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Business ‘Hardship’ Fears Over Gov’Ts Workforce Reforms

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The private sector is likely to warn that the Government’s proposed minimum wage and redundancy pay reforms will “create hardship” among businesses already reeling from significant tax-induced cost increases.

Peter Goudie, head of the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) employment and labour division, told Tribune Business yesterday that the Christie administration was aiming to increase the minimum wage to just over $200 per week.

He added that the BCCEC had requested feedback on this, and its potential impact, from its members and Family Island Chambers by February 13, with labour-related issues set to assume increasing importance.

Mr Goudie struck a conciliatory tone by saying he understood the Government’s position, but warned that the nature of the proposed reforms was set to heap further costs on a private sector still struggling to digest Value-Added Tax (VAT) and other increases.

He was particularly sceptical of suggestions that employers should give staff they plan to make redundant greater warning of their intentions, telling Tribune Business: “Give me a break.”

Mr Goudie was speaking after Shane Gibson, minister of labour and national insurance, outlined the Government’s priorities as it relates to Bahamian workers.

Presenting legislation to create a National Tripartite Council for its second reading in the House of Assembly, Mr Gibson confirmed Tribune Business revelations earlier this week that a minimum wage increase, and redundancy pay reforms, top the Government’s agenda.

Asserting that “the minimum wage must be increased”, Mr Gibson called for the Employment Act’s redundancy provisions to be “strengthened” so that employers could not spring lay-offs on employees by surprise, and when they were on the job.

He also echoed calls by Obie Ferguson, the Trades Union Congress (TUC) president, for changes to the way in which statute law provides/calculates redundancy pay.

The Employment Act ‘caps’, or limits, the redundancy pay (excluding the one month’s notice) to 12 months for managerial staff, and six months (12 weeks) for line workers.

This means that a worker employed by the same company for 35 years, and who is suddenly made redundant, is entitled to exactly the same compensation as a worker who has been there for 12 years - one-third of the time he has worked.

“We will fix it, and fix it sooner rather than later,” Mr Gibson said. “I would encourage the social partners [unions and private sector] to move, and move quickly.”

He said one group, who he did not name, had asked for more time to submit feedback on the proposed minimum wage increase, but suggested the Government would not wait indefinitely.

“People are suffering, people are hurting,” Mr Gibson told the House of Assembly.

Mr Goudie effectively confirmed that the private sector was the party that had sought more response time, telling Tribune Business the BCCEC had sent out the proposed reforms to its members on Tuesday.

Drawing on his memory, the long-serving human resources specialist said the Government was seeking an increase in the private sector minimum wage from $150 per week ($4 per hour) to “a little over $200 a week”.

This represents roughly a one-third, or 33 per cent, increase, but Mr Goudie said he believed very few Bahamian businesses were paying staff a minimum wage - or at a rate below $200 per week.

The increase is also well below the $300-$350 per week that the TUC’s president, Mr Ferguson, has been seeking.

Minimum wage increases typically impact those at the bottom tier of the workforce, such as part-time and casual workers, plus recent school leavers.

While it appears an increase would benefit those worker categories, the way it plays out in practice may not be so simple.

Robert Myers, the BCCEC’s former chairman, last year warned that increasing the minimum wage could further undermine the Bahamas’ competitiveness. He added that at least 90 per cent of Bahamian businesses were paying all staff above $4 per hour.

The economic theory is that, if the minimum wage is increased, employers may compensate for the increased costs by reducing staff numbers, thereby increasing the unemployment level.

And an increase might also make businesses more reluctant to employ young workers, thus preventing school leavers with minimal academic qualifications from entering the workforce.

“We’ve asked for their feedback,” Mr Goudie said of BCCEC members, “and told them to get back to us. I believe the magic date was February 13.

“I understand where Shane is coming from, but we know how businesses operate, and businesses don’t operate at a loss. It’ll be interesting to see how much of our feedback he’ll listen to. We’ll see.”

As for the Government’s desire for employers to give greater advance notice to workers they plan to make redundant, Mr Goudie told Tribune Business: “That’s a really nice thing to say, but how can you give someone notice that you’re going to make them redundant? What sort of performance are they going to give while they are still there? Give me a break.”

Mr Goudie suggested such concerns were already dealt with by the “common practice”, enshrined in the Employment Act, of employers giving redundant workers a month’s notice pay, or payment in lieu of notice, if they wanted them to leave immediately.

“You can’t have people around. They’re not going to care about the job,” he added. “It doesn’t make any sense to me.”

Predicting the likely business response to the Government’s reform package, Mr Goudie told Tribune Business: “You can be assured a lot of people will concerned about increasing costs, when costs have already gone up.

“Already we have had VAT, they’re talking about National Health Insurance, and you’re now talking about further costs. You’re creating hardship.

“That’s the kind of feedback we’re going to get. Increasing the costs is going to make it very difficult for businesses to operate.”

Still, Mr Goudie praised the National Tripartite Council’s creation for providing a forum where labour issues could be discussed in a “structured, proper” manner among permanently-appointed representatives.

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