The way out
Attracting MORE visitors from Britain is one of a number of suggestions made to help haul Barbados out of the recession. Others are pushing the use of alternative energy; positioning manufacturing and small and medium enterprises (SMEs) as solid drivers of the economy; and encouraging commercial banks to adopt lending rates and policies that favour them.The recommendations stood out from sectoral leaders in separate interviews with the SUNDAY SUN on Friday on actions that ought to be taken by Government, the private sector and the labour movementIn the absence of a 2010 Budget from Government, Barbados Hotel & Tourism Association (BHTA) president Colin Jordan, trade unionist Robert “Bobby” Morris, Barbados Chamber of Commerce & Industry (BCCI) president Andy Armstrong, Barbados Manufacturers’ Association (BMA) president Ian Pickup, Barbados Small Business Association (SBA) chief executive officer Lynette Holder and Barbados Employers’ Confederation (BEC) executive director Tony Walcott hoped that their propositions would be officially adopted.Jordan was convinced that not only would tourism continue to be the main breadwinner of the local economy, but spend from British tourists would remain at the core of tourism earnings.Hence, he was adamant that any attempts to diversify the tourism product must not be to the detriment of long stay arrivals from Britain.“We need to put some more resources into advertising. We also have to develop packages and promote those packages in the market to entice people to travel.“We know British people to be resilient in the face of hardship and even though their economy is going through tough times, we believe that the market share out of the UK can be held,” Jordan said.Central Bank of Barbados Governor Dr DeLisle Worrell in his review of the performance of the economy over the first six months of 2010 last week said visitor arrivals, driven by increases from the United States and Canada, were up, but not enough to grow foreign exchange reserves.The new BHTA president admitted that Government was enduring a fiscal struggle, but argued resources could be found.“Our point is that diversification should not come at the expense of what is still our most important market. Brazil is probably the one that has the most potential at this point, and as an association we have done things to facilitate dealing with Brazilian guests. But we cannot take out critical resources from going after the UK market to go after other markets, not in the very short term,” Jordan stressed.He felt that regional governments should find it compelling to address exorbitant travel taxes at their own ports and enormous airfares with regional air carriers, in order to stimulate Caribbean arrivals, a lack of which were also vexing the tourism sector.Slump in arrivalsWorrell also noted that arrivals from CARICOM countries, except Trinidad and Tobago, had slumped below that of the first half of 2009.“At the end of this month, some of our members along with some persons from the BTA [Barbados Tourism Authority] will be going to Antigua on a sales trip. We do Jamaica every year, Trinidad every year, Saint Lucia and Grenada as well. They [CARICOM travellers] are especially important for hotels in the three-two star segment of our membership,” Jordan pointed out.BCCI president Armstrong said the largest jump in foreign payments owing to foreign debt service, and a rise in the value of imported oil and other intermediate inputs, reported by Worrell, was an indication that “the Chamber of Commerce has been very correct in our move to try and push Barbados towards a more green economy to reduce our dependence on oil and to enhance our energy security by adopting renewable energy”.Meanwhile, BMA’s Ian Pickup said that despite a 7.7 decline in manufacturing for the first half of 2010, the sector had performed well compared to declines in other sectors.“It is essential that we move towards not relying on one sector or two to keep the economy going. We are seeing now the consequences of doing that, which is a real downturn in tourism, in international business and these are badly affecting our foreign exchange and total demand in the country.“So it is important that we maintain a manufacturing sector and improve the manufacturing sector. It is very important that Barbadians and Barbadian companies turn to locally produced goods because that way they not only save foreign exchange, but keep money circulating in the local economy and keep jobs going,” he said.However, he declared that liquidity in the banking sector was of little benefit to manufacturers “if the banks are not prepared to lend it”.“We certainly don’t see any evidence that banks are likely to change their risk assessment when lending to the manufacturing sector. As such liquidity only means that they are sitting on large amounts of money; but they are not lending it,” Pickup emphasised.Holder at the SBA supported Pickup on the philosophy of banks being out of favour with the needs of manufacturing as well as SMEs.Moral suasion“I would have liked to see the Central Bank of Barbados use moral suasion to encourage our commercial banks to be a lot more enabling as it relates to the SME sector in Barbados . . . . “What are we doing to assist our SME sector to access the necessary capital that would allow them at this point in time to invest in the retooling and restructuring of their firms to be able to take advantage of the market post recession?” she asked.The Central Bank Governor spoke of liquidity at banks that featured cash reserves equivalent to 7.5 per cent of deposits, 2.5 percentage points above that stipulated by the Central Bank, and Holder asked: “What are we doing with that excess liquidity? “I still think that the interest rates for loans and financing for small business are too high and do not lend to the kind of enabling environment that we are talking about.”BEC’s head Walcott, who focused on employment, said the ability of employers “to hold strain for longer, undetermined periods, does not bode well for a containment of the unemployment statistics”, which stood at 10.6 per cent at the end of March this year, an increase of 0.5 per cent over the prior period.He said that of greater concern to many employers were “emerging trends” such as declining levels of productivity in an environment of rising wage demands, deteriorating work ethics and absenteeism.“In the area of wage demands and productivity, the BEC supports the concept that any increases in compensation must be linked to increases in output,” Walcott said.Ultimately, trade unionist Morris made a commitment that unions would help companies to rally the economic crisis by trying not to “escalate” labour costs “in an environment where revenue increases might be fairly difficult for the companies”.Partnership“I still feel that the reason why unemployment is not even worse now – at one time people thought it would have been at 15 per cent – is because of the partnership arrangement that the union has adopted with the companies and I think that has to continue,” Morris said.He added that Barbados’ real test at this time was to reduce the cost of doing business, but not by laying off people.“It is getting from the people that you have higher productivity levels, which would then reduce the unit cost of whatever good or service you’re producing,” the trade unionist with the Barbados Workers’ Union said.
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