The Department of Labour must “get out of the dark ages” and focus on improved worker productivity if the Bahamas is to enjoy higher GDP growth, a governance reformer urged yesterday.
Robert Myers, a principal with the Organisation for Responsible Governance (ORG), told Tribune Business that the Labour Department and trade unions needed to stop pushing for increased worker benefits “if we are to lift ourselves out of this socio-economic recession”. Arguing that both were still “singing the same old song”, Mr Myers called for wages and benefits to be “held” at present levels until the Bahamian economy generated improved GDP growth rates.
He warned that any increase in labour costs and bureaucracy, through proposed reforms the Government has hinted at, would “discourage” the private sector from expansion and hiring, thereby undermining its own drive to spark economic growth.
Dion Foulkes, minister of labour, yesterday pledged that the Government “will not do anything to ruin efforts to move the economy forward, emphasising that growth and job creation were the Minnis administration’s main priorities (see other article on Page 1B).
He added that the Government would only advance labour-related reforms where there was “consensus” between the private sector and trade unions, and pointed out that the more “contentious” issues - raising the 12-year redundancy ‘cap’ and increasing the notice period - had yet to come before the National Tripartite Council.
However, Mr Myers, speaking after the International Monetary Fund (IMF) released its latest assessment on the Bahamas, continued to stress that the Government’s Ministry and Department of Labour, as well as the trade unions, are focused on the wrong priorities.
“What the Ministry of Labour and unions should be focused on is productivity, education and improved workforce skills,” the ORG principle told Tribune Business. “To keep hammering away on benefits and the like is very short-sighted.
“Where are these guys? The unions and Department of Labour keep singing the same old song, and they have got to start looking at this and become a significant part of the solution. They’re currently part of the problem.
“The solution is education, increased productivity and closing the skills gap. You cannot keep on doing the same thing and expect different results. That’s what the Department of Labour is doing,” Mr Myers continued.
“Come on guys, get out of the dark ages and get with the real discussion on workforce productivity, education. Let’s move the country forward and stop focusing on age-old stuff.”
Private sector fears over further labour law reforms, which would result in increased workforce costs, were fuelled after Mr Foulkes reaffirmed the Free National Movement’s (FNM) manifesto commitment to increase the redundancy notice period.
The Minister, though, told Tribune Business he believed his comments had been misinterpreted and taken out of context, as he never gave a “timeframe and process” for introducing such changes when responding to media questions.
Mr Foulkes added that this had been communicated to Edison Sumner, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chief executive, in a bid to calm business concerns (see other article on Page 1B).
And both the Department of Labour and trade unions have shown they are aware of the need to improve workforce output, having helped organise and attended, respectively, a two-day National Tripartite Council Productivity legislation workshop in September 2017.
Bernard Evans, the National Congress of Trade Unions’ (NCTU) president, said then: “We need to boost productivity levels and propel the Bahamas’ economic competitiveness.” Obie Ferguson, his Trades Union Congress (TUC) counterpart, has repeatedly made similar statements and commitments.
Mr Myers, though, expressed surprise that there was no mention of workforce development and productivity issues in the IMF’s latest assessment, especially since these long-standing problems are universally acknowledged.
“There’s one more component, and that’s labour,” he told Tribune Business. “That is the human side of our GDP growth, and that’s being ignored by all of them. It’s critical.
“We’ve got to close the skills gap, increase productivity and control wage growth and the cost of labour until we see GDP growth year-over-year. It’s a nine out of ten report [by the IMF], but the ten out of ten is the labour component. Let’s get the conversation moving that way, and the unions and Department of Labour being proactive rather than a drag on the economy.”
Mr Myers was unsure whether workforce-related issues fell within the IMF’s remit, but added: “We have been saying for a long time that poor education levels have hampered GDP growth.
“There’s this massive skills gap, and we’re not preparing students and young adults for working life and employment. As we get GDP growth through foreign direct investment (FDI), we are going to see a continuation of the struggle we have now with education and finding skilled employees.
“That has to change if we are to expand and lift ourselves out of this socio-economic recession. We’re going to have to improve productivity at the very least and make sure we don’t increase, in any meaningful way, the cost of labour,” he continued.
“If the Government’s only focus is on labour support or laws, and not labour productivity and reduced costs and things like that, it’s going to be a struggle. There are far more competitive regions for foreigners that are looking to invest without any of the bureaucracy and labour headaches.”
Workforce productivity, together with improved technology, is a core element of what economists call ‘supply side economics’. Advocates of this theory argue that improvements in these areas result in greater efficiencies, allowing firms to reduce their production costs and increase output, thereby making them more competitive.
Bahamian businesses have for decades expressed concern over the difficulties they encounter in recruiting workers with the necessary skills to expand their companies, with many suggesting there is an insufficient supply of human capital. They also argue that this nation’s relatively high labour costs are not matched by productivity received.
Warning that worker productivity and costs were going to be “critical challenges for the Bahamas over the coming years”, Mr Myers added: “We’ve got to get productivity up, and until we see greater GDP growth we have to hold wages and the ‘grey cost’ of labour.”
Defining ‘grey cost’ as worker benefits, such as sickness and vacation pay, and the likes of National Insurance Board (NIB) contributions, he said: “We don’t want to burden businesses any more, as they’re already quite heavily taxed.
“It discourages people from investing in the Bahamas, and existing businesses from expanding and hiring.”