Notes From The Margin

March 19, 2008

A Suggestion on BOLT’s

Minister of Tranport, Works and International Transport John Boyce made a comment in the house yesterday about the Government’s potential use of Build Operate Lease Transfer (BOLT) arrangements in the future.

ANY FUTURE BOLT – Build Operate Lease and Transfer – arrangements that Government signs will be designed to bring economic benefits
to the country.

Minister of Transport, Works and International Transport John Boyce told the House of Assembly yesterday during debate on the 2008-2009 Estimates of Revenue and Expenditure that BOLT arrangements were supposed to generate savings and not additional costs.

The previous administration made use of several of this type of arrangement. However the nature of the implementations often left questions on the transparency of the deals. This was noted in an IMF  report on Barbados.

The report makes a number of reccomendations with regard to this Public-Private Sector arrangement.

We on the margin would be much more reassured by the implementation of a legal framework to govern the use of BOLT’s and similar arrangements than simply Mr. Boyce’s statement of “Trust us”.
Marginal

March 5, 2008

Sir Charles Williams on Apes Hill and Agriculture

 

A couple of days ago we were listening to the mid day call in programme and heard Barbadian construction magnate Sir Charles (COW) Williams call in. After he had made his point, the moderator David Ellis took the opportunity to ask him about the progress of his Apes Hill project.

Never one to miss an opportunity for promotion Sir Charles proceeded to wax lyrically about the great success that Apes Hill is becoming. Apparently the sales of lots has been so great it has forced them to accelerate their business plan to keep up with demand.

Then Sir Charles made an insightful point, when Apes Hill was a dairy farm, it employed approximately 12 persons at minimum wage, in its current state of construction it’s employing close to 400 persons (we were driving so we didn’t have the opportunity to write this down so if the numbers are slightly off don’t scream for our scalps) and those 400 are employed at much higher salaries.  One can reasonably assume that as the project completes it will occupy much more than 12 persons.

Now this opens an interesting point, is moving land out of agriculture necessarily a bad thing for society? Obviously there are limits on how much of this you can do but, is society better off with Apes Hill in agriculture or with it in tourism and golf courses? Similar questions could be asked about Royal Westmoreland.

It is unfortunate that there wasn’t an opportunity for this point to be discussed more on the call in programme.

Marginal

February 23, 2008

Once Again Stn. Sargeant Reid We Disagree!

One of the more disturbing stories in the media this week comes from statements made by Station Sargeant Hartley Reid who is the First Vice President of Congress of Trade Unions and Staff Associations of Barbados (CTUSAB). We’re sure that Sargeant Reid is a committed individual who is passionate about his job and his Union affilliation, but these comments left us shaking our heads.

“The problem we have in Barbados is that not even half the workforce is unionised . . . . As low as 30 per cent of all workers are unionised, this is true.

“You could understand the struggles which the unions have in this country because they have 70 per cent of the workers who are benefiting from the subscriptions and the work of only 30 per cent,” first vice-president of the 14-member Congress of Trade Unions and Staff Associations of Barbados (CTUSAB), Station Sergeant Hartley Reid, said in an interview.

“I am happy that this issue has come to the fore at this early stage of the new Democratic Labour Party administration because they will now have to take a position on unionisation and the rights of the workers.

“I have long called for legislation which says that every worker should be unionised. There is a reason for it. When a worker is not unionised you have a situation
where the employers take advantage.

“They are offered whatever salary there is and the workers have no recourse. Workers are exploited left, right, and centre; late payment of their salary or
wages; shifting of their employment conditions; sometimes they have no conditions at all,” he said.

The CTUSAB vice-president argued that with “all the anti-worker practices by unscrupulous employers” any legislation enacted by Government regarding mandatory signing up would mean that it would no longer be a requirement that “50 per cent plus one” of a company’s employees for the union to be recognised.

“It would mean that even if one person is unionised in employment that the union of their choice would come in and bargain on their behalf,” Reid said.

He said that this move would also strengthen the ombudsman’s role because he would be responsible for overseeing the operations of the trade unions.

“That can easily be done. Governments must stop hiding behind democracy, by stating every worker has a democratic right to be a member of a union or not. They are perpetuating a system where persons are continuing to live a parasitic life where they would benefit from the contributions and efforts of a few,”
he said.

We on the margin have to admit that we never thought we would see the day that a trade unionist would argue for doing away with Freedom of Association! The question that we would have to ask Sargeant Reid is as follows:

If all employers are as bad as he says in the above quote, why have trade unions not been as successful in attracting more members?

Now we aren’t denying that there are employers out there whose management practices date back to the plantation era, but surely if they were all as bad as this…

“They are offered whatever salary there is and the workers have no recourse. Workers are exploited left, right, and centre; late payment of their salary or
wages; shifting of their employment conditions; sometimes they have no conditions at all,” he said.

Then we would be seeing a much higher proportion of Unionization in the population.
Perhaps what is even more disturbing about the above statement is that it comes not just from a trade unionist but from a police officer. If this is the thinking of someone who is charged with safeguarding our democracy, perhaps we should all be concerned.
Marginal
For our earlier comments on Stn. Sargeant Reid see below:
With Respect Sargeant Reid… We Disagree

February 20, 2008

Strike off – What Happens Now?

Now that the BWU has climbed down from the threat of a National Strike, what has changed? Minister of state in the Ministry of Labour is setting up a mediation panel to review that matter. However we on the Margin hold out little hope for this. Both employers in this issue have been very firm in not wanting to rehire the workers, given the Union’s climbdown from the national strike, it seems unlikely that they are going to budge from their positions at this point. The union may well be forced to seek a deal for the best severance package available.

At the core of the Sandy Lane issue there seems to be a fundamental point on the legitimacy of the use of wildcat strikes. On Brass Tacks today noted HR consultant Elsworth Young seemed to suggest that wildcat strikes are a part of IR practice in Barbados. This would seem to be reflected by Sir Leroy Trottman’s views given earlier

The employers on their part seem to be taking the view that a collective agreement spells out procedures for handling grievances, and is binding on both parties, hence why should they accept conduct that is clearly outside of the scope of the agreement?
We on the Margin cannot help but feel that this entire incident is an example of how the system of volunteerism is becoming outdated as the Barbados industrial relations environment becomes more complex. Perhaps it is time to consider other options. One thing is clear… given the entrenched nature of the positions and the peculiarities of the entities involved, it seems that this is unlikely to end well for the workers in question.
Marginal

February 19, 2008

STRIKE OFF – Picking Up The Pieces….

At the eleventh hour the Barbados Workers Union deferred the strike action after taking the country to the brink of a National industrial action. Sir Roy Trottman, indicated that the action (or deferment of action) was taken due to the “newness of the current administration” . This dramatic climbdown came after a week of deadlocked talks, where both sides became more and more entrenched in their respective positions.

We on the Margin always felt that the Union had painted itself into a corner by reaching for the “big gun” prematurely. The lateness of this climb down also has several knock on effects that may be more long lasting.

American Airlines cancelled flights today and tomorrow into Barbados, stranding some Bajans in Puerto Rico. It is not clear how many tourists this has affected.

Cruise ship handlers had indicated that in the event of a strike the cruise ships scheduled for Barbados calls on Wednesday would divert to other nearby ports.  At the time of writing, it is unclear if they have diverted or if they will make their regularly scheduled call.

Certainly in looking at our WordPress data we can see that much of the traffic we have picked up is be people looking for informaition on strikes. We believe that many of these queries originate outside of Barbados and we have to wonder if the uncertainty will result in potential tourism business going elsewhere.

In short, even though the strike action is off, we on the Margin are deeply concerned about the impact the strike will have. We are concerned that this matter was allowed to develop to this stage and was not resolved earlier. Even though we may have dodged the strike we still stand to be affected.

This whole sorry episode will do nothing to enhance the reputation of the Union, or the new administration for that matter, who we think should have intervened in some form far earlier than they did.

We can only hope that this issue (which is still ongoing) will now be resolved in an amicable fashion.

Marginal

BREAKING NEWS – Strike Off – Union Backs Down

“Due to the newness of the government” BWU defers the pending strike action. However talks continue.

We’ll publish more details as we get them.

Marginal

February 18, 2008

Down to the wire….

A national strike does seem to be about to happen in Barbados, (barring a last minute settlement by the intervention of the  Prime Minister) In both cases of dispute (Sandy Lane and the Royal Shop) no one seems to be shifting their position. The intervention of the Chief Labour Officer does not seem to have moved the disputes closer to any form of resolution and that leaves only one other arbitrator available the Minister and Prime Minister David Thompson.

 

 

 The entrenched nature of the positions was highlighted by a story in today’s Nation which highlighted comments by Sir Leroy Trottman:

Sir Roy added: “Why could they not have said before, that it is indecent to fire these numbers of people for what is an everyday occurrence in this country, which the BWU helps to resolve in a matter of hours, but always in less than a day.

The Union’s position is an absolute, they are pressing for full reinstatement of all the workers in both cases. The mood in the private sector is considerably at variance with that expressed by Sir Roy. The BHTA has thrown it’s full support behind Sandy Lane, who seems to have taken the position that can be summed up in saying that if the workers do not honour the collective agreement in place there are consequences.
While Sir Roy may consider wildcat strikes to be an “everyday occurrence” to an employer a wildcat strike is incredibly disruptive and costly. One of the reasons for entering into a collective relationship is to ensure the incidence of strikes is minimised.
In the case of the Royal Shop, there appears to be a hardened resolve NOT to rehire the workers. The company is offering full severance, but is not budging on its position.
To us here on the margin, it appears that the Union may have erred tactically in going for a general strike. The Royal Shop and Sandy Lane may both take the position that the Union will suffer more loss of good will than they will if the strike goes ahead. Indeed, for Royal Shop a national strike will hardly make a difference to their current situation.
To stretch a metaphor we used in an earlier post; national strikes are like atom bombs, they are great weapons to threaten with, but actually using them makes both combatants losers.
It is unfortunate, but it would seem that we are about to see that played out before us.
Marginal

 

February 17, 2008

Does Barbados Need An Industrial Court?

I run a small business (approx. 10 employees) if this general strike comes off next week it will cost me a significant amount of money. I have no part in this BWU/Royal Shop/Sandy Lane, and yet I will suffer a direct economic consequence of what is a Union action! In theory the Union must carry some civil liability for this cost, but in reality there is no way that I can recover this cost.

Why should I (along with everyone else) be penalised for one company’s perceived intransigence? The threat of a general strike is irresponsible and shows why we need to have an industrial court in this country.

Small Business Owner

Above is a comment by a small business owner and he asks what in our opinion is a valid question.

Historically industrial relations in Barbados has relied on a system of volunteerism. That is that collective agreements aren’t actually legal contracts but are considered to be more along the lines of “gentlemen’s agreements”; that is that either side can breach the agreement at will. Collective agreements are usually enforced by the relative power of the union and the business owner. Now here’s the funny thing… as INSANE as this system may sound, in Barbados it has actually worked! While industrial courts are well established throughout rest of the Caribbean, we in Barbados continue to function on a volunteerism basis, and have had a relatively stable IR climate for a long period of time. ‘

Now of course there are certain features of the Barbados system that make this workable, you have a very small number of very large powerful unions, and you also have a relatively homogeneous private sector. This has meant that historically, everyone knew the rules and how the game was played and everyone was prepared to give and take to make the overall system work.

Now in 2008 we still have a small number of large unions, however the private sector is no longer as monolithic as it was in the past. We have new international investors, we have regional investors, we have relatively new local players. In short we have people who are accustomed to functioning a more “rules based” industrial relations culture. They don’t know how we play the game “’bout here”

This of course leads to all sorts of complications, issues of recognition, issues of wildcat strikes. The Sandy Lane Showdown is a prime example of this. Is there a penalty for workers breaching the collective agreement? Where historically local employers have accepted the occasional wildcat strike as par for the course, someone accustomed to an environment where collective agreements are contracts will expect to be able to terminate wildcat strikers for “abandoning the job”.

Issues such as this will continue to come up. So we on the margin ask the question

Is it time that we retired the volunteerism system?

Do we now NEED an industrial court?

We think it deserves serious consideration.

Marginal

February 14, 2008

The Royal Rumble…..

Well after simmering for a few weeks the Royal Shop Vs. Barbados Workers Union is beginning to bubble. On the one hand the owner of the Royal Shop insists it is a straightforward case of a worker refusing to follow a reasonable instruction on the other hand the BWU is maintaining that the worker in question was fired for trying to organise the Royal Shop workforce.

The drama has rolled on through several acts, with allegations of untruths and insults being thrown around, the parties have met several times and there has been no shifting of positions. The latest salvo in the firestorm has the union reaching for perhaps its biggest gun, that of a national strike.

Now the Union actually doesn’t have many cards to play against the Royal Shop, there is no other unionised workforce there that it can call out, so it can’t stop the store from working. Further because of the smallness of the operation it can be run by literally a few people, so in a worst case scenario the owner can run it with friends and family. The stock of the store is high value, and brought in by individual courier so the union can’t say it’s not handling cargo consigned to the Royal Shop at the port. The shop’s main customers are tourists so it’s business is unlikely to suffer from a withdrawal of custom from Barbadian customers. That leaves the Union pretty much in the position of having to use the labour relations equivalent of an atom bomb to squash the proverbial cockroach.

However the Union should exercise some care with the idea of a national strike, while Bajans will support the idea of freedom of association in theory and in practice while it costs them nothing, the Union may well find that their support wavers if it suddenly starts becoming personally inconvenient to the average man in the street.

A national strike is in no one’s best interest, we on the margin would urge both sides to return to the bargaining table and let cool heads prevail.

Marginal

January 31, 2008

Economic Advice From Prof. Howard

Local Economist Prof. Michael Howard who has become a regular commentator on Government’s economic policies today wrote an guest column in the daily Nation offering his views on the way forward for Prime Minister Thompson’s government and Owen Arthur’s stewardship.

His comments on former PM’s Arthur are interesting:

Whether he knew it or not, Arthur was also influenced by Rostow’s misleading “catch-up” notion of Barbados becoming a “developed country”. We may have already reached there since we are now in Rostow’s stage of “high mass consumption”.

Arthur’s expansionary policies eventually led to “overheating” of the Barbadian economy. Overheating was caused by heavy expenditure on the World Cup, the bunching of lumpy capital projects, and high levels of conspicuous consumption. The positive aspects of overheating were increased employment and economic growth.

The Barbados model has now reached a critical turning point where serious decisions have to be made to reduce high levels of spending, maintain capital controls, and curb illegal immigration. Without capital controls the exchange rate will come under significant pressure, as the economy faces a possible recession.

( If you want a quick overview of Rostow’s Theory click HERE.)

The point on the removal of capital controls we have spoken about on the margin already. It does seem to be a judgement call. As we said in our post “Capital Account Liberalisation – Good or Bad? ” it seems that no one REALLY knows what will happen when capital controls come off. Prof. Howards view that the world economic situation is less favourable MAY be right.

Interestingly his other points include tax policy:

It’s likely that it may happen in a cosmetically changed format and Thompson may claim that it was his idea! Arthur’s tax policy seemed logical to us on the margin, and it favoured gradual incremental change over a period of years rather than sharp adjustments. In lowering the income tax rate he was able to address the issues with the NIS pension fund without the population feeling poorer. With his policies he began moving the economy away from income taxes which inhibit investment and towards VAT. Arthur had indicated publicly on more than one occasion that he considered moving to one tax rate for both onshore and offshore sectors to be desirable.
On the issue of VAT Prof. Howard had this to say.
We on the margin agree with the professor on this point, and are concerned that once exceptions are made to the VAT tax, it becomes easier to make further exceptions. “You zero rated sports equipment so why not this?” Also the more zero ratings the more loopholes there are for abuse. (Are rally cars sports equipment? How about clothes to train in?) The objective is socially laudable, but we believe that the Government should find another way of achieving it.
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We aren’t sure that we agree with Prof. Howard on one of his later points on the cost of living.

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“Reliance on imported food is a major cause of the high cost of living in Barbados.”
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We believe this argument ignores the fact that (1) Many of the input into local agriculture are imported, (2) Much of the imported food is so subsidized that it lands at costs BELOW the cost of local production. While the lack of competition in the distributive sector is definitely a factor it is in our view simplistic to view them as a major part of the problem of local agriculture withering, without a full examination of ALL of the factors involved.
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That said we are happy to see input from some of the best brains “On The Hill”. Barbados is at a stage of it’s development where precious few countries have gone before. Input such as Prof. Howard’s is invaluable in helping both policymakers and the public understand the issues of the day.
Marginal
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