Prime Minister Holness Speaking at the 105th Jamaica Civil Service Association Annual General Meeting
Keynote Address
By
The Most Honourable Andrew Holness ON, PC, MP
Prime Minister of Jamaica
At the
105th Jamaica Civil Service Association Annual General Meeting
On
May 30, 2024
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All dignitaries acknowledged, but you will understand the need for efficiency in the delivery of the presentation. My task is a difficult one coming after your very eloquent president. I did take a few notes, but I am not promising you that I will be able to respond to all the points you have raised. But before I do that, let me attempt to make some connections with this organization.
First, by complimenting the executive for transforming this hall. The last time I was here it was quite different. In fact, when I came in, I had to say wait, is this the same place? It’s modernized and I think it is appropriately named after your past president.
You will understand what I’m about to say and what I’m about to say is that I’m a civil service baby. My mother spent over 33 years in the civil service, in fact, in the Ministry of Labor and Social Security and I spent a few summers working in that ministry and I spent many days listening to her and her friends talking about their work. And I am still spending a few nights listening to her talk about her work because she still maintains contact with the ministry. She’s very passionate about her work and so I have a very deep understanding, a deep regard and deep respect for public servants.
There is a sense that the public service and public servants are impersonal and disconnected from the output of their work, but that is not the case. Many public servants, indeed, most public servants, are very passionate, very empathetic about the people that they serve and the service that they give. It defines them and it means a lot to them. So, I stand here as essentially a product of the public service, the civil service. In many ways, I am one of you. I come from you so I would well accept the title brother Andrew. Right, Sister Techa? Now that we’re connected, let me then capture your mind for a few moments.
The government is undertaking several major transformational projects in the country, major stuff; I use the term nation building projects. These are not short-term projects, meaning that the impact is not for five years. The things that we’re attempting to do will set the foundation for the country for the next 50 to 100 years. This is the first time that the country has been in a position to plan longer than a five-year cycle. The danger with planning outside of a five-year cycle is that you probably will do things that are not popular to get you re-elected, but you definitely will do the things to ensure that the country will be on a solid footing.
People won’t appreciate them right away, but on reflection, they will understand what it is that we’re doing. So, though I consider myself to be a planner, a builder, a transformational person, I’m also a politician and Dr Clarke has fast become one because we understand that for our good works to be accomplished, we need to have the support and authority of the people in our democracy to continue the work. And therefore, it requires us to engage, explain, put the facts before you the adjudicators, the judges, the voters, the members of the public service, for you to decide. That is the essence of our democracy.
So, we are undertaking nation building projects. There is one particular nation building project, which crosses administrations and I consider myself to be fortunate to be at the table when this nation building exercise was being put together and that is our Fiscal Management Programme. It started in 2009 out of crisis. We started with partnership with the IMF, and I remember those years very, very, very clearly. I was a minister in the Cabinet at the time. We transitioned to another government; the programme took a different shape but on the same pathway. And then transition back to my administration again, this time I had an opportunity to fully reflect and to work out a strategy and a structure and today, we are now at the point where our fiscal management programme is lauded across the world.
We are now at the point where we will establish very soon a Fiscal Commission which is a new feature in our governance architecture to ensure that any government that come makes the right decisions about your tax dollars because that’s essentially what the fiscal management programme is.
Another important part of that programme is that any government that comes will not be able to borrow in a way that places the country at risk. So, today we can celebrate that we have moved from- some people say it was 140 other measures, put it as high as 150% debt to GDP, in terms of the ratio, to now we are at about 72%. Now, you tell me if that is not a major achievement.
So, Jamaica today is quite different from Jamaica 10 years ago. It may not feel that way to the average person, but for you sitting here, you understand the imperatives of not having a high debt to GDP ratio and what that can do to your ability to get better wages. And I want you to reflect on that, that when you are sitting on the other side of the negotiating table and the situation is how are we going to pay you when we don’t have the money and this is our debt and you know what, maybe you’re going to have to take a wage freeze. You remember that? I’m glad you said that. That was in the past. I’m glad you recognize that. So, Jamaica today, Fae, is that different Jamaica and we want to keep it that way. I use this as an example, but it was your reality. You endured several years of wage freezes. Yes, as I said, I’m capturing your mind for a little bit. I wanted to just reflect on it.
And our fiscal management continues even under severe political pressure to ‘run with it’ because that’s what it has come down to. As we enter into election and pre-election seasons, the electorate is saying we are under pressure, we are not feeling it, we are suffering, spend! But that is just like a self-fulfilling prophecy of making it worse for you. If we were to abandon Fiscal frugality, all of what you want to achieve, we would not achieve it and that in itself is a different Jamaica because other governments would have done that in order to be elected. We’re a different Jamaica today.
We’re investing. Listen, remember what I said a while ago. This government is doing things that we’re not going to get the credit for today. You are not going to bring yourself to accept these things right away. I’m giving you harsh facts, realities, but I’m sure when you go home and internalize it, you may not feel publicly to agree, but these are facts you can’t argue with.
Another big nation building project that we are undertaking is road infrastructure. In campaigning for 2016 and other campaigns, I believe I would have gone around Jamaica two or three times. I’ve been on all the roads, and nobody needs to tell me that our roads are in a bad state. Nobody needs to tell me that. Why have our roads been in a bad state? And were they in a bad state since 2016?
Our roads are in a bad state because our high debt, low growth did not afford us the resources to have consistent investment in the maintenance of our roads; that’s the reality. Now, our road programme has strategically been directed towards in the first instance developing new highways and connections because that is critical to our economic growth programme. We have to open up new road corridors to get new lands opened up so that we can have new housing development, new business and to increase productivity with more efficient transportation on critical networks and corridors. And you can all see and attest to the massive infrastructure development on our highways.
Now, we have to shift focus to dealing with the roads that pass your house, your community roads and that’s what we’ve been doing. So, we have taken on this huge project of looking at over 25,000 kilometers of roadways in our country which we haven’t significantly invested in, in the last 40 years to start catching up to do that now. And that’s not easy but we are at the point where we can do it. We have allocated 40 billion Jamaican dollars to start to look at what we call the municipal corridors, the roads that are in your community.
It’s not going to fix all the roads overnight or one time but what I’ve said to the Minister of Finance is that we have to sustain this level of allocation so that we can, in the next decade, have a meaningful impact on our roads, that’s the reality. I could never stand here and tell you that tomorrow every road is going to be fixed. It’s not practical. The procurement process itself means that you have to wait six to seven months to almost a year before you can even start some roads. So that’s the reality.
Nation building project and we have started, crime and violence and police reform, another area. Again, these are long-term investments. The police have never been as equipped as they have been now. We have transformed the leadership and management of the police force. We have increased the numbers in the police force. Before, attrition was an issue, now it is not. As it appears, and people still say crime is high, and yes, crime is high, but the fact is we are now reaping the benefits of our investment in security where we are seeing major crimes going down and murders starting to attenuate. We’re not at the point where we want to be, but we’re starting to see the results of the investment.
I make a quick point as I talk about crime and violence. There are some challenges which will emerge which we cannot foresee. The challenge with our neighbour, Haiti, next door. When we made investments in offshore patrol vessels, radars, and other technology to protect our borders, we weren’t thinking about Haiti and the possible migration from Haiti. We were thinking about interdicting drugs and guns coming through our exclusive economic zone but as it has turned out, that investment is paying significant dividend. We are able to detect, we are able to deter, we repatriate very quickly and that is the benefit and dividends of the investment in security; something that the average person won’t see as a benefit but you as public servants, those of you who work in the Ministry of National Security, you know and understand the threat and how we are protecting Jamaica better and better every day.
Unemployment and training
Ten years ago, what was the unemployment rate? It was double digits, it was 14%. Thank you for reminding me specifically. Now the unemployment rate is 4.2%. These are just facts and realities; 4.2%. The biggest complaints I get from employers, ‘we can’t find enough labour and we can’t find labour that’s trained and aligned to the needs that we have’ and so training has now become our new effort to get those 20 or 30,000 persons who are outside of the labour force into the labour force and to upskill the workers that are in the labour force. That’s the big challenge for us now.
Economic growth
You know, for many years we struggled with economic growth, and I would say we’re still struggling. I’m certain Minister Clarke would not say that he is satisfied with the level of economic growth 1.9% which is the latest outturn from PIOJ. It’s nothing to brag about but what can we brag about? We can brag that this is a 12 consecutive quarter of growth since the recovery from the COVID pandemic: 12 consecutive quarters. And before the pandemic, we had 20 consecutive quarters of growth.
What does that say? It means that the economy has developed a level of sustainability. We are in a particular growth trajectory, certainty and stability, but that is not going to be enough. That is not going to be enough for the challenges that we have and I’m going to come back to that a little later, but another big transformational project that we have taken on is education.
I won’t say that I am satisfied as to where we are in education. We need to be much further along, but education is such a big task we had to put together a commission to review the education system and advise us as to how to treat with it. I certainly I’m going to shift some of my focus from other areas onto education because as we try to deal with this labour shortage and to the upskilling of our population particularly in terms of emotional intelligence as well, we have to focus on the education system so that’s going to be another area of focus for me.
I want to talk quickly about health. We’re making massive investments in health. For the first time we are building hospitals in 30 years. I mean, that’s the fact, that’s the reality. We’ve never built any hospitals in 30 years. Now, we have three hospitals building at once- they told me it’s four.
In terms of digital society, we’re making great strides in that, and I’ll come back to the digital society a little later. In terms of the social safety net, we’re making massive strides in that, and I just want you just for a moment think about how Jamaica is different today as a result of the changes we have made to our social safety net. Think about it.
So, we had the NIS which we celebrated recently, L. G. Newland. Then we had PATH. Now, we have the Social Pension Programme. This administration put that in a few years ago and we almost doubled the amount in the last budget. We have the Tourism Pension Plan. Minister Clarke announced the Unemployment Insurance. We have now the New Social Housing Programme. And by the way, we are conducting a review of the PATH Programme to make it more effective. So social safety net 10 years ago is not the same as social safety net today. Today we are capturing more Jamaicans in the social safety net in a targeted way to improve their lives. We have taken that on and we’re doing quite well there.
In terms of waste disposal, garbage collection; big challenge, massive challenge. No one here can say we’re satisfied about that. I certainly don’t like the way in which my country looks now and so we have a plan to deal with it. It has turned out to be a very complicated subject, as it relates to how do we create an economy around waste because that’s the issue, waste has no value, so it’s just all over. So, we need to create an economy around waste, where people can say waste has value, let me take it up. Instead of throwing away the bottle, let me properly dispose of this bottle, because there’s value in it for me. So, we’re building that mechanism out, you’ll hear a little bit more about that.
In terms of housing and urban renewal, we are on track with building out over 70,000 new houses. The NHT has charge of 43,000 of those and several projects are underway and I’m sure many of you inside this room will be beneficiaries of those houses. I am going to do special research on what we have in St Ann, and I will make a public announcement of it, but I wanted to point out that we continue to work with your association in building houses on lands that you would have gotten through negotiations with the government.
Recently I took on another major transformational project for Jamaica, Constitutional Reform. It was not originally on my list of projects, but as Jamaica approached our 60th year, some of our leaders, former prime ministers, would have reached out to me and others would have made public statements and I thought that it would be fitting that in our 60th year we seek to move towards Jamaica becoming a republic and so we put in place the mechanisms to do so. It has not gone quite as I had expected. We needed to have the support of the Opposition. We still hold out hopes that maybe we can actually do this. We will carry it as far as we can with the great hope that we can reach to some understanding and consensus. It is truly my wish for Jamaica to become a republic.
Now, one of the most difficult transformation projects that we undertook was the transformation of the public sector and I’ll give you a sense of why we undertook this project. When Minister Clarke and myself as we often do, we analyze the economic plan going forward, we recognize that it was going to be an almost impossible task to break out of this growth zone of one to two percent simply by just focusing on fiscal policy and monetary policy; meaning by how we spend public funds, taxes and how we manage money supply and inflation, that there was a third element to this growth conundrum and that third element is productivity.
But it’s all connected, and some people will say it’s a chicken and egg situation. Is it the productivity that comes first and then the wage increases? Or is it the wage increases and then the productivity? How do you break that cycle of low productivity, low wage to high productivity, high wage? Where do you start? I guess you’re beginning to see the complexity of the issue and the challenges that we face as policy makers. How do we strategically approach this problem while keeping you on board?
Anyway, we recognize that labour made a huge sacrifice, certainly with the wage freezes and you have been making a huge sacrifice throughout the years without question, and I’ll explain further. We also recognized that when we took over in 2016, we got the corporation of the unions and the workers to have a four-year negotiating window and we were very appreciative of that because that four-year negotiating window gave us an opportunity to properly plan how we could increase in a systematic and sustained way public sector compensation.
So, we examined it, we looked at what it would cost, and we don’t get any credit for this but look, 200 billion dollars more has been added to the public sector wage bill, that’s more than any other area of expenditure, 200 billion dollars. I don’t expect to get any claps but, as I said, I am giving you the facts. You can interrogate them yourself and use your conscience and analyze it. Of course, there are issues as to how that 200 billion dollars is distributed and who get more and who should get more and there are those issues. What I do, I leave them to Dr Clarke to solve. The big picture that I pay attention to is that there is the compensation increase and that workers are better compensated. The details we pay attention to as well and I follow up ever so often because you’ll be surprised the interventions that I am required to make in these matters.
People come and they plead their cases and I try to follow up. I have to be careful that my intervention doesn’t create a problem. In other words, somebody might come to me and say, I am being treated unfairly and then I go and insist upon the minister and then that creates an anomaly where somebody else said, oh, this one gets it so I must get it too, so I try my best not to get involved that way. I bring the problem to the attention of the minister. We look at it from a global perspective to see how we can solve it without creating other anomalies. A few have come to me.
What I’m trying to communicate to you is that we are very thoughtful in what we do, very strategic and whatever we’re doing, it is for the benefit, both the immediate and long-term benefit of all public sector workers. So, we managed to do what other governments have dreamt about and tried to do and I will share a perspective with you, and I urge you to consider it. You might be skeptical, but I urge you to consider it. It is not the first time that governments have attempted compensation reviews. They have never contemplated or attempted a comprehensive compensation review, meaning doing it all at once.
In the eighties, there was the administrative reform program where they looked at reclassifying and restructuring certain categories of public sector workers. In the nineties, there was a similar one. In fact, by 2000, they had increased some workers, including parliamentarians. You remember that? And by 2002, they had to abandon the program and in fact, implemented a wage freeze.
It was tried again in 2009. We gave teachers and then we did some parts of the health service, we did some adjustment for nurses. Well, it had to be abandoned by 2011, and then by 2013, wage freeze again. What I’m saying to you is that for us to have taken on this mammoth task, we had to think it out very carefully because what we don’t want to do is to give increases that are not sustainable. And whatever we’re doing, sustainability is going to be a critical part of it.
We want you to be satisfied that the new plane on which you have found yourself, you’re not going to fall below that in the future, and we can give that commitment. But there are some things that we need to do. So fiscal management, monetary policy management is yielding some dividends that we are taking and properly returning it to the sectors in the society but for us to move now out of this 1.93% growth band to get into the 4% and 5%, we need to do something differently. We need to focus on productivity.
Now, whenever I raise the subject of productivity, somewhere in the back of people’s mind is this view that I am asking people to go work harder. That’s not what I’m saying. The increase in productivity does not only require your effort and in fact, but it also probably doesn’t even start with you. The increase in productivity starts with the restructuring of the management of the bureaucracy.
When Max Weber coined the term bureaucracy, he didn’t mean it in a pejorative way. He saw bureaucracy as a good thing, as a style and structure of managing large organizations that deliver efficiency and effectiveness. As it has turned out, bureaucracy is now seen as a synonym for red tape and lethargy and slow delivery so the challenge we face as a country is how do we reform our public sector bureaucracy, that’s the challenge.
So, Madam President, your theme is a very good theme honouring our legacy, very important that the legacy of our labour movement of the 1930s be honoured.
The president of the confederation pointed out that historically trade unionists were a part of our parliament. They were a part of our parliament because they were a part of our political system, and it still remains the history. For you to have an institution that is 105 years old, that in itself is a significant asset. And during those 105 years, you would have gone through many struggles to get to this point to improve your conditions. I will be the first to admit that governments have not always been understanding of the worker’s needs.
I will say that the history would show that but what I can say about the government that I lead, having come from a single parent home with a mother who sent two children to school on a clerical salary in the civil service, nobody can tell me about the struggles of civil service households. I live it. I know it. I understand it. And therefore, when I hold this office, you can understand why 200 billion dollars is placed on improving the compensation of public sector workers.
I know these are some hard facts that I’m putting to you and it’s not something that you’re going to easily and immediately embrace but as I said, my job is to put them in front of you.
Now, there is a new struggle before us, and if we are going to realize the dreams and aspirations that we have, we must redefine our struggle. We are in a different era with different challenges and our struggle, which requires the bravery and advocacy of our Aggie Bernard in a new shape and a new form, is to say how do we protect the workers increased salaries from inflation because that is the main threat right now. How are we going to protect our workers from being replaced by technology? That’s the new challenge right now. Redefine your struggle.
I’ll tell you a little bit about inflation. Between 1989 and 2007, average annual inflation in Jamaica was 18.5%. So, imagine that for 18 and a half years, you’re losing 18.5% of your spending power per year, that’s the average annual inflation. Do you know what the average annual inflation in the United States was at that time, 2.9%.
So, you wonder why you are way, way behind? And the pressure is so much on the working class? That’s what we need to fight, inflation.
Between 2007 and 2011, average annual inflation was 12.3%. Do you know what it was in the United States, 1.5%. So, if you were comparing yourself, how has inflation affected the US workforce versus how inflation has affected the Jamaican workforce? You would be much worse off.
In 2011 to 2016, average annual inflation was 6.3%. In the United States it was 1.2% and in 2016 to 2024 January average annual inflation in Jamaica was 5.7%. Do you know how much it was in the United States? 3.4% and I draw this analogy between Jamaica and the United States to point out to you that better economic management has resulted in greater control of inflation. So, we’ve moved from 18.5% to 12.3% to 6.3% to 5.7%. Good economic management matters.
Sometimes you have shocks that you cannot control. So, we had a shock between 2009 and- well, presently. We’re still experiencing the post COVID shock so even the US was impacted, they are at 3.4% but look how close we are to them now. In fact, presently, we are lower, so we are converging. Good economic management allows you to withstand and recover from shocks.
Now, the challenge therefore, Madam President, is that we have to work together to conquer this enemy of inflation. There is a view that somehow inflation is exogenous, meaning that it just happens external to us, we can’t control it, we have nothing to do with it. The BOJ and the Ministry of Finance, in our policies, we have a targeting of inflation. We want to keep it between 4% and 6%. You need a little bit of inflation to ensure that there’s some growth in the economy. You don’t want too much to erode the wages of workers but one thing we don’t pay enough attention to, we look at the monetary policy, we look at the fiscal policy, but productivity is probably the greatest defence against the erosion of your purchasing power due to inflation.
So, if you ask what is my key point to you today, what is my key message to you today? What is the key that you should take away? The key is that we must manage inflation to protect the gains of improved wages for workers both now and what is to come and one of the greatest ways to control inflation, to buffer against inflation, is to ensure that productivity is increasing. So yes, we do monetary policy, we target inflation, but we must now focus on increasing productivity. If more people produce more goods, the unit cost of the goods, the labour cost particularly goes down.
A part of the strategy is that we recognize that we must pay our workers more and we have been doing that. We have been progressively increasing the minimum wage and we are now involved in this compensation review, which we hope to complete in short order. The next phase must be, how do we work together to improve productivity and that starts with a management strategy; what is the leadership of the country going to do, what is the management going to do to ensure that workers can give of their best and that is a part of our performance management system. It shouldn’t be viewed as a punitive system, but as a system that helps you, that promotes.
So, the government has to invest more, and we have started in scholarships to get our people trained and we are doing that, whether it is in the hundreds of scholarships we have been giving in STEM and scholarships that we have given in the Marcus Garvey scholarships and generally, so the government will be embarking on an even more expanded programme to ensure that all our workers are trained for the jobs that they currently have to improve their skills. But more than that, we have to make sure that we future proof our workers.
Recently, I had a meeting with an investor who is a major employer in the country, and he said to me, “Prime Minister, are you prepared for AI”, and we have been having discussions in the Cabinet. We have put together an AI committee. It’s part of what we’re looking for as future threats, but future opportunities. And he said to me, “Prime Minister, I could in a couple of minutes write you a policy brief on how to improve agricultural output in Jamaica”. And in three seconds, he went onto one of the AI platforms and emailed me a policy brief. Now, let me tell you something, it had a few faults, but it was as good as any policy brief, I’ve had. What does that say about a lot of jobs that do that? I don’t mean to scare anybody, but I’m saying that we have to redefine our struggle so institutions like the Jamaica Civil Service Association, this must be on your agenda.
So that’s the second key, so let us together redefine the struggles. We sit on opposite side of the table to negotiate, but we are all trying to solve the same problem. The tensions are good, it helps to bring resolution, but we mustn’t make it divide us because the new battle that we have requires us to be unified and it requires a higher level of understanding and a willingness to unite together in the struggle for a better life for all of us.
May God bless you. Thank you for listening.