Deep job cuts and a hike in bus fares are on the cards for the beleaguered state-run public transport agency, according to Chairman of the Transport Board Gregory Nicholls, in a memo sent via email to General Manager Felicia Sue, and copied to two other company officials.
In the email dated August 11, 2018, a copy of which was obtained by Barbados TODAY, it was evident that the International Monetary Fund (IMF) had demanded a “leaner” transport agency, and that subsidies to the Board would come to an end.
It was not immediately clear if the email was part of a thread, but its subject line, Re: Costs of Proposed Organizational Restructure -Transport Board, along with some of its content, suggested that it was.
Nicholls told Sue he had discussed the matter with Prime Minister Mia Mottley, but he did not say how Mottley felt about the proposed cuts and fare rise.
“I spoke with the PM yesterday [August 10]. We need a leaner organization. The cuts will have to be deeper if we are to survive in the post subsidy era of IMF adjustment,” he wrote.
Among those set to go on the breadline as part of the cost savings exercise, will be clerical staff, while two Government ministries that owe the Transport Board are to clear their arrears as the state agency attempts to demonstrate that not only was it cutting costs, it was also increasing revenue.
“The impact of the fleet management system, procurement system and fuel management system will mean that some clerical staff have to be retrenched. The cost and savings of that retrenchment has to be included,” the chairman wrote.
“We also need to show how the clearance of arrears by Education and People Empowerment ministries will obviate the need for subsidy in this financial year.”
This development follows closely on the heels of the revelation that workers from a number of statutory corporations would be severed as part of the second phase of Government’s Barbados Economic Recovery and Transformation programme.
In releasing the results of an online survey last week on the restructuring of state owned entities, one of Mottley’s key economic advisers, Dr Kevin Greenidge, said while he could not say precisely how many workers would likely be displaced, of the 40-plus statutory bodies identified in the survey, “at most about 1,000” of the 2,823 employees would be affected.
However, the changes at the Transport Board are to go even further than job cuts, and will also include a yet to be announced rise in bus fares, although the IMF has recommended that fares be increased to $5.
In his email to Sue, Nicholls said the proposed fare hike, along with fuel reduction following the purchase of compressed natural gas and electric buses “would have to be costed to show the reduction in operation costs and increase in revenue”.
Nicholls today would only confirm that he had written the memo, but he refused to offer any further clarity as to its implications for the Transport Board or its staff. However, he expressed disappointment that the memo had reached Barbados TODAY.
“I have no comment to make on the matter. It was a private email that I sent to the general manager. She in turn shared it with the managers with whom I wanted to meet, and one of those persons who received that email leaked it. The email speaks for itself and it is not a matter of public discourse. So I have nothing more to say on this matter publicly,” Nicholls stressed.
In the note, he indicated that he would seek to have a meeting organized of the finance and audit and human resource sub-committees of the Board the following Wednesday, August 15, to discuss the matter.
He requested that Sue alert “all management staff with the exception of the HR manager that they are required to attend this meeting”.
Nicholls also suggested some urgency to the process, stating: “We need to complete this work this week in order to get the monies voted for purchase of new buses.”
Following an assessment of the Transport Board last October, the IMF recommended an overhaul of the operations of the state-owned entity, including an increase in current bus fares from $2 to $5 per passenger.
The 58-page technical assistance report was prepared last December by a five-member team from the IMF’s fiscal affairs department following an assessment carried at the request of the then Minister of Finance Chris Sinckler.
While complaining that the Board’s business model was too “restricted”, the IMF warned that the existing bus fare must change in order to ensure the future viability of the loss-making entity, which is currently faced with a shortage of buses.
“A recent cost of service study by the EU [European Union] calculated that $5 would be more adequate for cost recovery purposes. This restriction on revenue collection has adversely affected investment in the fleet, which has not been updated since 2011,” the document entitled Promoting Fiscal Sustainability and Transparency of State-Owned Enterprises (SOE), specifically stated.
However, at the time the IMF acknowledged the need for a differential bus fare to protect vulnerable groups, such as the elderly, but suggested that the $5 charge should apply to all other users with a view to ensuring partial cost recovery by the Board.