Cablegate: Barbados Employers, Unions Muddling Through Recession With

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DE RUEHWN #0200/01 0561710
ZNR UUUUU ZZH
R 251709Z FEB 10
FM AMEMBASSY BRIDGETOWN
TO RUEHC/SECSTATE WASHDC 0559
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RUEHWN/AMEMBASSY BRIDGETOWN

UNCLAS BRIDGETOWN 000200

SIPDIS
STATE FOR DRL - GABRIEL RIGGS
LABOR FOR ILAB - CHATENIA GAY
COMMERCE FOR MICHELLE BROOKS
COMMERCE FOR FSC SANTO DOMINGO

E.O. 12958: N/A
TAGS: ELAB ECON EINT XL OECS
SUBJECT: Barbados Employers, Unions Muddling Through Recession With
Cooperative Effort

Barbados Employers, Unions Muddling Through Recession With
Cooperative Effort

1. (U) Summary/Comment: Despite unemployment hitting 11 percent
this year, Barbados has avoided large scale layoffs and appears to
be weathering the economic downturn reasonably well. Mothballed
construction projects are slowly coming back on track and tourist
arrivals, while down, have begun to stabilize. The mood among
corporate, government and labor contacts is that Barbados will come
out of the economic recession in fairly good shape, due in part to
the effective working of its social partnership, which has allowed
government, labor and business groups to discuss labor issues in a
cooperative manner that has minimized unemployment and restrained
labor demands during this economic slowdown. End Summary.

Barbados Social partnership working to keep layoffs to a minimum

2. (U) One of the distinctive features of the Barbados labor scene
is the existence of a vibrant social partnership that brings
together labor, management, and employers to deal jointly with
labor management issues. The partnership was formed in 1990 and
meets once a year under the chairmanship of the Prime Minister,
while monthly working groups led by the Minister of State for Labor
deal with more routine business. The social partnership met in
2009 when the economic downturn started in earnest and endorsed a
"no layoff policy" that called for corporations to use layoffs as a
last resort when dealing with the economic downturn. For the most
part, this policy has been maintained, as only a few businesses
have terminated employees. Most businesses, especially in the
tourism and construction sectors, have moved to a part-time
employment rotation. Some companies have also set up internal
training programs for workers temporarily laid off from full-time
employment.

3. (U) One reason that this "no layoff" policy has worked so well
is that the Barbados labor environment provides for mandatory
severance payments for laid off workers. For the most part,
putting workers on a part-time schedule is cheaper for the company
than laying them off and paying them one month's salary for each
year of employment. The Labour Commissioner noted, however, that
the construction sector was particularly hard hit and a number of
construction projects have been put on hold, resulting in layoffs.
The Four Seasons Hotel project has been put on hold until this
summer, for instance, resulting in over 700 layoffs. In February,
2010, however, the government announced it would be issuing loan
guarantees to ensure that the project would resume in the near
term, promising a jobs recovery for that project.

Labor unions show restraint in wage talks

4. (U) Both the National Workers Union and the Public Workers
Union, have shown remarkable restraint in wage talks, vowing not to
demand wage increases until the economy recovers. The National
Workers Union represents about 30 percent of the private sector
employees, (most large companies are unionized, smaller companies
tend not to be) while the Public Workers Union represent about 60
percent of the public sector workers. In short, about 40 percent of
workers belong to a union, which is one of the highest unionization
rates in the region. The unions do, however, consult with
companies to ensure that companies that are profitable offer modest
wage increases in future negotiations. The Minister of Economic
Affairs announced February 1 that he is calling on the government
and parastatal organizations as well as the private sector to
institute an immediate wage freeze, noting that "convincing these
agencies to cut the wastage and reduce expenditures was difficult
because some unionized entities somehow believe or don't understand
that an irresponsible trade union is a threat to economic growth
and development....The trade unions have to work hand in hand with
the administration so that we can get out of this economic
problem."

Government considering setting up re-training program

5. (U) The government, in response to the economic downturn, set up
a tripartite commission to make recommendations to deal with
growing unemployment. The commission recommended that the
government create a retraining program for unemployed workers. As
a result, the Ministry of Labor is now working on setting up the
BDS $10 million (USD $5 million) program, which should be in place
by mid-2010.

Comment

6. (U) The economic mood is beginning to brighten modestly in
Barbados as local businesses and consumers welcome reports of a
slow turnaround in the U.S. Tourism bookings appear to be
stabilizing, moribund tourism construction projects are ramping
back up, and new tourism developments are creeping back into the
news. With an effective social partnership mechanism and the
initial shocks of the global financial crisis in the rearview
mirror, the economic mood on the island is, if not cautiously
optimistic, at least a step above the fatalism that set in at the
front end of the recession. End Comment.

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