Identifier
Created
Classification
Origin
09BRIDGETOWN216
2009-04-06 19:12:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Bridgetown
Cable title:  

CARIBBEAN WORKERS: DOWN, BUT NOT OUT

Tags:  ECON ELAB ESSO PHUM XL 
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VZCZCXRO0863
RR RUEHGR RUEHHM RUEHJO RUEHPOD
DE RUEHWN #0216/01 0961912
ZNR UUUUU ZZH
R 061912Z APR 09
FM AMEMBASSY BRIDGETOWN
TO RUEHC/SECSTATE WASHDC 7296
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEHXI/LABOR COLLECTIVE
RUEHC/DEPT OF LABOR WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
UNCLAS SECTION 01 OF 03 BRIDGETOWN 000216 

SENSITIVE
SIPDIS

DEPARTMENT OF LABOR FOR ILAB

E.O. 12958: N/A
TAGS: ECON ELAB ESSO PHUM XL
SUBJECT: CARIBBEAN WORKERS: DOWN, BUT NOT OUT

REF: A. BRIDGETOWN 162

B. BRIDGETOWN 146

C. BRIDGETOWN 144

D. BRIDGETOWN 136

-------
Summary
-------

UNCLAS SECTION 01 OF 03 BRIDGETOWN 000216

SENSITIVE
SIPDIS

DEPARTMENT OF LABOR FOR ILAB

E.O. 12958: N/A
TAGS: ECON ELAB ESSO PHUM XL
SUBJECT: CARIBBEAN WORKERS: DOWN, BUT NOT OUT

REF: A. BRIDGETOWN 162

B. BRIDGETOWN 146

C. BRIDGETOWN 144

D. BRIDGETOWN 136

--------------
Summary
--------------


1. (U) A recent survey of labor contacts throughout our
region revealed an upswing in unemployment and poverty, but
also a surprising degree of optimism for the months ahead.
Labor leaders report that the impact of the global recession
has so far not led to feared high levels of job losses.
While overall tourism arrivals are down, the cruise ship
business is holding steady, with record arrivals in some
countries. Construction has fallen off, as many hotel
projects have been put on the back burner but not abandoned.
Most labor leaders expressed cautious optimism that the
region will weather the economic downturn provided it does
not extend past summer, 2010. End Summary.

--------------
Tourism Sector Slow, Not Stopped
--------------


2. (U) While the cruise ship business is largely holding
steady in the Eastern Caribbean through the recession,
overnight stays have begun to suffer. According to St. Lucia
Labor Commissioner Ray Narcise, overnight arrivals have
plummeted from an average occupancy rate of over 60 percent
to as low as 25 percent for smaller properties. Similar
occupancy rates are occurring throughout the region as the
economic downturn has started to take hold. St. Lucia's
Minister of Tourism, Allen Chastenet, announced March 19 that
the government is preparing a bare bones budget, including a
possible retrenchment of government employment. According to
the press reports, he expects to see a contraction in the
economy and, although he does want to see more layoffs in the
tourism industry, he expects that may become inevitable.


3. (U) Local hotels received a one-time boost recently due to
the West Indies- England cricket matches, which were played
in three five-day test matches in Antigua, Barbados and
Trinidad. The Barbados Public Workers Union General
Secretary, Dennis Clarke, noted that the country's alcohol
sales went through the roof due to the influx of British
tourists, and many rum shops ran out of product. Local

hoteliers expect more cricket visitors in June when the West
Indies Team hosts other international visitors.
Nevertheless, Clarke noted that the cricket tourism was a
one-week event and that long-stay tourism numbers for the
remainder of the year looked grim. He expressed hope that
there would be some spill over effect from the April Summit
of the Americas in Trinidad, and said local hotels are
gearing up for additional business associated with the
Summit.


4. (U) A number of hotels have shifted to reduced hours,
rotating staff on a week-to-week basis and, in some cases,
laying off workers. Many hotels are facing expensive
severance payments for workers that they have laid off due to
generous local labor laws. At the same time, a number of big
projects across the region have been put on hold, putting
downward pressure on construction jobs. The President of the
St. Lucia Chamber of Commerce, Christian Husbands, confirmed
in a meeting on March 19 that several high-end projects in
St. Lucia are back on track, having secured new financing,
including a Raffles project and the Ritz Carleton hotel and
resort. Both are now expected to open in 2011, he said.
Husbands has called on St. Lucia hoteliers to avoid layoffs
and use the downtime to improve the human capital of their
employees. He said that most hoteliers are holding onto
employees for now, largely because getting good staff has
always been a problem in St. Lucia where trained and
competent workers are a scare commodity (to say nothing of
the expense of severance packages). The biggest question
mark in the region seems to be the Four Seasons project in
Barbados. The developer has suspended operations, laying off
700 workers, and has not announced when or if the project
will come back on track. The foreign investors, including
Simon Cowell of American Idol are -- according to local press
reports -- looking at initiating legal action against the
developer.

--------------
Unemployment Up, but Not Unsustainable

BRIDGETOWN 00000216 002 OF 003


--------------


5. (U) Unemployment and underemployment are rising throughout
the region, but are not yet at unsustainable levels. Labor
contacts throughout the Eastern Caribbean estimate that
unemployment rates are running at between 15 to 20 percent,
but note that the informal sector is booming and that many
people are underemployed but not unemployed. Public sector
employment, meanwhile, is holding steady as the government
sector remains the largest employer in most of the islands of
the Eastern Caribbean.


6. (U) According to the Barbados Labor Commissioner, Victor
Burnett, unemployment has risen to 9 percent, but he was
confident that Barbados's strong social safety net will
prevent a rise in poverty levels. He noted that under the
law, full time workers can draw unemployment benefits if they
are laid off after 13 weeks of employment. He added that
many older workers seem to be taking early retirement due to
the economic downturn. The National Workers Union General
Manager, Gabby Scott, said that foreign workers are the first
to be fired, resulting in a decrease in the number of illegal
workers in Barbados.


7. (U) Barbados opposition leader Mia Mottley has pounced on
the rising unemployment figures to attack the government.
Observing that unemployment has gone above 8 percent and as
high as 12 percent, Mottley claimed that the tourism industry
was laying workers off or putting them on short working
hours. She decried the lack of a dedicated safety net and
noted that the "economy is going to decline by 2 percent this
year and is likely to have in the vicinity of 3,000 job
losses." Our labor contacts had all indicated that they
expect a modest increase in unemployment but that most
companies are not laying off workers.


8. (U) Rising unemployment may become a bigger political
issue in many Eastern Caribbean countries, several of which
will be holding elections in 2010 (or this year if early
elections are called). This includes Dominica and St.
Vincent, which will have elections no later than 2010, and
St. Lucia no later than 2011. If the unemployment rate
remains above 10 percent in these countries, many local labor
contacts have predicted that unemployment issues will be a
key rallying point for opposition parties.
-------------- -
Effects of Stanford, CLICO Crises Taking Shape
-------------- -


9. (U) Senator David Messiah, General Secretary of the
Antigua Workers Union, told laboff that the economic downturn
and the fallout from the Stanford SEC financial fraud case
has had a big impact on the economy of Antigua and especially
on employment in the hotel and financial service sector.
There has been an increase in part-time work, including
contract employment, which is something the unions in Antigua
have been fighting for a number of years. The Stanford
Development Corporation officially notified 94 more employees
of redundancy due to economic circumstances on March 4. An
additional 250 workers were let go earlier in February. Most
of the Stanford employees will be drawing unemployment
starting in April, Messiah said, as the company is unlikely
to rehire many of the laid off employees. Antigua Labor
Commissioner Mr. Haseath Williams concluded separately that
most if not all of the Stanford Corporation staff will
eventually be out of work. As Stanford is the largest
private-sector employer on the island, the social impacts
could be significant.


10. (U) In St. Vincent, President of the St. Vincent Public
Sector Union Cools Van Loo said his country's pension system
may be negatively affected by the recent CLICO debacle in
Trinidad and the Allen Stanford financial crisis as the
National Insurance System was heavily invested in both
institutions. He had heard that other pension funds in the
region may also be negatively affected. He worried that this
may have an impact on union membership, as pensions are an
important part of the union benefit package for many workers.

--------------
Poverty Rising, Remittances Dropping
--------------


11. (U) All the countries of the Eastern Caribbean still have
substantial pockets of poverty, with the poverty rate (as
estimated by labor contacts) ranging from 40 percent in St.
Vincent to less than 10 percent in Barbados. Labor contacts

BRIDGETOWN 00000216 003 OF 003


say their greatest fear is that progress in reducing poverty
in the region may be reversed due to the high cost of living
and the economic impacts of the declining economy, rising
unemployment, and falling remittances. Despite this fear, a
recent Eastern Caribbean Central Bank study on poverty in St.
Kitts reported a sustained drop in poverty, with 23 percent
below the poverty line, and unemployment holding steady at 9
percent. Minister of State for Sustainable Development Nigel
Carty noted that the survey was completed before an increase
in the minimum wage went into affect and during a period of
exceptional fuel costs, and opined that the real poverty rate
was closer to 15 percent. In Antigua, poverty figures have
not been updated for a number of years, but union leaders say
a growing number of people are living below the poverty line.
The minimum wage was recently increased to 7.50 ECD (2.7
USD) which the union feels is inadequate given the current
inflation rate of 4.6 to 6 percent (the union's best estimate
versus the official rate of 3.5 percent). Poverty rates are
rising in St. Vincent as well, they say, as the informal
sector is growing and the formal sector shrinking.


12. (U) The growing poverty level is being impacted also by
declining remittances from abroad, due to the rising
unemployment rates in the US, Canada and the UK. The
Inter-American Development Bank (IDB) reported on March 17
that remittances to the Caribbean dropped by over 5 percent
during the first three months of 2008. In the last quarter
of 2008, remittances to the region (Caribbean and Latin
America) dropped to 17 billion dollars, 2 percent less than
in the same period of 2007. The IDB predicts the trend will
continue throughout 2009. The IDB noted that most recent
figures show a 13 percent drop for 2009, compared to 2008.
They cited the economic downturn in the US, Canada, and UK,
sharp spikes in food and fuel prices, a harsher climate
against immigration, and the weakening U.S. dollar as the
major factors behind the deterioration in remittances, which
had been on a steady increase since 2001. Remittances make
up around 12 percent of GDP in a number of Caribbean
countries.

--------------
COMMENT
--------------


13. (SBU) With unemployment up, poverty up, remittances
down, and financial crises breaking in the region, it has
been surprising to hear labor leaders viewing the scene with
cautious optimism. This could be a by-product of the
apocalyptic predictions for these small economies that were
voiced at the start of the recession, compared to which the
current problems seem minor. With tourism performing better
than expected so far, and with government, unions, and
businesses working together to find creative alternatives to
lay-offs, the employment impacts of the global slowdown have
to date been muted in the region. Labor leaders and others
continue to predict that the U.S. and the world will pull out
of the economic tailspin by summer 2010 at the latest, and
that these small economies can quickly recover. That
prediction, though, is also predicated on the assumption that
the offshore banking sector holds firm. But with "Tax Haven"
legislation in the works in Washington and the UK, many
Eastern Caribbean countries are anxious.
HARDT