By Benjamin Flowers
Increasing Belize’s already high wage bill indiscriminately through salary adjustments will eventually have a negative economic backlash, declared Senator for the Business Community, Mark Lizarraga, this week.
Lizarraga explained that providing salary adjustments with the economy in its current condition will send the public debt higher than it is, and will have a cost effect on all Belizeans.
“We will continue to borrow, as a country, to meet our capital expenditure, which is on an unsustainable path, or we raise, taxes, or both”, Lizarraga said.
He illustrated through the approved budget estimates from the Ministry of Finance, that the total in labour-related costs represents some 63 percent of government’s expenditures.
Those labour-related costs are: direct salaries, 42 percent; travel and subsistence, 1.24 percent; training, 2 percent; contracts and consultancies, 3.2 percent; pensions, 4.7 percent and grants, 9.9 percent.
He added that if the world price of oil were to rebound, it would allow GOB to receive more low-interest financing through the PetroCaribe Fund. However, global estimates are that oil is unlikely to see prices over $100 a barrel as experienced up to the second half of 2014.
In 2014 GOB approved a 5 percent increase for teachers, and in June this year teachers and public officers got an 8 percent increase, worth $43 million.
The staff of the Karl Heusner Memorial Hospital (KHMH) received a 14 percent salary adjustment last month, valued at $1.6 million and at the end of September, the Belize Energy Workers Union (BEWU) announced a 7.5 percent salary adjustment to be rolled out between 2015-2018.
The University of Belize (UB) and the Social Security Board (SSB) are currently negotiating for salary adjustments as well.
Organizations such as the Caribbean Development Bank (CDB),the International Monetary Fund (IMF), and the Inter-American Development Bank (IDB) have all, in various reports, said that Belize’s wage bill is too high and poses an economic threat.
“Partially because Belize is a small state, its public administration is one of the most expensive in Central America compared to the size of its economy.
“This represents a potential risk in a challenging fiscal context.” the IDB said in its 2013 document “Public employment and pay policy in Belize.”
According to the CDB’s 2014 Caribbean Economic Review Belize’s Debt/GDP ratio is 77 percent, making it the 7th highest debt to GDP (gross Domestic Product) ratio in the region.
An increase in public debt would only serve to incase the ratio and put the country in further economic distress.
This report did not take into consideration the almost 500 million in supplementary spending thus far this year, and the settlements for BEL or BTl, and the yet to be specified final payment for BTL.
In its 2014 annual consultation report on Belize, the IMF called for GOB to not only undo the 2014 salary adjustment for teachers, but also to freeze spending on goods and services and to limit the wage bill and wage-related outlays.