10% pay cut for TCI civil servants

Paying public sector salaries in the TCI takes a 60 to 65 percent bite out of government’s revenue each year. And with revenue down 47 percent for 2009/2010, it has become even harder to pay out that money.

PROVIDENCIALES, Turks and Caicos Islands, March 10, 2010 – Pay packets for people who work for the Turks and Caicos Islands (TCI) government are going to be lighter from next month.

Faced with serious cash flow problems and finances nearing breaking point, Governor Gordon Wetherell announced that a 10 per cent pay cut would have to be taken by all civil servants for now, and there’s no telling when full salaries will be restored.

He said in a statement issued yesterday that there was no other option at this stage and the TCI had to take action similar to another British Overseas Territory, Anguilla, which recently reduced civil servant salaries by 15 percent. 

“This has not been an easy decision to take. It is cold comfort that other governments have recently taken, or are considering, similar measures. But the pressures on our cash flow are acute,” he said.

“While I can assure public servants that it is our objective to restore salaries and wages as soon as a sustainable fiscal position permits, I hope they will understand that there is no realistic alternative to taking this action at this time if we are to succeed in restoring public finances to good health and achieve long term prosperity.”

Paying public sector salaries in the TCI takes a 60 to 65 percent bite out of government’s revenue each year. And with revenue down 47 percent for 2009/2010, it has become even harder to pay out that money.

Other measures to cut expenditure and increase the money coming in have not been able to solve cash flow issues and the recent collapse of a US$85 million loan the government was hoping to get from a consortium of local banks has created more pressure. That money was to be used to pay off old debts and improve cash flow.

But just a few days ago, Governor Wetherell said the agreement which was to be signed since last month, had been shelved after sensitise and confidential information was leaked to the public before the deal was finalised.

At the time he announced the setback, the Governor said that “tougher decisions may now need to be taken and the depth and timing of their implementation deepened and brought forward”, although he did not specify what would happen next.

Then came yesterday’s announcement, which was also communicated to civil servants via a memo from Chief Executive Mark Capes, head of the public service.

“Circumstances are such that we have no other option apart from introducing immediate redundancies,” he wrote. “I much regret that Government has had to adopt this course of action and that we have had to do so without having had the time available to discuss the details with you.  Nevertheless, I am sure you will agree that a cut in pay is preferable to making wide spread redundancies across the whole public service, which would have been the only alternative.” 

“These are difficult times for the Turks and Caicos Islands; times which demand difficult decisions. You can all help to ease the financial difficulties we face by taking every opportunity to avoid waste at work in order to further reduce public expenditure. It is only through our combined efforts that we will be able to deliver a sustainable platform from which we can move forward to deliver quality essential services to our community,” he added.

Capes also made it clear that recouping reduced wages by working extra hours won’t be an option either.

“Overtime will be allowed only in life threatening or other strictly essential circumstances,” he wrote in the memo.

Governor Wetherell also indicated in his statement that additional cuts to rents paid by the government, utilities and scholarships were also under consideration, in addition to measures to increase revenue.  

Meantime, Capes has revealed that efforts are still being made to reach agreement for the stalled US$85 million loan to proceed.