MOU With Unions to Save $5 Billion In Expenditure

The Memorandum of Understanding (MOU) signed yesterday (February 16) between the Government and the Jamaica Confederation of Trade Unions (JCTU) will save the Government $5 billion in expenditure on wages in the 2004/05 budget, and will be a major reason for no big tax package in the upcoming budget.
This was disclosed today by Minister of Finance and Planning, Dr. Omar Davies, as he gave a preview of the 2004/05 Budget at a special sitting of the House of Representatives.
The Minister said the MOU with the unions, which calls for a wage restraint in the public sector until 2006, would enable the Government to hold wage expenditure to the same level as the 2003/04 budget, and would result in savings of 1 per cent of the Gross Domestic Product (GDP).
Dr. Davies said this was why the agreement with the unions “cannot be underestimated and why it is so critical to Jamaica’s development”.
Minister Davies told the House that the Government’s recent success in raising US$400 million in external funds would save the Government between $7 billion and $8 billion in interest payments in the next budget. This would not be possible if he had been forced to borrow on the local market, he noted.
Under questioning from Opposition Leader, Edward Seaga, the Minister pointed out that two successful initiatives by the Government – the signing of the MOU with the unions and the raising of loans from the Bank of Nova Scotia and Deutsche/Commerzbank – would result in the reduction of expenditures in the budget of some $13 billion.
The Minister said the prospects for the economy in the next fiscal year were good, with high returns expected from growth in tourism investments and tourist arrivals, improvements in the bauxite sector and the continued trending down of interest rates.
He said the Government had carefully identified those capital projects which were critical to production and that the Government would ensure that they were adequately funded.
Dr. Davies hailed the social partnership talks with trade unions and the private sector, saying they were the most important developments in the economic life of Jamaica since Independence.