As an antecedent to the debate, we have no immediate expectation with respect to the raising of wages by 10 per cent as expressed in the APNU+AFC Manifesto which states “APNU+AFC in government will… award a 10% increase on the total public sector wage…” We are of the firm belief that Guyanese of all political stripes owe the Granger-Nagamootoo led coalition administration its first 100 days in office without criticism. This is known as the honeymoon period for all newly elected governments around the world. It is the least one can bestow on the coalition government. But the sore losers in the PPP do not have the common decency and respect to give the new government the opportunity to try to solve some of the problems they have inherited from them.
The framers of the 2015 Budget must recognize the fact that the labour markets, like the broader economy, are also associated with the social and political sectors. While a 10 per cent increase may not be a full solution to poverty alleviation, the human development impact of a wage increase for those at the bottom of the economic ladder would be quite impressive. One only has to reflect on the socio-psychological impact on a clerk in the civil service. A wage increase can empower him or her and positively transform their outlook on life. It would enhance productivity, improve attitudes, validate self-worth and more importantly bolster the image of the APNU+AFC coalition government as being honest and one that has fulfilled its promise to the workers.
We are not blind to the depleted nature of the state finances, especially the Treasury which has been overdrawn by the PPP regime. The government, particularly the Minister of Finance has to be very cautious and must have the financial resources at hand before he embarks on any financial transactions. He should not entertain the thought of digging one hole to fill another. This is not a solution but financial voodooism. However we strongly recommend that the government honours its promise and gives the 10 per cent increase to the workers even if he has to reduce expenses or have a cut-back in other areas. A motivated nation is a productive nation, and an appreciative and a rewarding nation. Since elected to office, there is a premium on trust in the relationship between the new administration and the majority of the people, therefore any broken promise or misstep on policy on this and other issues will destroy that trust and do great harm to the government.
Furthermore, there is a dangerous myth which states that significant wage growth principally increases inflation. But as stated, this is a myth, not reality. The government should not be swayed by these unfounded fairytale statements that are issued by the confused opposition. The basics tell us that inflation is influenced by many factors, not only wage increases. With reference to Guyana where imports far exceed exports, inflation has resulted from a multiple of factors, such as increases in the price of oil on the world market, the higher cost to transport goods, artificial increases in the money supply and declining productivity both at home and abroad, etc.
In 1999 and 2000, the Jagdeo regime gave an across-the-board wage increase of 28 and 30 per cent respectively to the workers and the inflation rate in that period did not reach double digits; it was actually 2.6 per cent.
This empirical evidence clearly debunks the myth peddled by the PPP that increases in wages are the primary driver of inflation in Guyana. We see no reason why it should be materially different today, especially when the broad fundamental structure of the economy has not been radically transformed since 2000. Guyana is still a producer raw materials of basically the same products. In addition, the Bank of Guyana manages the money supply policy with some semblance of independence which partially empowers them to target inflation.
So, we concur with the wise saying ‘Never make a promise unless you can fulfil it.’ Not only will the government lose credibility, but it will lose the trust and confidence of the vast majority of people. The people are confident that the government will do the right thing and honour their promises.