Private sector may have to consider layoffs
As the Government continues with its retrenchment programme, the private sector cannot guarantee how much longer it will be able to avoid layoffs.
And in light of the recent statement issued by the International Monetary Fund (IMF), Alex McDonald, chairman of the Barbados Private Sector Association (BPSA), suggested that the association was still not convinced that economic conditions would improve in any hurry.
McDonald noted that the problem of low spending by consumers was compounded by high input costs, which continued to place increased pressure on businesses to maintain staff.
The private sector leader said businesses had been holding strain and trying to keep jobs “at all costs”, but it was becoming increasingly difficult to continue on that path.
“It is for that reason that three-day [work] week, salary cuts, week-on-week-off have been looked at, so that we try to preserve some of the social fabric. But if the spend does not match the expense, we don’t have the luxury of going to the banks again to borrow to prop up in the hope of a future turnout. So if things continue to trend down and spending continues to be depressed, I can see how some people can be thinking of what other options they do have,” said McDonald.
He reminded businesses to exhaust all options before considering layoffs, adding that they should “broadly consult” with all persons affected in order to find out what they were “willing to take”.
“The IMF Report spoke to labour in that they would prefer job cuts rather than devaluation. Similarly, dialogue with labour and other interest parties may result in other options other than layoffs coming to the fore. Having said that, what we are aware of [is] that labour cost is intensely very high in our input cost, and it may be an area that will have to be looked at. So do I see layoffs coming? I am hopeful that they won’t, but practically I see a point where businesses may have to consider it,” he explained.
Of the latest IMF country report, McDonald said: “We were hoping for a more positive outlook, but I think what we see is a neutral to mildly negative view of our outlook. To my mind . . . . it sends a clarion call to all of us to double the efforts that we are making and to try and see how we can really pull ourselves up from the bootstraps and get this done”.
He described the document as “a cautious approval” of the path that the Government was taking, but said it was “also a wait-and-see document”.
McDonald added that the report recognized “the very things” that the private sector had been calling for over the past two years, including that Government reduce its spending and address the inefficiencies in the statutory corporations, as well as greater public/private sector partnerships.
He said the private sector was “heartened” that the IMF recognized that there was no social or political will to go the way of devaluation of the Barbadian currency.
“We don’t agree with a devaluation, full stop,” added McDonald.