ECONOMIST Dr Marlene Attzs commented on the wrangle over wages between trade unions and the CPO by calling for some caution in what she said was now "a very uncertain economic time," speaking to Newsday on Monday.
With Russia's invasion of Ukraine having pushed the world oil price to as high as US$120 (Brent) and with the price on Monday at US$88 for WTI ( more closely aligned to TT's oil), and natural gas at US$8.18 MMBtu, unions have anticipated a windfall in national revenues and have been hoping to address long-outstanding wage talks.
CPO Dr Darryl Dindial initially offered several public-sector unions a two per cent rise for 2014-2021, comprising zero for the years 2014-2017, one per cent for 2018, zero for 2019-2020, and one per cent for 2021. He subsequently offered a four per cent rise for 2014-2019, comprisingzero, zero, two, zero, zero, two for each year successively from 2014-2019.
The unions representing protective services have rejected both.
Attzs noted the Government's high indebtedness.
She said the local narrative must be centred on global economic circumstances, noting that no one had foreseen Russia's invasion of Ukraine and its global impact on energy prices plus food availability. Recalling that Finance Minister Colm Imbert said in the Mid Year Review that TT could expect a couple billion dollars in energy windfall, Attzs said it might not be unreasonable for unions to seek some of that windfall, although she urged caution.
"You have to look at the steady state. The large economies of the world could intervene to cause energy prices to flatten."
Attzs said in the UK the public conversation expressed a fear of the upcoming winter pushing household heating bills to as high as £4,200. This fear, along with the ongoing Conservative Party leadership contest, could serve to put pressure on energy prices to come down, she warned.
"It is unsustainable for us to assume a windfall in perpetuity. We don't know when the windfall will end."
Attzs said she sympathised with public-sector workers living on 2012/2013 salaries but facing rises in the cost of living, including higher prices at the gasoline pump.
"But I don't think now is the time for the unions to advocate for higher wages. It is a very uncertain economic time. I'd suggest caution."
Attzs sounded two other warnings over wage hikes.
Firstly she said if more people were to enjoy higher wages but alongside continued global supply-chain challenges, this could create inflationary problems, eroding people's purchasing power. She said in North America, as inflation rises the interest rates are put up to try to temper people's appetite for spending and borrowing. However, she warned this measure can hurt individuals with flexible mortgages which rise or fall with the interest rate.
Secondly, Attzs cautioned against wage hikes pushing workers into higher tax brackets that could not only erode the increase but actually leave them worse off.
Hoping that any increases could make workers better off in the long run, she suggested, "Let the back pay be put against something tangible and sustainable, like a house.
"Why not suggest the Government relax some of the requirements so public-sector workers can qualify for low-income homes, and get medical insurance and pension plans? These are things that improve their quality of life, rather than simply higher incomes.
"I certainly don't think now is the time to agitate for higher wages."