The Barbados Social Compact - Model for
As we grope for
solutions in what passes for life and politics in Guyana, we often hear
references and suggestions in connection with the Barbados Social Compact.
Barbados is of course special among Caricom countries which makes it a hard
act to follow. It is the highest ranked of those countries by reference to
Human Development Index in the UNDP Human Development Report 2002; it’s a
country where everything work; a country GDP makes its stand respectably
among even developed countries; a country where “normal politics” as
defined by Mr. Henry Jeffrey, prevails. It does not have the racial problems
as Guyana or Trinidad nor does it suffer from the same debilitating divide
as we have not only in the labour movement but among and within our
churches, mosques and mandirs.
difficulties and differences Business Page considers it timely as Guyanese
seek alternative modes of governance including a place and space for civil
society, to look at the Barbados experience and consider whether the seeds
of a solution may lie in what has turned out to be a most successful
experiment in restoring economic growth and social development.
In Business Page
today we begin the reproduction of an article done by Dr. P. I. Gomes, a
Guyanese attached to CARICAD, which first appeared in Caricom Perspective
No. 69 Vol. II, July 2000 and which is also included in Kenneth O. Hall’s The
Caribbean Community: Beyond Survival. That article will appear in full
but it may be useful to note three salient points:1) the compact has been
adopted and continued even after changes in political administrations; 2) it
is now in its tenth year and has just been extended for a further two years;
and 3) it has produced the desired results of restoration of macro-economic
stability including the retention of the US$1=B’dos$2 despite pressure
from the international lending agencies.
While we in Guyana
quibble and argue over who should be included and who should be excluded the
Barbados Compact involves just three groups: the employers’ organization,
the employees’ organization and the government all with an equal number of
representatives. Despite its high churches to population ratio, the church
is not included nor are women’s group, professional group or youth group.
It is clearly a case of trust and keeping it simple.
Over to Dr.Gomes to whom
Business Page expresses its appreciation for his ready permission to use in
whole or in part his article.
a substantial financial deficit in 1991 and a spate of industrial unrest,
intensified by an IMF-linked Structural Adjustment Programme (SAP) that
required a reduction in public servant wages and salaries by eight per cent,
the Barbados dollar with its exchange rate ($2.00=US$1.0O) came under severe
pressure for a devaluation. The industrial unrest was extensive and mass
public demonstrations demanded that the cut in public service pay be
restored. Unemployment was already as high as 20 per cent and thousands of
temporary workers were being severed.
Retention of the exchange rate in its current state was
an inescapable imperative, in the view of the majority of the population.
Currency devaluation in an economy extremely dependent on imports for
basic necessities, particularly major food items for the domestic population
as well as the tourist sector, would amount to economic and social
dislocation. Such circumstances of enormous national significance could not
be adequately addressed by partisan responses. Neither the trade unions
continuing demands to reverse programmes of severance and reduced pay nor
the government opting for an IMP imposed solution, requiring the currency
devaluation, would be effective as a means of arresting the fiscal crisis.
A response based on a recognition of a collective
responsibility by both labour and government was, therefore, essential if
the national interest was not to be imperilled. Intense and innovative
discussions were initiated to explore ways to contain the crisis. With
public sector wages already reduced, a proposal to the unions, representing
private sector workers to also undergo a cut in salaries, was rejected with
a counter-proposal that a freeze on wages could be entertained, if controls
on prices were instituted. It was, therefore, recognised that involvement
of the private sector would have to be integral to any national adjustment
process. This was evident on account of two main factors. The reduction of
salaries and retrenchment of public sector workers implied a slow down of
demand for goods and services and reduced capacity to purchase basic
necessities on the part of a significant proportion of the working
population. By convention, such a situation would have prompted a reaction
by the commercial class to increase the price of goods, placing further
pressure on the cost of living for that section of the working population
whose livelihood is predominantly derived from wage labour. This did not
The prevailing circumstances, fortunately, were
encouraging enough to inspire a tripartite approach, with a view to ensuring
that mutual gains were derived on the basis of enlightened negotiations for
the overall management of the economy by the state; the avoidance of
industrial disputes and widespread hardships on the working population;
and the survival of local business with modest returns from
The negotiating of a national adjustment process was
perceived by all the stakeholders to be the only viable option for an
economy so heavily dependent on foreign imports for basic necessities, and
so reliant on a tourism market that could not allow uncompetitive prices for
its services. A period of protracted negotiations had been initiated late
1991 to 1992. It was to the credit of the leadership of the labour movement
that, faced with a proposal for a cut of private sector employees wages and
salaries, comparable to the eight per cent settlement with public servants,
the counter-proposal from the unions was the acceptance of a wage/salaries
freeze. Simultaneous with that offer was a mutual understanding to have
productivity as the central criterion for future increases in wages and
The bare-bones of an Income and Prices Protocol with an
essential link to productivity, were now advanced as central guiding
principles for macro economic stability and a new approach to collective
bargaining. Efforts were undertaken to garner experiences from outside of
Barbados, on productivity-related pay schemes and mechanisms by which to
promote and measure productivity. The subsequent establishment of a National
Productivity Board is a direct outcome of this enlightened tripartite
approach in cooperation between the social partners.
A period of protracted
negotiations and public debate in 1992 and early 1993 reached a critical
watershed in August 1993 when the Parliament of Barbados adopted a
resolution in support of a protocol for the implementation of a Prices and
Incomes Policy, endorsed by the social partners. For the purposes of the
protocol, the social partners referred to were the Government, the
employers’ representatives and the workers’ representatives. It was
explicitly stated in a August 1993 resolution that: ”the
Prices and Incomes Policy shall have as its major objectives the
safeguarding of the existing parity of the exchange rate and the creation
and expansion of a more competitive economy which would provide for greater
employment opportunities and make Barbados goods and services more
competitive at home and abroad.
Attention should also be directed at the very distinct
and precise objectives which had been agreed upon viz, safeguarding the
existing parity of the exchange rate and measures for a more competitive
economy. The latter was of course not an end in itself but to provide
greater employment opportunities.
It may be instructive to note here that despite public
protest demonstrations of almost two years previously, national consensus
had been hammered out on a common objective for the larger good of the
society, as a whole, — a fixed exchange rate of the Barbados dollar, and
Seven years later, the Barbadian society can reflect,
with understandable relief, that the exchange rate has remained constant and
unemployment, almost 20 per cent in 1992, has declined in 1999, to less than
10 per cent. In general terms, the fundamental objective and intention of
the 1993 Protocol has been realised in an admirable manner. The broadening
of the basis of governance by means of a protocol binding by mutual consent
and for the common good, above partisan interests is an enormous tribute to
the social partners of Barbados, given the record of eight years of
macroeconomic stability and substantial increase in gainful employment.
A distinctive feature of the political maturity in the
society must be also recognised. The core tenets of the inaugural 1993
protocol not only continued after electoral defeat of the government in
1994, but also received a reaffirmation for commitment and consolidation in
a successor arrangement that brought into existence an expanded protocol.
Business Page will conclude The
Barbados Social Compact – Model for Guyana? by which time I hope
to receive a copy of the Protocol signed earlier this year extending the
compact for another two years.
encouraging success of what amounted to a national adjustment process, in
rejection of an IMF demand for a currency devaluation, provided an
attitudinal platform on which to explore the main tenets of Protocol 2. The
preamble of this protocol stated that the tripartite approach to industrial
relations has been a vital component of a Barbados macroeconomic programme
for the realisation of sustained economic growth and development through
Among seven factors in the protocol, responsible for
reversing the gradual erosion of Barbados competitiveness, four should be
highlighted for their significance and applicability, as prerequisites for
sustainable economic growth and development, in all CARICOM member states.
Establishment of an environment of greater dialogue among the Social
Partners within which fundamental issues of economic and social policy may
Stability and sustainability of the industrial relations climate.
Opportunities for improved access to employment, thereby reducing the risk
of social dislocation, particularly among young people;
National commitment to improve productivity increase efficiency,
reduce wastage and enhance performance in the economy.
Such factors should not be treated as hard and fast rules
or magical principles. They were the outcome of a process of building
national commitment, in the context of a vision for sustained economic
growth, and development of a service economy which was being restructured
for competitiveness in the face of intense, international trade
The capacity to resolve the conflicting demands of a
traditionally strong commercial class and dominant tourism sector, with the
majority of Barbadians occupying low-paying jobs on the one hand, and a
dynamic and well organised union movement, on the other hand, was severely
tested. Business interests were represented by a private sector agency, as
an umbrella body, while the labour movement had been consolidated under the
Congress of Trade Unions and Staff Associations of Barbados (CTUSAB)
For Protocol Two, the social partners made explicit
references to circumstances in which the contrasting interests of business
and labour had to make a clear commitment to work together in the national
interest. The commitment should be based on mutual respect for each other,
discipline, and a commitment to security of tenure on the one hand and
reduction of labour disputes on the other.
The details of such a framework are not necessary for
this discussion. It is sufficient to note that Protocol Two recognised that
the entire process was to be understood in the context of the country’s
search for a new mode of governance. It stated that: “…the
implementation of all aspects . . . will be undertaken in a manner that
fully acknowledges the spirit into which it has been entered and
which honours the principles of transparency and objectivity.
Acknowledging that this protocol marked another stage in
the advancement of a process for alternative modes of governance, the
social partners accepted and agreed that: ‘Steps will be taken to
effect the deepening and widening of the social partnership.’
Three and Beyond
With the signing of Protocol Two in August 1995, a major
step towards institutionalisation of the restructured relations of
governance in Barbados, was the agreement to administer the protocol by a
sub-committee of the social partners who would meet once per month or as
often as necessary. This became the first time of consultation regarding
all aspects of the implementation of the protocol. The sub-committee
comprised six Government representatives, two of whom are Ministers, with an
equal number of representatives from the umbrella bodies of unions and
organisational basis for the current Protocol Three (1998-2000) has proven
to be an effective tripartite mechanism in that there has been no major
industrial dispute of a protracted nature. Quarterly meetings, under the
chairmanship of the Prime Minister have been maintained, close working
relations have developed and a prominent role is carried out by the National
instances have arisen to test the tenacity of purpose and the capacity for
participatory democracy, on the matter of securing national consensus on
wage restraint and a prices policy, sensitive to unavoidable or legitimate
cost increases. In early 1999, for example, a strike at a state-owned
corporation was vigorously supported by the largest union in the Congress.
Despite public differences and harsh language in heated exchanges between
union representatives and management, consultation at the highest level of
government, and the spirit of the social partnership prevailed.
would be naive not to expect incidents, in the future, that will test the
nature of the relations tat require partisan interests to be subordinate to
the preservation of a macro policy framework of economic and industrial
stability. It appears however, that the understanding of governance that is
participatory, and premised on inclusion, has become an integral element of
the public consciousness in l3arbadian society.
The formulation and upholding in practical circumstances
of the current Protocol for the Implementation of a Social Partnership
1998-2000, capture the spirit and modalities by which the record of economic
and social advancement has been demonstrated.
least four indicators are instructive. The rate of growth of the economy
over the last five years has been consistently 3.5-4.0 per cent; per capita
GDP is US$8,200. On the Human Development Index of UNDP, in 1999, Barbados
was the only Caribbean country rated among the top 30 countries of the
world, on the basis of quality of life on a composite index, reflecting life
expectancy, adult literacy, school enrolment and per capita GDP. Also the
fixed exchange rate has been maintained at BdsS2 = US$1.00.
the observance of Protocol Three, relations among the social partners have
evolved into a formal structure governing their continued collaboration and
consultation on fundamental issues affecting their individual and collective
contributions to all aspects of national development. This has been entered
into as a Social Compact for a two-year period. Now it is being considered
for further extension.
The document has a format which begins with a preamble,
acknowledging a mutuality of interests among the social partners and the
evolving process of the preceding five years, as well as a restatement of
the intent on which a policy of industrial harmony is grounded.
The seven-year success of Barbados social partnerships
cannot necessarily be taken as a blueprint or template for other CARICOM
member states to achieve similar economic and social results. But what
Barbados has demonstrated is a capacity to pursue a vision for sustained
economic growth and development, predicated on specific major objectives.
These objectives Include political and economic values that are
indispensable to the survival of every CARICOM member state. They should be
debated nationally, formulated and incorporated as basic tenets without
which the likelihood of maintaining even a modicum of current survival
patterns might be questionable. These tenets are imperatives of the
conjuncture of the external environment and internal polarisation of
inequities to which most member states are subjected. Therefore, the
Barbados protocols offer useful guidelines and lessons for adaptation in the
search for alternative modes of governance in the rest of the region.
necessity of a stable industrial relations climate; the pursuit of sustainable
expansion of the economy through its competitiveness; reduction of
social disparities through increased employment; national commitment
to increased productivity; and consolidation of the process of
tripartite consultation should not be dismissed with cynicism, and
Barbados’ success seen as being merely fortuitous. On the contrary, one
should hope that the lessons of consistent and deliberate efforts to make
participatory democracy a reality in a small Caribbean State can, and will,
bear fruit that will enhance the life of the individual.