Guysuco pressing hard for profit-based incentive
Stabroek News
July 7, 2004
Conciliation talks between the two sugar unions and Guysuco failed to iron out a proposal made by the corporation for the replacement of the Annual Production Incentive (API) with a new Profit-Based Incentive Scheme (PBI).
However, Guysuco is optimistic that a satisfactory decision would be arrived at before the end of the year.
The corporation and the unions were locked in negotiations over the past month under the chairmanship of Chief Labour Officer, Mohamed Akeel over its proposal, but the talks failed to produce a result as the unions continued to reject the corporation's move.
Akeel recommended that if Guysuco was still pushing for the new scheme then the two sides should seek to set up a commission of inquiry. He suggested that even though the inquiry may not be binding, the Ministry of Labour could be approached to have this done. The National Association of Agricultural, Commercial and Industrial Employees (NAACIE) and the Guyana Agricultural and General Workers Union (GAWU) are the two unions representing sugar workers.
Following the failure of the talks, NAACIE President Kenneth Joseph said he was not optimistic about the setting up of an inquiry before the end of the year and as such, Guysuco may very well have to pay the old API until next year.
But Industrial Relations Director of Guysuco, Jairam Petam said the corporation would pursue the matter relentlessly, adding that so far they have not made a decision with regard to payment of the API for this year. Stabroek News was told that GAWU, the lead union for the negotiation of the API, has since written to Guysuco requesting the commencement of talks.
The API is an incentive negotiated between the corporation and the union each year, most of the time being resolved with the Ministry of Labour's intervention and concluded near the end of the second crop each year.
Speaking to Stabroek News yesterday, Petam noted that the API at the moment is primarily premised on the volume of sugar produced and has absolutely no nexus to profit or cost of production. He said the award on this incentive is usually the product of several weeks of haggling that entails several meetings. According to him the chronology of the API over the years will clearly show that there is no objective and logical methodology of establishing this high-cost incentive scheme.
"Pertinent factors of cost of production, productivity, improved efficiencies through technological inputs and capital investments are not considered in determining the scheme and the unions unfailingly consider that any increase in production is wholly labour-related," Petam said. He contended that the predominant motivator is volume of production and in years when the corporation failed to make a profit and registered huge losses, large sums were paid out for the API amounting to approximately $1B or almost 7% of the current cost of production. The company paid around $1B last year in the API.
Stressing that the API is a significant cost to the corporation, Petam said workers are already benefiting from achieving targets through the Weekly Production Incentive and are also rewarded for their own individual performances through various incentives.
Looking globally, Petam noted the looming dangers to the country's crucial preferential markets in the European Union.
Prior to 2001, Petam said profits were disbursed to the workers in accordance with the formula established by the Guya Persaud Commission of Inquiry in 1968. This formula he said determined the shared profit on the basis of making provision for a return on capital employed of 12.5% and pro-rating total employment to the total cost of production.
According to Petam the proposed PBI will primarily be based on profit and it would supersede the Guya Persaud profit-share incentive. He said also that it seeks to replace a combination of the API and the Guya Persaud profit share.
Petam noted that under the new scheme the total net profit after tax and after deduction of the defined pension liability will be split into three equal parts: for the government, the corporation and workers.
Petam explained that the disbursement to the employees will be based on the gross annual income of qualified employees; qualification being proposed at attendance for 85% of the days available for work.
Additionally, Petam said in the first instance the corporation desires a three-year agreement for 2004-2006. For the 1st year (2004) which will be considered a 'transition year' the corporation will 'top-up' the available profit to meet the expectation under the API based on the production for the year. The top-up would not be used for all ensuing years, since the projected profits will be sufficient to meet the API expectation. A three-year agreement is a pre-condition for the topping up in the 'transition year'
Petam argued that apart from being a condition which the government of Guyana agreed with the World Bank for funding of the Skeldon Modernisation Programme, it is based on the imminent need to link incentives to profit.
Joseph reiterated his union's position on the issue, arguing that the scheme will not work and will effectively take bread out of the workers' mouth. Joseph said the API began 52 years ago and has been sustained so far. He contended that the company could not depend on its profits to encourage workers. His comments were endorsed by GAWU which is also holding out on its rejection of the new scheme.