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Civil service salaries to be cut by 10pct
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| Published on Tuesday, March 9, 2010 |
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In a letter to civil service staff on Tuesday, chief executive officer of the interim government, Mark Capes, informed all public employees that public service salaries and wages for all staff, plus certain allowances, excluding housing, will be cut by 10 percent.
This reduction will take effect, for wage earners, on 16 April and, for salaried staff, at the end of the month. Overtime will now be allowed only in life threatening or other strictly essential circumstances.
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| Mark Capes |
“By providing over 5 and 7 weeks’ notice respectively, I hope this will give you time to adjust your personal finances as necessary,” Capes said.
He explained that, in the Turks and Caicos Islands, as in many of regional neighbours and other countries internationally, the global recession continues to have a severe impact on the economy and public finances.
“In addition to the drastic reduction this has caused in the government’s annual revenue, our financial challenges are made much more difficult due to the high level of national debt and unpaid bills accumulated during the years of financial mismanagement and abuse by previous administrations,” Capes said.
He said that, on taking office, the Interim Government found zero financial reserves, sharply declining revenue and therefore, over the last six months, has accorded high priority to reducing the fiscal deficit.
New measures have been implemented to raise revenue while taking immediate steps to cut expenditure significantly across the public service. This has resulted in expenditure reductions of over 30 percent.
At the same time, Government opened negotiations with its bankers for an affordable, consolidated loan facility to allow payment of the many outstanding bills, inject significant funds into the local economy and helped to ease the acute pressure on the monthly cash flow.
However, Capes said, a day or so before the loan facility was to be signed details of the loan were leaked and subsequently published.
“This irresponsible action has undermined our capacity to negotiate with potential investors for the current and any future loan, and impacted on our efforts to close the deal in February,” he said.
According to Capes, the TCI now faces severe and immediate pressures on our cash flow.
“We are working to repair the damage done and reach agreement for the loan to proceed. However, the combined effect of the continuing fiscal deficit and the delay in our ability to repay the outstanding bills leaves Government with no choice but to make further cuts to public spending now,” he said.
Every effort is being made, Capes said, to explore the few remaining options left open - such as reducing the cost of rent paid for government offices – the point has been reached where cuts must be applied to public service staff salaries and wages.
“Clearly that is a decision we would wish to have avoided, especially in the knowledge that some of you are already struggling to meet your financial commitments, but circumstances are such that we have no other option apart from introducing immediate redundancies. As head of the public service I much regret that Government has had to adopt this course of action, and that we have had to do so without having had the time available to discuss the detail with you. Nevertheless, I am sure you will agree that a cut in pay is preferable to making wide spread redundancies across the whole public service, which would have been the only alternative,” Capes said.
Capes pointed out that the TCI is not the only country to have to take this hard decision; others in the region and internationally are in the same position. For example, Anguilla recently cut public service pay by 15 percent, while the Cayman Islands’ government has announced that it is considering cuts to civil service salaries and begun by agreeing a pay cut for elected members of the Legislative Assembly. Similarly, the Greek Government has announced measures to reduce pay for their civil servants.
Currently in the TCI, public service emoluments currently amount to between 60 percent and 65 percent of total annual revenue.
“This is simply unaffordable. Added to government’s other essential bills, it leaves very little indeed for services to the community such as, social services, education and policing,” Capes said.
The Ministry of Finance forecasts that public sector staff costs must be reduced to around 45 percent of revenue over the next 3 - 4 years.
“So, while there are no immediate plans for significant public service redundancies it will be necessary - as part of a thorough programme of ‘right-sizing’ - to review all posts with an overall objective of reducing the size and cost of the public service, while strengthening critical areas of activity,” Capes said.
He added that it is the government’s aim to restore salaries and wages as soon as the fiscal position has improved to a sustainable level.
“These are difficult times for the Turks and Caicos Islands, times which demand difficult decisions. You can all help to ease the financial difficulties we face by taking every opportunity to avoid waste at work in order to further reduce public expenditure. It is only through our combined efforts that we will be able to deliver a sustainable platform from which we can move forward to deliver quality essential services to our community,” Capes concluded. | | | | Reads : 514 |
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