COULD JOB CUTS in the public sector and the privatization of some statutory corporations be on the cards regardless of which political party here wins the forthcoming general elections?
These are two of the options to tackle Barbados’ high fiscal deficit which international credit rating agency Standard & Poor’s (S&P) cited last week as one of the reasons why they downgraded our country to “junk bond” status.
It is consistent too with some of the views expressed by noted economists through the years as statutory corporations and other entities account for nearly 40 per cent of Government’s spending.
As far back as 2008, for example, two economists – Richard Francis, a S&P analyst, and Barbadian Charlie Skeete, a retired economic adviser at the Inter-American Development Bank in Washington and a former permanent secretary in the Ministry of Finance – urged Government to consider “rationalizing state enterprises” with a view to shutting down some of them and cutting the fiscal deficit.
Both Francis and Skeete complained about the number of statutory corporations, saying they had obscured the country’s true fiscal picture because state enterprises relied on taxpayers’ funds to finance their operations and far too much of the money came by way of Government’s “off-budget” expenditures.
Though neither economist actually prescribed the cutting of jobs, “rationalization” and/or restructuring of companies often comes down to this.
Of course, both political parties may accuse me of being alarmist as neither would concede that to deal with the reality of Barbados’ dire economic situation such drastic action is needed. I understand their position – each wants to be voted into office, so they would avoid suggesting anything to turn off voters.
In other words, it is one thing to recognize that something should be done, but quite a different matter to do it.
But what are the two political parties’ positions on this issue?
Government is on the offensive on protecting public sector jobs. Their spokespeople continually say that they will seek to maintain employment because to let people go would be a signal to the private sector to do the same.
And the ruling Democratic Labour Party (DLP) spokespeople continue to suggest that if the Opposition Barbados Labour Party (BLP) is returned to office they will cut jobs.
The BLP has now turned the spotlight on this issue back on the Dems by revealing their hand on Sunday night.
Clyde Mascoll, the Bees’ main spokesman on the economy, told a mass meeting in Deacons Road that in order to deal effectively with the fiscal deficit Government needs a lump sum of money. He proposes that the BLP would sell shares of profitable statutory corporations like the Barbados National Oil Company to Barbadians, businesses and the credit unions to generate the necessary cash.
With this cash in hand, said Mascoll, the BLP would be able to do two things – pay off some of the debt and at the same time offer tax relief. The former would put a dent into the deficit, and the latter would put more money into people’s hands to spend. This spending would help to stimulate growth in the economy.
Mascoll concluded that far from cutting jobs, the BLP would need to keep people working so that they can spend more and boost economic growth. He said, too, the economy needs to be restructured.
Apart from continually assuring Barbadians that they would protect public sector jobs and accusing the BLP of planning to axe jobs, the DLP is yet to reveal a precise strategy on what they plan to do if re-elected. They keep mentioning the objectives of the Medium Term Fiscal Strategy but have not specifically spelt out a basic action plan like the Bees. The onus is now on them to do this.
They need to do so because the public heard Minister of Tourism Richard Sealy – the person who has been performing the duties of Prime Minister whenever Freundel Stuart is overseas – say that the public sector is too large. He made this point in his wrap-up on this weekend’s Brass Tacks Sunday.
That same night, Minister of Finance Chris Sinckler in a live TV broadcast spoke of a need to restructure the economy. He has also spoken specifically on statutory corporations.
In his address to the 185th anniversary celebration luncheon of the Barbados Chamber of Commerce and Industry last May, he said the emergence of statutory corporations had led to “overlapping and duplicating statutory bureaucratic entities which have grown exponentially but [are] void of any noticeable efficiency and quality increases”.
Clearly, action needs to be taken on the public sector to help trim Government spending. Both parties need to say how they will achieve this.
Sanka Price is the SATURDAY SUN Editor. Email him at sankaprice@nationnews.com