It was reported recently that a local fast food franchise informed its staff that there would be no Christmas bonuses paid this year. Management explained further that the business was facing challenges because of the economic recession and increased competition in the industry. As could be expected the staff members, supported by the union, expressed displeasure and disappointment that their expectations of receiving the usual extra cash for Christmas would not be forthcoming. This particular song is likely to be played in many companies and organizations during this holiday season. And that same sentiment of despair for expectations not being met will be present everywhere if only because so many of us have failed to come to terms with the adverse economic circumstances that have plagued this country over the past few years.
Perhaps there is a need for a collective reality check in order to obtain some appreciation for and an understanding of why it is no longer ‘business as usual’ in The Bahamas. And, more to the point, why some of the things that we have taken for granted (such as year-end bonuses) may have to be re-visited and, in some cases, revised until circumstances improve sufficiently for their reinstatement.
In our reality check, let’s begin with unemployment. The official statistics are showing that out of a labor force of about 198,000, more than 30,000 Bahamians are either unemployed or under-employed, which simply means that there is a lot less income available to purchase goods and services in the economy, and as a result many households and businesses have had to cut back on some of the things they would normally do during this season.
There are other areas of the economy which lend support to and underscore the seriousness of the new reality with which we are faced. The commercial banks are reporting that almost 20 percent or a little over a billion dollars in outstanding loans are currently in arrears. More ominously, about half of that number is considered in the non-performing loan category, over 90 days outstanding, and therefore interest (the banks’ main source of income) is not being calculated on that category of loan. A similar tune is being played out in some public sector agencies. Arrears at the utility companies are at historically high levels and growing.
The Bahamas Mortgage Corporation is reporting loan arrears in almost 40 percent of its portfolio. In most cases, both in the private and public sectors, the institutions have had to introduce special programs aimed at assisting delinquent clients to re-structure commitments more in line with their changed circumstances in order to avoid losing their homes or other pledged assets. That is the plight of many fellow Bahamians, who for the most part and through no fault of their own are facing a new and uncomfortable reality.
We must also recall that over the past year or two, one of the larger unions in the country, the Bahamas Public Services Union, agreed to defer certain salary and related benefits which were essential features of its industrial agreement with the government. That deferral of benefits no doubt was recognition of the new economic realities in The Bahamas; and perhaps more subtly, a signal to the government to not reduce staff levels as was done in some private sector entities.
Bonuses and other benefits should be pursued and granted whenever the resources are there to realistically support them. In our current economic climate however, we are well advised to do a reality check, particularly of those in the ranks of the newly unemployed in order to better shape our expectations and before we make our usual demands.