Balancing the budget
The Yuletide season has traditionally meant a lot to the business community as they cash in on the spending frenzy of the many customers who seek to make a range of purchases.
At a time when the country is experiencing sustained fallout from an ongoing economic recession, it is going to be quite interesting to see how this impacts on the spending trend during the 2012 festive celebrations. It is the norm to savour the moment at this time of the year but in the current circumstances, it is advisable that discretionary spending becomes the order of the day.
This advice to the many shoppers is unlikely to be welcomed by the business community. In like manner, the advice might just escape those who live for today and not for tomorrow. It is important that persons exercise prudence in their spending. This is definitely not the time for extravagant spending.
Caution should be taken against utilising savings for the purpose of purchasing non-essential items, or for the “maxing” out the credit card only to satisfy personal desires and those of others.
It would be a wise move if the sound advice given by our calypso king, Red Plastic Bag in his calypso Count the Cost is heeded. His reminder to us “to separate our wants from your needs”, adequately conveys the message.
At a time when there is a need for the island to protect its foreign reserves, it should not be overlooked that when an individual makes a purchase from an overseas sources, foreign exchange is used to make the required payment. This leakage of foreign exchange is one thing that most small economies can ill afford in recessionary times.
Those who use their credit cards to make purchase should be mindful of this. They should equally take into consideration the cost they bear by way of postage and/or freight charges, customs broker’s fees, custom and excise duties that become payable and bank charges which may apply.
The fact that the use of the credit card has become a way of life for conducting business, might cause many to dismiss this observation on the grounds that it falls short of the realities of contemporary living. Since it is virtually impracticable to dictate to credit card holders how to spend their money, it is left to educate them of their responsibility in exercising management over their spending. This is part of the education which should be provided for workers.
Based on the average level of wages and salaries in Barbados, the assumption could be made that the average Barbadian worker can qualify for a credit card. The likely impact of the spending using the credit cards for overseas purchase, could be measured by way of the average spend where half of the working population spends a minimum of $US 300.00 in each financial year.
In a liberalised world where free trade and commercial activity are the norm, many will likely scoff on any suggestion that controls should be put in place to deny them the privilege of shopping online at will.
Is there anything workers can do to ensure that they help to reduce the foreign exchange spend at this time? Locals should be encouraged to buy local. This will certainly leave the dollars at home, and moreover, help to preserve and generate new jobs.
The controlling of spending on luxury items which are purchased from overseas markets, is another way to reduce the level of foreign exchange that is utilised. The way to do so is to ignore the well packaged advertisements that appear on the television networks.
Those workers, who are amongst the fortunate few to receive bonuses or incentive payments at the year end, should carefully consider how they manage these funds. It is true that the local economy stands to benefit from the increase spend but taking into consideration the vulnerable nature of the employment environment, the emphasis on savings and investment should be a preferred option.
No one should ignore the fact that as long as the recession holds, there is every possibility that lays-offs and the non-hiring of workers will continue, that workers may be placed on short term work week, the possibility of wages and salary cuts will remain, and to top it off, minimum or no wages and salary increases are likely to be offered by employers.
* Dennis De Peiza is a Labour Management Consultant with Regional Management Services Inc.
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