Barbados Employers, Unions Muddling Through Recession With

UNCLAS BRIDGETOWN 000200 SIPDIS STATE FOR DRL - GABRIEL RIGGS LABOR FOR ILAB - CHATENIA GAY COMMERCE FOR MICHELLE BROOKS COMMERCE FOR FSC SANTO DOMINGO E.O. 12958: N/A TAGS: ELAB ECON EINT XL OECS SUBJECT: Barbados Employers, Unions Muddling Through Recession With Cooperative Effort Barbados Employers, Unions Muddling Through Recession With Cooperative Effort ¶1. (U) Summary/Comment: Despite unemployment hitting 11 percent this year, Barbados has avoided large scale layoffs and appears to be weathering the economic downturn reasonably well. Mothballed construction projects are slowly coming back on track and tourist arrivals, while down, have begun to stabilize. The mood among corporate, government and labor contacts is that Barbados will come out of the economic recession in fairly good shape, due in part to the effective working of its social partnership, which has allowed government, labor and business groups to discuss labor issues in a cooperative manner that has minimized unemployment and restrained labor demands during this economic slowdown. End Summary. Barbados Social partnership working to keep layoffs to a minimum ¶2. (U) One of the distinctive features of the Barbados labor scene is the existence of a vibrant social partnership that brings together labor, management, and employers to deal jointly with labor management issues. The partnership was formed in 1990 and meets once a year under the chairmanship of the Prime Minister, while monthly working groups led by the Minister of State for Labor deal with more routine business. The social partnership met in 2009 when the economic downturn started in earnest and endorsed a "no layoff policy" that called for corporations to use layoffs as a last resort when dealing with the economic downturn. For the most part, this policy has been maintained, as only a few businesses have terminated employees. Most businesses, especially in the tourism and construction sectors, have moved to a part-time employment rotation. Some companies have also set up internal training programs for workers temporarily laid off from full-time employment. ¶3. (U) One reason that this "no layoff" policy has worked so well is that the Barbados labor environment provides for mandatory severance payments for laid off workers. For the most part, putting workers on a part-time schedule is cheaper for the company than laying them off and paying them one month's salary for each year of employment. The Labour Commissioner noted, however, that the construction sector was particularly hard hit and a number of construction projects have been put on hold, resulting in layoffs. The Four Seasons Hotel project has been put on hold until this summer, for instance, resulting in over 700 layoffs. In February, 2010, however, the government announced it would be issuing loan guarantees to ensure that the project would resume in the near term, promising a jobs recovery for that project. Labor unions show restraint in wage talks ¶4. (U) Both the National Workers Union and the Public Workers Union, have shown remarkable restraint in wage talks, vowing not to demand wage increases until the economy recovers. The National Workers Union represents about 30 percent of the private sector employees, (most large companies are unionized, smaller companies tend not to be) while the Public Workers Union represent about 60 percent of the public sector workers. In short, about 40 percent of workers belong to a union, which is one of the highest unionization rates in the region. The unions do, however, consult with companies to ensure that companies that are profitable offer modest wage increases in future negotiations. The Minister of Economic Affairs announced February 1 that he is calling on the government and parastatal organizations as well as the private sector to institute an immediate wage freeze, noting that "convincing these agencies to cut the wastage and reduce expenditures was difficult because some unionized entities somehow believe or don't understand that an irresponsible trade union is a threat to economic growth and development....The trade unions have to work hand in hand with the administration so that we can get out of this economic problem." Government considering setting up re-training program ¶5. (U) The government, in response to the economic downturn, set up a tripartite commission to make recommendations to deal with growing unemployment. The commission recommended that the government create a retraining program for unemployed workers. As a result, the Ministry of Labor is now working on setting up the BDS $10 million (USD $5 million) program, which should be in place by mid-2010. Comment ¶6. (U) The economic mood is beginning to brighten modestly in Barbados as local businesses and consumers welcome reports of a slow turnaround in the U.S. Tourism bookings appear to be stabilizing, moribund tourism construction projects are ramping back up, and new tourism developments are creeping back into the news. With an effective social partnership mechanism and the initial shocks of the global financial crisis in the rearview mirror, the economic mood on the island is, if not cautiously optimistic, at least a step above the fatalism that set in at the front end of the recession. End Comment. HARDT HARDT