The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Outraged Bahamian employers yesterday slammed the Government’s decision to press forward with union-friendly labour law reforms, including a 67 per cent increase in redundancy pay, as “crippling” individual businesses and the wider economy.

The private sector was united in its condemnation after the Christie administration tabled in Parliament amendments to the Employment and Industrial Relations Act that give trade unions virtually everything they demanded.

Robert Myers, a business owner and principal with the Organisation for Responsible Governance (ORG), described the changes, which went through their ‘first reading’ in the House of Assembly, as “crazy” and “ridiculous”.

He warned that they would further undermine the Bahamas’ economic competitiveness and ‘ease of doing business’, while the increased costs and bureaucracy associated with redundancy will deter businesses from hiring.

Mr Myers, a former Chamber of Commerce president, argued that the amendments would ultimately be self-defeating efforts, as the increased private sector reluctance to invest and hire will frustrate efforts to reduce a ‘double digit’ unemployment rate that was 11.6 per cent in November 2016.

The Bahamian hotel industry, which is especially impacted by redundancies due to tourism’s seasonality and vulnerability to global economic cycles, was particularly strident in its criticism, warning that the reforms threaten to “undermine” the sector’s “sustainability” and deter investment in this nation’s economy.

The Bahamas Hotel and Restaurant Employers Association (BHREA), which represents major resorts such as Atlantis and Baha Mar, said in a statement that “the amendments as proposed will have a crippling impact on Bahamian businesses and the overall business competitiveness of the Bahamas”.

Describing the Employment Act and Industrial Relations Act changes as being “of grave concern”, the Association said they would increase costs and ‘red tape’ at a time when the Bahamas was still struggling to generate economic growth.

Suggesting that the Bahamas was in danger of being left behind, the BHREA said: “While the world is expanding around us, the Bahamas continues to move at a slow pace, with the economy experiencing anemic growth.

“The proposed amendments will only serve as a major disincentive for employment at a time when the country is best served by a strong private sector that can drive employment.”

The BHREA added that the labour law reforms would only add to a tax and regulatory burden that had expanded massively in recent years due to Value-Added Tax’s arrival, plus a 40 per cent increase in the minimum wage.

Pointing to National Health Insurance’s(NHI) imminent arrival, the Association said: “It is therefore distressing to see the extent to which the Government is prepared to go to undermine the sustainability of the hotel and tourism industry, and to add further barriers to investing and doing business in the Bahamas.”

It promised to provide recommendations to the Government after reviewing both Bills, and urged it “to embrace a consultative approach to legislating standards so that these regulations serve the interests of economic growth and the welfare of the Bahamian people”.

A Tribune Business study of both Bills found they differ little from the drafts upon which the Bahamas Chamber of Commerce and Employers Confederation (BCCEC) expressed wide-ranging concerns in a December 20, 2016, letter to Robert Farquharson, the director of labour.

Key among employer concerns then, and now, was the major increase in the Employment Act’s redundancy pay ‘cap’.

A minor modification was made, as the reforms have dropped plans to increase line staff notice pay (or pay in lieu of notice) from the current two weeks to three weeks, and that for managerial employees from the present one month to five weeks.

This, though, is likely to be of little consolation to the private sector. While the Bill leaves these unchanged, the Government has still pressed forward with the two-thirds, or 67 per cent, increase in the ‘cap’.

Line staff are currently entitled to a maximum 24 weeks or six months’ redundancy pay under the Employment Act, gaining two weeks for each year they have been employed up to the 12-year ‘cap’.

However, the Bill requires the ‘cap’ to be increased to 32 weeks (16 years) immediately upon enactment of the reforms. And, ultimately, the ‘cap’ for line staff redundancy pay is to be increased to 40 weeks some two years after the amendments are passed.

As for managerial staff, the existing 48 weeks (12 months/one year) redundancy pay maximum that they are due currently under the Employment Act is to be immediately increased to 64 weeks. Should the proposals pass, the ‘cap’ will ultimately be lifted to 80 weeks after two years.

“Clause 3 of the Bill seeks to amend section 29 of the Act to remove the cap with respect to the number of years in service in relation to severance pay,” the Employment (Amendment) Bill 2017 said.

The proposed reforms also impose bureaucratic notification requirements on Bahamian businesses, whenever they are considering redundancies, and a fine equivalent to 30 days’ extra pay for each terminated employee should these not be adhered to.

Employers will have to give relevant trade unions, or employee representatives, a “written statement” explaining the reasons for the redundancies and “facts” behind the move, along with the number and category of jobs impacted, and the timeframe over which the terminations will take place.

“Recognised” trade unions must be consulted “no later than six weeks” before the redundancies will occur in a bid to “mitigate” the impact, and determine the processes and procedures that will be used. The Minister of Labour must be given 30 days’ notice.

Private sector executives yesterday questioned the “logic” of such reforms, especially given the timing, with the Bahamian economy struggling for growth and grappling with double-digit unemployment. Several suggested that the Government was “pandering” to the trade unions, and seeking their members’ votes given the upcoming general election.

Rick Lowe, an executive with the Nassau Institute think-tank, told Tribune Business: “How are people expected to afford this? The economy sucks, businesses are losing money, the Government is taxing you on everything you make.

“It’s unconscionable to be populist at the expense of damaging the economy even further; the logic escapes me.”

He added: “It’s the same situation with the debt. They [the Government] know they’re in debt, but they keep cranking it up and expecting there’ll be no fall-out. It’s just more bureaucracy.”

Mr Myers, meanwhile, was just as blunt, arguing that the Christie administration was “trying to get the union vote” by bringing these reforms to Parliament now.

“It’s ridiculous. It’s crazy, crazy,” he told Tribune Business when informed of the proposed amendments. “All they’re doing is hurting our level of competitiveness on a regional and global scale.

“That’s going to have negative ramifications for growth and development and, therefore, future employment. If they put this into effect, it’s going to increase the cost of doing business, and you will have more burden on the employer in the event of redundancy.

“It’s going to affect the cost of doing business and ease of doing business. It’s going to put small businesses out of business, which will only further exacerbate the employment crisis.”

Mr Myers said Bahamas-based businesses would likely have to set aside funds and “provisions” to meet the increased redundancy costs, as this nation’s vulnerability to global events meant it was “a case of when, not if” staff would be terminated.

“At some point it’s going to happen, because we don’t control the global economy,” he explained. “If there’s another global recession, US recession, or housing, Internet, banking bubble that bursts, we don’t control that.

“External forces impact us, and there’s not a damn thing that we can do about it.”