A social partnership success story
August 8, 1999
In November of last year Patrick Frost, the General Secretary of the Congress of Trade Unions and Staff Associations of Barbados addressed the International Labour Organization Partnership Forum which was held in Guyana. Today Sunday Stabroek reprints excerpts from that presentation on how the social partnership model works in Barbados.
I wish to make it clear that while I personally may advocate the advantages of the Barbados experience nothing I say should be interpreted to mean that I am telling the Guyanese to follow the Bajan way - there already seem to be enough other Bajans coming to Guyana and telling you what to do. The concepts of social partnership may be universal, but the extent of the success of the application of any such philosophy will depend entirely on the adaptation of details which must follow its interpretation in each local context.
It is axiomatic to state that all relationships are evolutionary, and the development of the concept of social partnership in Barbados falls into the general pattern. That Barbadian society was able to respond in a particular way in the last seven years has been the result of a combination of factors which produced a convergence, rather than a divergence, of thought and action at a time of crisis, but the potential for that convergence had been created over the years. That process of social partnership is still evolving and we are all conscious, perhaps some more so than others, of its continuing imperfections...
Barbados had by 1991... already achieved a considerable degree of interaction between the social partners at both the individual and institutional level, even if there was no formal document of agreement on a social partnership. The attitudes, relative strengths and weaknesses of the various social partners were well known.
The 1991 crisis
I turn to the crisis which manifested itself in 1991, but of which there had been warning signs the year before, the language of which had not been fully watched.
The crisis, reduced to its fundamentals, was an absence of foreign exchange. It is now generally acknowledged that this had been occasioned by a number of factors which coincided or, if you prefer, had been allowed to coincide. The two principal ones were a failure by the productive sectors of the economy to earn neither what was anticipated nor what was needed, and a fiscal deficit which since being neither anticipated nor needed by the Government could not then be managed by it.
The blame for the deficit was placed, of course, upon the party which formed the Government because there seemed to be evidence to suggest an increase in spending just prior to an election. It was a matter of convenience for some to claim that the sum which tipped the scales in Government spending was almost identical to that paid to public officers in a regrading exercise the year before. That group of persons, conveniently, ignored the fact that the same regrading of posts should have been done two years earlier, something agreed upon in those negotiations in return for an acceptance of the Government's wages offer.
The truth is that the single factor which in the end precipitated the entry of the international lending agencies in 1991 was the bunching of debt servicing charges and, in particular, the repayment of a bullet loan of $50 million on the Japanese market, something which subsequently caused a focus upon four aspects of government's financial management - the extent of the foreign exchange component of national debt, the wisdom of negotiating large bullet loans, the bunching of debt service payments, and the advance planning essential for the repayment of all debts held in foreign currencies.
Response to the crisis
Next I turn to the thinking which began the process of the Barbadian response to the economic crisis. A meeting with the Prime Minister on 31st July, 1991 may be said to have signalled the official start of the exercise.
For the Government it was simply a case of whichever expediency would allow self-preservation with the least possible personal and political bruising. It had to accommodate the IMF and could only do so with the understanding and asistance of the trade unions and the private sector, both of whom in their own way had to be accommodated.
The private sector, initially, seemed willing to accept in toto what the IMF advocated without trying to ameliorate the deleterious effects upon the community.
Not so the trade unions. In them resided an independence of thought and an automatic hostility to the intrusion of the IMF proposals. The advice of Sir Frank Walcott, that doyen of trade unionists, from his hospital bed in August, 1991 was to face reality. The labour movement did just that in immediately banding itself together in a loose coalition. It came to terms with the fact that some trade unionists, including LeRoy Trotman its acknowledged leader, sat in the House of Assembly as members of the ruling Democratic Labour Party. It more than once rejected Trotman's stated willingness, given what he thought was the disadvantage of his membership of the governing party, to step down from the leadership of Coalition of Trade Unions and Staff Associations, and it concentrated on what the workers' organisations had in common. The labour movement was unanimous in recognising the futility of expending energy in apportioning blame; it submitted within a very short time a set of comprehensive proposals to government, and it was, above all, prepared to make material sacrifices, but not to shed principles. It offered a freeze on wages and the maintenance of industrial harmony in return for a commitment on the preservation of employment levels and the holding down of prices on basic commodities. It was bolstered in its actions by the strong nationalistic feelings of its collective membership and the wider Barbadian community.
Such was the manner in which the labour movement virtually overnight redefined its role and resolved to avoid the loss of membership which would have attended increased unemployment and which would, in its wake, have inevitably brought marginalisation.
A new approach
However, as the social partners came to terms individually with the programmes proposed in the Letter of Intent to the IMF of 25th October, 1991 first for stabilisation and then for structural adjustment, there grew the realisation that the response could not be treated only as a response to a matter of national financing. It went beyond that.
The crisis was identified, certainly by the labour movement, not merely how the macroeconomic difficulties could be resolved, but more so how the longer term development of Barbados could be influenced, particularly by ensuring that there would be no wholesale importing of the tried and often failed methods of the IMF and the World Bank, especially that of currency devaluation and the reduction of government services.
It was, in short, a matter of an approach to the application of a philosophy of fiscal and social engineering. That approach was rooted in a fierce determination to avoid the deprivations seen to the north in Jamaica and to the south in Guyana.
There was by the very nature of the discussions with the Prime Minister at the end of July, 1991 an instinctive reaction that there had to be a tripartite response to the crisis. The trade unions met in informal ad hoc settings with the various private sector entities, with the church, with the political parties in opposition. The labour movement did its research and it sought advice inside and outside of Barbados. There was thus considerable dialogue which through national awareness led gradually to common ground and the closing of local ranks against what was seen as a non-national face.
It was, in short, a master of an approach to the application of a philosophy of fiscal and social engineering. That approach was rooted in a fierce determination to avoid the deprivations seen to the north in Jamaica and to the south in Guyana
The idea of formalising something was not mooted until much later - not until the end of 1992 and early 1993: By then the Foreign Exchange Committee, with membership drawn from the leaders of the social partners, had lifted the level and scope of dialogue and the umbrella organisations for both the trade unions and the private sector had already among themselves reached certain common understandings.
In addition, the overall circumstances were more propitious since the trade unions had by then vented their collective passion against the 8% cut in the salaries of public workers and all the other draconian measures, had met with officials of the international lending agencies, and had seen some result from their combined influence. The initial baying for political blood which accompanied the announcement of the economic crisis had subsided and the voice of those persons within the private sector who favoured devaluation had been stilled - as had been an incipient debate on race with all its divisiveness. The process was thus allowed to develop without the presence of such potentially disruptive factors.
I think it is fair to say that the IMF officials were not accustomed to the type of response they got in Barbados. I also think it is fair to say that they could not help but be impressed by the level of commitment to find a solution, and particularly a solution that began with an automatic exclusion of the standard devaluation recipe as a means of ensuring a return to the competitiveness of the economy.
In that regard I believe Barbados was fortunate in having an IMF Head of Mission who was sensitive to the response, capable of persuasion and who, with her staff, through personal contacts developed an affinity for Barbados and an understanding of all things Barbadian. It was also in the interest of the IMF as an institution that another model for fiscal rescue be found, and so there was some willingness to allow IMF/World Bank dogma to retreat initially to a respectful distance.
If the measures failed, then Barbados would have no other options.
The good fortune of Barbados was further enhanced by the fact that one IMF staff member had a personal experience of the success of a social partnership initiative in Mexico in circumstances that were not entirely dissimilar. His experiences were shared informally and all the parties came in turn to a willingness to consider committing certain understandings and undertakings to paper.
The Government, as might be expected, produced the first draft discussion document. This was done after the Prime Minister's budgetary proposals in March, 1993. The paper presented a position which was unacceptable to the trade unions because it sought to establish in law an agency, the National Productivity Board, and to give that entity power to restrict the scope of collective bargaining and to modify existing contracts to fit the wages criteria it determined. It spoke of offences and penalties and sanctions, and proposed, inter alia, to extend the period of the 8% cut in public sector wages, to impose a wage freeze and defer the implementation date of collective agreements.
In reality it was an incomes' policy conceived in a legislative context and thus doomed to failure because it was contrary to everything that voluntarism in industrial relations in Barbados had achieved in the previous fifty years.
The Barbados Labour Party, then in opposition, used the opportunity to oppose the specific proposals and so score political points, but it implicitly accepted the general idea of a tripartite approach to resolve the macroeconomic difficulties.
The trade unions having instantly rejected the proposed concept then produced the first working draft, an initiative followed in each of the other Protocols as a means of exerting primary influence over the shape and content of the text to be negotiated.
The main departures agreed upon in the ensuing discussions were:
1. The addition of a prices policy.
2. The inclusion of an agreement for the establishment of a framework which would protect workers' security of tenure and seek to reduce labour disputes.
3. The inclusion of the following clause:
"Labour shall not be required to vary the benefits and conditions which it currently enjoys, unless it is for immediate general improvement, or by any such variation labour assists in effecting the long term improvement in the conditions of those employed and creates jobs for the unemployed."
This clause, together with the agreed protection of the freedom of collective bargaining, ensured that the status quo of the trade unions visa vis the employers was preserved.
The final document was relatively short and simple. Its objectives may be summarised as follows:
- the safeguarding of the existing parity of the Barbados dollar
- the securing of economic growth through improved competitiveness
- the restructuring of the economy
- the promotion of productivity
Provision was made for the pursuit of the objectives through the implementation of a number of policies, including the establishment of a National Productivity Board and the monitoring of prices.
The document was signed on 24th August, 1993 and was to cover the period April, 1993 to March, 1995. It was noted by way of resolution in the House of Assembly on that same day...
The attempt by the government during the life of the first Protocol to increase house rents and bus fares, under - it must be said - some pressure from the external lending agencies to do so, was a major test of the resolve of the social partners. The combined efforts of the representatives of workers and employers persuaded the government not to pursue such measures because any increases at that time would have been in contravention of both the spirit and letter of the Protocol.
At the end of the period the parties agreed that the Protocol had, despite its shortcomings, achieved its primary purpose. The dollar had not been devalued, the economy had been stabilised and Barbados was positioned well enough to absorb the shocks of continued structural adjustment. Although the agreed freeze on wages in the public and private sectors had held, the professional class and self-employed artisans over whom no one could exercise institutional influence, had increased their charges. It is also true to say that some prices had risen, but not sufficiently to jeopardise the Protocol.
The second Protocol
And so to the second Protocol to cover the years 1995 - 1997.
There had been in the intervening period the departure of LeRoy Trotman from the membership of the Democratic Labour Party, something which was interpreted by sections of the Barbadian public as a good thing since they claimed it would allow the trade unions to be truly independent. That the trade union had been exhibiting that phenomenon for some time seemed to have gone unnoticed.
There was also an election and a change of government which saw no trade unionist sitting in the House of Assembly. However, this fact made no difference to the evolution of the process since the Barbados Labour Party when in opposition had declared during the debate on the resolution on the initial Protocol that "...its contents are of a nature that are not in and of themselves offensive..." (Mr O.S. Arthur - Hansard - page 3909).
The negotiations on the text prepared by the trade unions took place against the background of an improving economy - foreign reserves were growing, unemployment, even if high was falling, and there had been modest growth in the economy.
The fundamental structure of the first document was left undisturbed, but the language in the redrafting was a bit more expansive and there were two significant changes. First, the commitment to a "wage freeze" was replaced by one of "wage restraint". Secondly, clearly defined administrative procedures were set out whereby a Sub Committee of the Social Partners was enjoined to be "the first line of consultation regarding all aspects of the implementation of this Protocol."
In addition, meetings of the full social partnership were to be held quarterly under the chairmanship of the Prime Minister.
That Sub Committee met more or less monthly for the duration of the Protocol and dealt with a myriad of national and individual issues, many of which threatened to disturb industrial.: harmony. It was a sounding board for policy directions and a sounding off board in all other directions. The meetings under the chairmanship of the Prime Minister were, by contrast, not held as frequently as intended.
The social partners were so satisfied with the working of the second Protocol that agreement to extend it by a further year to March, 1998 was a mere formality.
There are three matters in the life of the second Protocol which are worthy of attention. First, there was an attempt by some enterprises within the private sector to visit the worst aspects of downsizing upon Barbadian workers with all the attendant societal and political implications. The government made it clear that such a recipe for increasing unemployment was unthinkable and the trade unions, invoking the agreement in the Protocol for the establishment of a framework to protect workers' security of tenure, immediately proceeded to draft an amendment.
The wide ranging job security arrangements already articulated in an agreement between the Barbados Workers' Union and the Barbados Hotel Association were codified still further and, after numerous meetings, agreed upon by the social partners as an Addendum to the Protocol.
The second major difficulty arose out of the refusal of some data processing firms to recognise the Barbados Workers' Union and their subsequent attempt to impose North American industrial relations practices in Barbados. The upshot was an unprecedented joint press statement from the three social partners which reaffirmed their commitment to the voluntaristic industrial relations conventions of Barbados. The fact that the employers' representatives distanced themselves from those foreign companies is indicative of the strength of unanimity on a matter of principle.
People know one another enough about one another so as to know who not to know
The third issue was the manner in which the request for an increase in LPG prices was resolved. The government, after the elapse of time in providing answers to numerous questions raised by CTUSAB and still further time in the clarification of the information given, agreed to reduce their tax take so that the effective price to the consumer was not altered as a result of increased landed costs.
The second Protocol, like the first, had limited objectives, and, like the first, it accomplished what it set out to achieve...
And so negotiations on Protocol Three could begin in a totally different context. I mention for those with Internet habits that the text should be available on the Barbados Governmenrs website - BGIS.GOB.BB.
Protocol Three, like its immediate predecessor, was negotiated against an improving economic climate. Unemployment had fallen to its lowest level for years - just over 12% - foreign reserves had risen, there had been GDP growth for three years, and the inflation rate was levelling off after the initial rise following the introduction of VAT.
This situation and the previous experiences provided a foundation for something more ambitious. There was leisure for reflection and time to conceive and articulate a broader vision. In that regard we must record that we were greatly assisted by our examination of the Irish model, and had the benefit of a visit from Mr Kieran Mulvey of the Irish Labour Relations Commission...
The main difference between Protocol Three and its predecessors is that although it retains all the essential elements of the first two, it has added others so that it is no longer just a document of tripartite strategy to focus strictly on macroeconomic issues. Protocol Three acknowledges the scope of social responsibility of the partners and their collective obligations in respect of all factors which affect the development of Barbadian society. There are thus, for example, specific sections dealing with the role of the social partners in employment formation, training, reduction of social disparities, public sector reform, the miniraising of the incidence of crime, and the treatment of the disabled. The most critical clauses are, however, those which specifically state the collective and individual undertakings of the social partners. The commitments of the Government may be summarised briefly as follows:-
- to consult on the formulation and implementation of fundamental economic and social policies
- to acknowledge its responsibilities as a model employer and to ensure that its agents act accordingly
- to increase training and worker representation on Boards
- to ensure neither discrimination nor inordinate delays in appointments
- to initiate policies to reform domestic capital markets and to provide small business enterprises with awards of ..contracts
- to ensure that non-national investors are given prior information about industrial relations practices and ..conventions.
The Employers' Representatives have committed themselves
- to seek to increase membership
- to dissociate themselves from anti-worker practices
- to moderate mark up levels so as not to create inflationary trends
- to develop progressive management policies thereby ensuring consultation and full worker participation in the ..making of decisions
- to encourage share ownership and similar agreements
- to support local suppliers of goods and services
The Workers' Representatives have committed themselves
- to the honouring of contractual obligations ..
- to the provision of high quality of workmanship
- to the moderation of wage demands
- to the development of a culture of productivity in the work place
- to encourage workers to avail themselves of all opportunities for training, for consultation and for the ..development of national pride and the reinforcement of traditional values.
In addition to the foregoing there is also recognition of the commitment that should exist at the enterprise level - one characterised by an understanding of the basis of social partnership, of a mutual respect for rights and interests, of a willingness to share the profits equitably, of a willingness by workers to provide productive labour to ensure the continued competitiveness and sustained viability of the enterprise.
The effectiveness of Protocol Three will in time be judged by how each of those specific commitments has been honoured.
The Prime Minister at the signing ceremony of Protocol Three had this to say:.
"I make bold to say at the very outset that the Protocol which we will sign this morning embodies the most revolutionary new approach to the governance of our affairs in the course of (the) development of modern Barbados."
It is an admission that the governance of Barbados must no longer be regarded as the preserve of the single political party in office. It was a statement forced not from a position of political weakness, but rather one which sprung from the confidence of those convictions developed through genuine consensus that tripartism must be institutionalised.'
I would wish to emphasise that Protocol Three is no different from any collective agreement. Its essential worth will in the end lie in its implementation and, as with the first two, its strength, or weakness, remains in its spirit of commitment, its expectancy of a continued openness and trust in the sharing of information and concerns, and in the absence of the compulsion provided by law.
Deficiencies It also carries those deficiencies in absolute control which reside with each social partner in the exercise of their special areas of responsibility. Government, for example, must rely upon persons on Statutory Boards and in Ministries and Departments to function as perceptive agents and so comply scrupulously with what has been agreed. We know in advance that there will be breaches, each successive one adding to the cumulative jeopardy.
The private sector enterprises, by definition, must compete among themselves, something which carries all the potential implications for rising prices and increased unemployment. We know in advance that the influence of its formal agencies are adversely affected by an all too limited membership and obvious deficiencies of organisational strength.
The trade unions - well, if each unionised worker is a potential cannon in times of need, then we know in advance that there are bound to be a few loose ones, especially at times when they are not needed!
The Barbadian model of a formal social partnership, albeit young, has been successful so far. Its gains have come to pass because, in retrospect, the leaders of the several groups have all been persons of absolute and unchallenged integrity, have had the capacity to trust and to be trusted, have had the intellect to shape a common vision, and have been prepared to share information critical to the making of decisions.
They have been assisted in their task by the small size of Barbados and its relative homogeneity. People know one another or enough about one another so as to know who not to know. The process leading to the signing of the Protocols always had the potential to be managed because the size of Barbados limited the complex variables associated with long distances and large numbers of people...
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