Can T&T Afford a 10% Public Sector Wage Increase? The Numbers Behind the Promise.

As Trinidad and Tobago transitions into a new political era with the United National Congress (UNC) poised to govern, one campaign promise stands out for its sweeping fiscal implications: a 10% wage increase for all public servants. With the country still navigating the aftershocks of energy volatility, pandemic era deficits, and a fragile non-energy sector, the key question is not political it is mathematical. Can this promise be delivered without destabilizing the economy?

Public sector compensation already makes up a significant slice of the national budget:

• Wage Bill: Estimated at 10.5% of GDP, or TT$19.95 billion annually (based on a TT$190B GDP).
  

• A 10% increase implies an additional TT$1.995 billion per year in recurrent spending.
  

This is not a one-off cost; it's a structural addition to the expenditure base. To put it into context:

• FY2024 fiscal deficit is already projected at 2.7% of GDP (TT$5.1B).
  

• With the wage hike, the deficit could rise to 3.8% (appox TT$7.1B) if unmitigated.
  

Not easily. While the country’s public debt remains moderate (54.3% of GDP, with a projected peak at 56.3% in 2026), Trinidad and Tobago must begin consolidating or face future credit downgrades.

Debt servicing remains sustainable for now, but using borrowing or dipping into the Heritage and Stabilization Fund (HSF) which stands at roughly 20% of GDP, as a wage payment vehicle undermines long-term resilience.

The answer? Transfers and Subsidies. T&S account for 12% of GDP ( approx TT$22.8B). Reducing this by even 8.8% could entirely finance the TT$2B wage hike.

Key Reform Targets:

• Fuel Subsidies: T&T still maintains subsidized petroleum prices, despite international oil price volatility. A phased liberalization (e.g., price banding or subsidy cap per vehicle/family, there is global precedent for these measures) could save TT$800M–1.2B annually.
  

• Water and Electricity Prices: These remain below cost recovery, and reform proposals have already been floated. Raising prices with means-tested protection for low-income households could save TT$500M+.
  

• Overlapping Social Grants: Trinidad has over 100 social support programs, many with overlapping beneficiaries. Consolidating delivery through a unified social registry could free TT$300–400M with no reduction in protection.
  

These reformative measures will probably create the necessary fiscal slacked need to boost allocative efficiency and free sources for wage increases without rising taxes. Added to that the public payroll system in T&T is fragmented, with manual processes, weak real-time tracking, and limited fraud detection. A national digital payroll system can:

• Improve accuracy in overtime, sick leave, and contract duplication.

• Eliminate ghost workers and redundant staffing.

• Allow faster auditing and cost forecasting.
  

Countries like Estonia and Uruguay saw savings of 1.5–2% of total wage bill through e-payroll reform. For T&T, this translates to TT$300M–400M in potential savings per year 20% of the wage hike cost.

Key elements of the reform include implementing biometric verification at the ministry level, integrating AI-driven payroll auditing, and linking payroll systems with the NIB, BIR, and Immigration databases to detect double-dipping, track retirements, and monitor workforce migration. The UNC doesn’t need to walk back its promise but it must phase it, and pair it with smart structural reforms.