INTRODUCTION OF A JOBS CREDIT of 150 per cent of wages for incremental employment.
Introduction of a special soft loans/grants/venture capital window of $10 million for micro and small entrepreneurs, providing loans of up to $5 000 unsecured; this would potentially create 2 000 new start-up enterprises.
Assuming each new enterprise will offer employment to three persons (owner plus two employees), that can potentially generate 6 000 new job opportunities within a relatively short period.
Conditionalities/scheme structure to be developed, but could look like the following:
Entrepreneurs should be required to inject not less than $500 as equity; Funding can be accessed through the Barbados Youth Business Trust (BYBT), Youth Entrepreneurship Scheme (YES) or some Venture Capital Fund; Provide BYBT, YES and/or the Venture Capital Fund with an annual subvention to cover 50 per cent of the cost (up to $50 000) of hiring two persons to administer the portfolio (one lender and one recoveries officer).
Review the operation of FundAccess to ensure working capital support is readily available because of tightening credit availability from traditional banking sources.
Establish a Small Loans Insurance Scheme (say up to $20 000 per borrower) along the same principle as used by credit card companies; insurance premium to be paid by the borrower. In the event that the borrower dies or the loan is classified as non-performing after a period of 240 days, such amounts are considered for settlement by the insurer.
Encourage prompt payment for goods and services supplied and enforce rules/penalties on late payment in the private sector.
Ensure government departments pay promptly their bills to micro, small and medium-sized enterprises especially, but to all suppliers in general.
Where Government departments, agencies or companies fail to settle their legitimate payables in accordance with credit terms or statutory provisions, penalties for late payment should be automatic as set out by contract or statute.
Assist entrepreneurs (new entrants/unemployed Barbados Community College/University of the West Indies graduates, laid off workers) in writing high quality loan and business proposals.
Business facilitation strategies
Station business development officers (Barbados Investment and Development Corporation employees, retired bankers/credit union lenders, service club members, all with requisite skills) in local resource centres to assist budding entrepreneurs in establishing their operations.
We believe this proposal is one that can be developed with Barbados Association of Retired Persons and the service clubs as part of their outreach programmes of community development and should not require funding from the Treasury.
Create a sustained and sustainable public relations programme promoting the availability and benefits of such services.
Minimum wages proposals
Plans to develop sectoral minimum wages should be accelerated to ensure that a decent wage is mandated for all employed persons, based on scientifically compiled statistics.
Wage scales should be developed to cover a period of three years, with known increment dates, to allow business operators to be able to properly budget for these payroll costs.
Wages and incomes policy / restraint guidelines
Definitive guidelines must be issued. Excessive increases will put long-term strain on social security benefits, especially their funding.
Roll backs now being enforced across the Eurozone and the United Kingdom are classic examples of what can result from unbridled wage growth and the Social Security benefits package.
Tax free and other allowances
Limited reintroduction of travel and entertainment allowances.
Limited reintroduction of investment credits (shares, mutual funds, credit union savings) if we desire to accelerate the formation of new/additional capital to be available for development. Increase the allowance for contributions to pension plans and registered retirement savings plans to $25 000.
This will alleviate the long-term pressure on the National Insurance Fund to meet increased Old Age Pension payments and put more free cash flow/disposable income in the hands of employees for stimulation of economic activity.
The change in the non-taxable allowances and introduction of the consolidation tax has also had a negative impact on workers. In fact, in some cases, junior staff members are taking home more net pay than their immediate supervisor/manager who has now lost the tax free allowances benefits. This has created another challenge.
Support to the manufacturing sector
Fuel – Given the high cost of fuel, consideration should be given to the re-implementation of subsidies to the manufacturing sector.
Port charges – these charges are considered high, particularly in comparison to other regional ports; it is our understanding that the Port of Bridgetown has lost trans-shipment cargo to the Port of Castries, St Lucia, based purely on costs.
Both issues relate to costs which feed into cost of production and operations as a whole.
Favourable consideration should be given to examining ways to reduce the operational costs particularly in light of reduced demand for products and services.
Employment Rights Act
The cost implications and impacts for businesses arising from the proclamation of the ERA must be examined and analysed.
The issues of national productivity and competitiveness are matters which have already been addressed elsewhere in the comprehensive reports published by NISE and will therefore not be addressed in this article. Let the national conversation begin as we move in to 2015.
Anthony Walcott is the executive director of the Barbados Employers’ Confederation.
