Barbados lost about $22 million in productivity as a result of Wednesday’s national shutdown caused by Tropical Storm Matthew, a prominent economist has estimated.
However, according to Jeremy Stephen, the situation could have been a lot worse had there been major loss of life and property from a failure to allow the labour force adequate time to secure themselves, family and property.
“It is true that the country suffered $22 million by the shutdown but this [the shutdown] certainly staved off a possibly much larger loss which could have occurred if persons were not allowed the time to secure their vulnerable loved ones [elderly and children], their property and themselves,” Stephen stressed.
This would have presented major complications because of limited national insurance coverage, Stephen argued.
The economist made reference to the Catastrophe Fund established in 2007 to assist needy Barbadians in times of disaster, saying it was far from adequate.
“The real GDP [gross domestic product] of this island is around $22 million per day. About 16 to 19 per cent of that is Government, so essentially the private sector lost around 18 million dollars.
“There is an insurance policy called the Catastrophe Fund. Based on the premiums this yields around $6,000 per day, which adds up to $.5 million per year. Given the little bit that is collected in insurance premiums, if we were to have mass casualty as a result of persons going to work, the amount of premium gained would not even begin to cover damage and potential loss of life,” Stephen said, acknowledging that figures from private employer policies were not factored into his argument.
In open opposition to Minister of Finance Chris Sinckler’s plans to abolish the Catastrophe Fund, Stephen advocated either an increase in premiums or a greater allocation by the National Insurance Scheme (NIS).
In February of this year, Sinckler took a paper to Cabinet, asking his colleagues to abandon the Fund and place the accumulated $35 million into the Treasury until Government could decide on the best use of the funds.
The proposal was vehemently opposed by Opposition parliamentarian Kerrie Symmonds who threatened “the mother of all confrontations” should any attempt be made to repeal the Act, which established the fund to assist needy Barbadians in times of disaster.
“I don’t know if most people would want to hear about increase in NIS premiums but there is also the option of allocating more of the insurable earnings towards the Catastrophe Fund,” Stephen said, while making a case for better management of the Fund.
He argued that since Huricane Janet, Barbadians had been riding their luck with weather systems for six decades, pushing the limits on the law of averages as it relates to the impact of major disasters.
“We need to start putting aside a lot more to the Catastrophe Fund, considering the havoc which could be wreaked on our infrastructure by a major disaster. At the moment Barbados and the Eastern Caribbean are grossly under-covered nationally. We may need to put protocols in place to better manage the fund,” he added.
Earlier this year, Director of the NIS Ian Carrington told Barbados TODAY it had become impossible for anyone to access the Fund because the regulations governing it were in variance with its objectives. He also revealed that no one had benefitted from the Fund since 2007.
“The regulations to effect the proper management of claims were slow in coming and then when they were put into effect the regulations were in some way not reflective of what the purpose was set out to be achieved by this fund. So really that was the problem and is still the problem. So the fund is to be dissolved and the money used,” he said at the time.