Private sector lags behind government

 Delayed release

The preliminary 2012 census report is out but it does not provide data on employment and the labour force in general. At the time of the release of the preliminary report Guyanese were told that they would have to wait another year to receive official word on what the employment, workforce numbers and their trends were like. This is especially true about private sector employment data since employment data along with compensation about the public sector is published annually by the Bureau of Statistics of Guyana (BOS). The delayed release of employment numbers could hardly be good news for any serious private investor who needs the numbers to understand the labour market, and to develop good hiring strategies and compensation packages for potential new hires. But data research undertaken by the World Travel and Tourism Council (WTTC) indicates that government has been working with numbers that it feels confident about. The results of the census might just contradict what it has been projecting about employment.

The WTTC reported that in 2013, the tourism sector in Guyana directly employed 3.3 per cent or 8,000 of the total number of persons who were employed in the country. It also reported that a total of 8 per cent or 19,000 persons were directly or indirectly connected to the tourism industry. Crunching the two sets of numbers suggests that the number of persons that had jobs in Guyana in 2013 ranged between 237,000 to 243,000. These bald numbers say nothing about part-time or casual labour and leave one to think that they were all full-time workers. This is an assumption that is necessary in this article. Along with the data provided by the (BOS), it is possible to allocate the employment numbers between the private and public sectors and to make comparisons of employment and wages between the two sectors of the economy. This article bases its opinions and conclusions on the upper limit of the range of employment numbers just identified.

Public sector employment

20130728rawle's business pageA review of the data in the table below which was taken from the BOS indicates that the public sector employed 28,997 persons in Guyana in 2013. The central government was responsible for 42 per cent of public sector workers. These are the workers who are essentially paid from tax revenues. The public corporations had 58 per cent of public sector workers under their management and on their payrolls. Since the public sector falls under the control of the government, it could be said that 12 per cent of the total number of persons employed in 2013 were under government control. Employment in the public sector has been growing at an annual rate of one per cent as could be further seen from the table below.

The growth in employment by the government has not been even. The central government has been hiring at a rate of five per cent per annum while the rest of the public sector has been shedding jobs. The one exception over the past five years was in 2012 when both the central government and the public enterprises increased staff strength by a total of 964 persons.

The rest of the 243,000 workers or approximately 214,000 persons were being paid by the private sector and non-governmental organizations, even though some private sector workers are paid with the use of taxpayers’ dollars. The sizable number of these employees amounts to 88 per cent of the employed being under the control of the private sector and other non-governmental organizations.

 Educational attainment

The Lucas Stock Index (LSI) remained unchanged increased 0.89 percent during the second period of trading in July 2014.  The stocks of three companies were traded with a total of 844,386 shares changing hands.  There were no Climbers and no Tumblers.  The value of the stocks of Banks DIH (DIH), Demerara Bank Limited (DBL) and Sterling Products Limited (SPL) remained unchanged on the sale of 31,718; 810,028 and 2,640 shares respectively.
The Lucas Stock Index (LSI) remained unchanged increased 0.89 percent during the second period of trading in July 2014. The stocks of three companies were traded with a total of 844,386 shares changing hands. There were no Climbers and no Tumblers. The value of the stocks of Banks DIH (DIH), Demerara Bank Limited (DBL) and Sterling Products Limited (SPL) remained unchanged on the sale of 31,718; 810,028 and 2,640 shares respectively.

It is known that various factors such as experience, education, and the type of job would influence compensation packages. Highly skilled jobs are expected to pay more than unskilled jobs since they require far more formal training than unskilled jobs. Moreover, the wages figure used herein to make the comparisons are calculated on the basis of reported tax data which would not include the untaxed allowances, health coverage, pension benefits and other ‘sweeteners’ enjoyed by some private sector workers. In addition, it would be necessary to match the level of educational attainment with the income and that might only be known if the full census report covers such items. Under such circumstances, comparing private sector and public sector wages could be odious.

Yet, one is still able to get a sense of the gap between public sector and private sector wages. Using the tax data from the national budget and the employment figures derived from the WTTC, wages and salaries are estimated at $194 billion. The statistical publication of the Bank of Guyana (BOG) reports employment costs of public corporations at $32 billion and the total emoluments of the central government at $48 billion, bringing total income in the public sector to $80 billion. This means that only 12 per cent of the workers carried home as much as 41 per cent of the income earned in the economy while 88 per cent of the workers had to make do with 59 per cent of the income.

Further, a comparison of the average income earned in the public and private sectors offers an insight into the possible size of the gap. The average income in the public sector is $2.7 million per annum. The 12,056 employees of the central government earn an average of $3.9 million per year whereas the 16,941 employees of the public corporations earned an average of $1.9 million per year. In contrast, the average income of the private sector was G$598 thousand. On the face of it, the employees in the public sector appear to be better off than those in the private sector.

The above figures do not take account of the wide disparities in income among employees of both the public and private sectors, persons who earn super salaries and persons whose pay packets leave much to be desired. The employees of the central government earned the hog of the public sector money, taking home 60 per cent of the pie paid to public sector workers while those employed in the corporations took home 40 per cent. Just as there are inequities in income distribution, there are extreme living styles and conditions between the super earners of the public and private sectors and those at the bottom of the income ladder.

Not uncommon

The implications of these numbers might be more surprising than one expects, but it is not uncommon to see a gap between public sector and private sector wages that favours the public sector, especially in hard economic times. With better data with which to work, a study by the Congressional Budget Office in 2012 made some interesting comparisons between federal pay and that of the private sector in the USA. The study found that federal workers with a high school diploma earned 21 per cent more than workers with similar educational attainment in the private sector. Those with a bachelor’s degree earned similar pay while federal employees with a doctorate or a professional degree earned 23 per cent less than their counterparts in the private sector. In India too, recent studies have found that persons preferred to work for the government than the private sector because of the intangible benefits (greater job security and other non-cash benefits) which come with government jobs. Similar attitudes were observed in the United Kingdom (UK) indicating that public sector jobs could have high appeal.

Undervaluing skills

Is the same true in Guyana, particularly since Guyana is supposed to be going through good economic times? This question might remain unanswered if the employment data to be presented by the BOS does not provide the vital information needed to conduct such an analysis. An issue that arises, however, is whether the highly skilled employees are needed more in the government than in the private sector or vice versa. Could it be that the government with its much higher salaries is denying the private sector access to skills that could be better utilized in the private sector? Or is it a case where the private sector is undervaluing many of the skills offered to it and thereby causing suitably qualified persons to turn to the public sector for their livelihood? Equally important is whether the private sector is expanding fast enough to absorb the available skills? Such questions would have to be left to a more comprehensive study of the labour market. But this much is known. Many of the jobs that are being created in the private sector are low income jobs. These jobs could be found in the wholesale, retail, transportation, tourism, security and other services industries, and to perform them does not require much formal training.

 Needed discussion

The private sector with its heavy dependence on small businesses might not be geared to take advantage of the skills available to it. It is therefore necessary to find and examine ways to enable the private sector (small businesses in particular) to utilize needed skills to help them increase productivity. The value of this idea stems from the contribution that productivity increases would have on the ability to pay higher wages. This is a much needed discussion between the government and the private sector.

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