The Bahamas Employers Confederation P.O. Box N-166 Nassau, Bahamas

PRESS RELEASE

For Release: Monday, August 12th, 2002
For Additional Information Contact:
Brian Nutt, Bahamas Employers Confederation

Negative Impact on Economy From Labour Legislation

A survey of businesses conducted during the month of June by the Coalition of Private Sector Organizations, an umbrella group of private sector organizations, shows that the labour legislation enacted during the beginning of this year is having a negative impact on the overall economy, adding to business operating costs, consequentially increasing the overall cost of doing business in The Bahamas and adding to the cost of living for consumers.

The objective of the section of the survey that addressed the impact of the recently enacted labour legislation was to measure the initial impact of the legislation that has been in effect for several months. The time that elapsed between implementation of the legislation and the time of the survey has allowed businesses to begin measuring the actual impact that the legislation is creating in their business environment.

The labour legislation reduced the standard hours of work from 48 hours per week to 44 hours per week on the 1st of February this year, calling for a further reduction to 40 hours per week in February of 2003. 41% of businesses are affected by the reduction in work hours, with 12% of the total respondents employing additional staff to reduce overtime costs. 20% of those surveyed report that employees are earning less pay as a result of reduced hours.

Businesses that are impacted by the reduced hours are seeing increases in labour costs that average 10.2%. These increased costs are being passed on to the consumer by 9% of those businesses and 18% have passed on to consumers part of the increased costs.

According to 38% of the respondents, the labour legislation is having a negative impact on employee morale and productivity, stating that employee morale and productivity has decreased since the new laws came into effect. However, 5% of businesses have seen an increase in employee morale and productivity since the legislation was enacted.

The payment of sick leave is legislated for the first time in the Employment Act, 2001, providing one week of sick leave with pay per year. 41% of businesses are affected by this new provision and consequently are experiencing increased costs. 39% of employers are reporting abuse of the sick leave provision by their employees. A similar survey conducted in August of last year reported abuse of sick leave by 55% of employers, however at that time payment of sick leave was not a statutory requirement and was not universally practiced by all businesses.

Prior to the Employment Act, 2001, legislated vacation leave was "at least one week" and vacation pay was "four per centum of the wages earned by an employee", essentially being two weeks pay. The new legislation provides for "a vacation of at least two weeks" and vacation pay being "two weeks basic pay" for the first six years of employment and after seven years of employment "three weeks basic pay". 30% of businesses are affected by the increases in vacation benefits.

The length of maternity leave was increased by 50% under the new legislation, from 8 weeks to 12 weeks, however the portion of maternity pay required from the employer was reduced from 40% to 33 1/3% which produces an increased cost of 25%. 41% of employers are affected by the changes in maternity leave.

Redundancy payments are legislated for the first time by the Employment Act, 2001. In essence, redundancy payments are two weeks after one year's employment plus two weeks for each year worked up to a maximum of 24 weeks, unless the employee holds a supervisory or managerial position, in which case the amount of redundancy payments is basically doubled. 77% of employers are affected by redundancy payments with 31% reporting that the increased costs are significant. Concern exists that a contingent liability may now exist for accounting and audit purposes, which may affect the ability of businesses to obtain loans or cause reductions in the extension of overdraft facilities.

Termination of employment with notice provides for the amount of notice to be given to an employee when the employer terminates the contract of employment. The amounts are consistent with the amounts of payment required for redundancy, however unlike redundancy payments which are not applicable until one year of service is completed, notice payments become applicable after six months. 69% of employers are faced with increased costs of termination notice, with 27% stating the increased costs are significant.

The Minimum Wages Act, 2002 provides the first minimum wage requirement for all categories of workers throughout The Bahamas. The Minimum Wages Act provides three categories of wage types, hourly wages at $4.00 per hour, daily wages at $30.00 per day, and weekly wages at $150.00 per week. 25% of businesses have been affected by the implementation of minimum wages.

Overall, the impact of the labour legislation is having a negative effect on our economy according to 71% of businesses surveyed. 22% of businesses report that the negative impact is significant. The Coalition of Private Sector Organizations urges careful consideration be given by policy makers to the impact this legislation is having on our economy, and to explore measures that may mitigate this negative impact.

Survey Detailed Findings on Impact of Recently Enacted Labour Legislation