How do we craft a national economic Recovery Plan?

Fri, Oct 5, 2012

The global economic crisis and its effects on this country continue to stretch the resilience of our people to the limit.

Prime Minister Gonsalves, in a report, this week warned Vincentians that although there have been some tentative improvements in the economy, challenges abound (please see full report under Sub-Menu features). We didn’t need the Prime Minister to tell us that however, as every day, we see and feel the effects of the economic slowdown.{{more}}

We tell the story in this week’s edition of Erica’s Country Style, an established small business which, after over 20 years in business, has been forced to place its workers on rotation, in response to significantly diminished orders from buyers both at home and abroad.

At least Erica’s workers still have an income, albeit reduced. Other workers are not so fortunate. Just about one month ago, US-owned offshore data processing company Discoveryworks Legal shut its doors, placing about 40 workers, some of whom had been with the company and its predecessors for up to 15 years, on the breadline.

These two companies are not unique. Others have quietly gone out of business or reduced staff in efforts to cut costs. Some retrenched workers complain that severance pay from their former employers is not forthcoming. When the newspapers are perused, the list of names of defaulters, published by the hire purchase companies and financial institutions, seem to get longer each week.

Based on projections of the International Monetary Fund (IMF), it looks as if we here in the Eastern Caribbean are in for at least another 6 years, but probably more, of economic challenges.

The IMF Chief Economist Olivier Blanchard said in an interview published on Wednesday that it might take at least a decade from the beginning of the crisis in 2008 for the world economy to get back into “decent shape”. Even economies like Brazil and China, which were doing fairly well despite the global downtown, are now beginning to show signs of slowing down.

This is not good news. For even if the developed nations bounce back by 2018, it will take another year or two after that, for the effects of the improvement in Europe and North America to be felt in our small, vulnerable economies in the Caribbean.

In the meantime, what do we do? The government has embarked on a programme of housing lot distribution and the repair and construction of homes, in the hope that these activities will stimulate the economy through the construction sector, which is typically labour intensive. Efforts like the poultry project in south central windward are to be applauded as they have the double effect of reducing our import bill and generating income in areas which have been extremely hard hit by successive blows to the agricultural industry.

As individuals and businesses, we too have a role to play in trying to ameliorate the effects of the economic downturn. Erica’s Country Style is to be commended for going the route of wage reduction instead of layoffs. Other employers may also consider using this period when things are slower, for training of staff and for a review of their business practices in an effort to make them more competitive.

It seems en vogue to call for national conversations on one topic or the other. No other conversation is more relevant at this time, however, than one on the economy. We need to discuss how do we craft a national economic Recovery Plan, which while protecting our most vulnerable citizens, prioritizes our spending and investment, one in which entrepreneurship, innovation and resourcefulness are key ingredients.

The different departments of government are in the advanced stages of putting together the 2013 Budget. It is not too late however, for input from all stakeholders, including the Opposition. In fact, such engagement is essential, as ideas about how our economy can be stimulated into recovery, do not lie exclusively within the walls of Government. The system of pre-Budget consultations needs to be deepened and widened to allow for significant input from all sectors, not only for ideas for 2013, but for much beyond it.