5% IS NOT REALLY 5%

Dec 24, 2010 Features / Columnists, Peeping Tom

The ruling administration is stuck on 5% wage increases. For years now, this has been the figure imposed on public servants in the form of annual wage increases.
Year after year, the government announces a 5% increase or some figure near to this sum. Only when there was runaway inflation a few years ago were increases granted above this figure, and even this it was granted in two parts. When it comes to wage increases you can bet that the government will offer 5%
The teachers’ union had also some time ago negotiated a multi-year agreement which catered for annual increases of 5%. The regularity with which this 5% has been offered strongly indicates that very little scientific thinking has gone into the award of wage increases.
The truth of the matter is that in real terms, the wages of workers have hardly increased over the past thirteen years. And for the simple reason that inflation and taxation have undermined whatever increases have been offered to the workers.
The annual 5% wage increases to public workers does not translate to a 5% real increase in incomes, or to a 5% increase in disposable earnings. This 5% for those earning above the income tax threshold is taxable at a rate of 33.3 %, meaning that the workers earning above the threshold only gain 3.4%.
This net percentage is then undermined by inflation, which means that if the inflation rate is higher than 3.4%, then the worker suffers a net loss in pay.
For the authorities to pretend that it is helping workers with an annual 5% increase in wages is being ingenious. In real terms, the workers are losing because of the combined effect of taxation and inflation.
The sugar workers who were not going to receive any increases this year have been offered a one-off 5% payment which we are told will cost the treasury some $720M dollars. This is an insult to the sugar workers who last year received an increase of a mere 3% and were demanding a 15% increase this year. Overall, however, sugar workers are earning far more than they did when the PPP took over. But that is not the point. All future increases for workers must take into account its purchasing power and in real terms, the increase for workers across-the-board has been marginal.
In the case of the sugar workers, the government did not even have the decency to discuss the one-off payment with the workers’ union. They simply, as they have done with public servants’ salaries, imposed a percentage on the workers.
Yet, the same government has the temerity to announce that the sugar union will not be derecognised. However, the actions of imposing an increase without speaking to the union, the representatives of the workers, amounts to a de facto disregarding of the union.
How can the government speak about not derecognising the union when it is the government itself which has been bemoaning the poor turnout of workers and implicitly arguing that this along with strikes and poor weather has contributed to the poor production this year?
Very little is said about the poor planning involved in the Skeldon Sugar Factory, which initially saw the small farmers not being ready, and now problems with the factory itself.
Despite these problems, the workers are being asked to shoulder most of the blame for the state of the industry.
The union has very little choice but to accept the one-off payment. But it should do so under strong protest and press for an investigation into the state of the industry.
Unless this happens, the union will find that it would not be able to effectively negotiate with the corporation and can find itself, like the workers in the public service, having to accept each year increases that are imposed on workers, or increases that are almost immediately undermined by taxation and inflation.

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5% IS NOT REALLY 5%

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