BELMOPAN, Belize, CMC – The Belize government says it will from April 1 this year, wage provisions will include the resumption of increments for public officers.
But Prime Minister John Briceno told Parliament that “this will be merit-based and comes a full 12 months before the original date for restoration”.
Last month, Briceño had described as “unfortunate” the request by public sector trade unions that the government lifts the current freeze on increments to public servants by April this year.
President of the Public Service Union (PSU), Dean Flowers, said that the unions are demanding that their increments be reinstated by April 1 this year.
In August last year, the Ministry of Finance issued a circular that the government would not be engaged in new hiring, creating posts or filling vacant ones, and approving salary advances and new allowances.
Increments are usually between three to five percent of salaries paid to foreign workers at different times of the year.
Prime Minister Briceño told legislators that in the financial year 2022-23, the government will have spent BDZ$95 million (One Belize dollar=US$0.49 cents) on the pension plan for public officials.
He said that in the next budget, 2023/24, the spending will rise to BDZ$100 million.
Briceno said that the International Monetary Fund (IMF) estimates that the present value of this pension liability is 77 percent of the gross domestic product (GDP), more than the entire public debt of the country.
“I have said publicly, and I say again: this budget line spending is neither sustainable nor fair.
To illustrate, this year, the SSB (Social Security Board) is projected to collect some 140 million dollars in contributions and pay out 110 million dollars in benefits. This is the nature of a contributory pension scheme.”
Prime Minister Briceno said Belize is an outlier in every material respect regarding retirement age, replacement rate, and contribution rate.
“Everywhere else in the Caribbean and Latin America, public officers’ pension schemes are contributory. The average replacement rate, the average pension divided by average earnings in the entire Latin America and Caribbean region, is 61.9 percent.
“In Belize, the average replacement rate for public officers, when combining social security pension at 27.9 percent and public officers’ non-contributory pension at 67.5 percent, both of which public officers would be entitled to, is 95.4 percent, a whopping 33.5 percent above the regional average.”
The prime minister said that in most of the region, the voluntary retirement age is 60 years, and the mandatory retirement age is 65 years.
In the Caribbean, countries with unique pension plans for public officials tend to have higher retirement ages, 60 years in the case of Trinidad and Tobago and Suriname, for example, and 65 years plus in the case of Jamaica, Barbados, Antigua, and Barbuda.
Briceno said that IMF had presented their formula for public pension reform and sustainability, which involves a contribution rate of 10 percent of wages, half of which, or five percent, to be contributed by public officers, raising the current retirement age from 55 to 65; and reducing the replacement rate from 67 percent to 50 percent, all to be gradually phased in over time.
“I’m happy to report that significant progress was made at a recent meeting of the Ministerial Consulting Team that has been engaged in discussions with the joint unions on the critical issues of Increments and Pension Reform.
He said the update was positive, as the joint unions have agreed to a phased implementation of a contributory pension scheme, recognizing that the current pension scheme is unsustainable.
He said the first phase of the contributory pension scheme would commence with persons entering the Public Service as of July 1, 2023, and that the unions have agreed to work with the government on mechanisms for a second phase rollout, where other public officers will be included in the contributory pension scheme.
“For sure, we must applaud our ministerial team but, more so, the joint union’s team for this historic and unprecedented collaboration and achievement. We look forward to continuing constructive, reasoned, and respectful dialogue,” Prime Minister Briceno told legislators.
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