It is still too early for several private sector employers to start considering pay increases for their staff, says Chairman of the Barbados Private Sector Association (BPSA) Edward Clarke.
He said that despite getting an ease in corporation tax at the end of 2018, companies were yet to reap the benefits.
In addition, Clarke explained that due to the previous 12 “extremely difficult” years when businesses held strain, they would now be required to reinvest to modernize their operations and possibly re-hire people.
His comments came in light of another recent call from Minister of Transport, Works and Maintenance Dr William Duguid for private sector employers to grant workers a pay increase.
Duguid, who was speaking in the Well of Parliament earlier this week during the Estimates of Expenditure 2020/2021 debate from the temporary Worthing, Christ Church location, said “The Government has set the record and had given a five per cent wage increase to all its employees. I thought the private sector should have done the same.
“I don’t think we saw that private sector wage increase that we expected and that is sad, because it is clear that the cost of living had gone up significantly during the last administration yet there was no concomitant increase in wages,” Duguid said.
However, in an interview with Barbados TODAY, Clarke said while some private sector employees did grant their workers an increase over the last decade, others were simply not yet in a position to do so.
“Many small businesses have suffered. Many have closed. What you will find in the private sector in the last ten to 12 years is that we have tried to keep people employed,” Clarke explained.
“There are companies in Barbados that have had to put people on a three-day or four-day week just to keep them employed and keep things going. So it has been a difficult period. Even in the last two years since the new government came to office,” he added.
Despite the reduction in the corporation tax rates that took effect in December 2018, Clarke explained that it could easily take more than a couple years for companies to start reaping the benefits.
Most companies file returns in December, while some do their filing in June or September.
“Things have not just opened up and profits started to flow in nor is new revenue flowing in. It hasn’t happened that way,” said Clarke.
“We have to be realistic in what we are asking. If there is increased profitability and growth in business, I would expect companies to reward their employees accordingly,” he added.
The private sector head explained that several factors would impact on how the profit of an organisation would be spread around. Reward could come in the form of an increase in base pay or incentives pay, he noted.
“There are a lot of things that impact that, the growth has not been there on the revenue side of business in Barbados. It has meant a lot of work done on the cost side to retain business and to keep your doors open and keep employees employed,” he stressed.
He also pointed out that in addition to inefficiencies in some private sector firms, the business community was losing valuable production time as a result of lingering inadequacies in the public sector agencies with which they have to do business.
“So as things get more efficient on the facilitation of business you are going to see an ability for businesses to do things better within their own organisations,” he said.
“So if we don’t see the revenue growth in order to increase the profitability, you’ve got to see the efficiency improvement and I think that is where a lot of people have been trying to focus over the last few years because the revenue growth is just not there,” he explained.
However, Clarke remained optimistic that with the soon-to-be realized benefits from a reduction in the tax rates for corporations, companies will be able to reinvest in their operations, hire more people, give incremental pay increases and pay dividends to shareholders.
He is also confident that as Government continues its modernization programme, business facilitation would improve in coming months and that too should help boost the productivity and by extension the bottomline of firms.
“The Government should be able to see better results this year from the Barbados Revenue Authority and how the profitability has moved and then we will have some better data to work with,” he said.
Read our ePaper. Fast. Factual. Free.
Sign up and stay up to date with Barbados' FREE latest news.