Opportunity Lost

GOVT-PSA DEALOPPORTUNITY LOST

By GREGORY McGUIRE

No surprise that the President of the Public Services Association, Watson Duke, was this year’s most popular Good Friday Bobolee by public acclaim. But even as they vented their anger on the hapless effigies, public servants should have been wondering whether they themselves weren’t the real bobolees when, in a stunning volte-face, Mr. Duke suddenly signed an accord with the Government for a 5 per cent wage increase for public servants for the period 2008 to 2010. Duke may well be remembered as the modern day Judas, who perpetrated what some consider the most brazen sell-out in T&T’s trade union history. While public servants groan, the Government gloats, confident in having scored a major victory. But is this really so?
As both sides gear up for the next round of negotiations for 2011-2013, each might discover the real cost of Duke’s accord to be far more than they have bargained for.
For public servants, it is the cost of not taking responsibility for the quality of their representation. For the Government, it is the cost of winning a battle but losing the trust on which public service transformation can be built.
The reality, however is that none of us, bystanders to the main event, has escaped. As a nation, we bear the cost of having once again lost the opportunity to raise the issue of public servant salary negotiations to another level and, in so doing, to bring the national conversation in line with the demands of the twenty-first century.
At the end of the day, the negotiations accomplished nothing that could be defined as strategic improvement. Locked in the archaic style of wage negotiations, there were monumental errors on both sides.

The PSA failed in several areas:
It failed to prod the Government into providing a proper account of the state of the national economy and the stake of the national pie due to public servants. This was an important conversation because public servants have been losing out badly over the last several years. Data from the Central Bank indicate that over the period 2001 to 2010 the share of public service wages and salaries as part of current revenue declined from 30.6 to 15.6 per cent. The share of public servant wages and salaries to GDP also declined (from 7.4 in 2001 to 5.2 per cent in 2010). Comparatively, government spending on goods and services moved from 11.8 to 17.3 per cent of expenditure, whilst spending on transfers and subsidies skyrocketed from 25.1 to an astounding 56.3 per cent for the same period. Why such a glaring disparity in the evolution of spending patterns? This seems especially incongruent with the Government’s stance that it could not afford to pay public sector employees more than their 5 per cent offer.
Secondly, the PSA allowed the government to continue setting wages in what could be perceived as an arbitrary manner. The clamor for wage increases has been largely fuelled by the inflationary erosion of purchasing power. Public sector employees claim salaries cannot cover basic living expenses and as such increases ought to compensate. In defence of this position, inflation rates have averaged 9.1 per cent over the past five years, never going far below 7 per cent. One rule of thumb dictates that the price level will have doubled in approximately ten years (i.e. by 2015) given 7 per cent annual inflation; in this case, 5 per cent wage increase over three years hardly begins to come to terms with that. Though there are arguments against linking wage increases to inflation rates, it is at least a defensible foundation to setting wages.
Thirdly, the PSA also failed to make the distinction between negotiating a debt – as in wage increases owned to them – and negotiating future wage increases. It neglected to seize the opportunity to break the cycle of retroactive wage negotiations by declaring past salary increases as a debt! The difference here is that Government must be made to pay the price for failing to settle negotiations in the required timeframe. The settlements for the year 2008 must therefore be based on the state of the economy in 2008 and not on the good or bad state of today’s economy. PSA members seem less than impressed with the $3000 lumpsum buyout as compensation for waiting on the conclusion of negotiations.
The PSA’s reluctance to go before the industrial court is also not supported by the data; at least as far as increases go. Over the period 2006 to 2009 the average annual increase offered by the industrial court was 5 per cent per annum. In the period covered by these negotiations the court offered salary increases in the range of 2.5 – 5 per cent per year. What this means is that if the court held to the pattern of wage increases, the minimum it would have offered the PSA would be within that general range of 3 – 5 per cent per year versus the 2, 1 and 2 per cent per annum increases (2008, 2009, 2010 respectively) that were agreed upon.

Finally, the PSA did not capitalize on the relative solidarity of its own members and the support of other trade unions in rejecting the Chief Personnel Officer’s proposal. Not only were PSA members dismayed at what seemed to be a top-down decision to capitulate, but other unions such as TTUTA and OWTU have stated publicly that the 5 per cent increase has now set a low unofficial benchmark for wage negotiations to come.
While Government basks in its glory, its success must be judged against what else may have been accomplished.
Government lost the opportunity to address the question of productivity in the public service. Poor levels of service in the public sector are a function of the lack of performance metrics and service standards. The Government could have tied a portion of salary increase to the accomplishment of certain service standards across the public service. The set of performance metrics would then have determined productivity levels on which salary bonuses and/or merit increases could be paid. Given that one of the negotiation outcomes was an agreement to begin a one-year job evaluation exercise commencing in July 2011, there was an opportune moment that was missed.
As it turned out, the public cannot expect improvement in service going forward. In fact, given the nature of the settlement, it is more likely that productivity in the public service will continue to deteriorate as public officers seek other means to supplement their income. We all know the old maxim, ‘it is what is measured that gets done’. Pay for performance has been talked about for years in this country, but there has been no traction on it and certainly there is no indication from the Government that it is an icon on their screen.
The Government also passed up on the possibility to define the quality of resources it wishes to have in the public service. In some countries in the Pacific rim, the salaries of public servants are on par with those in the private sector because the Government knows that as a service-oriented business it must recruit high quality resources. The exact policy of this Government with respect to the quality of resources to be attracted to key ministries like the Ministry of Energy or Ministry of Health is unclear. Specialised skills and executive leadership do not come cheap. If the Government is to compete to draw and retain appropriate human resources, it must be prepared to face market prices.
There was also, arguably, the neglected chance to move away from acrimonious collective bargaining to bargaining based on mutual gains. The theory goes that given certain pre-conditions, such as willingness from both parties to divulge relevant information and surrender the traditional notions of power, bargaining outcomes can benefit both union members and the state. So called “Win-Win Bargaining” begins with an analysis of the underlying issues and determination of each party’s interests. If the bargaining is successful, outcomes usually treat with underlying issues more comprehensively and objectively than traditional sequential negotiations. This negotiation style requires a great deal of maturity and trust from both sides. Failing the ability to bury the proverbial hatchet and operate in the national interest as detailed above, a neutral mediator may have served to prevent the eventual deadlock which threatened to take the negotiations to the Industrial Court Special Tribunal.
Proposals for a 2011-2013 collective agreement must be submitted by the PSA in August of this year. For all our sakes, we can only hope that both sides have learnt the appropriate lessons from the recently concluded debacle.

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