Natuc: Inflation beating workers

Trinidad and Tobago’s rate of inflation has been growing much faster than the rise in wages over the last few years and this has impacted negatively on the country’s working population. This is one of the points made by National Trade Union Centre (Natuc) in a document with recommendations for the 2012/2013 annual national budget. Natuc president Michael Annisette delivered the document to Finance Minister Larry Howai last week in the ongoing pre-budget consultations at the Ministry of Finance. The document showed that headline inflation between 2007 and 2010 was six per cent and it rose to almost ten per cent last year.

 

 

Awards by the Industrial Court have on average been more than 3.5 per cent, with awards to some sectors as high as five per cent a year, according to the Natuc document. With inflation outstripping wages, Natuc acknowledged the economic constraints that the Government faces, but at the same time said this will have an adverse effect on the national economy.

“Government’s effective five per cent cap continues to erode workers’ standard of living. This is not only unjust, but is also having an undesirable effect on the national economy. As disposable income is effectively decreased, workers’ purchasing power also decreases and the domestic productive sector is affected. Workers in the public sector continued to be demoralised and as a consequence, their productivity is reduced,” the document stated.

 

 

To assist workers, Natuc proposed the creation of an investment instrument, which could be used as compensation for public-sector workers and the option of shares in the National Enterprises Ltd (NEL). On the issue of housing, the Natuc document has asked the Government to consider a tax rebate on mortgages below $800,000. “With the spiralling cost of housing, mortgages are consuming a greater portion of the income of working people. The tax rebate will increase the disposable income available to workers.” Natuc also pointed out that any loss of income to the Government could be compensated by: “Increasing the marginal rate of tax on high-income earners. Also, by closing the tax net as self-employed professionals and others continue to evade and avoid taxes, while salaried workers subsidise those who are better able to pay. The system is manifestly unfair.”

 

 

Investment generation

Natuc’s budget document also called on the Government to rethink the approach to investment generation. “Natuc believes that there is an opportunity to mobilise domestic investment and contribute to more sustainable economic and social growth and development. We suggest one way in which this could be done is through a partnership composed of the Government, trade unions and the private sector.” The document suggested that the Government identify specific investment projects that can be targeted to specific investors, which should match four criteria: market factors, comparative advantage, transformational impact and the quality of life. One area for investment is the construction sector. Natuc believes that construction has always been a sector that absorbs labour and creates employment and economic activity in other parts of the economy.  It added that a number of trade unions have been involved in providing reasonable accommodation for their members and there are two ways the Government can encourage these activities:

 

 

• Making grants of land to trade unions for the purpose of residential accommodation

• Providing incentives by raising the income cap for low-cost mortgages to a combined income for the household of $20,000 a month, in order to encourage home ownership in these developments

“The benefits are obvious and would include reducing the pressure on the Housing Development Corporation in providing accommodation for citizens.” Natuc also spoke about the opportunities the maritime sector offers. “Immediate benefits could be realised by amending Legal Notice 132, which allows foreigners to enter T&T to work for 28 days without a work permit, to be applied to a certain categories where there is no skill set in T&T. This provision is currently exploited and shipping agents use foreign workers on a rotational basis when there are underutilised skills in the country.” Natuc gave the view that Caribbean Drydock Ltd (Caridoc) is the “ideal vehicle” to fast forward the shipbuilding and repair industry. “With the widening of the Panama Canal and the increase in shipping in the region, a revitalised operations at Caridoc can increase the employment level in the maritime industry to 3,000 workers.”

 

 

Food Warehouse

Natuc proposed the creation of a retail warehouse system to provide cheaper food. “Workers can spend more than 50 per cent of their wages on food and other essential consumable items. This outlet can be run on the basis, similar to members’ clubs, in which workers and others can pay for membership. Unlike existing members’ shopping clubs in the country, part of the profits will be rebated to workers at the end of each year.” Natuc has asked the Government to provide a long-term lease on four parcels of land, so that a food warehouse outlet can be constructed. These parcels of land will be in north Trinidad, central Trinidad, south Trinidad, and Tobago. “We propose the programme can be done on a phased basis. This model has been used successfully with significant impact on the well-being of workers in countries such as the Philippines.”

 

 

Productivity

In its budget proposal, Natuc quoted from Nobel laureate in economics, Prof Paul Krugman who said, “The economic performance of any country, the competitiveness of its business and the standard of its people depend primarily on productivity over time, and the higher will be the standard of living of the people it employs...productivity is not everything, but it is almost everything.” Natuc stated that it represents 150,000 workers and some 300 bargaining units and as a social partner wants to contribute to the country’s productivity levels growing. “Natuc is advocating the combination of economic growth with the creation of high-quality jobs combined with social wealth creation. There is the need to build a high-quality workforce.”

 

 

Skills planning

Natuc also called for a more focused approach to skills planning to further develop the economy. “In the modern economy, the principal means of developing and sustaining competitiveness is through the formation of human capital. We continue to have a supply-driven approach to skills development and as a result, institutionalise poor performance in the workplace. We recommend a new market demand-driven approach to skills development.” Natuc used the Republic of Ireland as a model.

“Ireland has a standing Expert Group on Future Skills Needs that continually reviews the requirements of the international marketplace and seeks to align training and skills development in the country to those requirements. The advantages are increased attractiveness of the location, high levels of sustained productivity and better opportunities.”