Workers reeling from high cost of living - GAWU

Workers reeling from high cost of living – GAWU

Jan 03, 2023 News

…knocks businesses for not passing on incentives offered by government

Kaieteur News – Amid the heightened cost of living situation in the country, the Guyana Agricultural and General Workers’ Union said that while efforts are being made by government to ease the burden of citizens the reliefs are not meeting them.

“It is unfortunate that there may be some who rather than seeking to share the relief offered by public policies were seeking to profiteer. We are disappointed by such behaviour as it represents yet another form of exploitation perpetuated against our people, especially the workers. We abhor those who engage in such practices and we believe that a re-evaluation of policies may be necessary to seek to provide greater support to the people directly,” GAWU reasoned in its New Year message.

Since returning to office, the PPP/C Government has unveiled a range of tax reliefs and other incentives to businesses, ostensibly aimed at helping struggling Guyanese cushion the blows of the high cost of living.

These measures however, have not been passed on and even President Irfaan Ali at one time criticized the private sector for not doing so. During an address to the Nation back in November last year, Ali disclosed that the benefits given to the private sector have not been passed on to local consumers. “The measures that we are imposing to help the importers, to help the farmers… to help the producers, we expect them to act in a way that befits their moral responsibility to the consumer, and that moral responsibility is to pass on the benefits that you receive as a result of this intervention to the consumer to minimise the impact [of the global situation],” the President said back then. President Ali had acknowledged that the pandemic had severely impacted the supply chain around the world thus resulting in a backlog in shipments and shortages. This he said led to increased costs at the production level and at the logistics level – the combination of which has driven high commodity prices globally, something from which Guyana has not been spared.

Sugar workers last year staged many protests against poor management of the sector as well as matters of their welfare.

However, GAWU said in 2022, the heightening cost-of-living is an issue that attracted the attention of many workers. The union said the Bureau of Statistics recorded that the Consumer Price Index (CPI) increased by 6.5% for the year up to October 2022. Notably, the food CPI was nearly double at 12.3% over the same period. “Some may express doubt over the figures given the situation in the markets, supermarkets, and shops. It is acknowledged, however, that prices grew greater than the usual during this year. We are mindful that to a large extent the price increases have their origins in occurrences taking place far beyond our borders and of which we are an unwitting victim,” GAWU stated.

Only recently, this newspaper reported on a new Inter-American Development Bank (IDB) study which flagged Guyana’s ballooning inflation rate. The bank said it has been above historical levels since June last year, eroding consumer purchasing power and contributing to higher poverty levels and inequality. Titled ‘Headwinds Facing Post-Pandemic Recovery in the Caribbean’, the IDB quarterly report said that Caribbean countries should prepare for prolonged effects of external economic shocks in 2023, including for high food and fuel prices and rising international interest rates. The bank said higher interest rates could lead to economic slowdowns, or even recessions, in important source markets for exported services and goods from the Caribbean.

Though the report spoke glowingly of Guyana’s economic prospects, it noted that there have been important local effects of these global headwinds that have not been as favourable as the improvements in the terms of trade, mainly through their impact on local price levels. “The inflation rate has been above historical levels since mid – June 2021. The annual inflation rate was 2.1 percent in December 2019, remained subdued through 202 0 and early 2021, and then reached 6.9 percent in June 2021,” the Bank stated. According to the IDB, the inflation rate averaged 6.6 percent in the second half of 2021 and 6.2 percent through September 2022. “More notably, food prices have seen even higher rates of inflation, averaging 11.2 percent this year through September. The implications of this challenging global context driven by high energy prices and disrupted supply chains is that consumer purchasing power has eroded in the face of increasing price levels, contributing to higher poverty levels and inequality.”

The report noted that a recent IDB study, estimates that a 20 percent increase in food prices in 23 countries in Latin America and the Caribbean would lead to an increase of 1.6 percent in moderate poverty and 1.8 percent in extreme poverty, increasing the total number of people living in moderate and extreme poverty by 9.8 million, and 10.8 million, respectively.

According to the report, the current global context of high commodity prices affects countries differently, depending on whether they are mainly commodity importers or exporters, and directly affecting their terms of trade. Countries that mainly export products whose prices increase benefit from improved terms of trade, which means imports become relatively cheaper, supporting a country’s purchasing power. However, for Guyana, this development is two-fold, since the country is not only benefitting from higher energy prices but also from higher levels of oil production, the report stated. It added that specific commodities such as oil and aluminum are projected to have relatively high prices through 2024. The average price of the main oil benchmarks (Brent, WTI, and Dubai) reached a high of US$98 per barrel in 2022, up from US $61 before the COVID – 19 pandemic. The price is expected to remain over US$80 through 2024, before dropping to US$71 by 2027.