The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Government has been warned it could undermine its own efforts to spark economic growth by sending mixed messages over further labour law reforms.

Michael Maura, the Bahamas Chamber of Commerce and Employers Confederation's (BCCEC) chairman, told Tribune Business it "doesn't make sense" for the Minister and Department of Labour to be talking about increasing labour costs at the same time as other parts of government are seeking to liberalise the economy for greater growth.

Effectively suggesting that the Minnis administration is speaking out of 'both sides of its mouth', and endangering its plans for economic expansion and job creation, Mr Maura urged it to first focus on improving workforce productivity as opposed to making it harder for firms to hire. "Standard & Poor's were very clear that while they gave us a 'stable' outlook, it was possible we could experience a downgrade in the future if they don't see signs of economic growth," the Chamber chairman said. "I would say that it's as if we have a branch of government apparently looking for opportunities to appropriately expand our economy through initiatives like the Commercial Enterprises Bill, having recognised the need to allow businesses and foreign investors to bring in expertise to allow and ensure their investments are successful.

"They also recognise from a Bahamian business perspective that we also need to utilise that expertise in our business," Mr Maura continued. "In the next breath, you have a different branch of government speaking about increasing the cost of local labour, which doesn't make sense."

Dion Foulkes, minister of labour, told Tribune Business in late November that the Department of Labour was preparing proposed changes to the Employment Act that include an increase in the notice period for redundancies.

"There are several amendments to the Employment Act we intend to propose. One of the biggest issues from the unions' point of view was to increase the notice period for employees upon being made redundant and that is something the Tripartite Council is actively considering," the Minister said then.

The Minnis administration has also pledged to remove the redundancy cap of 12 years for workers' compensation.

"In this term in office we pledge to move the redundancy cap of 12 years for workers' compensation, and institute a new cap after consultation with the Tripartite Council," Mr Foulkes previously said.

At present, line staff remain entitled to a maximum of 24 weeks or six months' redundancy pay, gaining two weeks for each year they have been employed up to the 12-year 'cap'.

Managers remain at a maximum of 48 weeks, or one month for every year worked up to 12 years.

Many in the private sector believe the timing is all wrong for the Government to be talking about further reforms, especially given the amount of effort expended in holding off the former Christie administration's worker-friendly labour law reforms just prior to the May 10 general election.

With the Bahamian economy in need of urgent revival, the focus on increasing workforce costs and bureaucracy is seemingly incompatible with the Minnis administration's pro-growth focus and could undermine a still-fragile private sector confidence.

Echoing this, Mr Maura told Tribune Business: "The Chamber does, however, wish to share its concern with recent comments from the Department of Labour regarding their intention to review the Employment Act with the purpose of increasing the cost of business.

"The Chamber wishes to remind the Government that our relatively high labour costs and poor productivity today make It very difficult to compete. Any effort to increase the labour cost to business will likely be viewed by S&P during their next visit as a contradiction to the Government's economic growth objectives."

He added: "While we applaud the Department of Labour's efforts to address the productivity issue within the Bahamas, and the fact they have engaged the International Labour Organisation (ILO) as part of that process, our reality is that our productivity levels are extremely low in comparison to other jurisdictions.

"Then you take into consideration that the cost of labour in the Bahamas is relatively high compared to other jurisdictions. When we consider that 60 per cent of GDP comes from tourism, to place additional pressure in tourism and other businesses is unacceptable.

"We should be looking at ways to make it easier for businesses to hire more staff, but as they put all these terms and conditions on labour contracts, it makes it harder to do so," Mr Maura continued.

"Why would a business want to expand its operations when it's uncertain from a cost perspective about the labour environment it will be faced with in the future. It's not that we have substantially addressed the productivity issue in the country. Let's address productivity, then talk about cost."