Published On: Tue, Jan 26th, 2021

Government sidelines unions with unilateral decisions about austerity measures

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PHILIPSBURG — The government had decided to take decisions about COVID-19 related cost saving measures without the express approval of the unions that are represented in the CvV (Commissie van Vakorganisties – Committee of labor unions) and the GOA (Committee for organized consultation about matters that concern civil servants). This appears from three pieces of draft legislation that deal with salary cuts for politicians, civil servants and employees of (semi) public entities. The parliamentary Committee for General Affairs discussed the drafts in a closed-door meeting with Minister of General Affairs Silveria Jacobs on Friday January 22.

The decision to sideline the unions appears from two draft ordinances: the one that aims to maximize the top salaries at (semi) public entities to 130 percent of the prime minister’s salary and the ordinance that regulates the 12.5 percent cut in de package of labor conditions for civil servants.

Last year, the unions initially reached an agreement about the decision to pay 50 percent of vacation allowances in 2020 and the remaining half in 2021. But when it turned out that the government needed deeper cuts to meet the requirements for receiving continued liquidity support, the unions balked and refused to return for further negotiations.

This has forced the government to deviate from the requirement that it needs an agreement with the unions about salary-cuts. The draft legislation refers to the LMA (the rulebook for civil servants) that allows the responsible minister to take unilateral decisions if it is not possible to arrive at an agreement.

“The financial support from the Netherlands is in the interest of the whole population,” one of the drafts states. The interest of one group cannot prevail over the general interest.”

The draft ordinance that regulates the top salaries at (semi) public entities notes that the measure violates the property right as it is defined in the First Protocol of the European Human Rights Treaty. Such a violation is only permitted if it meets three conditions: it must have a legal basis, it must serve the general interest and it must be fair and balanced.

Given the circumstances St. Maarten finds itself in, the government is of the opinion that these conditions have been met. “Organizations with a public task that are funded with public money have to pay their managers decently: balanced, socially responsible but not exorbitant.”

The ordinance notes that the financial situation of several (semi) public entities is a reason for concern. Most of the annual subsidies of 190 million guilders go to the (semi) public sector.

Politicians lose their 6 percent representation cost, 500 guilders a month transportation cost and their vacation allowance per July 1, 2020. The annual cost for ministers and members of parliament was 5.4 million guilders; the austerity measures take that number down 25 percent to 4.1 million, resulting in savings of 1,369,332 guilders ($764,990).

The salaries of ministers and members of parliament are based on the highest step in scale 17 for civil servants – 18,517 guilders ($10,3450) per month. The prime minister received 15 percent on top of that amount (21,295 guilders), other ministers, the president of parliament and the minister plenipotentiary 10 percent (20,369 guilders) and members of parliament 5 percent (19,443 guilders).

The cost cutting measures lower these percentages per July 1, 2020 to 4.35 percent for the prime minister (19,322 guilders), for other ministers, the president of parliament and the minister plenipotentiary to -0.54 percent 18,417 guilders) and for members of parliament to -5.43 percent (17,512 guilders).

This brings the annual gross remuneration for the prime minister to 231,864 guilders ($129,533) and one would think that therefore the top income at (semi) public entities, limited to 130 percent of that income, would amount to 278,023 guilders ($155,320).

But no: the ordinance that regulates these top salaries mentions 474,237 guilders ($264,936) as the annual ceiling, more than $100,000 higher. The draft ordinance does not explain this difference, nor does it refer to the relationship to the lower salary for the prime minister.

It only states in article 3 that the top-amount includes apart from the salary the vacation-allowance, the vacation days, monthly allowances, contributions to the pension fund, other allowances and every other form of remuneration. Annual increments and indexation of income have been scrapped per 2021.

The staff at the entities in the (semi) public sector will have to take a 12.5 percent cut in the total package of their labor conditions. The minister who is responsible for a particular entity will announce these cuts within six months after the ordinance goes into effect.

The measure affects entities like SZV, Bureau Telecommunication and Post, Bureau Intellectual Property, pension fund APS and the Central Bank. The ordinance mentions 18 entities that are subsidized for 50 percent or more by the government and they also fall under the measure. Among these entities are the St. Maarten Development Fund, the VKS, the university, the library and educational foundations. There are 26 (semi) public entities of which the government owns at least 50 percent of the shares and they are also affected. Among them are the airport, Winair, the harbor, TelEm, the post office and GEBE.

The Council of Advice notes that it is unclear from the ordinances how much savings will be achieved from the 12.5 percent cut in the labor conditions for civil servants and employees at (semi) public entities. The Council describes the government’s opinion that the general interest had to prevail over the interest of certain groups (like the civil servants) as “superficial.” The advice furthermore states that the ordinances lack information about side-effects like a decrease in tax revenue and social premiums.

The Council observes that it is not a given that the measures will indeed result in 12.5 percent savings and that the principle of legal security stands in the way of declaring the measures retroactive.

The three draft-ordinances are all marked as “temporary” but, once Parliament has approved them, they will remain in force until further notice.

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