[ARANGUEZ, October 10] — Following a preliminary review of the 2019/20 budget statement, the Employers’ Consultative Association of Trinidad and Tobago (ECA) sees this as a reasonable attempt to assuage the relative impact that successive austerity measures may have had on the country, given the recent trends associated with oil and gas prices over the last five (5) years and its relative impact on our country’s ability to earn related revenue.
The ECA also believes that the Government must be commended for keeping expenditure closer to revenue over the past four (4) years. Although we have not yet been able to realise a balanced budget, moving expenditure down by approximately $10 billion from 2016 and 2020 – despite the resultant difficulties, is an achievement that must be recognised.
A more detailed review of the fiscal package as presented reveal that while several important issues were addressed, there were some deficiencies and omissions in what was presented. Further, the ECA also believes that while some proposed measures are likely to have a positive short-term impact on the economy and the country’s citizenry, there is some concern about the medium to long-term sustainability of some of the proposed measures, especially within the context of a sluggish global energy market and continued uncertainty within that sector for the foreseeable future.
Certainly, there is more to be told once specific details of allocations are revealed in the coming weeks and the ECA will monitor these developments closely for further assessment. Accordingly, the following are some of our initial reactions to the 2019/20 budget presentation:
1. VAT Refunds.
The ECA is pleased that the issue of outstanding VAT refunds to businesses have been addressed, to some extent, though not in the form anticipated. While the proposed use of tradeable and transferable interest-bearing Government Bonds will bring some level of relief, especially to micro, small and medium-sized businesses, some of which are currently crippled by cash flow issues, there is some uncertainty hanging over the mechanism for the sale of these bonds relative to the arrears due to specific businesses. There is also some concern over the value that will be ascribed to these bonds on the open market. Before making any further pronouncements on the matter, we now await further information as it relates to the accumulating interest owed to businesses in respect of outstanding VAT refunds.
2. Oil Prices.
The 2018/19 Budget Statement was pegged at an oil price of $65 per barrel. Based on recent trends it has been clear that oil prices have been sluggish and generally did not realise this price point except for a brief peak at $66 in April 2019. This reality warranted a revision down from the projected $65 per barrel. Whether or not the revised figure of $60 per barrel is realistic remains to be seen as global events continue to unfold. If oil prices do not reach the projected level, the ECA is concerned about the relative impact on the ability of the Government to meet some of the obligations articulated in this budget presentation and the strategies for adjustments in this regard.
3. Minimum Wage.
The ECA, in principle, is not opposed to the proposed increase in the minimum wage, provided that we are able to manage the emerging risks associated with such a decision. More importantly, the ECA has repeatedly articulated its position on the need to assess the current system for determining wage increases in T&T. This approach must include, among other factors, productivity improvement mechanisms.
In respect of the minimum wage, guidelines for determining what the minimum wage ought to be at a particular time need to be developed within the context of achieving two primary objectives – protecting jobs and enhancing competitiveness, with due consideration to prevailing wage trends, overall economic conditions and national competitiveness. Increasing the minimum wage should neither be considered simply as an effective means of addressing poverty nor a mechanism for enhancing national productivity.
Opportunities for an increased wage are available through many forms in the world of work including performance improvement, skills enhancement, career change, career advancement, productivity gains and reward incentives. Minimum wage earners all have the opportunity to take advantage of the Government sponsored or subsidised portals for further education, training, upskilling and re-skilling opportunities to earn increases in wages, while improving their employability and resilience in recessionary periods.
There is an urgent need for greater investment in proactive initiatives for remedial learning and skill development of young persons who have dropped out of school and/or require special support to develop their talents in becoming productive and successful adults. This can be achieved, in part, by strengthening our TVET (Technical and Vocational Education and Training) system and facilitating the reintroduction of an appropriately designed apprenticeship framework, especially if we are to mitigate the increasing number of what we may describe as academically displaced young persons in a society that boasts about free tertiary education. This will also provide an opportunity for persons to transition out of minimum wage jobs and become employers, owners of businesses, and contributors to Government taxes.
We recognise that some work has started on this with discussions around the introduction of a National Qualifications Framework (NQF) in line with the existing Caribbean Qualifications Framework (CQF). However, deliberate actions must be taken to advance this process along with investment appropriate infrastructure and resources for expanding current TVET system. Youth unemployment in the Caribbean is high, gendered and dangerous to social stability. Statistics show that nearly 1 in every 4 (25%) young person in the Caribbean is unemployed, compared to a global average of 13.1%. T&T’s youth unemployment rate (approximately 6.6%), while below the world average, is still a source of concern.
4. Institutional Strengthening.
The ECA would have liked to see some consideration given to the strengthening of those institutions charged with the management and administration of a stable industrial relations system. These include adequate funding and staffing for the following, among others:
- Ministry of Labour, especially its conciliation function and labour inspectorate
- Industrial Court
- OSH Authority
- Registration, Recognition and Certification Board (RRCB)
We therefore await further information from the Ministry of Labour in respect of any specific allocations in this regard. Completion of the transformation of the Central Statistical Office and implementation the proposed Revenue Authority are also important initiatives that we cannot continue to delay, especially where the Government continues to lose significant and much needed revenue. We live in a world where data is what drives successful businesses and economies. We must get our CSO up to speed. We therefore remain optimistic that these will come to fruition in 2020.
It is time that we take a serious look at infrastructural development, especially relative to traffic management. We can no longer turn a blind eye to the unsustainable crawling traffic that so many of our citizens face every single day in commuting to school and work. This is affecting the health and wellness of our citizens, the productivity of our businesses and the environment of our country. Data already shows that T&T’s per capita ranking for excessive carbon emissions is #3 in the world!
Many proposed solutions have been explored in the past and the ECA was hopeful that the Government viewed this issue as serious enough to warrant a place in the budget presentation. Sadly, this was not the case. This certainly cannot be addressed in a single fiscal cycle, but we must have a clear plan, implement measures in accordance with this plan and budget for these measures moving forward. The budget measures articulated in this regard, though commendable, demonstrate the fact that we are still operating in silos without an integrated approach to solving this worsening issue.
As previously articulated, there is certainly more to be said about the proposed fiscal measures in the 2019/20 budget presentation we will continue to assess and articulate our position in this regard in the coming weeks as more information comes to light and following a more in-depth review of the proposed package.
Story courtesy: NEWS DESK