The Revolutionary Labour Bill

First Published: 2000-01-30

Mr. Dion Foulkes, the Minister of Labour, in meetings with the Trade Union Congress and the Bahamas Employers Confederation, discussed his proposed Minimum Labour Standards Bill dated January 2000. He described it as "revolutionary and historic" legislation that will produce equity for the worker and the industrial peace that is crucial for economic survival.

Regulation of the peaceful.

This comes at an odd moment in the country-s history. Under the Free National Movement the country is experiencing economic growth and labour prosperity after ten to fifteen years of stagnation… a period when growth adjusted for inflation and population was flat. And, in fact, this prosperity has occurred without a "revolutionary" labour bill

In the private sector unemployment is at low levels, wage rates are up and employers are struggling to find and retain qualified people. For Bahamians there are opportunities to improve skills and to use them; and for employers there is an absolute scarcity of qualified job applicants that causes them to improve wages, working conditions and training. The labour market is working to the benefit of all.

In contrast the government-managed sector of the economy is in a shambles. After seven years in office the government is running a Post Office that does not work, an airline that cannot stop its losses and a telephone company that cannot be sold. More importantly… the government-controlled sector of the economy has the majority of the trade unionists. Since 1992 by far the greatest labour unrest has occurred within this sector and not outside it where up to 70% of the population works.

The logic of the labour proposal seems to be that –

  • In the name of labour peace, the peaceful must be regulated… or…
  • The regulation of the peaceful is the price that the Trade Union Congress is setting for labour peace.

The price of "peace".

If prosperity is to be sustained, the country must become more efficient and innovative. Yet the government is proposing legislation that will make this more difficult… not easier. It wants to create two new bureaucracies to regulate labour contracts and worker safety in private enterprise.

  • For bureaucrats this Bill provides jobs, a mandate to police private enterprise and favor-granting opportunities.
  • For lawyers it handsomely enriches those who promote and litigate this legislation.
  • For the businessman and the economy it means added costs in employing people and managing them effectively.

This is a sure way to undermine job security and prosperity.

The cost of "peace".

This Bill dramatically increases government control over the economy at a moment in time when the world has discovered that such centralized control diminishes economic growth and public welfare. Let us look at the facts:

  • In the United States whenever the real minimum wage increases as a result of legislative action, unemployment of teenagers increases; and when the real minimum wage decreases as a result of inflation, unemployment of teenagers decreases.
  • In developed countries centrally planned labour markets, mainly continental Western Europe, have substantially higher unemployment rates than more market-directed less rigid labour markets such as the United States, Japan and New Zealand after its reform program of 1984.
  • The Economic Freedom of the World Annual Reports show a positive measurable relation between economic freedom and economic welfare… higher levels of economic freedom have higher levels of economic welfare and growth.
  • Corruption feeds and grows on government regulations and control. Furthermore, it diminishes and in time stops economic growth. Citizens in free countries eventually react; and one needs to look no further than the Bahamas in 1992 and Venezuela in 1999.

That-s the evidence.

Yet… this Labour Bill gives the Minister of Labour unlimited and extensive powers to set wages, to administer mandated labour benefits and to police working conditions. It creates two new "inspector corps" suitably armed to secure evidence and to level penalties.

As the great economist F. A. Hayek pointed out years ago, it is "both ironic and tragic that governments in trying to shape the economic future of its citizens… often with the most noble intent… unwittingly produce the very opposite of what they intend."

That is the reality of politics.

Why take this road?

If economic reality conflicts so sharply with the Government-s intent, why is the FNM again proposing this legislation?

There are two reasons –

  1. Organized labour is being squeezed by the country-s need to shed inefficient government enterprises and its inability to promote militant trade unionism in the private sector.
  2. The FNM wants labour support in the next election so it passes legislation to solve "organized labour-s" problem.

Neither of these is a sufficient reason to propose such "revolutionary" legislation.

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