Monday, March 27, 2017

UWI economist: Possible ripple effect of wage hike by unions


ST AUGUSTINE
 

THE Oilfields Workers’ Trade Uni­on (OWTU) should not be asking for a ten per cent wage increase for Petrotrin workers, but inflation has eroded the buying power of their salaries.
This was stated yesterday by The University of the West Indies economics lecturer Dr Roger Hosein.
In an e-mail yesterday, Hosein questioned whether there could be a “ripple effect of a wage hike in the petroleum sector” that could prompt “demand by other unions”, which would ultimately raise the Government’s wage bill and the country’s fiscal deficit.
He said: “For example, should Petrotrin pursue a ten per cent increase in salary, would other unionised workers pursue similar increa­ses, and can the State refuse them should it capitulate to Petrotrin? The State, in fiscal year 2015/2016, spent $9.7 billion on wages and salaries as compared to $6.9 billion at the height of the oil boom in fiscal year 2007/2008.”
He asked: “At a time when T&T is seeking to rationalise State-level expenditures, can we really afford such
an increase? At the same time, and in fairness to the workers, the retail price index (inflation), if rebased to 100, in 2005 stood at 214.3 in 2016, a sharp increase by any standards.
“This means that if a salary of $10,000 in 2005 purchased 10,000 items valued at $1 each, then the same salary in 2016 would only purchase around 4,700 of these same items, reflecting a sharp decrease in the standard of living of workers, if measured in terms of items that their salaries could purchase.”
Let good sense prevail

In the interest of businesses in Trinidad and Tobago, Hosein implored “all policymakers and stakeholders to let good sense prevail and seek reasoned outcomes that will not cause the fiscal deficit to sharply widen”.
He said external shocks such as the impact of increased shale oil production in the United States or a fall in economic growth in China are determined by factors outside of T&T’s control, but still affect the country’s economic growth.
He said: “Internal factors such as strikes and negotiated salary outcomes also affect our growth, but the difference is that we have an input into these internal policy outcomes and so we need to use great judgment and work as a team to ensure that our internal policy errors and actions don’t harm the growth process whilst we navigate with adverse external shocks.
“Indeed, as we recalibrate the growth process in Trinidad and Tobago, all hands on deck are required, pulling in the same direction.”