ECA urges caution as public wage hikes raise expectations

Raphael John-Lall

The bil­lion-dol­lar wage set­tle­ments that the Pub­lic Ser­vices As­so­ci­a­tion (PSA) and the Na­tion­al Union of Gov­ern­ment and Fed­er­at­ed Work­ers (NUGFW) have both re­cent­ly se­cured should not im­pact wage ne­go­ti­a­tions in the pri­vate sec­tor.

This is the view of the Em­ploy­ers’ Con­sul­ta­tive As­so­ci­a­tion (ECA).

Re­spond­ing to ques­tions from the Busi­ness Guardian, the ECA, the coun­try’s largest em­ploy­er body, ex­plained that pub­lic sec­tor wage ne­go­ti­a­tions dif­fer from those in the pri­vate sec­tor.

The PSA reached a ten per cent wage in­crease set­tle­ment with the Chief Per­son­nel Of­fi­cer (CPO) in late 2025.

The agree­ment cov­ers two bar­gain­ing pe­ri­ods for the Civ­il Ser­vice, Statu­to­ry Au­thor­i­ties and the To­ba­go House of As­sem­bly (THA), pro­vid­ing back pay es­ti­mat­ed at $3.8 bil­lion. The new salaries took ef­fect in Jan­u­ary 2026, with an ad­vance on ar­rears paid last Christ­mas 2025.

In ear­ly April, the NUGFW signed off on a ten per cent wage in­crease, a deal that will cost the State $2.6 bil­lion in back pay and add $252 mil­lion an­nu­al­ly to the na­tion­al wage bill.

The ECA said there is no doubt that de­vel­op­ments in the pub­lic sec­tor could in­flu­ence sen­ti­ment and ex­pec­ta­tions with­in the pri­vate sec­tor, par­tic­u­lar­ly where unions op­er­ate across both spaces.

How­ev­er, pri­vate sec­tor ne­go­ti­a­tions are fun­da­men­tal­ly dif­fer­ent in na­ture and can­not be de­ter­mined by pub­lic sec­tor out­comes alone.

“Pri­vate en­ter­pris­es must op­er­ate with­in their fi­nan­cial re­al­i­ties, in­clud­ing prof­itabil­i­ty, cash flow, mar­ket con­di­tions, pro­duc­tiv­i­ty lev­els and com­pet­i­tive pres­sures. Un­like the State, busi­ness­es can­not re­ly on deficit fi­nanc­ing or bud­getary re­al­lo­ca­tion to ab­sorb in­creased wage bills,” the ECA said in a state­ment to the Busi­ness Guardian.

The em­ploy­ers’ body al­so said that while some or­gan­i­sa­tions, par­tic­u­lar­ly larg­er or more prof­itable ones, may have the ca­pac­i­ty to of­fer stronger wage ad­just­ments, it would be nei­ther re­al­is­tic nor eco­nom­i­cal­ly pru­dent to ex­pect uni­form repli­ca­tion of pub­lic sec­tor set­tle­ments across the pri­vate sec­tor.

This is es­pe­cial­ly true for small and medi­um-sized en­ter­pris­es, many of which op­er­ate on nar­row mar­gins in an al­ready chal­leng­ing busi­ness en­vi­ron­ment.

“Ul­ti­mate­ly, pri­vate sec­tor out­comes will con­tin­ue to be de­ter­mined at the en­ter­prise lev­el, based on af­ford­abil­i­ty, sus­tain­abil­i­ty and op­er­a­tional re­al­i­ties,” the ECA said, as it em­pha­sised that col­lec­tive bar­gain­ing must re­main a struc­tured, ev­i­dence-based process car­ried out in good faith and ground­ed in the spe­cif­ic re­al­i­ties of each bar­gain­ing unit.

Though note­wor­thy, these set­tle­ments do not re­move the need for prop­er cost­ing, eco­nom­ic as­sess­ment and ne­go­ti­a­tion on a case-by-case ba­sis.

“Pub­lic sec­tor bar­gain­ing is in­her­ent­ly tied to the State’s fis­cal ca­pac­i­ty as the coun­try’s sin­gle largest em­ploy­er, and its abil­i­ty to not on­ly meet cur­rent oblig­a­tions but al­so sus­tain these new com­mit­ments re­spon­si­bly over time,” the ECA added.

WAGES AND PRO­DUC­TIV­I­TY

The is­sue of pro­duc­tiv­i­ty re­mains cen­tral to any dis­cus­sion on wage growth, and the ECA made it clear that it has con­sis­tent­ly main­tained that, over the long term, sus­tain­able im­prove­ments in wages are best sup­port­ed by cor­re­spond­ing im­prove­ments in pro­duc­tiv­i­ty, ef­fi­cien­cy and over­all eco­nom­ic per­for­mance.

“At a time when many busi­ness­es are al­ready con­tend­ing with ris­ing costs, un­cer­tain­ty and com­pet­i­tive pres­sures, there must be a stronger fo­cus on the wage-pro­duc­tiv­i­ty nexus. Wage in­creas­es that are not sup­port­ed, over time, by cor­re­spond­ing gains in out­put, ef­fi­cien­cy, ser­vice de­liv­ery or over­all en­ter­prise per­for­mance can place ad­di­tion­al strain on en­ter­pris­es and, by ex­ten­sion, the wider econ­o­my. Re­cent pub­lic sec­tor set­tle­ments are there­fore sig­nif­i­cant not sim­ply be­cause of their im­me­di­ate cost, but be­cause they re­in­force the im­por­tance of sus­tain­abil­i­ty and val­ue cre­ation over the longer term,” it ex­plained.

Im­por­tant­ly, pro­duc­tiv­i­ty is not sole­ly the re­spon­si­bil­i­ty of work­ers, the ECA added.

“It is a shared out­come that de­pends on mul­ti­ple fac­tors, in­clud­ing man­age­ment prac­tices and the qual­i­ty of su­per­vi­sion, in­vest­ment in re­sources and a sense of du­ty to use avail­able re­sources in a pro­duc­tive man­ner, ca­pac­i­ty de­vel­op­ment and up­skilling, work­place sys­tems, and the broad­er eco­nom­ic en­vi­ron­ment. Em­ploy­ers, em­ploy­ees and the State all have a role to play in cre­at­ing the con­di­tions for a cul­ture of stronger per­for­mance and con­tin­u­ous im­prove­ment,” the ECA out­lined.

It al­so not­ed that these de­vel­op­ments are tak­ing place with­in a broad­er con­text of pro­posed labour mar­ket re­forms, un­der­scor­ing the im­por­tance of en­sur­ing that wage out­comes, work­place ex­pec­ta­tions and pro­duc­tiv­i­ty im­prove­ments are ap­proached in a bal­anced and sus­tain­able man­ner.

COST OF LIV­ING

Labour re­la­tions spe­cial­ist and lec­tur­er in labour stud­ies at the Cipri­ani Col­lege of Labour and Co-op­er­a­tive Stud­ies, Trevor John­son, fur­ther said that, though there is an ex­pres­sion of some de­gree of sat­is­fac­tion, one must bear in mind that these set­tle­ments are for two col­lec­tive bar­gain­ing pe­ri­ods (2014 to 2016 and 2017 to 2019).

He said this im­me­di­ate­ly brought in­to fo­cus the sig­nif­i­cant chal­lenges work­ers in the pub­lic ser­vice face in align­ing their salaries with the re­al­i­ty of the ac­tu­al cost of liv­ing in 2026.

John­son added that the set­tle­ment of these ne­go­ti­a­tions, while unions and work­ers may be re­lieved at the out­come, still leaves two full bar­gain­ing pe­ri­ods (2020–2022 and 2023–2025) out­stand­ing and ac­tu­al­ly en­ters a third pe­ri­od (2026–2028).

This is cer­tain­ly not an ide­al sit­u­a­tion in an in­dus­tri­al re­la­tions en­vi­ron­ment where work­ers are rou­tine­ly in ar­rears of set­tle­ments, he said.

“Jux­ta­pose this to the da­ta from the Cen­tral Sta­tis­ti­cal Of­fice (CSO/2023), which re­veals that there were in­creas­es across the board in re­al ‘bread and but­ter’ is­sues for work­ing peo­ple. The cost of ne­ces­si­ties such as food, shel­ter, trans­port and health has sig­nif­i­cant­ly in­creased, while peo­ple face an up­hill strug­gle with an in­crease in food prices of 44.24 per cent, an in­crease in trans­porta­tion of ap­prox­i­mate­ly 43 per cent, shel­ter by 10.21 per cent and a sig­nif­i­cant in­crease in health­care ex­pens­es of 38 per cent,” John­son ex­plained.

He said these fig­ures should be suf­fi­cient jus­ti­fi­ca­tion for why col­lec­tive bar­gain­ing must be brought up to date and not lan­guish two and three pe­ri­ods be­hind, as the pre­vi­ous ad­min­is­tra­tion seemed to have be­come too com­fort­able with.

John­son al­so en­cour­aged trade unions to play their part in pre­sent­ing pro­pos­als for the out­stand­ing pe­ri­ods and to press for ear­ly dis­cus­sions with the CPO.

“It should be not­ed that in sev­er­al Caribbean coun­tries such as Bar­ba­dos, An­tigua and Bar­bu­da, and Ja­maica, pub­lic sec­tor ne­go­ti­a­tions face chal­lenges as well, with those re­spec­tive gov­ern­ments seek­ing res­o­lu­tion to ad­vance dis­cus­sions with the unions to bring re­lief to work­ers,” John­son added.

He al­so point­ed out that even though the PSA and NUGFW have set­tled, sev­er­al unions in the pub­lic sec­tor re­main in ne­go­ti­a­tions with the CPO, and he re­mains hope­ful for a time­ly set­tle­ment to bring re­lief to their mem­ber­ship as well.

Speak­ing about its ef­fect on the pri­vate sec­tor, John­son said ne­go­ti­a­tions in the pub­lic and pri­vate sec­tors of­ten in­ter­sect in terms of their im­pact and in­flu­ence on each oth­er. In the case of the pub­lic sec­tor, the Gov­ern­ment is the largest em­ploy­er in the coun­try, and its set­tle­ments are made pub­lic in both Par­lia­ment and across the me­dia, so the im­pact and in­flu­ence are im­me­di­ate.

“Ex­pec­ta­tions are aroused, and work­ers and their trade unions, and even in non-unionised en­vi­ron­ments, do have an ex­pec­ta­tion that their com­pa­nies or or­gan­i­sa­tions in the pri­vate sec­tor will not just fol­low suit but seek even more en­hanced set­tle­ments, as they are of­ten in a very com­pet­i­tive en­vi­ron­ment,” John­son added.

IN­FLA­TION­ARY IM­PACT

Econ­o­mist Dr Vanus James fur­ther told the Busi­ness Guardian that if there is no struc­tur­al change and ac­com­pa­ny­ing pro­duc­tiv­i­ty, this process could neg­a­tive­ly af­fect in­fla­tion.

“The in­fla­tion will af­fect our re­al ex­change rate and wors­en the pres­sures on our ca­pac­i­ty to ad­dress the short­age of for­eign ex­change, es­pe­cial­ly since much of our in­fla­tion is im­port­ed and on­ly long-term eco­nom­ic and trade re­struc­tur­ing and growth of the ‘pro­duc­tiv­i­ty of im­ports’ can ad­dress that vul­ner­a­bil­i­ty. Note that in a coun­try like this, im­ports are a fac­tor of pro­duc­tion,” he said.

Com­ment­ing on the bil­lions of dol­lars the Gov­ern­ment is spend­ing on out­stand­ing wage ne­go­ti­a­tions, he said he ex­pects this to im­pact the na­tion­al econ­o­my.

“Any large ex­pen­di­ture will do the same, in­clud­ing ex­pen­di­ture on the pub­lic sec­tor wage bill. Keep in mind that the gov­ern­ment will have to bor­row (es­pe­cial­ly in­ter­na­tion­al­ly) and draw down on na­tion­al sav­ings to meet these com­mit­ments, es­pe­cial­ly since rev­enues are gen­er­al­ly be­low ex­pec­ta­tions. Check the Cen­tral Bank web­site (fis­cal), and you will see ev­i­dence to sup­port these ob­ser­va­tions,” James added.