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Owen Arthur: Social partnership: the Barbadian experience

Published:Monday | July 20, 2015 | 12:00 AM
Owen Arthur

This is the second excerpt of an address by Owen Arthur, former prime minister of Barbados, to a social partnership retreat in Jamaica last week.

Based on the Barbados experience, I would suggest that the following principles should apply to make Jamaica's Partnership Agreement work effectively.

First, participation should be based on voluntarism; specifically, the active decision of each partner to engage voluntarily rather than for the imperative of statutory compliance. Since its purposes and modus operandi are not laid down in statute, the social partnership should never become unwieldy and should be able to evolve to address challenges as they arise.

Second, in Barbados, it was agreed that the tripartite nature of the partnership would be sustained and that, where necessary and relevant, the three core partners would broaden the dialogue to include groups and entities from the civil society which had an active interest in the matters under consideration.

The Barbados Partnership has been criticised on the grounds that it has not made specific provision for the inclusion of the media, NGOs (non-governmental organisations) and religious organisations as active members.

However, every provision was made for such entities to participate in national consultations organised by the social partnership. But it would have been difficult to conceive how an open-ended social partnership could achieve the pragmatic results expected of it.

Third, the social partnership is essentially a community. A community has to be based on communication that enables it to find and hold common ground. In recognition of this, the Barbados social partnership has been served by two main institutions.

The first is a National Productivity Council that serves as a tripartite institution to address and advise the partners on matters to enhance productivity.

The second is the Centre for Policy Studies, which was created to ensure that reports commissioned in the name of the partners provide the common information on which their deliberations came to the based.

ANYTHING IS POSSIBLE

The Barbadian experience establishes that once governments have to deal with practical, man-made matters rather than celestial affairs, anything is possible.

It was conceived as an extraordinary response to an acute and extraordinary crisis. In 1991, Barbados had effectively exhausted its holding of foreign-exchange reserves. Indeed, the net foreign-exchange reserves of the Central Bank of Barbados were negative.

This constituted the background against which the country had to enter a programme with the IMF (International Monetary Fund) which, following its usual orthodoxy, thought that a devaluation of the value of the Barbadian dollar was the appropriate policy response.

There was, however, a consensus among all of the stakeholders that there was an alternative course that would entail shared sacrifice and compromise, and which would not foist on the people the hardship that would ensue from a devaluation of the exchange rate.

The Barbados Social Compact, therefore, took the form, initially, of a protocol to give effect to Prices and Incomes Policy, and a range of measures tantamount to an internal devaluation, involving wage cuts, wage freezes and the lay-off of public-sector employees as a means of addressing the country's competitiveness crisis.

From the very outset, the instrument to give effect to a social contract among the social partners recognised the need for shared sacrifices, the requirement that each partner should yield some part of its special interests in pursuit of the ultimate common good, and that there should be clearly defined roles for each of the partners in pursuit of such.

Above all, there was appreciation for the fact that a strong commitment to the attainment of social justice for all had to be clearly evident in the design and workings of the social contract.

The focus of the social partnership has also evolved beyond issues pertaining to the growth and competitiveness of the Barbados economy, but to address every conceivable major issue that affects the cohesive and harmonious development of Barbados as a society.

It is beyond dispute that the Social Partnership has contributed massively to Barbados' progress over the past two decades. It contributed by being the chief agency by which the economy was stabilised and its decline reversed.

SUSTAINED GROWTH

Second, the range of matters on which its consensus decisions were put into effect placed the country on a path of sustained growth.

Third, it served the strategic role of being the mechanism which built a national consensus to facilitate national development on the strength of socially acceptable public policy.

It can be gleaned from this that the Social Partnership of Barbados was not of the greatest benefit where common ground existed, but where it had to conceive of policies for the nation in areas where unilateral action by the State, though necessary, would have been counterproductive, or where it had to find a solution to a problem which would only become apparent many years in the future.

In this regard, one the most enduring legacies of the social partnership of Barbados is that it provided the tripartite framework within which the National Insurance Scheme (NIS) of the country has been reformed.

Barbados is an ageing society. At the turn of the century, it was recognised that without substantial reform, its NIS would become bankrupt by the early 2030s, or require impossibly high levels of contributions from the projected working population to fund the pensions of projected beneficiaries.

It had to be reformed by making significant adjustments to the retirement age and to the rate of contribution to the fund.

In a democracy, it is very difficult for the Government, acting unilaterally, to get citizens to accept major changes to their financial circumstances to deal with a national problem that is likely to occur some 30 years in the future.

The Social Partnership also played a role that is likely to be of historic significance in creating the national consensus which enabled Barbados to accept the full jurisdiction of the Caribbean Court of Justice.

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