Chapter 35: LABOUR AND EMPLOYMENT POLICY

DRAFT May 26, 1996

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I. Basic Features of the Sector

Guyana's economy contracted severely during the 1970s and 1980s. This resulted in a steady decline in the country's social and physical infrastructure and a drop in the population's standard of living. However, in recent years the country's economy has started to recover. Although the possibility of rapid growth has been demonstrated, the future structure of the economy is yet to be fully defined, and policies need to be put in place that would sustain this recovery.

In 1988 the Government embarked on an economic recovery programme (ERP) to stabilise the economy, restructuring it and laying the basis for rapid growth. The Government instituted a phased programme of removing price controls, liberalising the exchange rate, bringing laws in the banking sector up to international standards, divesting some State-owned enterprises and undertaking other reform measures. These initiatives have led to impressive growth rates, averaging 7.6 percent during the years 1991 to 1994.

With the restructuring that has taken place at the national level, various aspects of the economy have been altered. There have been shifts away from traditional patterns and practices. These changes have especially affected the allocation of labour between the public and private sectors.

Although there have been hardships, the Guyanese economy is well poised to produce increasing employment and employment opportunities of a higher quality. The overall aim of any strategy for labour and employment should be to move labour progressively to emerging opportunities that are more productive and remunerative. Workers must be trained to be flexible and the economic conditions must exist to allow them to move freely from one job to another. This reallocation of labour increases both the output of the nation and the returns to the labourers.

A recent study has shown that six African countries that undertook the deepest structural reforms experienced the highest economic growth. Evidence from two of these, Tanzania and Ghana, showed that both employment and wages improved following structural adjustment that gave greater emphasis to the private sector. During 1985-92, total employment in Tanzania grew by an average of 6.1 percent per annum. In Ghana, real earnings in the private sector tripled between 1983 and 1988⁽¹⁾

.

These statistics indicate that as a country Guyana should not be afraid of continuing to restructure its economy. Between 1980 and 1992, the economy produced about 53,000 new jobs. This represents a job growth rate of 2.3 percent per year during the twelve-year period, quite a remarkable achievement given the economic conditions during that period. However, most of that growth occurred during the first half of the 1980s and during the period 1990 to 1992. Most of the growth also occurred in the informal sector. It is estimated that since 1992 employment has been growing at a rate of about 4 percent per year and the sectoral composition of output is diversifying, providing a broader base for employment.

The structural changes that occurred in employment between 1980 and 1992 can be seen in Table 35-1. The table shows the drastic decline in public sector employment, all of which could be classified as "regularly salaried." It also shows that the regularly salaried private sector only grew modestly and did not absorb those that left public sector employment. Most of these workers entered the informal sector either as self-employed workers or as "others" (construction workers, porters, etc.). The category self-employed also includes most farmers.

Table 35-1

Employment Structure

Sources: 1980 Population Census Report

1992 Household Income and Expenditure Survey (HIES) data base

Table 35-2 shows a more detailed breakdown of the employment structure by sector. The sectors generating the highest employment were commerce, finance, construction and installation, agriculture and services. What is more important, the sectors labeled agriculture, hunting and forestry, and commerce produced 48.1 percent and 47.5 percent, respectively, of all the jobs created between 1980 and 1992. It must be borne in mind that in 1992 the economy was still undergoing structural adjustment so these tables do not provide a very complete of the employment-creation capacity of the economy. However, there are no household survey data available for more recent years, and the data do offer instructive findings about the structure of employment.

Table 35-2

Sectoral Breakdown of Employment Structure

Source: 1992 HIES data base

Data from the 1992 HIES show that these main employment generators generally recruited undereducated workers as elaborated in Table 35-3. These data also reflect the prevailing conditions of labour supply and the quality of workers entering the labour force.

Table 35- 3

Percent of Workers with Primary Education or Less

Source: 1992 HIES data base

At the same time, participation in the labour force has been increasing as shown in Table 35-4. This implies that the economy must continue producing jobs to cater for these new workers. Most of the new workers are women, who often have not received opportunities for the appropriate kinds of technical education. Hence the table has two important implications for policy: that the job base must keep expanding even if the total population remains static, and that technical and vocational education and training must increasingly focus on the needs of women and career opportunities for them.

Table 35-4

Labour Force Participation Rates

Source: 1992 HIES data base

The survey data from the 1992 Household Income and Expenditure and Survey show that by international standards of developing countries, i) Guyana's agricultural sector still accounts for a relatively high share of total employment, ii) manufacturing employment still is relatively low, and iii) in spite of its economic importance, the mining sector is not a very significant generator of employment. Perhaps the most surprising statistic concerns the marked decline in manufacturing's share of employment up to 1992. It is likely that its share began to increase again subsequently, especially with the expansion of wood processing industries.

The following table and associated graphs illustrate the aggregate changes that have occurred in Guyana's labour force during the past twenty-two years in terms of growth trends of the adult population, total labour force, employment, unemployment and participation rates. Figure 1 shows the variation of adult population during the 22-year period. It can be seen that there was a drop in the population between 1986 and 1992, which can be attributed to emigration.

Table 35-5

Aggregate Changes in Guyana's Labour Market between 1970 and 1992

Figure 2 shows that while the adult population declined during this period, there was nevertheless an increase in the total labour force in absolute terms from 275,390 persons to 278,078. Clearly, more people were entering the labour market, as reflected by the increasing participation rates shown in Table 35-4. This suggests that even as people were emigrating, others were joining the labour market for the first time.

Figure 3 shows the growth of employment between 1970 and 1992. Between 1970 and 1986 jobs were created at a rate of 3,850 per year or at a rate of 2.5 percent per year. This increase was largely as a result of Government employment. The annual rate of job creation actually increased slightly during the period 1980 to 1986. This however slowed substantially during the period 1986 to 1982, averaging just 0.4 percent per year.

An examination of the figures reveals how the trends have changed. During the period 1970 to 1986, the adult population grew by 106,681 persons, and of those, 93,219 decided to enter the labour market. At the same time only 85,690 were able to find jobs. The period 1986 to 1992 was markedly different. The adult population actually decreased by 9,610 persons. Despite this decrease in population, the labour force grew by 2,688 persons and employment grew by 5,676 jobs. The rate of creation of jobs was therefore more than twice the rate at which the labour force was growing. This is in stark contrast to the period 1970 to 1986, when the rate of creation of jobs was less that the rate at which people entered the labour market. Hence the increase in the open unemployment during the period 1970 to 1986 and the decrease in this rate during the latter period in question. It should also be noted that during the period 1986 to 1992, unemployment dropped not only in percentage terms, but also in absolute values. Although there are no statistics available for the period 1993 to 1995, evidence on the rate of growth of aggregate output suggests that employment is being generated in the economy at a rate exceeding that at which the labour force is growing. With GDP growth rates averaging more than 7 percent over the past four years, employment may be growing in excess of three times the rate at which the labour force is growing and therefore it is likely that the unemployment rate has continued to decline. The recent experience of the sugar industry in finding adequate out-turn of labour (see Chapter 33 of this Strategy) points in the same direction and indicates that selective labour shortages may be emerging. The slowing and possible reversal of the trends in international migration is another indicator of the same nature. It shows that Guyana may be in a somewhat unique position in that, within limits, the labour supply may respond to opportunities.

In summary, the data suggest that while in the short to medium-term, unemployment is a serious issue, it is falling in spite of increased labour force participation rates, and in the long-term Guyana needs to focus its efforts on educating the workforce and providing more remunerative jobs, as opposed to just creating job opportunities. The resulting strategy should be to empower Guyanese, through education and training and the necessary institutional arrangements, to take advantage of the changing face of the Guyanese economy.

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II. Policies of the Sector

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A. Past Evolution of Policies

Traditionally the role of labour in Guyana's economy and politics has been primary. Since the beginning of the colonial era, the history of Guyana has been built around labour, from the early enslavement of Amerindians, to the trade in African slaves and the indentureship of Indians. The injustices of these activities have continuously influenced the politics of Guyana. Labour has always fought against 'the masters,' first for freedom, then for wages and better working conditions.

There is no event in the history of Guyana that is comparable to the introduction of sugar cane cultivation in the middle of the 1630s. It is this activity that shaped early policies towards labour and employment. Early European settlers may have used white indentured labour⁽³⁾

, but white labourers were not, however, available in sufficient numbers. Amerindians were used but never in large quantities due to the Dutch declared policy of winning the friendship of the Amerindians as a top priority. The Amerindians used were mostly those that were captured far in the interior by the Carib tribe. These were often not suitable for plantation work for several reasons, including their nomadic nature and lack of familiarity with intensive field work. There was therefore a shortage of labour for the plantations to meet the growing demand for sugar in Europe.

This led to the importation of African slave labour. Much has been written on the indignities of slavery, which led to the first rebellions against the plantation owners. The constant struggle by African slaves throughout the new world for better living conditions and freedom eventually led to the abolition of the slave trade in 1807 and of slavery itself in British territories in 1834. This was followed by a period of apprenticeship intended to provide a transition between slavery and paid labour. This scheme failed and the apprentices won their full freedom in 1838, two years ahead of schedule.

To maintain control over the labour market, the planters had both a long-term and a short-term policy. In the short run they held wages down to reduce costs. In the long run, they pursued three strategies: first, the introduction of labour-saving equipment; second, the setting of high prices for available Crown Lands and high minimum sizes of holdings to exclude former slaves from the land market; and third, the importation of labour.

Labour was first imported from England, Ireland, Germany and Malta. The mortality rates of these people were high due to their lack of familiarity with the tropics and plantation life. More successful was the importation of labour from Madeira, although the mortality rate of these immigrants was also high. The first such immigration began in 1835. Labourers from other West Indian islands were also sought. Portuguese and West Indian labourers were brought under a system of using public funds to pay a bounty for every immigrant labourer. The effect was to increase the availability of labour at little expense to the planters, thus keeping the cost of labour within manageable levels. During the same period, more Africans were brought to Guyana, after being rescued by the British from ships bound for countries that had not yet abolished slavery.

Notwithstanding these efforts, there was still a shortage of plantation labour, probably attributable to the very low wages and harsh working conditions. This led to the recruitment of indentured East Indian labour. Despite some early legal problems with their immigration, some 238,960 Indians came under indenture contracts to Guyana between 1838 and 1917. Conditions of work under indentureship were not much better than slavery. The difference was that with indentureship planters could be prosecuted for mistreatment of the immigrants. Following some actual prosecutions of them, the planters devised a detailed network of labour laws in 1864 that severely restricted the freedom of the Indians. One law stipulated that the wages paid to Indians should be no more than the wages paid to Africans. This was a clever piece of legislation as it anticipated the increase in overall labour availability and the consequent drop in the demand for African labour.

These laws were frequently used against the Indians. Between 1866 and 1870, the planters brought 31,900 cases before the courts for breaches in labour laws. During the same period, the Indians brought fewer than 100 cases before the courts. Using these laws, the planters were able to devise a system of immigration that was advantageous to themselves. At the same time, the cost of implementing the legislation fell heavily on the Africans who were the main taxpayers then.

From the time of the abolition of slavery there were instances of labour unrest. Twice in the 1840s, former African slaves struck to resist attempts by the planters to reduce the wages of free labour. While the Indians could not strike by law, there were several 'disturbances' on the estates. The intensification of the labour movement and its attempts to influence the labour market began in earnest after the turn of the century. Between 1900 and 1916 there were several of these strikes and disturbances, indicating a high level of dissatisfaction with wages and working conditions.

Unsatisfactory working conditions eventually led to the formation of the first trade union in 1919, the British Guiana Labour Union (BGLU). The head of the BGLU, Hubert Nathaniel Critchlow, is remembered as the father of Guyana's trade union movement. As the economic crisis in the country worsened through the 1930s, there was an intensification of labour unrest and unionisation mushroomed. Between 1937 and 1939 an additional twelve unions claimed to be fighting for workers' rights. Following the appointment of the Moyne Commission to look into the situation in Guyana, a fragile Trades Union Congress was formed in 1941. Finally, In 1942, legislation was passed setting up the Labour Department. In 1946, the Guiana Industrial Workers' Union was formed and it soon surpassed the Manpower Citizens' Association as the leading representative of the sugar workers. In 1948 it was closely involved in the fight against the 'cut and load' system.

Out of the burgeoning labour movement were born the political parties that still dominate the political landscape today. These parties traditionally placed great emphasis on the welfare of labour and sought to protect the well-being of the working masses. During the days of colonial rule it was an obvious priority to fight for better working conditions and higher salaries. Since independence, however, successive Governments in Guyana have had to deal with tougher questions relating to labour and employment policies. It cannot fairly be said that the advent of independence improved the lot of the working class as much as had been expected. Without economic growth, no amount of attempts to regulate and control the labour market can produce lasting employment gains.

This can be partly attributed to the lack of coherent and well-thought-out economic policies, and it affected the labour market adversely. For example, all political forces accepted during the 1970s that nationalisation of 'the commanding heights of the economy' was in the best interest of the workers. As it was, although Government employment rose from 22 percent to 47 percent of the labour force during the 1970s, unemployment rose from 15.9 percent to 16.8 percent. Little forethought was given to the effects of certain policies on the entire labour market. For instance, the compression of salaries within the public sector led to a flight of the best civil servants to the private sector or overseas, with a consequent deterioration of the quality of public service and the capacity of the government to raise revenues.

The world was changing though, and it soon became a much different place from the world of the 1950s. Workers, whether former slaves or indentured labourers, were not tied to the State or obliged to be obedient to some 'master.' In this fast changing world, labour was free to move, acquire skills (often at a great cost to the worker) and demand wages on the world labour market. This is indeed what has been happening since the 1970s. Guyanese with varying skills can be found around the world: farmers in Suriname and North America, teachers, lawyers and nurses throughout the Caribbean, and engineers and other professionals in every part of the world. Clearly Government's policies of attempting to control the labour market and other aspects of the economy were not working; labour was feeling the ill effects of these policies and sought greener pastures wherever they could be found. The ripple effect on the economy was very adverse and is still being felt today. Every sector, especially Government, is now faced with a shortage of skills.

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B. Current Policies of the Sector

In 1988, recognising the problems that beset the economy, the Government embarked on an economic recovery programme. As Stated before, the economy has responded well. However, no comprehensive document or well-articulated position exists that can be described as Government's labour and employment policy during the post-1988 period.

Despite the lack of a comprehensive policy, some Government policies clearly have had favourable effects on the labour market, this time through policies that favour the creation of jobs in the private sector and attempt to reduce poverty, rather than those that expand public sector employment. Policies to attract international investors, open the interior, liberalise the housing market and rationalise the public sector, among others, all affect the labour market. The thriving commercial and service sectors have contributed significantly to employment generation in recent years. Efforts at improving occupational health and safety on the workplace would soon be felt in the working environment. Efforts are being made to establish a Labour Market Information System (LMIS) and to update laws to make them consistent with the latest conventions promulgated by the International Labour Organisation (ILO).

Government also has to work within certain conditions that now limit its degrees of freedom in the labour market. Among these is conditionality by the International Monetary Fund (IMF) that effectively puts a cap on increases in public service salaries. Fiscal constraints also limit expenditure on public works projects that could generate employment.

There have also been direct interventions in the labour market by Government and donor agencies in the form of attempts to attract skilled labour back to the country. The United Nations Development Programme (UNDP), through its TOKTEN programme, offers expatriate Guyanese benefits in addition to local salaries, although this has not been completely successful. In principle, there are benefits offered to re-emigrant Guyanese by the Government, although they have not yet been applied on a wide scale. The Interamerican Development Bank (IDB) and the World Bank have been forced to create Project Execution Units, sometimes offering salaries that are internationally competitive, to administer their projects. This has often resulted in a wide gap in salaries among persons doing the same jobs. The Overseas Development Agency (ODA) is working closely with Government and the unions in formulating policies for revamping the public service, and the IDB is about to embark on a Public Sector Management Project that will examine the role and functioning of the public sector.

The labour market has been quick to respond to changing conditions provided whenever it has been free to do so. The overwhelming example of this is the flight of workers from the public service to other areas of employment. Unfortunately, many new job openings are in the informal sector as implied by Table 35-2. Simplifying the procedures for registering small firms would help incorporate microenterprises into the rest of the economy and speed up their rate of creation. On the other hand, workers in the LINMINE bauxite industry are still finding it difficult to leave the depressed area of Linden in search of more productive jobs. This is because many of them are 'tied' to the industry, having become dependent on subsidised electricity and other free social services. Movement of these workers currently occurs mainly to industries situated relatively close to Linden, such as Omai Gold Mines Limited. The absence of efficient housing and labour markets in other parts of the country has also inhibited their movement.

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III. Issues and Constraints

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A. Issues

1. Unemployment

Unemployment in Guyana has fluctuated during the last three decades. During the 1970s the national unemployment rate began rising despite the previously mentioned increase in public sector employment during the same decade. Subsequently the trend was reversed and by 1992, open unemployment declined to 11.7 percent. Lack of data makes it difficult to ascertain when the unemployment rate started to fall, but the decline most likely began during the early 1990s as a result of the restructuring of the economy. Although there was a reduction in public sector employment, this occurred essentially because of privatisations and the non-replacement of Government workers who left the service. The growth of the informal sector and emigration contributed to the decline in unemployment, but undoubtedly the economic recovery itself played a key role in recent years.

Unemployment in Guyana has forced Guyanese into the informal sector because the cost of not having a job has increased over the years. There are no social security programmes to ameliorate the situation of the unemployed. The quality of life for the unemployed declined significantly and there was an increase in poverty during the 1970s and 1980s. According to the World Bank Report # 2861-GUA, Guyana: Strategies for Reducing Poverty, "there is substantial evidence that levels of poverty increased significantly during the 1980s." The increase in poverty can be directly linked to the decline in real per capita consumption. Average real wages in the Central Government declined by 18 percent between 1986 and 1991. The HIES survey shows that the informal sector cushioned the effects of the economic downturn during the 1980s and the early effects of structural adjustment during the late 1980s. The informal sector continues to play a key role in providing employment, especially to women and young people.

Latest estimates put the unemployment rate at between 10 percent and 11 percent. Rates of unemployment vary by gender and age as shown on Table 35-6 below.

Table 35-6

Variation of Unemployment by Age and Sex, 1992

Source: 1992 HIES data base

It should also be noted that there is a constant stream of people entering the labour market. This is especially so for women and youths. While the position of women is improving, they still not only tend to cluster in low-paying jobs that require few skills, but also they tend to get stuck in areas that are becoming less attractive in terms of wages. A good example of this is public service employment, where the ratio of women to men is 5:4 and in teaching, where women now outnumber men. This situation is also prevalent in the industrial sites and in light manufacturing in general.

Unemployment also has a geographic dimension. This can be gleaned from the results of the HIES. Poverty is mostly found in rural areas and especially in the interior. In the rural areas, the unemployed have turned to self-employed agriculture or work as manual wage labourers. In semi-urban areas, unemployed women have been forced into entering the low-paying market of domestic services. In the urban areas, some unemployed youths have gone into illicit activities. Many former junior-level employees in public service can now be found among the ranks of pavement vendors. Some of these activities provide an income exceeding that of the public service.

2. Underemployment

Underemployment can be divided into two categories. The first is visible underemployment in which people are not employed for an established minimum number of hours per week, e.g., 40 hours. The second is invisible underemployment in which people are employed in jobs that require a skill level that is below their qualifications. It would appear that besides poor wages, underemployment also contributes to poverty in Guyana.

No statistics are available to show which of the two types of underemployment is more prevalent in Guyana. According to the aforementioned World Bank report visible underemployment is common in rural areas. For all persons over the age of 14 who consider themselves as employed, the average amount of work was only 13.7 days during a 30-day recall period. Farmers worked only 3.1 days. The number of days worked during a 30-day period is, however, higher for other sectors such as "agricultural labourers, clerks and service workers, professionals, construction workers and miners," who average 20-22 days of work for every 30 days. (The report does not state whether this is for all workers in that category or rural workers only.)

In urban areas it is speculated that there is much invisible underemployment for certain classes of workers. At the highest end of the education scale there is a shortage of skilled personnel, but many workers with secondary education or higher have chosen to enter the urban informal labour force. It is often the more entrepreneurial and better motivated ones that do so. The impact of this is that the average education levels are reduced in the formal labour force, especially in the lower levels of the public service. Here, because of lack of in-house training, low wages and other motivational factors, the public service is left with too many poorly trained individuals.

Underemployment, whether visible or invisible, underutilises the country's labour assets and limits the possibility of workers to increase their living standards.

3. Falling Real Wages

Real wages declined sharply during the 1980s. Those most affected were employees on fixed nominal wages. Between 1986 and 1991, real wages in the Central Government declined by 18 percent.⁽⁴⁾

In 1993, a person earning the minimum wage would fall into the category of extreme poverty. Those at a grade one position within the Central Government would also be below the poverty line. At that time, grade one positions accounted for 22 percent of 18,000 public service positions. Data show that there was a significant dependence on remittances from abroad to supplement wages. According to the HIES (1992), the value of these transfers rises continuously from the poorest to the richest households. The percentage contribution to total income is higher at the lower levels, at around 60 percent. Above this it levels off to an average of around 22 percent.

Salaries in some decentralised Government agencies are higher than in the public service. At the Guyana Electricity Corporation they are 1.5 times greater than within the Central Government, while at the bauxite industry in Linden they are even higher. However, not many data are available on wages outside the public sector. Data from the HIES of 1992 suggested that on average regularly salaried employees (in both public and private sectors) earned less than self-employed persons in both rural and urban areas. Surprisingly, in rural areas self-employed workers in non-agricultural activities earned more than self-employed workers engaged in agriculture. This is undoubtedly attributable to the small acreage of the average farm.

Additional information on private sector wages is provided by a study of eight firms conducted by the IDB in 1993 that showed that, as expected, real wages in the private sector are much higher than in the public sector.⁽⁵⁾

At that time the highest paid worker in the private sector earned about seven times more than the highest paid worker in the public sector. It is speculated that over the last two years the spread has grown more. Additionally, there are many non-wage benefits in private enterprises, especially at the top end of the salary structure, including free or subsidised cars and houses.

There has been a shift regarding which sector of employment is the wage setter. Before the Government began cutting back on employment, it was the wage setter and the private sector simply tried to match Government's salaries. However, in recent times, as the economy has reoriented itself towards private investment, industry has been setting the level of salaries and benefits within the labour market, especially for more qualified workers. Furthermore, the private sector no longer competes only with Government but also with the international labour market. Salaries outside Government can therefore be expected to continue increasing, but no faster than productivity rises except for special cases where wages have fallen well below the occupational norm.

4. Public Service Employment

Employment in the public sector (including the public service) peaked during the 1970s at the height of the nationalisations of the economy, increasing from 22 percent to 47 percent of the labour force. As noted, simultaneously the open unemployment rate rose from 15.9 percent to 16.8 percent. After 1985, the Government began scaling back on its workforce. While there were small amounts of retrenchment, most of the reduction in the Government labour force was due to privatisation or voluntary departure of the employees. For many Government workers at the lower levels, the cost of being employed simply exceeded the benefits of employment. At the higher levels, the mobility of better educated employees led them either to emigrate or move to the private sector.

Despite the reduction in the Government's workforce, the core public service remains over-dimensioned. There is a chronic lack of upper and mid-level skilled and managerial personnel while the lower ranks are over-staffed. The result is that Government is sometimes unable to perform critical functions to a satisfactory manner. Project funds for physical works have often been underutilised due to a lack of absorptive capacity of the Government. This chapter does not attempt to present an in-depth study of the public service or detailed recommendations for its reform. Such a task is right now being coordinated by the Government in collaboration with the British Overseas Development Agency. The Inter-American Development Bank, CIDA and the United Nations Development Programme are also working on issues in the sector. However, any reform of the public service will consider the following factors:

The future role and functions of government.

Implications for skills composition and levels.

Implications for wages.

Implications for recruitment and training.

While substantially higher real wages will be essential to attract and retain qualified personnel in higher-level positions, there is a great need for training in management techniques, use of computer software, evaluation procedures, modern approaches to public policy and other topics. Above all, placement needs to be based on merit and a performance-based system for evaluations and salary increments is required.

To overcome the problem of inadequate wages in some agencies, Government has created semi-autonomous agencies and project execution units with increased salaries and benefits. This has created anomalies in the Government structure. The remaining core structure of the Government has further been weakened, exacerbating Government's ability to fulfill key functions. The inability of Government to reach its full potential as to revenue generation has also stymied efforts at increasing public sector salaries. Organisationally, Government is poorly managed. Among the symptoms of this problem are:

Insufficient attention by senior managers to the development of their staff.

Inadequate arrangements for: setting and maintaining staff establishments that reflect the actual needs of the public service, filling vacancies with appropriately trained staff, and eliminating nonperforming or surplus staff.

Inadequate systems for the generation, storage and dissemination of operating and management information.

Piecemeal and uncoordinated computerisation.

Inadequate systems for evaluating staff performance against pre-established objectives.

5. Growth of the Informal Sector

It is generally felt that the informal sector provides fewer benefits to the worker than does the formal sector. The evidence, however, suggests that this is not necessarily the case. The 1992 HIES data base revealed that self-employed urban workers in the informal sector earned 16.7 percent more than workers in the urban formal sector and 37.6 percent more than the national average. It is estimated that the informal sector contributed about three-quarters of the increase in employment during the period 1980 to 1992. Growth in informal employment occurred mostly in agriculture, manufacturing and trade.

The informal sector, along with emigration, provided a cushion to workers during the 1980s. The sector not only benefitted the workers, but consumers gained from its activities. Measures need to be adopted to further encourage the growth of this sector and foster its incorporation into the formal economy. There is, however, a shortage of data on informal activities and a survey is needed to determine their composition and nature.

Government policies in the past have not directly addressed the needs of the informal sector. For example, incentives and concessions do not generally apply to small and medium scale enterprises. High interest rates at commercial banks resulted in the cost of loans being out of the reach of small scale enterprises, and the informal nature of the establishments meant that they often could not fulfill requirements for collateral. Land policies that favour nontradeable leases over freehold forms of tenure have worked against small farmers who require collateral for borrowing.

Attempts have been made to strengthen the role of this sector through micro and small enterprise development. Three organisations in Guyana currently pursue micro and small enterprise development very actively: the Institute of Private Enterprise Development, the Scotia Bank and the programme called Community Development. However, as the economy continues to grow, the capital requirements of the informal sector are expected to increase. These lending agencies would also be required to improve their managerial and extension services. At the same time, by reducing legal barriers to the incorporation of small firms, the Government hopes to help the informal sector to play an even more important role. New and innovative methods of financing and capital formation would be explored. Incentives would be aimed at the economically marginalised sections of society.

6. International Labour Standards

Guyana has ratified forty Conventions of the International Labour Organisation, the highest number of ratifications in the Caribbean. The last ratification was registered in 1983. A list of the Conventions that have been ratified is attached in Appendix A to this Chapter. These ratifications are evidence of Guyana's commitment to fundamental principles of human rights, including the prohibition of forced labour (Conventions 29 and 105), freedom of association and the right to organise and carry out collective bargaining (Conventions 11, 87, 98, 135, 141 and 151), and equality of opportunity (Conventions 100 and 111). A commitment to an appropriate system of labour administration is shown in the ratifications of Conventions 81, 129 and 150. Occupational safety and health are also a high priority of the Government, as is proved through the ratification of Conventions 45, 115, 136, 139 and 137 for dock workers. The adoption of Conventions 12, 19 and 42 endorses compensation for on-the-job injuries. Conventions 5, 7, 10 and 15 that outline minimum age requirements for hiring in various trades have been ratified. Convention 144 on tripartite consultations has also been ratified.

The Government has stated its continuing commitment to the ratification of Conventions that are applicable to Guyana and will result in protecting workers' rights and improve working conditions. In this regard, Guyana will implement Convention 166 on the Repatriation of Seafarers (Revised), 1987; and Convention 172 on Working Conditions (Hotels and Restaurants), 1991. Convention 155 on Occupational Safety and Health and Convention 156 on Workers with Family Responsibilities will be analysed, with a view to proceeding to their ratification.

Recent technical cooperation activities in Guyana also demonstrate a desire by Government to promote international labour standards. These endeavours include:

A national tripartite consultation on the preparation of comprehensive Occupational Safety and Health Law.

A national workshop and sub-regional workshops on the development of a policy on workers with family responsibilities.

The preparation of a draft Occupational Safety and Health law through a participatory approach, with the assistance of a consultant from the International Labour Organisation.

An educational workshop for the Trades Union Congress on international labour standards.

Preparation of a draft policy specifically related to chemical safety and the prevention of major industrial accidents in Guyana and a subsequent national workshop.

7. Industrial Relations

There is still too much of a tendency to react to labour disputes in Guyana by calling strikes, especially if political considerations are involved. The cost of strikes to the Guyanese economy is shown in Table 35-7. There is a need to resolve disputes in a more amicable manner through better structures and procedures for bargaining. It is also important to move away from the idea of industry-wide bargaining, as other economies, even Germany, are doing. Such bargaining contributes to rising costs to unsustainable levels for some firms, especially smaller ones, and in the end discourages employment creation.

Table 35-7

Cost of Strikes to the Guyanese Economy

Note: Approximately 90 percent of the production costs are associated with lost production at GUYSUCO.

8. Social Security

Before 1969, there existed a Workmen's Compensation Ordinance that allowed for protection in case of industrial accidents, death and disease that arose out of employment. There were no other benefits to cover situations such as pregnancy or sickness.

At that time, the Government's Old Age Pension was granted based on a means test. Many retired employees were not eligible for benefits from the workmen's compensation. With a desire to increase both the type and access to coverage, the National Insurance Scheme was formed in 1969. Employees are now eligible for industrial benefits from the first day of work, maternity benefits after 15 weeks' contribution and sickness benefits after 50 weeks' contribution. Maternity benefits are paid for up to 13 weeks and can be extended to a maximum of 26 weeks, while sickness benefits are paid from the fourth day to a maximum of 26 weeks. Medical care is also paid for during sickness and under certain circumstances, maternity care as well.

The sustainability of the scheme is a matter of ongoing concern. The contributions to the scheme may not be able to support the level of benefits, and an actuarial-based reform is required. The reform should also establish a basis for private pension schemes, which have been adopted recently in many countries, including Mexico, Chile and Latvia. Among other benefits, private pension schemes have been shown to raise the national rate of saving substantially.

9. Skills Gaps in the Economy

This is one of the most critical aspects of a Labour and Employment Policy for Guyana. There has been a serious under-investment in human capital in Guyana. Lack of skills continues to hamper the success of the programme of revitalising the economy. A recent survey showed that while 1,200 technically skilled workers are needed per year, the technical schools are only producing 400.

Nothing that is done, including an increase in salaries in the public service, will bear fruit unless there is a commensurate investment in worker training. Simultaneously, however, there must be an increase in salaries or emigration of the most skilled workers will continue.

Right now, the technical schools (not including those secondary schools that have a technical bias), such as the Government Technical Institute, the New Amsterdam Technical Institute, the Carnegie School of Home Economics and the Guyana Industrial Training Centre, all report to the Ministry of Education. Budgets for these schools come from the Ministry of Education and are appropriated to the various schools. The Guyana Industrial Training Centre focuses on accelerated vocational training courses of not more than forty weeks' duration, in carpentry, electricity, agricultural mechanics, masonry, welding and plumbing. The Government Technical Institute and the New Amsterdam Technical Institute offer courses in both crafts and technical skills. There is also the Board of Industrial Training that supervises the apprentice scheme from within the Ministry of Labour. This Board directs youths from among the lowest educational strata to participating industries. However, clearly these efforts are insufficient.

A goal of training policy must be to increase worker productivity at a rapid rate. Fulfilling the growth objectives of this Strategy will require that workers must be productive, flexible and of high quality. If the country only has low wages as its primary inducement for investors, then at least at the outset Guyana will only attract firms with low wage/low skill jobs to offer, and that may not be the best path to true development.

10. Labour Market Information

The establishment of a labour market information system is an important prerequisite if Guyana is to have an adequate and reliable basis for formulating, carrying out and evaluating employment and human resource policies and if workers are to receive timely and relevant information on job openings.

Lack of information on what is needed and what is available in terms of skills, results in a gap between the skills required from the labour force and the training it receives. Furthermore, there are no channels for communicating skills needs from Government and industry to the schools that retrain redundant workers. Also, little information is available on the burgeoning informal sector and its impact on the national economy.

The size and characteristics of the current labour force, employment, unemployment and underemployment need more detailed study. Labour demand, skills needs in both the public and private sectors, private sector salaries and employment trends also require in-depth analysis.

Right now the Statistical Bureau, which is a part of the Ministry of Finance, is the de facto collector and coordinator of labour statistics. The Ministry of Labour, though not staffed to perform this function, is generally expected to play this role. Other agencies currently involved in collecting data that are relevant to labour and employment policies include the Bank of Guyana and the State Planning Department in the Ministry of Finance.

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B. Constraints

Based on the discussion of the issues above, the constraints facing the labour sector can be summarised as follows:

Lack of a sufficient number of productive and adequately remunerative jobs in the country.

Wages in the public service that are too low to attract and retain the most skilled and talented people.

On the supply side of the labour market, too few technically skilled people and a system of technical and vocational education that does not attract the finances required to sustain it.

A legacy of a weakened educational system, in the form of too many entrants into the labour force who are functionally illiterate.

Poor relations between unions and employers, and weak mechanisms for resolution of disputes, that lead to unnecessary strikes.

Lack of a policy framework to encourage workers and enterprises in the informal economy to enter the formal economy.

Fragmented efforts aimed at addressing the concerns of micro-, small- and medium-scale enterprises.

Lack of basic workers' rights for employees in the informal economy.

Lack of an adequate financial and institutional basis for worker pension programmes.

Inadequate provisions for occupational health and safety.

An insufficiently mobile labour force and a lack of supporting mechanisms to promote labour mobility.

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IV. Objectives of Labour and Employment Policies

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A. Broad Objective

The broad objective of the labour policies presented in this Strategy is to reduce unemployment and underemployment and the accompanying poverty, by creating greater amounts of productive employment and greater labour flexibility and mobility. Satisfying this objective will contribute directly to greater well-being of the Guyanese people and will assist in good measure to reduce poverty. The attainment of this objective will require successful implementation of many policies in various Chapters of this Strategy. Labour and Employment Policies alone cannot do the job, but nonetheless they are vital to the achievement of this broad objective.

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B. Sectoral Objectives

The sectoral objectives of the Strategy are:

To encourage the development of labour-intensive industries and modes of production in the short term and to increase productivity in the medium to long term.

To increase the skills, education and productivity of the labour force through improved technical and vocational education.

To improve the functioning of the labour market via better information so that job seekers and policy makers can access up-to-date information on employment opportunities and on the status of the country's workforce.

To encourage the mobility of labour so that workers can more easily move from one industry to another and from one location to another.

To promote improved working conditions and working environments that are fair to both employers and employees.

To define clearly the role, rights and responsibilities of trade unions, employers, and Government and legitimise the right of collective bargaining on a firm-by-firm basis.

To ease the transition for workers affected by restructuring of industries.

To improve the actuarial and institutional basis for and benefits from pension schemes.

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V. Policies for Achieving Stated Objectives

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A. Description of the Policies

1. Producing Remunerative and Productive Employment

The overall macroeconomic framework of this strategy is designed to accelerate economic growth, a process that will increase both employment and real wages. In fact, over the next ten years some labour shortages can be expected to appear, which will give further impetus to increases in real wages, attract more re-emigrants, and accelerate the process of reallocating labour to more remunerative occupations. A policy framework will be maintained that does not lead to an excessively high indirect cost of labour to employers and does not subsidise capital, so that the growth path is as labour- intensive as possible.

Specific policies designed with these purposes in mind include the promotion of smaller enterprises and the creation of export processing zones.

a. The promotion of micro, small, and medium-scale enterprises

i) To encourage these enterprises to enter the formal sector, Government ministries and agencies will be mandated to allocate 25 percent of their annual purchases of goods and services to registered small and medium scale enterprises. The aim is to give these businesses access to more opportunities for growth than they have while operating normally. To the extent that this policy encourages the registration of firms from the informal sector, it also will provide workers employed in this sector of the economy with benefits provided in the formal economy, such as NIS benefits and pensions.

ii) Another component of the policy is that new industrial sites will allocate space for 'incubators' that provide common facilities to micro, small, and medium-scale enterprises so that they can share common services. This would reduce the overhead cost to these businesses.

iii) Government will establish a small business development department within an agency to be identified, either Go-Invest or the Ministry of Trade. This office will be charged with implementing Government policies with respect to micro, small, and medium-scale enterprise development. Among the responsibilities of this department would be to:

Coordinate and encourage the activities of various agencies and bodies involved in micro and small enterprise development, including but not limited to international agencies, financial intermediaries, the private sector, NGOs, the Bureau of Standards, etc.

Work closely with the agencies outlined above and other agencies to certify micro, small, and medium-scale enterprises so that they could benefit from Government initiatives directed to this sector of the economy.

Function as a one-stop window for processing paper work for the registration of micro, small, and medium-scale enterprises.

Work closely with associated agencies in implementing Government policies such as assigning factory space in industrial sites or export promotion zones, and other policies as outlined below.

Other Government initiatives aimed at the sector include:

iv) Amending the Companies Act to eliminate overlap between the personal income tax and corporate taxes. This measure will negate any double taxation for registered micro, small, and medium-scale enterprises. Consideration will be given to setting a tax rate for these registered small companies that is lower than the current corporate tax.

v) Legislation that provides for charging household and not commercial rates for public utilities that service registered micro and small scale enterprises

vi) Legislation that provides for the waiving of stamp duties and other costs associated with the transfer of personal property to a business.

vii) Development of other financial instruments will be explored with banks, including the conversion of commercial debt of micro, small, and medium-scale enterprises into equity, or venture capital.

viii) The creation by legislation of a class of shares that carry no voting powers. This would allow micro, small, and medium-scale enterprises to increase their equity without losing control. Businesses would have to guarantee the payment of dividends for such shares.

b. The creation of export processing zones

Government will pursue the creation of at least one export processing zone (EPZ). Such a zone can become a source of growth for the entire country in terms of production, employment, foreign exchange earnings, investment and transfer of technology. EPZs can absorb some of the unemployed and underemployed, and workers from the informal economy. They can also become a second source of income for families in their area of operations.

Experience with EPZs in other countries suggests that employment creation may be slow at first, but it gradually builds up to high levels if clear and consistent policies favouring the zones are maintained. As they develop, the labour cost advantage tends to dissipate and so they must progressively increase their efficiency in production and marketing. The labour force must itself develop skills suited to the needs of the EPZ and the country at large.

An EPZ must be built with several considerations in mind, one of them being international transportation. For it to be internationally competitive, transportation costs must be kept to a minimum. The EPZ should therefore be constructed in a location where conditions are favourable for the construction of a deep water harbour and where it will be accessible to the road from Lethem that is anticipated to bring much in-transit exports from Brazil. Location within easy access to a modern port facility may be the decisive factor in making the EPZ a viable venture. More details on the proposed EPZ are provided elsewhere in the National Development Strategy, especially in Chapters 34 and 36, but there should be no doubt that it is vital to the objective of increasing employment and real earnings.

2. Improved Technical and Vocational Education and Training

For Guyana to be competitive in the world economy and satisfy the economic expectations of its population, the country must have a highly flexible and trained labour force. Government is committed to policies that will put technical and vocational education on a stronger footing. The provision of technical and vocational education and training (TVET) will be restructured to strengthen the involvement of the private sector in its management. This policy will establish a National Council on TVET that is to be managed by a tripartite body. The policy also proposes charging a training levy to the industrial sector for securing funding for training. To illustrate the financial possibilities, according to figures from the 1995 budget,⁽⁶⁾

68 million Guyana dollars were allocated to TVET. From figures provided by the National Insurance Scheme, a payroll tax of 0.5 percent would provide G$90 million, and a 1 percent tax would provide G $180 million. This shows that even with conservative estimates, there is a potential for more than doubling allocations to TVET through a small tax on industry.

In the course of implementing this strategy, the specific mechanisms for funding and administering TVET will be clarified, but the basic policy orientations are clear:

Greater private sector participation in TVET, through a tripartite governing council in which industry has the majority representation, to guide the training in the direction of the skills needed.

Partial cost recovery for TVET through a payroll levy of 0.5 percent to 1 percent to be instituted on industry.⁽⁷⁾

Additional funding based on a levy on future earnings of those trainees, who are successfully placed.

The new council will be authorised to receive and allocate international donations and technical assistance in the area of TVET.

The overall orientation, health and prospects of the economy will also determine how willing firms are to engage in worker training. Training outside established institutions is best left to the private sector without direct Government intervention. The private sector could achieve this at a lower cost than Government and it also tends to be more in tune with the requirements of the market. Government also recognises that training required for informal workers, and micro, small and medium-scale enterprises is best left to lending agencies, such as the Institute for Private Enterprise Development, Scotia Bank and others. Government's direct involvement in training will be limited to retraining public servants and workers who are displaced because of industrial restructuring, such as the closure of sugar estates, and those who are transferred to other forms of employment.

As cost recovery is begun in public training institutions, Government will shift its public financing away from the providers of training to the demand side of the market, enabling targeted workers to purchase training within a competitive environment of suppliers. One instrument for doing this is through training vouchers to targeted individuals such as the young, unemployed and women. Trained workers will be required to repay Government part of the training costs after gaining employment at the end of training. Though there are a limited number of training institutions in the country, Government may wish to contract with both public and private institutions for offering the training. The company that can deliver the training at the lowest cost and at the same time meet established standards will be granted the contract. Government will implement policies to reimburse schools for costs incurred in training, preferably depending on the rate at which trainees find jobs after training, in order to give schools a greater inducement to make the training as relevant as possible. These policies are designed to shift the burden of designing and implementing training programmes to where they belong: at the training institutions themselves.

3. Labour Market Information Service

Government will continue to view training as an investment in people. It is also recognised that the expansion of human capital only delivers its full potential when there is a corresponding increase in market-driven demand for labour skills, and there is an adequate match between demand for and supply of those skills.

The Government of Guyana, with the assistance of the ILO, is in the process of establishing a Labour Market Information System for Guyana, to provide job seekers with up-to-date information on opportunities and to establish an adequate statistical basis for continuously formulating, implementing and evaluating policies and programs for human resources development. Some areas would require immediate attention by an LMIS. Among these are surveys that dissagregate current statistics of employment, underemployment, informal sector activity, labour movement, skill requirements and others.

4. Increasing the Real Wages of Guyanese Workers

The Government has little control over salaries in the private sector. Supply and demand conditions in the labour market generally set these. However, there is no doubt that Central Government salaries need increasing. The alternatives that will be considered are a) eventually setting public sector salaries at 70 to 80 percent of private sector salaries in corresponding job classifications, and b) increasing real salaries in the Central Government by 100 percent over the next five years.⁽⁸⁾

The final choice between these two options will depend in part on the availability of information and the accuracy to which private sector salaries can be predicted. In either case, salary increases will be weighted in favour of workers at higher levels. The cooperation of the private sector will be critical to avoid a situation in which public service wage increases lead to wage inflation. Government will urge the private sector to reach agreements to limit their wage increases over the next three to five years, so that public service wages can approach competitive levels.

Despite the need to raise public service salaries, these increases will be linked to a vigorous job appraisal program. Merit-based promotions and salary increases will be based on performance evaluations that will use predefined annual performance objectives as the criteria. Retraining also will be mandatory in most cases as workers receive the wage increases.

The cooperation of the unions in charting this new course for public service remuneration is important. Unions need to be appreciative of the need for a decompression of wage scales. A compression of wages may send the wrong signal to workers about what skills are most needed, and which industries and occupations have the highest productivity. Wages must differ if investments in education and skills are to be rewarded. Inflexible relative wages also undermine employment restructuring by discouraging the movement of labour from less productive to more productive jobs. It must be borne in mind that the danger of out-migration of the most skilled and talented persons is ever-present if they do not receive appropriate remuneration, especially in light of the increasing globalisation of the economy.

5. Occupational Safety and Health

The approach taken by Government in this area is pro-active. Government's new occupational safety and health policy involves the Government, industry and workers. A National Council on Occupational Safety and Health was established which comprises the Ministries of Health and Agriculture, the Guyana Fire Service, the National Insurance Scheme, the Guyana National Bureau of Standards, the University of Guyana, the Guyana Association of Professional Engineers, the Trades Union Congress and the Consultative Association of Guyanese Industry. This body has a mandate to develop a new policy specifically for occupational safety and health.

Government's new policy on occupational health and safety has clearly defined and formalised the roles and responsibilities of the various sectors. Intersectoral cooperation is fostered as a basis for the protection of workers' occupational safety and health. The policy also notes the role of women, youths, the incapacitated and the elderly. Through this policy, occupational hygiene and safety standards are to be established, applied and enforced.

The policy also clearly defines the roles and responsibilities of the newly established National Advisory Council on Occupational Safety and Health. This Council functions as an advisory body to the Minister of Labour. Roles and responsibilities have also been defined for the Ministry of Labour, employers, trade unions, the National Insurance Scheme, the Bureau of Standards and other agencies that play a role in this area. Regulatory responsibility will remain in the Occupational Safety and Health Department of the Ministry of Labour. The Ministry of Health will establish an Occupational Health Unit that would relate directly to employers and employees in advising on better workplace health practices. The National Insurance Scheme will serve to provide information to the Ministry of Labour on unsafe and unhealthy practices observed on the workplace, as far as can be determined from the frequency and nature of occupational injury claims.

To carry out these policies, Government is formulating a five-year action plan and the relevant legislation. Workplace implementation of the policy and legislation would be accomplished by safety and health committees made up of workers and employers.

6. Encouraging Labour Mobility

This is a policy direction that requires a multifaceted approach. Creating an environment for such mobility requires the implementation of many other policies. Besides a decompression of wage scales, improved labour market information and improved TVET, which are dealt with separately, these include policies aimed at breaking the link between social services and the conditions of employment, while fostering efficient housing and land markets:

a. Breaking the link between social services and the conditions of employment

Because of Guyana's vast interior, it will be necessary sometimes to link social services to the conditions of employment to attract labour to these parts of the country. The linkages will be discouraged in the coastal regions of Guyana, as social services that are independent of employers are strengthened. One of the industries where this separation will be initiated is GUYSUCO, which has provided a paternalistic package of benefits including health, water and housing subsidies. This places an unnecessary burden on the company and distorts its cost of production. Although GUYSUCO sells most of its sugar to protected markets, its competitiveness on the world market for sugar is affected. (See Chapter 33.)

b. Land markets

This Chapter does not directly address housing and land markets. However, as discussed before, the availability of land has been directly linked to unemployment, underemployment and poverty in rural areas. In other sectors of the National Development Strategy, e.g., agriculture and tourism, the case has been made for a liberalisation of land markets. Government will pursue policies that ensure that investors and small farmers have forms of land tenure that can serve as acceptable collateral for banks. Opening land markets is important for increasing the productivity of the land, reducing unemployment and underemployment and increasing the income of farmers, thus improving standards of living.

7. Reforming the Public Service

The issue of public service reform is being addressed by the Government with the support of the Overseas Development Agency's Public Service Reform Project, the World Bank's Public Administration Project and the Interamerican Development Bank's Public Sector Management Programme and CIDA's regional project on the same field. A Public Service Reform Committee comprising of key Government representatives and working closely with the ODA, has formulated a preliminary Public Sector Reform Strategy.

The theme of the strategy is to produce a functional, proactive public service that can support a dynamic economy. A principal requirement for this to occur is that public service workers must be adequately remunerated as previously discussed. The other major areas that Government is addressing are:

a. Revenue generation regarding targeting internal and external sources and allocating increases in revenue to the public service payroll as far as practical. This involves the creation of a Central Revenue Board and the overall improvement of the tax and customs administration.

b. The institution of management practices using objective setting and performance appraisal schemes throughout the public service, to grant merit awards and promotions or disciplinary action as warranted. This will be established initially through a pilot programme and then expanded to the wider public sector. A training strategy will be developed that will focus on methods of setting and monitoring targets, appraising performance and operating the scheme.

c. A reduced role for the Public Service Commission in personnel management of the public service. Personnel functions will be decentralised to line ministries and agencies. Government will also update public service rules and consider the abolition of the Public Service Appellate Tribunal. The training of personnel officers would accompany this reorganisation of personnel management.

Staff development will also play an integral role in the reform of the public service and will be used as one of the criteria to judge the performance of managers. Staff training needs will be prioritised and planned according to the training needs analysis identified by KPMG Peat Marwick in 1993.

d. Government will reexamine its staff requirements and implement a redundancy policy and procedures in line with current employment legislation and in consultation with the unions. Redundant staff will be matched with existing vacancies within the public service and the necessary training will be provided. Mechanisms will be established for ensuring that revised staff levels are maintained.

e. As a priority, Government will implement management information systems in the Ministries of Finance and Public Service Management and the Public Service Commission. In the long term, information systems would be extended to the entire public service to ensure that the need for information is satisfied effectively and efficiently.

Information technology used in the public service will be standardised. Computer linkages between line ministries and agencies and the Ministry of Finance payroll system would be established. The role of the National Data Management Authority as a national computing centre will be examined.

f. Government will establish criteria and implement plans for the creation of additional semi-autonomous agencies and the involvement of the private sector in performing certain public sector functions. This will ensure the orderly reduction of the public service through privatisation and the creation of semi-autonomous agencies. The private sector would be involved in contracts for specific duties, management contracts and asset leasing where such arrangements will lead to a financial and economic benefit to the Government.

g. As a follow-up to KPMG Peat Marwick's recommendations of 1990, financial authority will be decentralised and the reorganisation between and within ministries and agencies will continue.

h. As part of improved management of the public sector, the Government will make regular staff meetings between and across agencies. Regular communications with trade unions will be initiated. Guidelines for negotiating, consulting and informing unions will be developed.

i. In exchange for higher real wages, workers in the public service must be prepared to reduce annual vacation allowances and forego the right to accumulate vacation time from one year to the next. Vacation absences of two and three months have very adverse effects on an agency's productivity.

8. The Role of Unions in a Changing Guyanese Economy

Government will work closely with unions in encouraging their involvement in the development of Guyana. Unions are expected to continue playing a major role in organising workers into a single entity that can bargain with employers. Unions are also expected to play a positive role in monitoring employers' compliance with Government regulations, reducing workplace discrimination and increasing workplace productivity. The importance of employers working closely with unions hinges on the fact that they are in a good position to contribute to the growth of the economy. Unions can play a vibrant and useful role by promoting a safer occupational environment, encouraging worker flexibility, helping define training needs, enhancing in-house training and promoting job rotation. This leaves the workforce more readily adaptable to changing conditions and to take advantage of emerging job opportunities. Unions need to be the ones pushing for the adoption of productivity-raising innovations, changing product mix, plant reorganisation, etc. Government will work closely with the unions in achieving these goals.

However, if precautions are not taken, unions also have the potential to act as monopolists protecting a minority group of unionised workers at the expense of the unemployed and those in the informal and rural markets, whose formal sector employment is correspondingly reduced. This needs to be noted in the case of Guyana, since only about 25 percent of the labour force is unionised. Unions also need to recognise that employers operate in an increasingly competitive world economy. Therefore, conditions of work should take into account the market realities. For example, while the deficient wages of public servants are understood by all, salary increases in other sectors of the economy should be granted only as a result of increases in productivity. The granting of increases to workers in sectors of the economy that do not show increases in productivity will be discouraged. Collective bargaining should take place at the level of the firm, where it also can enhance mechanisms of cooperation between management at the level of the workplace.

9. Institutional Coordination

To coordinate the handling of labour statistics better, the Government will establish an inter-agency committee staffed with a technical secretariat. It is recommended that the Secretariat will be placed in the Statistical Bureau. The State Planning Department will collaborate closely with the Statistical Bureau in formulating policies related to employment and manpower. The Ministry of Labour will maintain responsibility for the regulation and functioning of the labour market.

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VI. Recommended Legislative Changes

Voluntary relationships characterise industrial relations in Guyana. While there are "gentlemen's agreements" between employers and workers to recognise unions, employers have no legal obligation to do so. Industrial relations need to be conducted on a more orderly basis and be based on a legal foundation, thus making the recognition of unions enforceable. There have been several attempts to pass a Trade Union Recognition and Certification Bill, beginning from as far back as 1953. The latest attempts were made in 1995. Following disagreements between TUC and the Government on the contents of the bill, negotiations continue. The enactment of this bill will reduce industrial unrest caused by inter-union rivalry. The Government will continue to work to have a Trade Union Recognition and Certification Bill passed by Parliament as soon as possible.

More comprehensiveness in the labour legislation is also important to clarify the roles of Government, employers and workers. At present, there are differences between industries and firms over basic labour regulations. Some of these standards are written into different laws that relate to employment. The result has been that different groups of workers have established standards, such as hours of work, provisions for overtime work, working standards, etc., while others work in completely unregulated environments. To reduce these differences, Government will formulate more comprehensive labour legislation that establishes minimum working conditions across all industries. Standards that exceed these minimums should be removed from the law and be included in the collective contract between the employers and the workers. Collective bargaining relating to working standards that meet the minimum requirements set by the labour code, should be conducted at the plant level between workers' councils and employers.

Legislation will be enacted to establish the workers' councils mentioned above. These councils will be empowered to make recommendations to their trade unions at the plant level in certain areas, e.g., general working conditions, productivity incentives, etc.

Moving collective bargaining to the firm level also has the advantage of being able to deal with conflicts at a level closer to the source of the problem. This is a measure that will help resolve disputes at an earlier stage, rather than having them escalate into nationwide strikes that are very costly to both workers and the economy as a whole. The result would be that negotiations are more transparent and less contentious.

The Shops (Consolidation) Act, Chapter 91:04 is also under tripartite review to update it to reflect current economic realities. Among other controls, Chapter 91:04 sets the opening and closing times for commercial activity, including shops and retail stores. However, in reality, many retail stores such as supermarkets are already opening beyond the times stipulated in this act. Government in tripartite consultations would amend this act to extend opening hours, including stipulated times for opening on Sundays. Such an amendment would be accommodative to the changing characteristics of the labour force, which is attracting an increasing number of working women. This proposed amendment recognises the concerns of trade unions relating to the treatment of workers in this sector of the economy and the potential effects on them due to an extension of opening hours.

Similar consultations are taking place regarding a Termination of Services Act. The proposed act lays out the conditions under which the employees may be terminated in both the public and private sectors. This proposed legislation will present guidelines for notice of termination, severance pay, benefits, etc., to be paid at the time of terminating employment.

The Pan American Health Association and the ILO are assisting the Government in preparing an Occupation Health and Safety Act that will replace the Factories Act, Chapter 95:02. This act will follow the guidelines laid out in the National Policy on Occupational Health and Safety and the Trades Unions Congress and the Consultative Association of Guyanese Industry are currently discussing a draft for their input. The draft act covers all spheres of economic activity and caters for all workers, including the field, office and factory, and public and private entities. Provisions are made for joint responsibility, the duties of employers, employees and unions and the role of the National Council on Occupational Health and Safety. Other areas include the enforcement of the act, penalties, regulations and the rights of workers, including "the right to participate, the right to know, the right to refuse to work [in conditions that are injurious to health], and the right to be free of reprisals." Specific measures in the act cover areas such as clothing, the use of toxic chemicals, records and reporting requirements, safety equipment and the medical examination of workers. The act will also establish safety committees at the plant level who will monitor compliance with the bill.

New legislation also will be required to establish the National Council on TVET and to mandate the associated payroll tax for technical and vocational education and training. This is an urgent matter, given the priority that necessarily is attached to increasing workers' skill levels.

Another priority is to reform the conditions of public service once the strategy for that topic is finalised, so the Government can move ahead with the upgrading of the quality of its services.

Other legislative changes are as follows:

The Pensions Act, Chapter 28:01 will be amended to remove any ambiguity regarding the right of a public servant to be paid a pension.

New legislation will confirm the enforceability of court decisions concerning the reinstatement of employees who are found unjustifiably fired in the private sector.

Government will consider outlawing sympathy strikes that have the potential for hurting the economy.

Government will consider legislation to form an industrial court to deal with labour-related cases expeditiously.

The Government recognises that the enforcement of legislation is of utmost importance and will therefore improve the enforcement capacity of the Ministry of Labour. This will entail the hiring of more labour officers to increase the current complement of two to an acceptable level capable of monitoring and enforcing all labour laws and regulations. This is a prerequisite to ensure that Guyana's labour market is governed by standards that are in keeping with current trends, and at the same time provide the economy with a framework of labour practices that are consistent with the rest of the National Development Strategy.

APPENDIX A

List of International Labour Conventions that have been ratified

by the Government of Guyana

* Excluding Part II.

** Excluding provisions of Annexes I to III.

1. World Bank, World Development Report, 1995, Workers in an Integrating World. Oxford University Press.

2. Government in this case refers to Central Government.

3. For more details on the effects of sugar cane cultivation on the history of Guyana, see "A Short History of the Guyanese People" by Vere T. Daly, MacMillan Education, 1975.

4. World Bank, Guyana: Strategies for Reducing Poverty, Washington, 1993.

5. IDB, Job Evaluation and Compensation Study, Georgetown, 1994.

6. Ministry of Finance, Budget Estimates for 1995, Georgetown, Government of Guyana.

7. Industries may be given credit against this levy for training programmes of their own that meet the criteria of the National Council on TVET.

8. With compounding, this is equivalent to an annual increase of 15 percent (in real terms).