Make the tough choice - cut jobs, says Pan-Jam boss
Chairman and CEO of Pan-Jamaican Investment Trust Stephen Facey is urging Government to take the bold step of job cuts in order
to correct the imbalances in the economy.
He said the lack of decisiveness is weighing heavily on prospects for growth and development at both the individual and institutional level. Jamaica has committed to cutting its public wage bill to 9 per cent of GDP under its agreed reform programme with the International Monetary Fund. The Ministry of Finance is in tough negotiations with unions who want more than the five per cent raise the government has offered. Increases above that level would mean cutting jobs, perhaps as many as 15,000, the Ministry of Finance has said.
Facey joins other private sector voices calling for Government to go ahead and shrink the public sector. It's a decision that has been postponed for too long, he said Thursday at the property conglomerate's annual general meeting.
"We need to change the way we are thinking; change the way we do things. There are countries that have succeeded, changed, and I think that it's because they have taken the bold step and changed the paradigm," said Facey. "We've begun - the Ministry of Finance, in particular - but there are still inefficiencies in the system and we'll have to change that to get that growth."
Facey noted that Pan-Jam, which is celebrating its 50th anniversary, remains strong and has grown over the years through prudent business decisions and strategic acquisitions. But, he also noted that despite this strong performance, they have not really grown the business, noting for example, that subsidiary Jamaica Property Company has not done any new construction over the last 20 years.
"That's not a positive," the CEO said. "The fact that we have managed prudently and continue to make profits is a positive but it's not a strong story," he told shareholders.
Pan-Jam is otherwise engaged in two new projects - the redevelopment of the Oceana hotel property in downtown Kingston; and development of a new hotel in New Kingston to operate under the banner of Courtyard Marriott starting this summer. Both investments are being pursued with foreign partners.
Facey said Pan-Jam's own growth was being stymied by problems in the Jamaican economy in that the underlying fundamentals cannot support expansion or increased activity. He blamed this phenomenon for the continued softness of the Jamaican property rental market, noting that rates are presently half of what they need to be in order to support the development of new construction.
Pan-Jam reported strong after-tax profits for 2014 of $2.85 billion, which was up 14 per cent on the 2013 numbers. The group's asset base also expanded by 13 per cent to $26.4 billion.