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Trust, but verify on wage talks

Thursday, March 3, 2011

 It was Ronald Reagan, the 40th President of the United States and, prior to that, a movie star, who made the term “Trust, but verify” famous. Mr Reagan is reported to have used the phrase often in relation to the arms control negotiations between the US and the Soviet Union during his two-term presidency, which lasted from 1981 to 1989, and most famously after the signing of the Intermediate-Range Nuclear Forces Treaty in 1987. In modern times, the term—which ironically is said to have its popular origin in usage by the Russian Marxist revolutionary Vladimir Lenin—has come to signify a state of transparent trust: one that is based on the sharing of information as well as perspectives.

While the term has been used in weighty matters of international politics, it can also apply to any situation in which one party is making assertions without providing an adequate amount of proof or empirical evidence to support the case that is being made. The term, of course, can be applied to the Government’s handling of the negotiations with the Public Services Association in respect, in the first instance, of some 33,000 members of the civil service and statutory authorities and in the future negotiations between the Government and teachers, police officers, members of the Defence Force, and other workers whose salaries are paid by the State.

In a statement late yesterday, the Ministry of Finance declared that the offer by the Chief Personnel Officer of a five per cent increase in the salaries of public servants over the period 2008-2010 was the Government’s “final settlement proposal.” The Finance Ministry’s statement said this final offer “has been made taking into consideration the current economic realities which face Trinidad and Tobago and the need to stabilise the economy and encourage growth.”

While the country trusts the statements coming out of the Ministry of Finance, there is certainly need for the ministry to provide much more information which would allow for the easy verification of the exact state of the country’s “current economic realities” and the extent to which increasing the offer to the public servants from five per cent would destabilise the economy and discourage growth. In other words, as was argued in this space two weeks ago, the Government needs to provide some informational muscle on the bare bones of the assertions that the economy can only afford a retroactive five per cent increase to its public servants.

The Government needs to outline the precise impact on the economy if all of the public sector unions accepted a five per cent wage increase, and what the cost would be if salaries were increased by ten per cent over the three-year term of different collective agreements or, indeed, by the 17 per cent which trade unions at state-owned bank First Citizens and ammonia producer Yara were able to negotiate for their respective workers.

The kind of analysis that would allow the public to verify the Government’s claims could include the incremental expenditure as a result of a 10 per cent increase as opposed to a five per cent increase and the extent to which a 10 per cent increase would drive the country’s fiscal deficit and endanger its ability to finance future endeavours. But it would also provide information on the amount of increased revenue that the State would receive if it opted to go for a higher wage increase than the single-digit one that the Government says is its final offer. Under T&T’s flat tax paradigm, for example, an average worker whose salary goes from $10,000 to $12,000 a month would pay 25 per cent of the higher amount back to the State as income tax and would pay more VAT and other taxes as the salary increases. The public deserves to know what is the Government’s estimate of the amount of additional revenue it would receive as a result of various wage-increase scenarios.


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