With a public sector sick out currently in effect, a local economist today warned that the industrial unrest, ordered by this island’s major trade unions at the height of a taxation row with the Freundel Stuart Government, could have a devastating impact on the island’s already low foreign exchange reserves.
University of the West Indies lecturer Jeremy Stephen also told Barbados TODAY that while he agreed that labour unions must represent their workers “to the fullest”, they should bear in mind “the real issues”, which include how can Government lower its debt, raise revenues and help to spur economic growth and improve productivity in the public sector.
The island’s four major public sector unions – the National Union of Public Workers, the Barbados Workers’ Union, the Barbados Union of Teachers and the Barbados Secondary Teachers’ Union — today embarked on a two-day sick out, with a view to getting Government to either lower its National Social Responsibility Levy (NSRL) from ten per cent or to grant public servants tax relief by way of a coping subsidy.
However, so far Government has been refusing to budge on either proposal.
It has also been dragging its feet on negotiations with the unions for a pay increase for the workers with Stephen stating today that he did not see public servants getting a wage increase in any hurry.
However, he suggested that with Crop Over season currently in high gear, now was as good a time as any for the unions to get Government to sit up and take notice of their demands.
“Around this time [of year] it should really make Government accede to the unions’ demands, but I worry personally that a lot of us still are taking our eyes off the ball, both on the side of Government and on the side of the unions and the general private sector,” he said.
“The issue now [is] we need to handle Government debt, which is linked inextricably to productivity of workers within the sector, which is linked inextricably to our private sector; and the interest costs that have been bundling up and now representing the second highest cost to Government and has the ability in years to come to even be higher. That can end up stymieing any hopes of unions being able to negotiate successfully,” he cautioned.
“So I think that even if you agitate at this time, in the background somehow it should be clear to people that the unions at least are very cognizant of what the real issue is and therefore it would make more sense to continue to educate their workers as to the real issues, while still trying to agitate.
“When I say educate, I mean talk about issues other than wages and issues pertaining to wages directly,” the economist explained.
While Stephen was not in a position to say how much the country stood to lose by way of foreign exchange as a result of any protest action, he maintained that any shutdown of the country by public sector employees had the potential to definitely affect foreign exchange inflows.
“If they actually have another round of serious sick outs leading up to August 7 [the Crop Over climax], when you definitely would have a lot of people that spend precious US dollars in this economy – especially given the weeks of imports having fallen to [just over] ten weeks – you can expect that it will be a little more tight. The amount of US dollars circulating in the economy and also economic activity for the season would be underwhelming. That is the direct effect,” he said.
The economist, who last month described the NSRL measure as a regressive one, said he expected prices to “really balloon” in the coming months, while warning that the knock-on effects could be such that Barbadians would cut back on their spending, which would then result in loss of revenue for both businesses and Government and ultimately the loss of employment.
In response to a recent suggestion that seek to fix its Value Added Tax system instead of going the route of the NSRL, Stephen said such a suggestion was better in “theory”. However, he further cautioned that the Stuart Government was caught between a rock and a hard place with one of its major problems being cash flow.
“[It then] becomes a question of how do you fix that, while, if you chose to, putting the NSRL at a lower rate because the NSRL itself has the potential to be a very good cash flow item for Government, while not considering how regressive it is.
“VAT on the other hand is not as good given the high amount they [Government] owe on VAT returns”.