The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Businesses are committing a major blunder by failing to link wages to worker productivity, a trade union leader yesterday arguing that the Bahamas only referred to this concept in an “academic” setting.

Obie Ferguson, the Trades Union Congress (TUC) president, told Tribune Business that too many Bahamian employers were focused solely on minimising labour costs when it came to staff contracts or industrial negotiations.

Arguing that the private sector seemed “not to welcome” productivity and performance-related pay, Mr Ferguson said he had seen few employment contracts - for both union and non-union labour - where such clauses were included.

This, the TUC president argued, was a major mistake because businesses were missing out on an opportunity to incentivise greater worker output and efficiency - factors that could “outweigh” higher salary levels.

Shifting the debate away from the Government’s proposal to increase the $4 per hour private sector minimum wage, Mr Ferguson said: “What the business community needs to look at is to develop mechanisms for productivity.

“They seem to concentrate on the cost of living, but if they work on that they will find incremental increases in wages will be absorbed by productivity and proficiency in their workforce.”

So-called ‘supply side economics’, which focus on reducing a company’s marginal costs and boosting productivity/efficiency, gets little mention in the Bahamas. Yet Mr Ferguson, also a labour attorney, is suggesting that it merits a second look by businesses, unions and the Government.

“That is not something the employers of the Bahamas seem to welcome,” he told Tribune Business. “They seem not to focus on productivity. They only seem to be concentrating on keeping wages down to ridiculous amounts of money.

“They don’t realise the level of performance and productivity can far outweigh the direct cost coming from wages.”

Mr Ferguson called for Bahamian companies to directly tie salary levels to worker productivity, rather than simply continue to talk about this as an abstract concept that had no practical relevance.

“I have this very strong view that productivity should become a major part of wages,” he told this newspaper. “You index wages to productivity.

“In the Bahamas, the word ‘productivity’ is used only for academic purposes. When you look at the contracts with workers, union and non-union, there’s not one provision in those agreements for the level of productivity and efficiency required of that worker.

“If you’re found to be stealing, found to be rude, that’s in there in most contracts. But what the business needs to survive - productivity, efficiency, sales levels - it’s not in there.”

Responding to an International Labour Organisation (ILO) report, which found that the Bahamas had the highest hourly private sector minimum wage rate in the Caribbean, Mr Ferguson acknowledged private sector concerns about the threat posed to economic competitiveness by unjustified, excessive salary increases.

However, he said his concern was for Bahamian workers to earn a “liveable wage” - a concept he differentiated from the minimum wage.

“With the cost of living in the Bahamas, $150 a week is not acceptable,” Mr Ferguson added.

“I understand the concerns of the businessmen with respect to competitiveness. I understand and appreciate the point they’re making, but are we concerned with a minimum wage or a living wage?”

The TUC president said he had been unable to obtain the latest government studies on poverty in the Bahamas, but suggested that these would show a ‘living wage’ was somewhere between $250-$350 per week given the cost of living.

“There’s a lot of variables to look at,” Mr Ferguson said. “But $150 a week? You pick up three to four bags at the grocery store, and the cost is over $100.

“NIB is increasing per worker, I think by $3 and something cents, and VAT is coming in at 7.5 per cent. How do you justify that? That, to me is ridiculous.”

Mr Ferguson said the ILO survey could not be used by the private sector to justify its assertion that the minimum wage was at an already-high level, as the Caribbean countries the Bahamas was being compared to all had different economic structures.

“I don’t subscribe to this thing about the wages in the Bahamas, the cost of the minimum wage, being the highest in the region,” he added.

“You can’t compare the Bahamas to Jamaica or one of the other Caribbean islands. The Bahamas is one of the most productive and, in some cases, the wealthiest Caribbean island.”

Mr Ferguson said worker pay in some Caribbean countries was also structured differently to the Bahamas. He cited the Bahamian hotel industry as an example, suggesting it was more reliant on tips and gratuities, which enabled the likes of doormen and bellmen to earn $75,000 a year, than counterparts elsewhere in the region.

“The pay in Jamaica is altogether different from the Bahamas,” the TUC chief said. “You have to look at all the various aspects of the business, and what the socio-economic needs of the community are, to justify the situation. There’s a lot of variables to look at.”