Business

Pension talks begin between government and trade unions

BY BALFORD HENRY
Senior staff reporter
balfordh@jamaicaobserver.com

Wednesday, August 09, 2017

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Ministry of Finance and the Public Service and public sector trade unions have started discussions in an effort to resolve issues affecting the pension reform bills, and to pave the way for commencing negotiations on a new wage agreement.

The parties met at the ministry on Friday, and focused mainly on the passage of one of the pension bills, the Pensions (Public Service) Act of 2017, which facilitates a new system under which permanent government employees will contribute to their pension.

The second bill, the Constitution (Amendment) (Established Fund) (Payment of Pensions) Act 2017, facilitates a constitutional change to provisions which currently protect the right of public employees to a non-contributory pension paid from the budget. The bills were first tabled in the House of Representatives on November 15, 2015. They were eventually passed in the House in April, this year.

Under the pension reform measures, the five per cent contribution from the public sector workers would eventually go into a segregated fund, to which the government would also contribute, and which is expected to accommodate investments in the country's economy.

The unions, including the Jamaica Confederation of Trade Unions (JCTU), have expressed concerns about the possibility of their contributions ending up in the government's consolidated fund, if the establishment of the segregated fund is delayed. They are also concerned about when the government would start making its contribution to the segregated fund.

The public sector workers should have started contributing to the pension fund from April this year, but Minister of Finance and the Public Service, Audley Shaw, informed the House of Representatives in April that they would start paying 2.5 per cent in April 2018, and the full five per cent in April 2019.

However, despite assurances from Prime Minister Andrew Holness that the fund will be established as soon as possible, the unions say they are concerned that, like the revenues of a number of public sector bodies, which were recently directed into the consolidated fund, the pension funds might also take the same route, instead of flowing into the segregated fund.

Holness has cautioned, in the meantime, that the delay in reforming public sector pension will result in a “major crisis”.

“I cannot over emphasize that point. In 1990, the pension bill of the Government was 0.4 per cent of the Gross Domestic Product (GDP). Today, it has more than quadrupled. It is now two per cent of GDP,” he told a Bustamante Industrial Trade Union (BITU) conference, recently.

He noted that in the current circumstances, the government is forced to find some $34.5 billion annually to meet the pension expenses.

“The pension bill is growing…It is absolutely important that we get the Bills passed. The end result will be to the benefit of you the workers and the country,” Holness insisted.

Chairman of the Economic Growth Council (EGC), Michael Lee Chin, has also expressed disappointment over the delay in passing the bills and establishing the fund, which is expected to swell the availability of financing available to investors, and help accelerate the EGC's economic growth programme.

Interestingly, the two bills were passed in the House of Representatives in April after limited debate involving the Prime Minister, the Minister of Finance and the Public Service and the Leader of the Opposition, Dr Peter Phillips, who only insisted on a timeline for the fund to chip in. However, they have been stalled in the Senate since.

The Jamaica Observer understands that the delay in the Senate involves other issues raised recently by the trade unions, including their demand for the discontinuation of contractual employment within the public sector, as well as for temporary workers to be included in the pension scheme.

These and other matters are expected to be highlighted when the parties meet again.

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