Small gov’t pay cut proposed

Civil servants reject pension, healthcare measures

Cayman Islands civil servants have generally agreed to a smaller pay cut than the
one first proposed by Premier McKeeva Bush earlier this month.

However, according to a report
released Monday by the Cayman Islands Civil Service Association, government
workers have utterly rejected plans for a “100 per cent” pension suspension for
all government entities. They have also not agreed to pay up to 50 per cent of
health care premiums as was earlier suggested by Mr. Bush’s government.

The civil service association is
not technically a union and therefore cannot act as the bargaining agent for
civil servants or for employees of statutory authorities and government-owned
companies.

Rather, the association is acting
as a sounding board for government proposals, taking feedback from civil
servants on those plans and expressing the extent to which government workers
would be willing to agree.

“The association…cannot support nor
recommend that the Cayman Islands government
engage in any illegal acts,” the report issued by the association read. “We believe
that any attempt to change the terms and conditions of government employee contracts
without agreement by each individual employee could expose the government to
large and severe liability.”

There are approximately 1,300 civil
servants out of the roughly 3,700 working in central government who are on
contract. They are either foreign nationals or Caymanians who are over the age
of 60 – the mandatory retirement age for government workers in the Cayman Islands.

Comments from civil servants on
government’s budget cutting plans have been received steadily since an 8 March
meeting held at Mary Miller Hall in George
Town, during which Premier Bush laid out government
proposals for budget reductions.

According to that running
commentary, it appears that the government’s plan to suspend civil servant
pension payments for the remainder of the current 2009/10 budget year, as well
as the 2010/11 year, is the least likely to be accepted by government workers.

“We do not believe that a pension
suspension would be legal,” the association wrote in its report.

Moreover, a one-year break in
pension payments by civil servants in the defined contribution plan – the plan
that provides monthly pension payments to retired government workers – would
cause that fund to liquidate in 33 years, according to actuaries.

“This means that all remaining
benefits from the defined benefit plan would have to be paid out of future
recurrent expenditure,” the association report stated. “(This) increases the
onus on future generations to fund the benefits of the current generation.”

As for the “current generation”,
actuarial studies have shown that current contribution rates to the pension
fund are not sufficient to provide adequate retirement benefits. A pension
suspension would simply exacerbate the problem, the report stated.

Employees of statutory authorities
and government companies who are not part of the Public Service Pension fund
could face a situation where their five per cent statutorily required pension
contribution would be taken away and not paid back into their monthly salaries,
the association stated.

Government’s proposed health
insurance premium contribution, which was last week apparently taken off the
table in ongoing budget discussions, could end up being accepted by civil
servants; just not in the way Mr. Bush’s administration first put it forward.

According to government estimates,
health care premiums could cost anywhere from $179 per month for single employees
to $536 for civil servants with families.

“Civil servants have expressed…that
they would support exploration of co-pay options if, and only if, those options
include the ability to choose health care providers and if the cost is
comparable to those experienced in the private sector,” the association’s
report stated.

Also, civil servants indicated that
some discussion would be required to ensure that health insurance premiums for
government workers were not being artificially inflated to subsidise care for
indigents or those patients deemed “uncoverable” by private sector providers.

Salary cuts

Combined with the earlier proposed
pension suspension and health care premium payments, a sliding scale of pay
cuts – between five and 15 per cent for civil servants – would end up looking
like a 15 to 29 per cent loss in take home pay, according to analysis done by
the civil service association.

The association recommended that
government consider a “less damaging” reduction in pay.

For the current budget year, which
ends on 30 June, civil servants have proposed a 3.2 per cent reduction in pay –
to match the most recent cost of living pay increase provided by government in
2008.

At the start of the 2010/11 budget
year, which begins on 1 July, the civil servants propose to get that 3.2 per
cent temporary reduction back. However, they would also be required to take 10
days off throughout the next year without pay. That equates to roughly a four
per cent pay cut.

“They would also allow those
employees that can go above the required amount to do so,” the association
report stated. “There are individual employees that would consider one day off
every two weeks or a four day work week. This would create a ten or 20 per cent
savings to government respectively on salary costs for all employees exercising
these options.”

The association did
not recommend any unpaid leave for the remaining three-and-a-half months of the
current budget year.

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1 COMMENT

  1. Why cant civil servants pay half their insurance premiums and monthly pension payments? At 100% medical coverage I see this as a deal with all the other benefits of the job? Their are people out there paying their whole premium and not getting a quarter of that kind of coverage. Maybe its greed. You better look at the private sector to see what can happen. In that world if your not willing to do what is best for the company, they find someone who is. Look out before that happens to you. Besides as far as I understand it is only a temporary measure untill things get back to normal, well if that ever happens. So whats the big deal?

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