Established October 1895 Generating business activity key at this time Page 5 Wednesday June 3, 2020 $1 VAT Inclusive Pay cuts and the public service CAPITAL WORKS WE have recently seen comments published elsewhere in the media that suggest it would be unfair for the civil service to take pay cuts alone, and that the whole of Barbados’ work force should also be asked to take a similar hit. We appreciate that TO BE DONE some of this rhetoric is union engendered and perhaps much THERE are a number of abandoned,” she said. that we can get more water in comes from workers in the public sector, and/or their families. projects Government is hop- She referred to such work the North of the island, in partic- The fact is many companies have already asked their staff to ing to achieve through its while revealing that as much as ular St. Joseph, St. John and St. take cuts for a period of time, or to defer payment of a portion capital works programme $70 million is spent by Andrew,” she stated. of income. That said, there still seems to be a fundamental lack with the help of the Government per year in the The Prime Minister also spoke of understanding of how and why the public sector came into Barbados Optional Savings rental of office space and it im- about the significant road works being, and what the cost means to taxpayers. Scheme (BOSS). perative, she maintained, that needed across the island. She The public sector exists to carry out the work of an elected Prime Minister Mia Amor that rental bill is reduced.That, admitted that while Government, which includes providing common services needed Mottley made the comments she said, can only be achieved if Government has been trying its to keep society running – water, sewage management etc. The yesterday morning during the steps are taken to bring aban- best, the state of the majority of cost of the public sector,a significant portion of which is employ- first of three meetings held yes- doned buildings back into pro- the roads has deteriorated be- ment, is paid for out of tax revenue extracted from those who terday to discuss the proposed ductive use. cause there was no regular earn a salary or wage or generate profitable revenues that can savings scheme with govern- “Secondly,we have to continue maintenance for a significant be taxed – and in Barbados’ case, even from retirees and pen- ment employees. the process of the laying of water period of time. sioners. If there is a dramatic and prolonged fall in Government “We are going to fix some mains as well as the temporary “We are going to be able to ex- revenue, especially one accompanied by a dramatic rise in so- schools that need fixing; we can’t desal plants that were negoti- pand that, in addition we are cial care costs (like unemployment and severance payments, fix all, we’re going to fix some. ated and received back by the also talking with the Chinese Covid-19 response costs), any responsible Government must We are going to fix some govern- Barbados Water Authority a few Government to sign a memoran- look at what costs can be cut, even at the expense of reduced serv- ment buildings. There is a min- months ago, as well as us doing dum of understanding to do cap- ices.With the wages bill being a significant portion of the over- istry in Reef Road for example the project I have spoken about ital works along the East Coast all public service cost, how can Government not seek to cut this that has been abandoned... like for some time, from Vineyard to through the Scotland District, expense, particularly if there is to be no reduction in the num- the old Water Works building Stewart Hill to Bowmanston, in which as you know, if you want bers of civil servants? there in The Pine that has been order to be able to guarantee BOSS on Page 3 Additional taxation, some may say? At this point imposing more taxation is not sensible – Barbadians are already reeling from high taxation, and with declining income from job losses and business disruption (e.g. tourism), additional taxation would be counter-productive.We question whether cutting costs, includ- ing reducing Cabinet and consolidating ministries, is not the ob- vious and wisest option. The cost of this public service is a core part of the economic problem facing the country.We can’t expect to maintain that level of expenditure, and we can’t easily raise additional tax revenue, and it will be a long while before our key industries return to profitability – so, something has to give. The Prime Minister’s BOSS initiative This brings us to the PM’s recent press conference on a pay cut in the public sector. At first blush, we thought we had to hand it to the PM’s advisors for coming up with a scheme that would defer part of the public sector wage bill over the next several years. The reason it appears clever is because it still gives civil servants the chance to get their full pay by allowing them to put their bonds on the market which, her advisors say – at 5% in- terest and “protected” from any future debt restructuring – is going to be attractive and readily saleable to investors waiting to snap up these new BOSS bonds. It seems, though, there is something amiss with that logic.The BERT debt restructuring exercise decimated the savings of thousands, including the retirement income of many pension- ers, and hit banks and financial institutions hard enough to cause reported financial losses. All of that pain is still fresh, and among those hard hit were public servants, both retired and planning for retirement. We cannot help but wonder if these affected investors will not be ask- ing that dreaded question – can I really trust the word of this or any Government anymore? Will we be truly protected, or will they simply go to Parliament and pass legislation to get out of their obligations, as was done before? More to the point, we don’t believe deflecting the problem to a future date, or trying to solve a core cost problem with a cash flow solution, are what Barbados needs. It’s time to deal directly with the public sector issue, both in terms of size, cost and effi- ciency – the true elephant in the room. Prime Minister Mia Amor Mottley (left) and Senior Economic Advisor Dr. Kevin Greenidge, listen during a Barbados Optional Savings Scheme (BOSS) meeting yesterday at the Garfield Sobers Gymnasium 2 • Wednesday June 3, 2020 The Barbados Advocate The Barbados Advocate Wednesday June 3, 2020 • 3 BOSS a win-win for all, says Mottley PRIME Minister Mia Amor Mottley is opt out; opt in fully,opt in partially; opt out be insulated should there be any cata- this time is not one of financing, but of fis- telling government employees in fully, opt out partially,” PM Mottley told strophic global event. cal space, and the savings scheme go a Central Government and state- those gathered in the gym and joining “What we are trying to do now is create long way in helping to get the capital ex- owned enterprises that the Barbados online. what is known potentially as a secondary penditure that is needed. Optional Savings Scheme (BOSS) is She added,“A win-win for those who are market and it allows people to trade and But, she said it is not the only way potentially a win-win for all going to ensure that you can opt in and to buy and sell. Some people buy and sell Government is seeking to achieve that. involved. opt out, namely the credit union move- cars, some people buy and sell fruit and She indicated that Government is also in She was speaking yesterday morning ment, or individuals who may have more vegetables; all you are doing is buying the process of reviewing the Estimates during the first of three meetings held liquidity than others in or out of the sys- and selling bonds, and why? Because dif- and various programmes that are on the yesterday at the Garfield Sobers tem, working or not working as pension- ferent people have needs for financing cards. Gymnasium to discuss details of the ers. And a win-win for the goal we have Moreover, she noted that the liquidity “There are some programmes we would BOSS initiative. set ourselves as a nation, which we have option for the bond will always be there. have to put on hold, there are some pro- “A win-win for the Government in not yet reached regrettably and that is the But, she explained if the bond is liqui- grammes we would have to pause, there terms of the capital works programme goal of economic enfranchisement.” dated after the day which public officers are some programmes we would have to that we need to undertake so more PM Mottley said while the country has are supposed to make decisions on the get rid of, or find somebody else to do Barbadians can get work – significantly achieved political, educational, worker bonds, the pay-out may not be 100 cents them, because we are in that moment more Barbadians can get work over the and social enfranchisement, economic en- on the dollar, explaining that it would be and because COVID-19 is in a once-in-a- course of the next 12 to 18 months than franchisement is not at the level it should slightly lower or higher depending on the lifetime event, what we don’t want is to would otherwise be able to.A win-win for be.