THE ISSUE: Poor demand, labour and energy issues among hurdles
As 2012 drew to a close, Barbados Chamber of Commerce & Industry (BCCI) president Lalu Vaswani highlighted a number of problems facing the private sector and warned that layoffs were looming for 2013.
Issues he outlined included delayed value added tax (VAT) and corporate tax refunds to companies, and increased operational costs linked to new labour legislation.
Furthermore, he said all this came against the backdrop of another year of economic challenges and reduced consumer spending.
He noted that the economic downturn had led to a ten per cent decline in the number of seasonal workers hired by local companies over the Christmas period.
In his review of the year and outline of prospects for 2013, the chamber president said: “Business owners were finding it costly to implement workplace improvements such as holiday with pay, safety and health at work, pensions and securities regulations.
“With costs rising and salaries remaining relatively flat, workers are experiencing an internal devaluation.”
According to Vaswani, “In spite of these economic challenges, members in the retail/distribution sector had not resorted to layoffs but rather curtailed all overtime.
“Overall, the business community is anxiously monitoring their expenses, particularly labour costs. Try as they might, one of our members will be forced to lay off people in the New Year. Very little growth is expected in the construction sector while food sales are stable. People will eat, even if it means trading down to cheaper brands or more basic foods.”
Although the economic outlook for 2013 was not very encouraging, the president felt that Government should introduce new employment-related legislation on a phased basis to preclude businesses’ having to consider adjusting employment levels to meet the added costs arising from new legislation.
Furthermore, as the outlook in the island’s major tourism source markets was also challenging, the BCCI boss said there was an urgent need to review Government’s current strategy of not stimulating the economy.
“A more vibrant economy will not only secure the existing employment levels but encourage new employment and investment. In addition, there is a pressing need to release VAT refunds for companies as this has made the operating environment for business more acute. Sustained or higher employment levels have salutary macroeconomic benefits for the economy,” Vaswani said.
Meanwhile, Barbados Private Sector Association chairman John Williams said Barbados would undoubtedly continue to grapple with ongoing fallout from the world’s economic downturn during the year.
“For the past few years we have hoped that each New Year would bring a shift in the world economy back to growth and prosperity from which our country would benefit.
“It has been a long wait and although we are confident that eventually the recovery will come, the timing has been impossible to predict,” he said in the January 1, 2013 DAILY NATION.
Williams noted that the private sector was severely challenged to see significant improvements in the short term as businesses face depressed domestic demand. Commodity and energy prices have also contributed to inflation and increased the cost of doing business, he added.
“Barbados has weathered the economic storms of past years, particularly in the 1980s and 1990s, through the spirit of partnership among major stakeholders in the economy.
“Although we will wait and hope for improvement in the international economies, we cannot plan on that being our only salvation.
“The Government of Barbados, together with the labour movement and the private sector, must collectively focus our efforts on fixing that which is within our power to fix,” he said.
Meanwhile, with a substantial number of businesses involved in tourism or tourism-related areas, the Barbados Hotel & Tourism Association (BHTA) called on Government to speed up the implementation of promised initiatives that could ensure the viability of the sector.
In the December 14, 2012 WEEKEND NATION, president Patricia Affonso-Dass said past presidents and members had been meeting with Prime Minister Freundel Stuart over the past few months.
“Although there has been some positive feedback with respect to some of the challenges, namely the sanctioning of additional items to be added to the second schedule of the Tourism Development Act (TDA) and the promise of an incentive to assist hotels with the cost of electricity, the actual implementation of these [has], to date, not taken place,” she said.
Affonso-Dass stressed that hotels and attractions needed to continually improve their offering by keeping it fresh and current for the discerning traveller.
“Items that are contained in the second schedule of the TDA need to be continually revisited so that the product can remain on the cutting edge.
“The core incentives that are currently offered are in serious need of revision to not only encourage investment but assist the industry to survive in today’s ever changing business atmosphere,” she said.
The president said customers’ expectations were shaped by “fabulous offerings from our competitors” and Barbados’ tourism industry needed to have the ability and the regulatory support and framework to be dynamic.
“We should be constantly studying our competitors and benchmarking against best practice, and our accommodation and service providers must be aggressively committed to product excellence,” she said.
Affonso-Dass said the BHTA had long discussed the benefits of a facilitation unit within the ministry to ensure that challenges are efficiently routed to the relevant agencies, ministries or decision makers for prompt solution and to help potential investors go from project-plan submission to functioning business without too much red tape.
“While we are grateful to Cabinet for the approval of additional items to the TDA over two months ago and to the ministry for the collaboration with the private sector to complete the list, these items are still not available to the industry.
“This simply is not acceptable in a tourism-based economy,” she said.
In the January 7, 2013 BARBADOS BUSINESS AUTHORITY, Barbados Employers’ Confederation executive director Tony Walcott said organizations needed to place greater emphasis on improving individual and corporate efficiency and productivity “if we are to lift national productivity and enhance our international, regional and local competitiveness”.
“Current world economic outlooks and forecasts suggest that sustained recovery is unlikely for another 18 to 24 months; this will have significant negative impacts on our key foreign exchange-earning sectors of tourism and international financial services.
“Foreign direct investment inflows are expected to continue at relatively low levels, further compounding our foreign exchange-receipt challenges,” he said.
Walcott noted that innovation had to be a key pillar in businesses’ strategies as the environment evolved rapidly.
“We must make greater use of and embrace the rapidly changing information and communication technologies.
“We must not fear change but embrace it as necessary for our long-term survival and prosperity,” he said.