Towards the end of last year, the Barbados Minister of Finance, Chris Sinckler indicated to the citizens of the country that it had become clear that the country was faced with a reduced ability to meet its financial commitments. He also gave indications that the foreign exchange reserves needed to be carefully handled, and that these two factors would impose on the government the necessity to take certain measures to reverse the situation.
As is now well known, by the middle of this month, Minister Sinckler produced an array of measures, the most significant of which to the general public would have been the government’s decision to reduce employment in the central government and the statutory corporations by 3000 current employees, through immediate lay-offs.
There can be no doubt, in spite of the fact that the government had been in extensive discussions with the IMF, that this decision has stunned the Barbadian people. And this is so even though many of them will have been aware, through statements by financial commentators and the Central Bank, that the country had, like other Caribbean states, been experiencing a recession reinforced by the global economic situation of recent years. But the decision to make the retrenchment virtually immediate indicated that the situation of the government itself in relation to its public expenditure commitments was much worse that might have been thought.
For many Barbadians this situation would have been somewhat reminiscent of the financial crisis which the government had experienced in the early 1990s that had induced a turn to the International Monetary Fund, and caused a political convulsion that saw the Democratic Labour Party (DLP) government of then Prime Minister Erskine Sandiford defeated in the subsequent general elections.
It has now been the fate of another DLP government, led this time by Prime Minister Freundel Stuart, to present bad news to the Barbadian people, so soon after his party’s re-election to another term of office. The opposition Barbados Labour Party, led by the former Prime Minister Owen Arthur, whose terms in office were largely associated with good economic times, had preached in the general elections of February 2013 a gospel emphasizing the potential difficulties of the economy, but the party failed to persuade the voters.
The shock to the public will surely have been emphasized by the Minister of Finance’s statement, indicating a certain urgency for implementation of the retrenchment decision, that “the process of retrenchment [will] be spread over the period January to March 2014 and be front-loaded starting with the first 2000 job cuts by January 15th 2014, followed by the second tranche no later than March 1st 2014.” And in addition, he announced a freeze on civil service increments for two years.
Further, younger persons in the community, hoping to enter the public service, would hardly have been pleased by the Minister’s statement that “Cabinet has agreed to institute a strict programme of attrition across the central public service, filling posts only where it is absolutely unavoidable, over the next five years ending 2018-2019.” And they will probably have recalled a decision of the government in 2012, itself the subject of much controversy, that there would no longer be universal free university education financed by the state.
While it cannot be concluded that the government has signed an IMF agreement, it is certainly the case that the decisions came consequent on extensive discussions with that institution, and has its general agreement. The Fund’s representatives have emphasized the extent to which tourism receipts “have remained flat” and the country’s “current account deficit is projected to widen to 11.4% of GDP this year,” the highest in the region.
In addition, groupings of employees beyond the public service have been made aware of the IMF’s statement that “a fundamental review of the tax base is warranted… the goal would be to broaden the revenue base which has been seriously eroded by statutory and discretionary waivers.”
The reaction of the public service unions, particularly to the proposed retrenchments, has been severely negative, though expressed with few suggestions of alternative measures which the government could find it possible to accept. The Democratic Labour Party has had a quite strong connection with the unions of the country, commencing with the link established between the then leader of government Errol Barrow, and Frank Walcott, the leader of the strongest trade union, virtually from the time of Barrrow’s ascendancy to government.
In effect, Barbados has long prided itself on the sobriety of its leading trade unions, including those relating to the public service, and this has been seen as part of the wider bargain that has kept the country stable over the years.
The decision of the government has, however, also seemed to cause some ructions within the opposition Barbados Labour Party (BLP), now led by Ms Mia Mottley, as her predecessor, Owen Arthur has expressed his displeasure at his inclusion in the BLP’s main response to the government’s measures. Her proposal for the establishment of a Commission on the Economy that would include Mr Arthur, and be wider than the BLP’s membership in its composition has been rejected by the former leader, throwing the limelight on disorder and discomfort within the opposition ranks.
Mr Arthur has, however, remained in the Parliament after ceding the leadership of the party to Ms Mottley. His latest decision seems to suggest that he wishes to have a free hand in the Parliament when debate on the implementation of the new economic measures takes place.
Whether disorder in the opposition ranks, and the fact that there are four more years to go before the next general elections, will give the government some breathing space is left to be seen. But the statements of the IMF do not suggest much leverage or space for alternative decision-making. And it is unlikely that a population with an extensive middle class such as exists in Barbados, will want to tolerate parliamentary behaviour that does not contribute to lifting the country out of its present and future travails.
