Severance fund remains solid, assures BEC head
An assurance to Barbadian workers that the Unemployment Fund, which has come under increasing strain because of hefty payouts in recent years, should return to “some normalcy”.
This assurance today from the president of the Barbados Employers’ Confederation (BEC), Ian Gooding-Edghill, as he explained a decision by employers to temporarily redirect their monthly 0.5 per cent Severance Fund contribution to the Unemployment Fund for a period of three years.
Gooding-Edghill said that decision was taken after the Director of the National Insurance Scheme, which manages the Unemployment and Severance Funds, approached the BEC around the middle of last year to discuss matters relating to the depleting Unemployment Fund and the best way for it to be shored up.
“As you would have read, the Unemployment Fund was underfunded as a result of the extension of benefits paid to the unemployed in 2009 and increasing levels of unemployment [in subsequent years], which had an effect on the fund,” explained Gooding-Edghill.
“The executive director, I as well as members of the council discussed this matter with the Director of the NIS and agreed to the NIS recommendation that the 0.5 per cent severance contribution paid by employers would temporarily be directed to the Unemployment Fund for a period of three years from January 1 this year to December 31, 2017,” he added.
The BEC president was speaking to the media this morning as he provided an overview of the financial year of the association, which ended on April 30, and officially launched a week of activities for this year.
An amendment to the Severance Payments Act, covering the January 2015 to December 31, 2017 to facilitate the transfer arrangement, was debated and passed in the House of Assembly last week. In addition, Cabinet has agreed to provide a further cash injection of about $12.5 million to the Unemployment Fund.
The Unemployment Fund was reportedly taking in approximately $2.5 million a month but was paying out twice that amount in benefits.
Responding to questions from reporters, Gooding-Edghill stressed that the decision to allow the 0.5 per cent to go towards the Unemployment Fund would not impact negatively on the Severance Fund since that fund was “solid” and “healthy”.
“There will be no financial damage done to the Severance Fund. It is a fund that is funded solely by the employers of Barbados,” he said. “Hopefully, you will have a situation that over the next three years, as long as . . . unemployment doesn’t get out of hand, we will have a situation where the Unemployment Fund returns to some normalcy,” said Gooding-Edghill.
Describing the temporary decision on the severance fund contribution as a case of employers “rising to the challenge”, Gooding-Edghill said it was a recognition that they had a role to play and were doing so as professionals.
“As an employers’ grouping, we will continue to help because, at the end of the day, we all live here and have (a) vested interest here and we have to ensure that those of us who are less fortunate will not continue in the position of hardship, and that is why we agreed,” he explained.
The BEC president said while last year was “challenging” for the organization, they managed to intensify outreach programmes and had seen increased interest from the over 200-members. The BEC has also increased training opportunities.
The BEC week of activities, which ends on Sunday, is being held under the theme Challenging Times, Resilient Responses.