I knew Government couldn’t pay one month tax free salary – Eustace

by Chanolde Munroe

Leader of the Opposition Arnhim Eustace says he knew all along that Government would not have been able to pay the one month’s tax free salary being demanded by public sector unions.

“I know the Government can’t pay,” he told listeners of the New Times programme on Nice Radio yesterday.{{more}}

Eustace explained that at present, the monthly salary bill is between EC$23 and $24 million and if the Government were to give in to the unions’ demand, it would cost the Government approximately EC$28 million.

Moreover, if the Government is to agree to the unions’ proposal they would have to pay the monthly salary of $24 million and the additional tax free salary of $28 million, which he says would amount to roughly $50 million.

“They would have to pay two salaries in one month,” the Opposition Leader stated.

Eustace, who is also the president of the New Democratic Party, stated that he has known about the economic inconveniences a salary increase would bring to the country since 2001.

In October 1999, after protracted negotiations, teachers finally settled for a 12 per cent increase in salary over three years, after their demand for a 30 per cent increase was rejected by Eustace, who was, at the time, Minister of Finance in the former NDP administration.

He stated, “If I had gone to 30 per cent, this place would have been in a much worse position and as bad as it is, it would have been much worse. If I had built in that 30 per cent since that time and you are getting increases over 12 to 14 years, what do you think would have been the situation.”

An economist by training, Eustace further said that the international community does not like it when salaries exceed 50 per cent of recurrent expenditure.

However, he believes that St Vincent and the Grenadines should be given some leeway by international bodies because of the additional costs associated with administering a multi-island state.

“So, we have five airports, we have five ports and so on and so we have some additional costs which a lot countries that have one island [do] not have. So maybe they can give us a little over the 50 per cent target.”

He, however, said he does not think that salaries should be as high as 60 per cent of the expenditure.

“…but when you want to carry it to 60 per cent and so on in wages and salary we are wasting time; the international community is not going to help us with that nonsense and I knew that back then, not only now,” the president of the NDP declared.

Last year, public sector unions put forward a proposal to the Prime Minister for one month’s tax free salary in lieu of an increase in salary.

The Prime Minister has repeatedly told the unions that the Government cannot afford to make the payment at this time. The Teachers’ Union, in response, recently sent a letter to the Prime Minister stating that their request for the one month’s tax free salary was now a demand, and necessary action would be taken if the demand of the union is not met.