The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A trade union leader yesterday pledged that organised labour will not employ strong-arm tactics to achieve inflation-matching wage increases, adding: “We must all come to grips with reality.”

Obie Ferguson, the Trades Union Congress (TUC) president, told Tribune Business that the unions could not ignore the devastation inflicted by COVID-19 on companies and the wider economy in their industrial negotiations and other dealings with private and government sector employers.

Asserting that unions, and workers generally, were all too aware of the pandemic’s economic fall-out, he added that organised labour would not be unduly aggressive in seeking salary hikes despite facing inflation that James Smith, ex-finance minster and Central Bank governor, said could exceed the present 7 percent rate in the US.

“Obviously any inflation would have an impact on workers. That’s a fact,” Mr Ferguson told this newspaper. “I think the labour movement, certainly the trade union movement, understands the seriousness of the matter at this time - the unfortunate situation that has been created by the COVID-19 pandemic, the impact it has on our country as a whole.

“Therefore, while it is not something that we welcome, the reality is we made a commitment as well. Whatever is reasonable, having regard for the interests of our members and 220,000 workers, and the interests of our economy, we will work with the Government, work with the employers, with a view to finding a win-win situation.

“It [inflation] is not something we are happy with, but the trade unions, like any other organisation, must come to grips with reality. The reality is that COVID-19 has had a very devastating effect on the workers, the economy and the employers.”

Mr Ferguson indicated trade unions may be willing to defer or delay taking wage increases as part of their industrial agreement negotiations. “The important thing is that when we get around to negotiating an industrial agreement, and when we get into the area dealing with wages, there are many, many creative ways to reach an agreement on wages,” he added.

“There are ways that can be worked out in the best interests of workers and employers. It all depends on the attitude of both parties. It has to be reasonable, with everyone prepared to sit down intelligently, look at the state of the economy, look at the state of the business enterprise, look at the interest of the workers and come up with something reasonable that does not disadvantage either side.”

Mr Smith had earlier this week warned that “every family can expect hardship” from rising inflation that will exceed the current 7 percent rate in the US.

He told Tribune Business that The Bahamas will likely see “US inflation rates-plus” due to its consumption-based tax system that will exacerbate the impact of a sustained rise in the cost of goods and services imported from the country’s northern neighbour.

And, with the cost of living increasing, and living standards and disposable incomes falling, he warned that an “already depressed” economy could come under further pressure from workers demanding salary increases that keep pace with inflation. Strikes and work stoppages could result if unions fail to get their way, Mr Smith said, with pay rises possibly further fuelling inflation.

“This is happening without any changes in disposable income among the local population, so they can expect hardship that every family would experience,” Mr Smith said. “With what essentially are fixed incomes, people will be able to buy less goods and services because of price increases, and that will have an impact on general output.

“It just compresses the economy a little bit more. You’re paying the same for a lesser amount of goods and services being purchased, and the economy is less efficient because it is not operating at optimum output.”

Mr Smith warned this could translate into worker demands for wage increases to maintain living standards, especially in unionised workplaces, even though companies may not be able to afford this post-COVID.

“Everyone would want their income to increase, so they will be making demands for higher wages and, if those demands are met, there will be more pressure on the economy because you are taking from an economy that is already depressed, so you have a bit of a downward spiral,” he added.

“On the other hand, if you don’t pay them, you have the possibility of strikes or stoppages which affects economic output. From that point of view we need to keep a close watch on what inflation is doing in the US because with a very short time lag we’ll be experiencing it.”