A possible wage increase could be on the cards for 2022, as the government gets a better understanding of inflationary trends and the strength of the economic recovery.
Finance Minister Camilo Gonsalves says government will engage with workers to conceptualise what sort of wage augmentation is possible, within the confines of our Fiscal Responsibility Framework.
“By the terms of that approved Framework, the wage bill is fixed as a percentage of GDP. As the economy grows, the wage bill is scheduled to move from the current 14 percent of GDP to 12 percent by 2026. While our Fiscal Responsibility Framework allows for some deviations in the wake of pandemics and natural disasters, we intend to hew as closely as possible to these prudential benchmarks. As such, our ability to enhance wages in the near term is directly tied to worker productivity, economic growth and how well we can control the COVID Pandemic”.
Salary increases for public servants were last negotiated in December 2018, for 2018 to 2020 fiscal years.
This negotiation brought about a 1 percent increase in wages and salaries, retroactively from July 1, 2018, a 1.5 percent increase from January 1, 2019, and a 2.0 percent increase from January 1, 2020.
September 2021 data indicate that the point-to-point inflation rate stood at 2.7 percent compared to 1.2 percent in September 2020. The increase in inflation reflects rising price levels in the United States and other emerging economies.
Gonsalves said the main channels for these upward price pressures are freight costs and oil prices.
“While the wage bill increases annually by 2.5 percent due to changes in increments and allowances, the current inflationary pressures contribute to a reduction in the real wage for many, particularly those already at the top of their salary band. We are acutely sensitive to this challenge and its impact on Vincentian workers”, Gonsalves said.
