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Gov’T Making Business Into ‘Social Safety Nets’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday accused of seeking to transform Bahamian businesses into “social safety nets” by eliminating the Employment Act’s current ‘12-year cap’ on redundancy pay.

Peter Goudie, one of the private sector’s representatives on the National Tripartite Council, told Tribune Business that the business community was “totally opposed” to efforts by the Christie administration to alter severance pay laws.

Describing the Government’s proposal as “ridiculous”, Mr Goudie, the former City Markets human resources head, warned that if implemented it would only drive investment away from the Bahamas.

He added that the Government’s plan would also make it “cheaper for companies to go bankrupt” and cease business, rather than engage in downsizing essential to their survival and the preservation of at least some jobs.

And Mr Goudie also pointed out that this latest ‘social’ initiative ran counter to what the Bahamas needed most - getting its stalled economy moving and creating jobs to bite into an unemployment rate likely approaching 15 per cent once again.

“We’re totally opposed,” Mr Goudie told Tribune Business, confirming that the Government’s proposal to amend the ‘severance pay’ clauses of the Employment Act were now before the Tripartite Council.

“They’re effectively looking for companies to provide a social safety net. Companies are not social safety nets.”

The Employment Act currently allows line staff two weeks’ severance pay for every year worked up to 12 years, ‘capping’ the maximum payment they are entitled to at the equivalent of six weeks’ salary plus two weeks’ pay with, or in lieu, of notice.

Managerial staff are entitled to one month’s severance pay for every year worked, ‘capping’ the maximum sum they are entitled to at the equivalent of 12 months or one year’s salary, plus a month’s pay with, or in lieu, of notice.

Mr Goudie described these sums as “generous compared to a lot of other countries”, but revealed that the Government now wanted to remove the ‘caps’ or upper limits on statutory severance pay due to Bahamian workers under the Employment Act.

“The severance would be determined, but there would be no limit on it,” was how Mr Goudie described the Christie administration’s current proposal.

“The problem is that they want to eliminate that ceiling of 12 years, and they’re going to drive business away from this country with these kinds of ridiculous payments.”

He added that the Government’s proposal implied that an employee who had worked for the same company for 30 years would now have to be provided with the equivalent of 30 months’ pay, determined whether they were line staff or managerial employees.

The Bahamian judicial system has previously ruled that the Employment Act was intended by Parliament to provide a statutory minimum, or floor, for severance payments made to Bahamian workers.

This has resulted in several successful court actions where long-serving employees, who were with their employer for more than 12 years, used common law to obtain greater redundancy benefits than those due to them under the Employment Act.

These cases, coupled with large-scale redundancies at major employers, such as the recent 2,000-plus terminations at Baha Mar, seem to have prompted the Christie administration to move on the proposed amendments.

But Mr Goudie said yesterday that redundancy payments were only intended to enable laid-off employees to “get by” until they found another job. And there were also the unemployment benefits they could obtain via the National Insurance Board (NIB).

Suggesting that the Christie administration was largely targeting foreign-owned companies with its proposal, Mr Goudie said: “We’ve talked to the International Labour Organisation (ILO), and they’ve told us it’s not normal for any country in the world to require companies to provide social safety nets.

“We know they’re targeting expatriates, foreign companies if you want, but effectively you’re going to penalise every Bahamian employer.

“You’re effectively going to put companies under extreme financial burdens if they do any downsizing, which a company is allowed to do. Companies are not in the business of providing social safety nets; they are in the business of making money,” he added.

“If you do this, people coming here to do business will say: ‘You must be kidding me. It’s too expensive to do business here’.”

Mr Goudie said the ‘severance pay’ proposal also ran counter to the need to reverse the Bahamas’ slide in the World Bank’s ‘ease of doing business’ rankings, suggesting this initiative would help ensure that trend continues.

Based on Mr Goudie’s comments, the Christie administration is effectively talking out of both sides of its mouth - promoting the Bahamas to foreign investors as an attractive destination for doing business, while simultaneously ramping up the social programmes that inhibit ‘business ease’.

Following swiftly behind Value-Added Tax (VAT) and the minimum wage increase, the Bahamian private sector is being asked to absorb both a new National Health Insurance (NHI) tax and increased severance pay.

That is likely to be a burden too heavy for some, and Mr Goudie told Tribune Business on the latter initiative: “This is scary.

“If you’re a local businessman, and have got people who have worked for you for years, and if the economy gets worse and you have to downsize, you’ve got to pay enormous sums. It’s cheaper to go into bankruptcy.”

Comments

asiseeit 4 years, 8 months ago

This government is biting the hand that feeds it. When business starts to close who is going to pay the taxes this government love to waste and steal? We know PGC is a socialist and would love nothing more than to be a dictator. Perry Mugabe would be right up his twisted ally!

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DDK 4 years, 8 months ago

They have gone crazy! Totally out of control!

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DDK 4 years, 8 months ago

Hoping that this time the opposition will remove the legislation passed by this Government which they opposed while in opposition and not maintain status quo as they are wont to do!

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MonkeeDoo 4 years, 8 months ago

Unfortunately there is more opposition to The Government on this channel than anywhere else. If he really wants a safety net why did he dump 2000 Bahamian workers with only a hope and a Pinocchio Promise.

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The_Oracle 4 years, 8 months ago

Enact that crap and many many Companies will fire all employees overnight, and re-hire them as needed as subcontractors. The above only proves that the more any government tries to "run things" the less there is to run.

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Sickened 4 years, 8 months ago

It's time!!!

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by Sickened

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MonkeeDoo 4 years, 8 months ago

Sickened: Did you mean its time for them to go ?

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Sickened 4 years, 8 months ago

I mean it's time to March on Parliament and force satan's spawn out of our House of Assembly. These criminals have got to go and have got to get locked up for a very long time. Their proceeds of crime in offshore accounts need to be closed and the monies returned to the people of The Bahamas. They have destroyed our country and need to pay! We need to set a date to march!!!! Does anyone know when the house closes and when it reopens in the new year? I propose that when the house reassembles in the new year, thousands of us line Bay Street and gather around Parliament, wearing these masks; sending a very ominous and strong message that WE DEMAND BETTER GOVERNANCE!

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The_Oracle 4 years, 8 months ago

What the citizens of the Bahamas need to wake up and realize is that without their private sector efforts, investments, work and profitability, the Government has nothing. Not a dime with which to pay civil servants with, never mind all these Freebies they keep promising to everyone! The real problem is the lack of cohesive combined effort in the private sector to fight back against the fools and idiots who couldn't make a dime out of fifty cents! Which is why they steal and scheme to profit for themselves. Think about it, the Government collects, giving them one collection point to steal from! Until the ENTIRE Private sector lends its support and presence to counter foolhardy government efforts and initiatives, the only thing changing is the business environment, and for the worse. This is nothing new, it has been going on for decades, and getting worse and worse. It is your Dollar that will get devalued, your standard of living flushed down the toilet. Those who have stolen their way to the top on your back hold U.S. currency in foreign lands! They will walk away and reminisce "about the good old days"

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truetruebahamian 4 years, 8 months ago

Do NOT play their game. Pay them nothing.

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pablojay 4 years, 8 months ago

Perry and the boys are full of it, if they really want to help Bahamians, especially those with limited income and very little chance of making much money, those of us who do not have the connections of Baltron Bethell, they should take some of the 'stupendous', using one of Perry's , amounts of money collected from VAT and the numbers boys and increase old age pensions and social security ,as just like VAT, they are using gaming boys as another way to collect taxes from mostly poor black Bahamians and like the UBP, fattening up their own.

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whybahamas 4 years, 8 months ago

They're just trying to buy more votes for the PLP. If this same government somehow manages to get re-elected, I'm moving. There's no future with them in charge.

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sealice 4 years, 8 months ago

Gubmint can't take care of the people so they trying to dump the responsibility on the business owners. When they pass this they won't have anything to but blame the FNM for their record murder rate and tief money from the few foreign investors left?

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TruePeople 4 years, 8 months ago

They're probably thinking about their OWN severance packages.... They see the ship sinkin and sey to dem one annedda, 'Bey, less get one lass handfulla cash and a lifeboat each before dese fool citizen kno whats up'

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