by Dr the Rt. Hon. Keith Mitchell, Prime Minister
Sisters and brothers, ladies and gentlemen, Grenadian patriots all.
Tonight, our nation sits at a crossroad, still challenged by the lingering after-effects of a pandemic, facing uncertainty in a global space over-heated by man’s damage to the environment, and chilled by the harsh reality of a war far removed, but with far-reaching impact.
In this perfect storm that’s brewing, our generation is being called to meet the moment.
It calls for a fresh conversation – actually, a different conversation that will inspire patriotic action and set the tone for a worthy future of which we can be proud.
In the face of what seems to be insurmountable odds, where the pain of history intertwines with the demands of now, and the hopes of tomorrow, we must get to this near-perfect place by being reasonable, rational, and understanding the realities of a developing economy.,
Our history is filled with many examples of our people overcoming dire situations, and then thriving.
When our forefathers were brought here against their will 5 centuries ago, we were not supposed to emerge with a viable independent society. Yet, we have done so, and we are still standing.
When bombs rained down on Beausejour and bitterness flowed like the Paradise River, we healed the wounds of intervention to bounce back – with our pride and our dignity intact.
This period, and in particular, the pension issue presents another defining moment in our history, that we as a nation must face together.
Sisters and brothers, we meet this moment by not being consumed with old suspicions, nor by distrust; but by a national discourse, befitting of the creation of a society worthy of the inheritance of our children.
The recent high court decision reinstating public sector pension scheme rules creates a very large financial pension obligation which is additional to pension expenditures of the National Insurance Scheme. And remember, Government, like all other employers, is responsible for paying 6% of employee earnings as part of their monthly contributions to NIS. The 2022 fiscal impact is estimated at between 2.2 and 7.9% of GDP, largely depending on how current employees who already meet the re-instated scheme eligibility conditions, react to the court ruling.
In the recent past, Government attempted to address public employees’ dissatisfaction through legal amendments and agreements with trade unions. In response to the demands to reduce the large difference between NIS and public sector pensions, the Government signed in 2018, a Memorandum of Understanding with trade unions, granting a top-up to a limited group of people.
Eligibility was conditioned on 26 years and 8 months of service or more, retiring at age 60; the top-up was equal to the difference between the NIS pension and 70% of the retiree’s final salary.
The Government also introduced, in 2003, a Special Pension Act, for people who were hired prior to 1985 and who, by virtue of their employment status, did not qualify for a public sector pension. Although this Act was not considered by the High Court Judge, its constitutionality may now need to be considered.
The recent court ruling declared the closure of public sector pension schemes unconstitutional, retroactively establishing pension entitlements for public employees who entered the service after 1985. The ruling implies that pension benefits would become payable to public employees who were hired after 1985, and not solely NIS pension benefits.
The payment implications of the ruling comprise:
- Pension to people hired after 1985 and retired before the date of the ruling, for the period between the date of retirement and the implementation of the ruling;
- Future pension to people hired after 1985 and retired before the date of the ruling (for the period after the implementation of the ruling, until the beneficiaries’ death;
- Current people, who will now retire from the public service.
- Pension for people who will be hired after the date of the ruling.
While the ruling only focused on the constitutionality of certain features of the pension acts governing public sector pension, it is nevertheless creating a pension system which differs considerably from what was envisioned by both the 1983 reform and its revisions in the past 30 years.
The original pension reform concept of the early 1980s did not foresee public sector employees earning two pensions in parallel: one from the contributory NIS and another one from the non-contributory public schemes.
The court ruling has created a 2-pillar pension system for public sector workers which, without further changes, would create a large fiscal burden on the state, since in its current construct, it is non-contributory. As part of the wider national dialogue, it is a matter that must be addressed through rational discourse and widespread consultation.
While the fiscal obligations of the court ruling are still being tabulated, preliminary indications are that we will have to find $465 million. And then on average, about $120 million each year, for at least the next 37 years, and that figure is without considering inflation.
The fiscal impact of the court ruling will be dominated by benefit obligations towards current employees who could have retired earlier under the re-instated pension scheme rules. The timing and consequent cash flow impact of these obligations can vary within a wide range, depending on behavioural responses of the employees concerned.
In the current version of the fiscal impact estimate, the number of new retirees and their benefits were estimated using simple statistical methods for the period of 2023-2030. That has serious fiscal implications and is no walk in the park. But this administration, the Government of the day is determined and committed to finding a fair solution.
In recent weeks, we have been holding many discussions with all stakeholders, seeking local and international technical advice as we consider what’s best for the nation in approaching the challenge. There are some other constitutional concerns coming out of the judgment that must be addressed, or else there could be further conflicts down the road. But in the medium term, we will propose a mechanism for us collectively as a society, to address those.
In considering all the issues before us, this Government has taken the decision not to appeal the recent court judgment. We believe there are ways we can honour the intent of the judgment as it relates to the reinstatement of public pension, even while we seek to address going forward, some of the inconsistencies other aspects of the judgment seem to create.
My friends, Government is committed to sitting down with all concerned. This consultative approach is consistent with our posture on matters of national interest. Years ago, when the court ruled in favour of Hermilyn Armstrong in her pension fight, this Government, as a matter of policy and principle refused to appeal the ruling. We could have done so and had strong legal advice that there are good enough grounds for an appeal, but we chose not to.
My friends, let this be remembered as our first genuine signal that we have always intended to do right by all workers. Refusing to appeal the judgment, however, might be considered the easy part.
Regarding the issue of the payment of the state pensions, unless we manage the process well, and set out a viable road map under which the state could meet its obligations, it can completely derail the economy, sink thousands into dire poverty, set us back many years and cripple future development plans. We can only have the best outcome, however, by having the most honest conversations – and by all stakeholders being engaged.
The Government obviously must lead on this matter, but it puts a reasonable final solution in doubt unless we purposely engage all stakeholders. And that we have begun to do. We have begun dialogue with our social partners – the churches, the NGOs, the business community, social organisations and the trade unions.
The first meeting with the trade unions was scheduled for last Friday. Unfortunately, there was a decision taken by the major unions not to attend the meeting and participate in any discussions.
Fellow Grenadians, I stand here tonight, still hopeful that this broader dialogue will get started in the interest of public officers who have already retired and those for whom retirement is likely soon. We understand that the leadership of some of the trade unions has some lingering concerns – but we are determined to engage them in a meaningful way and consider their input as we chart the way forward.
Sisters and brothers, our society will be better off if dialogue continues – and we remain hopeful that the Grenada Union of Teachers, the Public Workers Union, and the Technical and Allied Workers Union will join this broadening and urgent national discussion on the single most defining issue of our time. We must think beyond here and now and consider what our legacy will be, as it relates to this issue.
We remain hopeful that all the unions will join in this national conversation because we know that despite all the disagreements through the years – the one thing that brings us together is our patriotism and our unquestioned love for a nation that has made us who we are.
This nation – under the banner of its 7 stars – must provide us with the reason to set aside our differences in the interest of wider national objectives. Tonight, therefore, we extend an open hand, understanding that this moment calls for all of us to beat our swords into ploughshares, and our spears into pruning hooks.
This Government has also moved to set up a broad-based advisory committee that will provide further technical advice and other general guidance on this complex, but critically important issue. They will use their expertise and experiences in studying the entire issue with the objective to make specific recommendations to the government. That committee will be headed by economist and experienced global public servant Dr Spencer Thomas, and include other economists, Dr Kari Grenade and Dr Patrick Antoine and former Chief Justice, Sir Dennis Byron. There will also be a fifth representative coming from the Eastern Caribbean Central Bank.
Dr Thomas is a Special Envoy for Multilateral Environmental Agreements and the country’s lead negotiator for climate change and biodiversity. He has over 25 years of experience in international environmental diplomacy. He was a Lead Negotiator for the Alliance of Small Island States during the period of Grenada’s chairmanship of that body from 2007 to 2011. Dr Kari Grenade is an IMF Long-term Macroeconomic Advisor. She also formerly worked with the Caribbean Development Bank.
Dr Antoine is a Consultant, Economic Policy Advisor, Trade and Finance Negotiator who has worked extensively in the region and beyond. Sir Charles Michael Dennis Byron is a former President of the Caribbean Court of Justice, former President of the International Criminal Tribunal of Rwanda and former Chief Justice of the Eastern Caribbean Supreme Court. Born in St Kitts, he also served in Grenada as a High Court Judge.
The advisory committee held their first meeting this morning and will get to work immediately to look at all aspects of the implications of this pension issue, and to make specific recommendations for the government to consider. The government expects that it will have actionable recommendations within 3 months.
We understand what some people will describe as the fierce urgency of now.
Sisters and brothers, this society that we are seeking to build, as imperfect as it is right now, must turn out to be fair and balanced. Emerging from this challenge, is the need for all of us to urgently, and completely relook the organisation of the entire society – and to ensure it’s fairer for working people; and it gives disadvantaged people a better shot. As challenging as all of this might sound, we believe we now have a big opportunity here, emerging from all of this – to borrow a slogan from the past – not just to build another society, but to build a just society.
Shortly, this government will unveil a plan for what we call Expanding the Empowerment Agenda, and we must refocus our effort to decisively be able to also declare War on Poverty. We are currently reviewing all aspects of the idea. As the state considers how best to meet its obligation to public sector workers; its obligations to all the other sectors remain.
We cannot – and would not – use the excuse of the pension challenge to abandon people – especially those who need the government’s intervention the most. That will not only be immoral, but it will also be counter-productive and will create a further imbalance in society. We must maintain our youth empowerment programmes; continue to spend on giving our people more access to education; invest even more in healthcare and maintain a viable infrastructure that can adequately run local economic life.
We believe at the core these are working people’s issues – all working people.
The payment of pension must be seen as only one aspect of a new economic construct that also emphasises greater production and better efficiencies – especially in the public sector. In fact, to ignore those is to effectively undermine the cause of workers.
Prior to the issue of this now due pension, this Government was actively considering a programme we would have described as 100,000,000 for 100,000 – where over the next 5 years, we planned to spend $100 million each year, making direct investments in working people, in a daring and ambitious open declaration of war on poverty.
We are still determined to expand that empowerment agenda, but we may be forced to review some of its aspects given this new inescapable liability. But we are determined to find a way to keep some of it because we think it is very important in building the just society I have alluded to.
Tonight, sisters and brothers, there is a family in Belle Isle we must get to; and there is this young girl in Grand Roy, filled with ambition and ability, who we shall invest in, affording her the best education. They are counting on us sisters and brothers. A young man in River Sallee has this long-held dream of opening his mechanic shop. The idea is viable, but he needs a hand up. And we should not let him down.
A social security structure shall be strengthened for this Birchgrove cocoa farmer, who this morning marched up to the foothills of Grand Etang – like he has done for decades. We owe him too; he is depending on our support. The fishermen of Gouyave are eager for better arrangements to help guarantee markets for their catch. When it looked like things were breaking down, they took to the streets and we immediately acted on their behalf.
This country must recommit itself to fight for everyone, not just a single category of persons. In this competitive economic environment where it’s every man’s right to fight for his own family; we must not do so at the expense of the other man’s family.
In all our considerations, we must also be determined to continue to live in a society, where we are completely committed to looking after the less fortunate, those who are more vulnerable. And so, in our decision making and, in our posture – all of us must also always be mindful of the biblical precept: whatever you do unto the least of these brothers and sisters you did for me.
My friends, the Covid-19 pandemic dealt a drastic blow to economies all over the world and Grenada was no exception. Thankfully, Government’s prudent fiscal management in preceding years allowed us to develop a buffer which we were able to tap into, along with access to highly concessional financing.
In the past few months, our economy has continued along the road to recovery, but we are still not seeing the pre-pandemic numbers. Government’s response to the pandemic necessitated additional expenditure and even now, expenditure continues to rise. Additionally, Grenada like all other countries around the world continues to experience inflationary pressure on imported goods and services.
In the 2022 budget, Government started to address this challenge by introducing a number of cost-of-living measures, but we have continued to examine ways in which we can further alleviate the financial burden on the population, particularly as it relates to food items. Government will soon roll out additional measures and tonight, I am appealing to the business community to partner with us when we do, to ensure that the benefit reaches the people in keeping with our intentions.
Sisters and brothers, Government continues its efforts to mitigate the impact of rising food prices, we must embrace the opportunity to boost food production, become less dependent on imports, and improve the country’s food security. We must focus more on growing what we eat and eating what we grow. While sometimes circumstances may appear to bring us to our knees, we shall move forward on our feet. As we have done in the past, we are equally determined today, to find fair solutions to complex problems. We have an opportunity to galvanise this nation – community by community– each working for the general good.
With faith and courage, we shall aspire; we shall advance, and we shall build.
There must be a greater understanding among competing interests and an unshakeable national unity that must bind us together so we can better tackle today’s challenges. The issue we face today is one of national importance and one which has significant implications for all citizens. It is not simply a trade union matter or a public service matter. This pension issue will affect all of us. Therefore, I assure you that Government will not play games with the future of this country and the future of our children and grandchildren.
We must choose to work together to find solutions that go beyond any political party, organisation or individual. These solutions must be grounded in the interest of our beloved country and equally beloved people. Together we must be more determined to elevate a more caring society.
People may disagree about many things – but the one thing we must all agree on is that the future is worth fighting for. We won’t fear the future. We shall embrace the possibilities that it presents and walk hand in hand toward it.
May God bless you all, and may God bless our beautiful nation.
I thank you.
GIS
