6.5% pay hike for public servants: Govt taking balanced approach to salary increases to sustain them – Jagdeo

In light of criticisms that the recent 6.5 per cent salary increase for Public Servants is paltry, Vice President Dr Bharrat Jagdeo has argued that the People’s Progressive Party/Civic (PPP/C) Administration has carefully thought out its approach towards recurring expenses, in order to sustain them in the future.
Last week, Finance Minister Dr Ashni Singh announced an across-the-board 6.5 per cent pay rise for all Public Servants. Retroactive to January 2023, this increase will benefit over 54,000 Public Servants, teachers, members of the Disciplined Services, holders of constitutional offices, and Government pensioners; and place an additional $7.5 billion in disposal income annually in the hands of these employees.
Government also announced a one-month tax-free bonus for the more-than 12,000 members of the Disciplined Services, placing another $1.5 billion in disposable income in their hands.
However, commentaries from various quarters, including from the Opposition, have criticized this year’s pay hike, which is less than the eight per cent paid out in 2022 and the seven per cent paid out in 2021.
During a press conference on Thursday, Vice President Jagdeo pointed out that Government is focused on sustainably running the country, and will not spend excessively without thinking about the future. He noted that any salary increase that is not grounded in an analysis of the country’s economy, the state of its finances, and does not take account of the future revenue stream will be conjecture, and will not be sustainable.
“(Salary increases are) carefully thought out. We want to make sure that we can sustain it in the long run. We want our people to continue to benefit… We can’t just spend everything on recurrent expenditure (like salary increases) and can’t sustain it. It is a balanced approach, and that’s how we approach these matters. And it’s the only way you can sustainably run a country; not by (wanton spending) with no thought behind it. And every expenditure we make has a clear thought behind it,” he contended.
According to the Vice President, people are focusing on the fact that Guyana is now an oil-producing nation, and how much money it is earning from that sector; but they fail to recognise all the other initiatives that Government is undertaking, such as increasing the grants to school children by some $10.5 billion this year alone, and another $14.5 billion for increases to old age pensions.
These, he outlined, are annualised and recurrent expenses, like salary increases, that need to be sustained in the future as well. The Vice President highlighted the certainties regarding the future of fossil fuel, noting that if global demand plummets to a point where it is not sustainable to continue production, then it will be difficult for Guyana to sustain these recurring expenses, as has been happening in neighbouring countries in the region.
“That’s why I’m saying you have to plan for the future too… Anybody who tells you otherwise will doom this country… People don’t look at all of these things,” he said.
“When you increase salaries, it’s recurrent. You have to pay for this year, last year, the year before increases etc, because that’s part of your salary. So, they only look at 6.5 per cent of $200 billion (earned from oil and gas) but what about last year’s increases. When you look at the growth of the wage bill, it’s (more than) $20 billion over the past couple of years,” the Vice President posited.
In addition to these recurring expenses, Jagdeo noted that Government is making massive investments on developmental projects and initiatives in the country that would not only benefit Public Servants, but all Guyanese in other sectors.
“When you run a country, you have to take care of your Public Servants, they’re your people to help you administer the country; but you have a duty to all the people of the country too, who are not Public Servants; who work; who contribute to national wealth; who pay taxes. They also have to benefit from the treasury… You can’t get them to benefit by paying higher wages, because they are not working with [in the Public Sector],” he explained.
Since taking office in August 2020, public employees have received salary increases from the PPP Government of seven per cent in 2021, eight per cent in 2022, and now 6.5 per cent in 2023, for a total of 21.5 per cent over the last three years.
Additionally, the Government raised the income tax threshold from $65,000 to $75,000 in 2022, and then to $85,000 in 2023. It also reinstated the one-month tax-free bonus that was given to members of the Disciplined Services at the end of the year.
President Dr Irfaan Ali has only last month announced salary increases, incentives and allowances for teachers, a $25,000 one-time bonus for all public employees and pensioners, and a one-off $35,000 cash bonus for persons with disabilities (PWDs), all to be paid in December.
Approximately 67,000 public employees will gain from this one-time bonus, including teachers, employees of semi-autonomous agencies, and members of the Disciplined Services. A total of 19,000 PWDs stand to benefit, and a total of 72,000 pensioners will benefit.
“These one-off bonus payments will benefit almost 160,000 persons, and increase their disposable income by over $4.1 billion,” the Head of State had said.
These cash bonuses were introduced to help offset the rising cost of living, and the $5 billion cost-of-living fund included in the 2023 National Budget is what is being used to pay for them. (G8)