The Public Sector as structured at present is not sustainable'

The Rock offers free education, healthcare, and provides pensions but the reality is that we have a mixed economy that incorporates socialism with capitalism.

The term ‘Champagne Socialism’ is bandied around by those who feel that Gibraltar’s socialist roots have being bulldozed over by ruthless and self-serving capitalist regimes.

BLURRED POLITICS

The GSLP and GSD have socialism branded into their names but both have demonstrated when in power that they are not exclusive to its ideals.

The ‘flexibility’ of both political parties to transcend into either system has allowed greater economic growth while still keeping the population content with comfortable living conditions.

Norway, Sweden, and Denmark have strong socialist systems, however, these countries also have successful capitalists. The top 10% of each nation's people hold more than 65% of the wealth, which is also emulated or perhaps surpassed in Gibraltar.

One of the reasons for this is because most people do not feel the need to accumulate wealth since the government provides an adequate quality of life. An example of how the two systems collide resides in the Rock’s workforce. Although the government is the largest employer and provides high wages, we are seeing an increase of outsourced labour to lower income cross-frontier workers.

Labour being outsourced is not a socialist ideal, but neither is providing excessive wages to locals who are unproductive and take advantage of the system.

Expert economist Sir Joe Bossano highlighted, albeit controversially, that the current strategy was ‘unsustainable’ and changes needed to be made in order to increase efficiency of civil servants.

OVERBLOWN PUBLIC SECTOR

Gibraltar’s overblown public sector has led to local civil servants earning 25% more than their UK counterparts, something no government in the last decades has attempted to tackle.

Instead they have continued to contribute towards this unbalanced scale that will reach a tipping point if no action is taken to curtail or backtrack on its incremental rise.

Sir Joe, who for decades ironically spearheaded a movement for locals to receive parity in pay with the UK, signalled the reverse was in order in 2018.

“One thing is clear, the size and the costs of the public sector as it is structured at present are not sustainable even without Brexit,” he said last year, before adding that the public sector was growing in number and costs prior to 2011. “Things will have to change. Controlling Officers have a duty to keep their departments within budget. Not keeping to budgets is in conflict with the policy of the government to ensure greater efficiency.”

Sir Joe noted that the earnings gap between the public and private sectors had increased every year even before the GSLP took over from the GSD in 2011. As a result, the government was required to increase growth in the private sector in order to generate government revenue and cover the costs of the public sector.

“It gets bigger every year,” he said. “It is for this reason that it is unsustainable in economic terms.”

Sir Joe added that the average wage gap discrepancy between the public and private sectors stood at 50% in favour of the former.

“This is impossible to sustain economically and difficult to justify socially,” he said. “We need to look at the detail of workflow to see if things can be done differently. It is about working smarter not working harder. People can work very hard and produce very little value, through no fault of their own.”

The Minister received substantial backlash from the opposition as well as from civil servants who felt he was attacking the public sector unfairly and without justification.

TOMORROW: Criticism that previous and present governments use the large Public Sector to gain votes

30-10-2019 PANORAMAdailyGIBRALTAR