Dear Editor,
On December 8, 2023, the Government of Guyana (GoG) announced a 6.5% across the board increase for public sector employees, bringing the cumulative total to date to 21.5% for the period 2021-2023. The announced increase is above the projected inflation rate of 3.8% for the period ending 2023, which is below the global average of 6.6% projected for 2023, but still above pre-pandemic levels.
Critics of the government argued that the 6.5% increase is inadequate. I wish to propose that they have ignored a number of other measures the government implemented, aimed at improving the overall working conditions including wages and salaries. For instance, the adjustments for anomalies across the various categories of workers.
Since 2021, the GoG delivered on one of its undertaking for the first time in decades to adjust various categories of public sector employees’ salaries for anomalies, resulting in upward adjustments. As summarized in table 1 attached, three major categories have so far been adjusted.
The average increase after the adjustments for the disciplined services was 11.9%, when added to the cumulative across the board increase for the period 2021-2023, this brings the average total to an increase of 33.4%, with different levels ranging from 25.3% to 46.3%.
In the education sector, the average increase after adjustments for anomalies was 14% for the teachers, when added to the cumulative across the board increases for the period 2021-2023, this brings the average total to an increase of 35.5%, with different levels ranging from 12% to 16%.
In the health care sector, the average increase after upward adjustments for anomalies was 48%, when added to the cumulative across theboard increases for the period 2021-2023, this brings the average total to an increase of 69.5%, with different levels of health care workers ranging from 34.5% to 125.2%.
The average increase across all three major categories of public sector employees amounted to a 24.6% increase after the upward adjustment for anomalies; plus the 21.5% cumulative across the board increase for the period 2021-2023, gave rise to an average total increase of 46.1%. Of note, this level of increase is consistent with the cumulative increase in the total employment cost reflected in the national budget estimates for the period 2020-2023. To this end, the total employment cost (actual) in 2020 amounted to $71.9 billion, which increased to $105.7 billion (budgeted) in 2023, reflecting an increase of $33.9 billion or 47.13%.
With respect to public sector salary increases and the expectations thereto, the criticisms the government has to confront and contend with are understandable, but often times unreasonable considering the many other benefits, initiatives, and programs the government administers for the overall wellbeing and welfare of people. As such, it may be worthwhile in this premise to establish a general appreciation of where the country stands today financially, and more so how it arrived here, by reflecting briefly on the historical state of public finances.
In 1992, current revenue stood at $17.7 billion, current expenditure stood at $10.3 billion of which total employment costs was $3 billion, representing 17% of total current revenue and 29% of total current expenditure. By 2008, current revenue increased to $116 billion, current expenditure increased to $81.6 billion and total employment costs increased to $23.6 billion, representing 29% of current expenditure and 20% of current revenue.
By 2023, current revenue (excluding NRF/oil resources), is expected to reach $302 billion, current expenditure is an estimated $394 billion and total employment cost is an estimated $107 billion, representing 33% of current revenue and 27% of current expenditure.
Notably, the total employment cost relative to current revenue increased from a low of 17% of revenue in 1992 to 20% by 2008 and 33% by 2023 (almost doubling in size as a percentage of revenue from 1992 to 2023). In absolute terms, current revenue increased by $302 billion or 1706%, current expenditure increased by $384 billion or by 3729%, and total employment costs increased by $104 billion or 3431% from 1992 to 2023.
Notwithstanding the foregoing, one of the key challenges for the GoG is managing the expectations of the population, especially when there are many critics of the government’s economic policies. More so, these criticisms are largely premised upon the notion that the government is receiving an abundance of economic rent from the natural resources sector.
However, there is no such thing as an “abundance of resources” when the reality is such that the resources at the government’s disposal are [constrained. In](http://constrained.In “”) this respect, a number of factors have to be taken into account―against the backdrop of the development needs of the country, the decades of historical political challenges and setbacks, such as transitioning from a bankrupt economy three decades ago.
The government is always placed in a position to make difficult decisions on how they allocate resources andhow they organize the development priorities that would serve the best interest of the people in the short, medium, and long-term.
Progress and development is continually a long, painful, painstaking, tedious and challenging journey. It’s never an overnight process.
The GoG is committed to consistently improving the working conditions of public sector employees within a sustainable framework. This is evidenced, for example, in the annual across the board salary increases; the continuous progress made in upward adjustments to various categories of public servants salaries for anomalies; introduction of additional allowances and benefits for several segments of employees; and the restoration of tax-free bonus for the disciplined services.
Altogether, the cumulative increases applied to the salaries and benefits largely across three major categories of public sector employees for the period 2021-2023, including the upward adjustments for anomalies, is approximately 50%, on average; thereby resulting in an additional $34 billion in disposable income annually. The government is therefore doing their best in this regard, given the resources at their disposal, and more importantly―within a prudential and sustainable framework.
Yours respectfully,
Joel Bhagwandin
(The author is the Director of Financial Advisory, Market Intelligence, and Analytics at SphereX Professional Services Inc. He can be reached at [[email protected]](mailto:[email protected] “”).)
