The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Ministry of Finance's top official last night said the $68m year-over-year increase in compensation for government employees during the 2022-2023 fiscal year is "not an annual norm".

Simon Wilson, the financial secretary, told Tribune Business that the 9.2 percent rise to $805.2m over the 12 months to end-June 2023 will "taper off over a period of time" as the multiple industrial agreements signed with various public sector unions typically "front load" improved compensation such as lump-sum payments.

With "close to 90 percent" of public sector industrial deals now completed, he added that the wage, benefits and compensation agreed had been "kept within the fiscal framework" set by the Government as it sought to balance prudence and meeting Budget targets with maintaining productivity and morale.

Mr Wilson spoke out after the Ministry of Finance's fourth quarter and full-year 2022-2023 fiscal report, unveiled yesterday, highlighted the impact of the multiple industrial agreement signings on the Government's wage bill.

"Compensation of employees increased by $68m (9.2 percent) to $805.2m and represented 97.3 percent of the budget target," the report said. "The increase in the public sector wage bill reflects staff promotions, salary adjustments and additional hires for staffing needs in new and existing government ministries and agencies."

The financial secretary, though, told this newspaper that the magnitude of the 2022-2023 increase is unlikely to be repeated moving forward. "That's not an annual norm," Mr Wilson said of the $68m increase. "It's because of the industrial agreements. You front load a lot of payments in the industrial agreements, and arrears and the level of increase.

"The payments are front-loaded so they're going to taper off over a period of time. Most of those agreements are three-year agreements. I would say we have completed close to 90 percent of it, and have to look forward to the next negotiating window. We have to just keep pushing forward."

Asked whether the industrial agreement increases had been kept within reasonable limits, given the Government's fiscal constraints, Mr Wilson replied: "Yes, yes, yes. We were able to keep them within the fiscal framework. We feel comfortable with the agreements that have been agreed; that they are affordable and fair. Affordable to us and fair to the employees."

Elsewhere, the Ministry of Finance report affirmed that near-$500m, or half a billion dollars, in COVID-19 related spending continues to wither. Just $12.3m of such expenditure, largely representing healthcare spending and small business loans, was incurred during 2022-2023, taking the total to $467.3m. Mr Wilson confirmed that COVID-related spending in 2023-2024 will be "very, very minimal" if any.

The 2022-2023 fourth quarter and full-year report affirmed that the Government's recurrent, or fixed cost, spending on the likes of wages and rents was held largely flat against the prior year in line with its overall fiscal strategy of containing costs.

"During the 12 months to end-June for the 2022-2023 fiscal year, total recurrent expenditure increased by $18.9m (0.6 percent) to $3.062bn compared to the same period in the prior year, representing 99.6 percent of the targeted spend," the Ministry of Finance report said.

"Spending on the use of goods and services was higher by $32.7m (5.1 percent) at $671.7m, which corresponded to 99.6 percent of the annual budget. Rental costs increased by $22.4m (26.7 percent) to $105.9m, mostly comprising payments for office lease and rent, vehicle leases and living accommodations. Rental costs during the period surpassed the budget target by 2.5 percent."

The Ministry of Finance report added that the Government's spending on services was higher by $90m (45.4 percent) at $288.3m, driven by higher outlays for consultancy services and operation of facilities. This exceeded the Budget target by 3.2 percent.

"Public debt interest payments expanded by $21.3m (3.9 percent) to $573.1m, which surpassed the Budget target by 2.3 percent. By currency, payments on foreign currency obligations totaled $316.5m (56.1 percent), while payments on domestic debt obligations totaled $256.6m (45.5 percent)," the Ministry of Finance report said.

"Subsidies, which include transfers to government-owned and/or controlled enterprises that provide commercial goods and services to the public, receded by $31.2m (6.3 percent) to $464.7m, which surpassed the budget target by 7.5 percent.

"Subsidies to public non-financial corporations declined by $34.4m (7.3 percent) to $439.2m, paced primarily by the $26.9m contraction in COVID-19 support to the Public Hospitals Authority following the end of emergency orders. Subsidies to private enterprises and other sectors rose by $3.2m (14.6 percent) to $25.5m, owing to higher equity contribution payments to Baha Mar ($2.8)," it added.

"Social benefit payments declined by $58.4m (20.4 percent) to $227.4m, which corresponded to 98 percent of the annual budget. Social assistance benefits contracted by $67.6m (56.2 percent) to $52.8m, primarily explained by the cessation of the COVID-19 emergency orders and the need for related assistance.

"Pension and gratuity payments increased by $9.2m (5.6 percent) to $174.6m, largely attributed to the recent cost of living increase granted to pensioners... Payment of insurance premiums decreased by $55m (40.5 percent) to $80.7m (96.8 percent of Budget) compared to the prior year."