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An Unsustainable Wage Bill

BELMOPAN, Mon. Jan. 11, 2021– The first House of Representatives meeting of the year, which took place last Friday, stretched on for hours as House members engaged in extensive discussions over eight bills that were brought before the National Assembly. Two of these eight bills were General Revenue Supplementary Bills which made provisions for additional spending by the government. Of all the extra funding that must be secured by government to cover its expenses, the largest allocation, by far, was made to pay public servant wages.

According to Prime Minister John Briceño, the wage bill and the pension bill alone make up about 80% of the budget. The wage bill currently stands at about $45 million monthly, and the PUP administration has had to borrow “a little less than a million” dollars daily to be able to meet its payment of salaries and emoluments.

During his address at the beginning of the year, Prime Minister Briceño did announce that the previous administration had “maxed out” the government credit card and, as a result, all his Ministers had committed to a 10% salary cut as a show of solidarity with the government, to ensure that employees would continue to receive their salaries.

While the new Government has expressed its dedication to ensuring that public service workers do not bear the brunt of any necessary fiscal shortfall, the current financial situation has been said to be unsustainable, which begs the question as to how the PUP will address this huge financial challenge moving forward. During an interview with local media, the Prime Minister had this to say about the way forward:

“We are going to sit down with the union with a blank sheet of paper, and we are going to see what are the steps that we can take to be able to cover this huge crater of the budget, how we will try to reduce the debts that we have. The UDP alone as of late last year borrowed almost a billion dollars all from paper, from Central Bank, and it is unsustainable. We have to fix it. And we can only fix it with our partners, both the Public Service Union and the Teachers Union,” he said.

While many are hoping that the labour unions and GOB can arrive at a viable way of addressing the issue, many are wondering if retrenchment is the only option, as the wage bill continues to grow and the country sinks deeper into debt. When asked if he was considering retrenchment and cutting salaries by 20%, Briceno said:

“We have not considered anything. As I said we have a blank paper and we are going to sit down with our partners and together we have to make the decisions. Whatever decisions that will be able to get us on a sustainable footing, we are going to do that. But we cannot continue to spend money that we don’t have, because if we continue to do that, then everything is going to crash.”

The Prime Minister stated that he has put his confidence in his Economic Recovery Task Force to find a sustainable method to jumpstart Belize’s economy once more.

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