A fortnight ago, we argued in these columns that the wage restraint agreement between the Government and public sector unions, contained in the so-called MoU2, was a bad idea.

We do not hold that position because we believe that the Government's pay bill should be allowed to rocket and that the budget deficit should remain unrestrained. Nor do we believe that people should not have jobs.

There is, to put it simply, no malice.

We insist upon our case because, fundamentally, it is right. It is what makes sound economic sense.

Indeed, as this newspaper reported on its front page yesterday, the International Monetary Fund (IMF) had endorsed our argument, notwithstanding the interpretations placed by some on the acknowledgement by the international rating agencies of the impact of the MoU2. Its benefits are, at best, short-term.

The fact is that the MoUs, this one and its predecessor, exist because of the failure, or unwillingness, of the Government to take the really tough, but economically prudent decision. It has chosen to take the politically safe stance on the matter.

In the 1990s, the Patterson administration presided over the rapid expansion of the public sector, both in terms of its share of GDP and the number of people employed by the Government. The wage bill grew rapidly, aided earlier in this decade by the agreement to push public sector wages closer to those in the private sector. This placed pressure on the budgetary deficit, which was exacerbated by Dr. Omar Davies' 'run with it' loosening of the budgetary tap leading to the 2002 General Election.

When it was clear to the Government that a wage bill of 12 per cent of GDP, and rising, was unsustainable, its prudent response should have been to cut staff. In the euphemistic parlance of the management gurus, Dr. Davies should have right-sized or restructured.

Instead, he cobbled this arrangement that 'saved' 15,000 jobs but froze wages for two years. There is a now a further cap that will limit hikes to an average 16 per cent in the first year and five per cent in the second.

But as the IMF has pointed out, even with the current increases, real public sector wages have declined sharply over the past two fiscal years. In other words, the Government and the trade unions have contrived to redistribute poverty.

The upshot is that the Government finds it difficult to recruit and retain qualified and motivated staff, so necessary to run a modern, efficient bureaucracy. It would make sense to have a smaller, better paid public service, rather than this big, lumbering one which the treasury pretends to pay for an approximation of work.

We do not believe it good enough for the Government to tell the IMF that it cannot now undertake the reforms because at this point in the electoral cycle, it would be difficult to forge political and social consensus. Really, the only thing that is necessary is for the Government to do the right thing.

That must start with the administration accepting that the existing strategy is fundamentally flawed and wanting to correct it; then having the guts to implement it. Unless, that is, the administration feels that it has lost the moral authority to do what is right.