The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas’ biggest employers, including some of the largest hotels, are mulling whether to impose a wages and hiring freeze in retaliation for the Government’s decision to force controversial labour reforms “down our throats”.

Tribune Business sources yesterday confirmed that a private sector, outraged by legal changes that will dramatically increase the costs and bureaucracy associated with doing business, plans to fight back in a very real way against the Employment Act and Industrial Relations Act amendments.

This newspaper can reveal that members of the Bahamas Hotel and Restaurant Employers Association (BHREA) plan to meet this afternoon to determine their strategy and way forward, viewing this as one battle they cannot afford to lose if they are to maintain their economic viability.

Tribune Business was also informed that the hotel industry is seeking the participation of other large employers, including the commercial banks and retailers, in a bid to form a united front to push back against the Bills.

Robert Sands, the BHREA’s president, did not confirm or deny whether his members were planning to freeze wages and new hirings as a response to the Government’s legislative changes.

He did, though, yesterday confirm that the BHREA and its hotel members had discussed a number of options in relation to the proposed labour reforms, with the Association set to issue another formal statement on the matter imminently.

“We’ve been meeting continuously on the matter, but we’re not going to discuss the details until we finalise everything,” Mr Sands told Tribune Business.

“Certainly, we discussed a number of wide-ranging topics, and once it’s finalised we will lay out all the options we’re focused on.”

However, one private sector insider, speaking on condition of anonymity, confirmed the discussions among large employers - particularly in the hotel sector - over imposing a wage and hiring freeze across their companies.

“That’s very, very accurate,” the source said, when Tribune Business put the wage and hiring freeze to them.

“There is a sentiment out there to take some action against what’s being forced down our throats. We’ve got to come together to figure out how to initiate some kind of action to show the Government we’re serious. We want to be forceful in doing it.”

With the peak winter tourism season coming to an end shortly, and labour the largest cost component for Bahamian hotels, the source hinted that some resorts may elect to downsize immediately ahead of the proposed reforms becoming law.

“We might have to right-size those businesses fairly quickly,” the source said.

A wages and hiring freeze, and possible redundancies, could impact the livelihoods and well-being of hundreds, if not thousands, of Bahamian workers should employers follow through with their threats, in addition to complicating efforts to reduce an 11.6 per cent national unemployment rate. Youth unemployment remains at 25 per cent.

Bahamian employers, though, will likely argue that they have little choice but to take a stand, given the threat posed to their economic survival in an environment where it is becoming harder and harder to conduct business.

The labour law reforms are hitting after a period in which the private sector has had to contend with Value-Added Tax (VAT), an increased minimum wage, an increasingly regressive Business License tax, anemic economic growth and a declining ‘ease of doing business’. Business costs and bureaucracy, in contrast, have increased significantly, with no appreciable rise in productivity.

Gowon Bowe, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chairman, confirmed yesterday to Tribune Business that the hotels were planning to meet today on the Employment Act and Industrial Relations Act changes.

With the Chamber’s participation invited, Mr Bowe said the private sector body had also recommended that the commercial banks and retail association be asked to attend.

“I believe cooler heads have to prevail,” Mr Bowe told Tribune Business. “It’s how do we speak to the Government to ensure they appreciate the consequences of what they’re proposing.”

He added that the private sector needed to provide empirical evidence of the impact the reforms will have, not just on businesses but the wider Bahamian economy, and reiterated calls for the Government to instead introduce mandatory pensions legislation.

“If you’re trying to provide financial security for workers, the biggest bang for your buck is pensions legislation, which is far more forward-looking, far more progressive than asking you to pay as you go,” Mr Bowe said.

Key among employer concerns is the 67 per cent, or two-thirds increase, in the Employment Act’s redundancy pay ‘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.

The reforms effectively make redundancy ‘cost prohibitive’ for employers. Among the consequences could be employee ‘churn’, and a reluctance to employ older workers given the cost of dismissing them, and labour market inflexibility at a time when the likes of the IMF have called for structural reform in this area.

Mr Bowe said that while no employer would reject the argument that workers needed to be “appropriately compensated” and looked after, this had to be balanced with the fact businesses have “limited resources”.

“There has to be a balance between ensuring businesses remain, and remain economically viable, and providing adequate benefits,” he told Tribune Business.

“This has to be one where we all sit down, and very calmly go through, and spell out, the implications - positive and negative - from decisions made.”

Mr Sands, meanwhile, said the hotel industry was “extremely concerned” about the proposed labour law reforms should they be enacted - not just for its members, but Bahamian businesses in general.

“It is a concerning situation, and we would have hoped that, certainly, our inputs into these discussions would have been considered,” he added, “and the opportunity to at least have discussions on the proposed Bills prior to their subsequent publication would have been helpful.”

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.

Meanwhile, the proposed reforms to section 51 of the Industrial Relations Act deem the terms and conditions of industrial agreements as automatically incorporated into individual workers’ contracts.

Other proposed amendments force employers to start collective bargaining talks within 45 days of receiving a trade union’s industrial agreement proposal.