been running?’

“Much of that financing has come from the Central Bank and we all agreed that is not a sustainable way of dealing with the deficit. So I don’t see how we can add to the deficit without identifying the compensating measures that are going to address that increase,” Haynes said.

In any event, he said it was Government’s decision to determine how it would “reward the public servants for the sacrifice they have made over these last few years”.

Source:
Marlon Madden
Barbados Advocate
Wednesday May 10, 2017

https://www.barbadostoday.bb/2017/05/10/pay-rises-unaffordable-at-this-time-warns-central-bank/