Government ‘inundated’ by calls to breach 75% salary deductions

As of Monday, November 27, 2017

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Government has been forced to reaffirm the 75 per cent limit on civil service salary deductions, after being “inundated” with demands for the policy’s relaxation.

Marlon Johnson, the Ministry of Finance’s acting financial secretary, told Tribune Business he was seeing “too many requests for my liking” when it came to civil servants seeking waivers from a policy intended to ensure they retain at least one-quarter of their salary as ‘take home’ pay.

He confirmed that his November 23, 2017, memorandum to the Government’s permanent secretaries and department heads was designed to reinforce the 75 per cent ‘limit’ and confirm that waivers will only be granted for true medical emergencies.

The memorandum, which has been obtained by Tribune Business, states: “Recently, the Ministry of Finance has been inundated with requests from public officers to have the established 25 per cent salary threshold policy waived, on their behalf, to allow for additional salary deductions.

“For clarification, we wish to advise that the suspension of this policy will be considered for emergency medical cases only.”

Mr Johnson, when contacted by Tribune Business, said the sheer volume of requests from civil servants to exceed the 75 per cent threshold had prompted the Ministry of Finance’s move to reinforce existing policy.

He emphasised that it was intended to prevent public officials from reckless over-borrowing that transformed them into ‘the working poor’, pointing out that some had been “taking home less than $50 per month” after deductions were made to service bank loan commitments.

“It’s just because we get lots of requests to go over that [75 per cent limit], and we say no,” Mr Johnson explained to this newspaper. “I’ve only been in the chair since September, but I’ve seen too many requests and petitions for my liking.

“Because we get so many requests to go past that 75 per cent threshold in salary deductions, it was just a reminder to the gatekeepers; the financial officers that we will not be entertaining such requests unless it’s a true emergency.

“That’s what the memo was about: A reminder of what the policy is, and we will only consider it in emergency cases.”

Mr Johnson’s memorandum, though, highlights the extent to which many Bahamian families and individuals continue to be over-burdened by excessive consumer debt - a problem that has contributed to the wider economy’s sluggishness.

Persons who have run up excessive debts on auto loans, credit cards, furniture and other consumer goods are unable to qualify for mortgages and other credit that would help to stimulate the more productive economic sectors, such as the housing market and associated sectors.

The impact at an individual/family level has been just as dire. Many Bahamians have fallen into the so-called ‘debt trap’, where the ‘take home’ portion of their salaries is minimal because so much has already been committed to salary deductions that service loan payments to banks and other lenders. This leaves them unable to afford basic, every day necessities essential for living, such as food and water, and the payment of utility bills.

The surge in civil service requests to waive the 75 per cent limit is also likely to have been driven, at least partly, by the upcoming Christmas season and need to provide presents for friends and family.

Recalling the rationale for the Government’s salary deduction limit, Mr Johnson told Tribune Business: “The concern, when the policy was put in place, was to prevent instances where people were pretty much taking home nothing; everything was pledged to financial institutions.

“When the policy was put in place, some people were taking home less than $50 per month. That’s an untenable situation. It was to ensure people had a modicum of take home pay to enable them to live; some security with take home pay.”

Mr Johnson said the 75 per cent ‘limit’, “meaning that at a minimum your non-committed salary should be at least 25 per cent of your gross earnings”, had been in place for “at least 20 years” across successive administrations.

“Generally, it has been maintained,” he added. “However, the seniors team at the Ministry of Finance does have the option to override that in compelling circumstances. There’s a process to it, where people have to write in and be considered.

“The memorandum was just to remind people that a policy has been in place for some time, and we will enforce the policy as it is written.”

However, several Auditor-General reports suggest previous administrations have not always been focused on such enforcement, criticising them for allowing salary deductions that breach the 75 per cent threshold.

bogart 6 years, 5 months ago

Any employer must have a duty of due care and protection for the employee to ensure the conditions of work is healthy including having money for food. Its common sense and may lessen curruption. On the other hand the salary should go directly to the employee and what they do is their business and the govt has no right to act as a personal banker without receiving a fee for this salary assignment or deduction service they entertain. Similarly, the BPL should not be allowing staff to run up financial charges in owing light bills when the company is govt. supported by taxpayers. Similarly govt vehicles should not be used for private use on taxpayer gas. Similarly govt should not be having the Bank of the Bahamas give out loans which cost the taxpayers some 300 million over the past 5 years and no public investigation etcetc. Same ol same ol. Admire President Obama for recognising the Cuban situation as continuing because they have been doing the same things year after year and then expret some fundamental change. Do the right thing Mr. Johnson.

John2 6 years, 5 months ago

THE Government has been forced to reaffirm the 75 per cent limit on civil service salary deductions, after being “inundated” with demands for the policy’s relaxation.

This has been a problem for decades, because we have become a materialistic society, running after our wants instead of our needs.Trying to please the proverbial Jones's have made us slaves to the institutions we work for. This has resulted in many people having sleepless nights. high blood pressure and a host of other diseases including cancer. Not taking home enough disposable income to buy the necessities of life like healthy food is also the cause of many issues in family life. Sadly the banks are feasting on consumers with their predatory lending practices.by being concerned with only their bottom line. All of the commercial banks routinely set up kiosk loan desk at all of the government corporations and hotels to entice employees into consumer loans. Personal financial education is very much needed starting in the school curriculum, but then again we have become too americanized as a society and we do what ever we see the americans do ! .

sheeprunner12 6 years, 5 months ago

When a person is making a reasonable salary of $2,000 or $3,000 per month, but they are only receiving $400 or $500 on payday, it leads to stealing from their employer, taking of bribes, gambling, prostitution, sugar-daddy relationships etc. that lead to all kinds of corrupt and immoral compromises to their personal integrity ......... hence the breakdown in social order and decency.

hrysippus 6 years, 5 months ago

I wish John2 would set up a bank that . was not designed to feast on consumers with their lending practices.and was not concerned with only their bottom line. He could call the bank of the Bahamas 2.0..

ohdrap4 6 years, 5 months ago

THE AD ON THE RADIO SAYS:

YOU DO NOT HAVE TO HAVE MONEY, ALL YOU HAVE TO HAVE IS SALARY TO DEDUCT.

75% in salary deduction is indentured labour.

a long time ago i worked for an organization which thrived on salary deductions. when i looked at the peoples paycheck i tried to dissuade them from getting more salary deductions and they used to get angry and say their govt salary was not their on;y income as ''they had apartments on rent''. Amazing, you get apartments on rent and now scrambling to get a 40 dollar salary deduction.

but there are predatory relatives too, As soon as their young sons join the forces and the civil service their ma and grandma force them to get salary deduction and call the wutless. i know a man who ended up in sandilands because the relatives deducted 60% of his salary and the poor fella could not even enjoy the fruits of his labor.

TheMadHatter 6 years, 5 months ago

Exactly correct.

Socrates 6 years, 5 months ago

in a free and democratic society, gov't should not be in the business of managing your personal finances.. they should not be in the salary deduction business either.. a credit arrangement is between the parties concerned and should be governed by the risk-taking decisions of the lender, based on their lending criteria, and application of civil law for breaches of any agreement.. should gov't also tell you what to eat and when to exercise so you dont become a burden on the public health system? how far do you go? we bahamians need to learn to take ownership of our actions, good and bad...

TalRussell 6 years, 5 months ago

Comrades, no greater hell bent on bankrupting workers earnings sin has ever been committed by both the Red Shirts and the PLP governing administrations than that of even permitting government salaried workers paycheques to be used as collateral against loans for any amounts money. In fact, it should become an impeachable act - punishable by Ten (10) Years Hard Labour of imprisonment to be levied against any group of governing politicians permitting such a treacherous rape of government workers paycheques. The current 4th Red Shirts governing regime must move to cancel this disgusting, financially encouraging workers to overextend their repayment capabilities - all for the greater financial benefit of the Merchants and Money Exchanges, mostly in bed with whomever just happens to be the governing politicians of the day responsible for setting down what should be the good policies of government. This policy STINKS and I have been lone voice speaking out for years against why its even allowed to exist.

DDK 6 years, 5 months ago

Why Comrade! You deserve a red shirt for that wise missive!

Dawes 6 years, 5 months ago

Salaries are low in a number of fields, however there is no excuse for having 75% of your salary deducted before pay day. There has been no real growth for the last 10 years and it appears things will get worse. We need to go back to being less materialistic. In the article it states that one of the reasons for the increase in requests to waive the limit is due to Christmas. Whilst its nice to give family presents at Christmas, going broke to do so makes no sense. Any loving family member will understand not getting a gift. Government should either limit it to 50% or less, or say in 2 years time we will no longer be making deductions so everyone can make the necessary adjustments before it occurs.

TalRussell 6 years, 5 months ago

Comrade Dawes, one has thinks that a Judge would not looks friendly towards a creditor using the court to recover a loan that they had to know the borrower's ability of repayment would be all but near starvation impossible?
Surly, Lenders and Merchants can be held liable when knowingly loaning money or extending credit to a government worker who at a 75% of their salary has be a risky insolvent borrower under ANY conditions..... other than when the government's payroll department is there to safeguard the Lender or Creditor?
Some Lawyer should put this to a Court test?

Dawes 6 years, 5 months ago

This is why we need the credit act (or whatever it is called), that was proposed by the PLP and now the FNM are saying they will do it. Currently a lot of these companies have to rely on the honesty of the person requesting the loan, so they then rely on the Government to make sure it doesn't go over 75% and they feel sure they will get paid (they are a lot less likely to do this for Private sector employees). But all this is besides the point, none of these companies force people to take a loan. The person decides to do that. The company runs the risk of the loan not being repaid (which is why they like Government employees), however if the applicant says they can make the payments and still be OK, they will say OK. Unless you want the companies to be able to look into every detail of the applicants life to make sure they know their full in comings and outgoings so they can make a decision. Though i will agree that something should be done about the level of interest being charged as that is too high.

TalRussell 6 years, 5 months ago

Comrade Dawes, if you want see how suddenly and without waiting for some Credit Bureau to open - the Banks and Merchants will know all they needs knows about you - not to loan you another red penny - just remove the umbrella of government payroll deductions. It has becomes creditors security blanket.
The PM and his red cabinet colleagues, does urgently needs start tracking suicides among government workers taking home but 25 Cents out of every $1 they've earned in wages. Its unconscionably High Treason committed against government paycheques and MUST be discontinued.

Dawes 6 years, 5 months ago

Fully agree. This is why i said Government should give 2 years notice that they are doing it, so there can be a smooth transition (well as smooth as anything can be). Problem is will the Government workers be OK with this going forward. If not then Government will not do the right thing and stop it.

TheMadHatter 6 years, 5 months ago

Thank you Minnis & Johnson for holding firm on this. The figure of $50/month is correct. I heard of one who actually took home $9 (NINE) each month. That is insane.

Others commenting make good points too about pressure from family members / girlfriends etc. to lead one to bankruptcy - not to mention certain banks themselves along with fu* plus and other "creditors".

Those blaming the individuals and talking about individual rights etc. have got to be joking. It is an insane argument to suggest that if someone makes $1200/month as a janitor for government, that they should be allowed to only get $300 in cash per month. What can you do with $300 per month under your own control? Nothing much.

Hope they continue to enforce the 75% threshold. Good stuff.

bogart 6 years, 5 months ago

Socrates you are leading Mr Johnson in what should be correct according to the Credit and Truck system where the TRUCK ACT laws was used to protect workers from exploitation by working for the merchants and forced to accept script or vouchers to only be redeemed at company stores. Today the govt employee contract should not allow the govt to be complicit with the merchant in extracting portions of the employees paycheck when the govt or dept is not a financial agent or act in capacity of one without financial expertise and without due care and attention. The systen also creates a false representation and unfair credit system to non govt employees who must go through a rigorous due care and attention process where the TDSR total debt service ratio of 45% income applies AND the bank has a due care to ensure the applicant can live on the remaining 55% or else no judge will agree the loan can be repaid successfully. We need independent agencies like the 2013UK Financial Protection Bureau or the 2010 US Consumer Financial Protection Bureau.

TalRussell 6 years, 5 months ago

Comrade Bogart, using good common sense and best lending practices should apply until and if we ever get a Credit Bureau or Financial Protection Bureau kinds creditor polices.
This payroll deduction corrupt practice MUST be DISCONTINUED - not in 2 years but TODAY!
One of our senior Queen's Counsel's, should make this a test case before the courts and if required - all the way to the Privy Council in England.

hrysippus 6 years, 5 months ago

Government workers want to spend................... ..... A whole lot more than their month's stipend... .......... That's why they sometimes "cook the books"...... ................ But don't you dare to call them crooks..... ................... Cos they only borrow 'til their number fall.................... ................. And the numbers house gives them a call.......................... ........... And then they mean to pay their debt............................ ................. Not waste it making one more bet. ......... ........................... They've watched the cabinet borrowing more................................... ....... As the country sinks to third world poor,................ ......................... If gander's sauce is good for goose, ....
.................... Their fists' not tight, it's largesse loose. ...

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