In 1934 Soviet Russia liquidated the Kulaks (the businessmen who bought from the farmer and sold to the consumer) and the country experienced the worst famine in its history. Six months later Josef Stalin celebrated both the liquidation and the starvation as a triumph on the road to a Marxist utopia. In the celebration the big “lie” became truth; “starvation” became “well-being”. There was not only a split between rhetoric and reality but reality was redefined. In the Bahamas in a less lethal and extreme situation there is a split between politics and reality in labour relations.
When Prime Minister Hubert Ingraham first introduced the Labour Bills in Parliament he declared that the prosperity of the 1990s had eluded the common man and his labour bills would get the worker his fair share.
Yet Mr. Ingraham engineered the 1990s prosperity that produced stunning results. Most notably income was redistributed in favor of the “working classes”. The lower 60% of the population, according to the Bahamas Department of Statistics, got a bigger slice of the bigger economic pie; the top 40% got a reduced share; and the top 20% had the largest loss of share. This record was the opposite of the prior PLP government. Then the country stagnated and the income share of top 20% of Bahamian households increased.
This reality has been over-looked. It does not fit into what Bahamians want to believe. It’s as if it did not exist.
Incomes, costs and prices.
In December 2001 Prime Minister Ingraham tabled three labour bills in Parliament that were passed with no dissenting opinion.
Prior to this the Nassau Institute over several years wrote articles and held seminars on the proposed legislation. The negative experience of France, Italy, Germany, New Zealand and Argentina was reviewed. The political appeal and adverse economic impact of the Minimum Wage was thoroughly and repeatedly discussed.
The International Monetary Fund examined the Bills and stated that the bills contained undesirable “structural rigidities” related to the increased cost of hiring and firing employees that reduce the ability of business to adapt to changing market conditions.
The Bahamas Employers Confederation (BECon) developed an electronic spreadsheet, its members used it and the data showed that the bills would produce significant labour cost increases. Then BECon argued that the legislation should not be introduced in the middle of the recession. All of this was to no avail. It appeared that the only accomplishment of these efforts was the elimination of the gross absurdities in the original bills.
A BECon survey of June 2002 shows what happened. In fact, the labour legislation did —