Benefits of aligned interests in public-sector negotiations
THE EDITOR, Sir:
WE TOOK careful note of your editorial of Friday, March 23, 2018, which stated: “At the same time, we continue to believe that there are creative ways for the Government to compensate public-sector workers beyond digging into the Consolidated Fund.
“We have previously raised the idea of the Government bringing to the markets, through IPOs, some of its better enterprises and offering public-sector workers equity in lieu of increased pay. Workers could seek to immediately monetise their holdings by selling shares on the market, or hold them for capital gains and/or dividends.”
The idea of divesting government entities is sound on the bases of theory and empirical evidence provided by the 65 per cent annualised return realised by the Pan Jam/Jamaica Producers Group consortium in acquiring the business and assets of Mavis Bank Coffee Factory (MBCF) in October 2011 ahead of its eventual resale to the Michael Lee-Chin-controlled Speciality Coffee Investments Company Limited in late 2016.
One would do well to recall that MBCF was previously in the midst of declining revenues and some measure of net losses when in the hands of the Government. Another example of an effective divestment exercise is the sale of Caymanas Track Limited to the Supreme Ventures Group that now finds itself in the midst of a turnaround predicated on speedier purse payments and upgrades to the landmark Caymanas Park facility.
Both examples should comfort onlookers as to the possibilities of divestment success once proficient ownership is at the wicket. Recordings of Parliament suggest that former Finance Minister Audley Shaw and the Opposition spokesman on finance were in some measure of agreement regarding the public sale of the Government’s minority holding in JPSCo via the Jamaica Stock Exchange (JSE). While understanding that the needs are many, we find great merit in a proposal rooted in the assignment of blocks of shares to civil servants as a means of plugging the gap in the ongoing publicsector wage negotiations.
Civil servant holdings in JSE entities would be beneficial by virtue of additional ownership depth in the local equities market. Additionally, as shareholders, they would participate in capital gains and dividend yields, which are tangible benefits of improved performance from new, competent ownership. Successful divestment will also reverse the Government’s usage of state resources to plug holes in struggling entities and cause it to be a recipient of dividends from a thriving entity.
This will assist the Government in concluding the negotiations without budget displacement and breaching the strictures of the International Monetary Fund agreement. That it is also likely to accelerate the divestments of stakes in the Urban Development Corporation, Factories Corporation of Jamaica, and National Water Commission is a win-win for all concerned.
We hasten to state that an initiative of this nature will require enhanced finance education that we propose be spearheaded by the respective trade unions.
Additionally, since persons would have differing risk tolerance levels, persons unwilling to accept price risk could monetise shares to realise capital gains, while others willing to accept such market risk could hold these shares and benefit from potential dividends and much greater capital gains.
Notwithstanding, the proposal has the potential to be net positive for the Government, the agency, and the public, sector worker by improving the efficiency and productivity of Government and increasing the net worth of the hard-working public-sector employees.