Dealing with the downturn

Jun 05, 2009 Editorial

The announcement by Bosai that it was laying-off additional workers highlights the impact of the global recession on our local economy. Rusal, the operator of the Berbice bauxite operations, had already laid off some of its workers last year.
Spurred by historic high prices for aluminium only two years ago, there were ebullient predictions of billion-dollar investments in the local bauxite operations. The present layoffs indicate how suddenly the world demand has plummeted on account of the financial meltdown and also, how quickly even an isolated economy like ours can be affected.

But the layoffs in the bauxite industry are not isolated even though – coming on the heels of a two-decade decline – it has to hurt much more intensely than in other areas. A cursory survey of businesses around the country – retailing, manufacturing and services – indicate that falling demand, occasioned by reduced remittances and exports, has precipitated an inevitable round of belt-tightening that feeds on itself in a vicious circle by spurring further layoffs.
We do not want to revisit our disputation of the Minister of Finance’s assertion that the economy is still expected to show positive GDP growth for the present year, but merely to suggest that aggregate figures like “GDP” can hide a multitude of negative effects that can befall the statistic that matters most – people – even if the GDP were to grow.
There is, after all, the clichéd but nonetheless true observation that “growth isn’t necessarily development”. And then, even the IMF, which receives its figures from the government, later projected a much lesser GDP growth figure that the Minister’s.
Irrespective of the varying assessments of our current economic situation, we hope that there will be consensus that the economy has deteriorated and continues to show downward movement. Can we agree we are in a downturn?

This does not mean that we have to simply weep and wail and beat our chests – as well as beat up on the government: the IMF, after all, has also noted: “output per capita is projected to decline in countries representing three-quarters of the global economy.”
The question is what do we do to alleviate the human dislocations, starting with job losses that inevitably accompany economic downturns?
Is the Ministry of Labour keeping track of the loss of jobs? What is the present unemployment rate – and how has it changed from a year ago?
Compounding our problem will be the consequences of accommodating hundreds – probably thousands – of Guyanese who will be deported from Barbados and Antigua in the coming months. These countries have decided that removing “illegals” from their countries will help keep unemployment rates down in their slumping economies.
These deportees and “newly-fireds” will be adrift in a country that is at a much lower economic level than its neighbours: there is not much “fat” on which they could live off, much less a “dole”.
In addition, even at the best of times, our employment level has historically been quite high – especially when it is placed in the context of the two largest employers in our country – rice and sugar – providing only seasonal employment.

The administration, led by the President, has been assiduously pursuing a “low carbon development” strategy but the payoff will at best become visible in the medium term. The Ministry of Agriculture has also been very aggressively pursuing a diversification of our agricultural base but this strategy, while it holds the secret of our eventual economic independence, will also take some time to germinate.
What we need is a strategy that can stimulate the economy to both rehire and employ new labour in the here and now. We need a stimulus package.
We do not pretend to have all, or even any, of the answers as to the details, but we believe that if we do not identify the problem, the answer will never be forthcoming.
And by now we do not have to theorise what an upsurge of idle hands can lead to in our dear land of Guyana.

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