FITUG2019Budgetproposals

Budget 2019 – the first step to the ‘Good Life’ The Federation of Independent Trade Unions of Guyana (FITUG) appreciates the opportunity to, once again, share our views regarding issues which we believe ought to be addressed by the APNU+AFC Government through its 2019 National Budget. The Budget we hold ought to be developed within the context of delivering a “Good Life for All Guyanese”. We believe though more than half of the Administration‟s term has elapsed, the promised „Good Life‟ remains an elusive mirage. Today, people of all walks of life are finding it difficult to make ends meet; to send their children to school; to reach their life‟s aspirations, and have become despondent about the future. This is not the life we believe our people want or desire but it is the sad reality they find themselves in now-a-days.

In preparing our submission we took account of those realities and are happy to share with the Ministry our thoughts on what, we believe should be included in the 2018 National Budget. We must also say that while we are pleased that the Administration has upheld the concept of prebudget consultations, we, at the same time, cannot help but feel the exercise has adopted a mere ritualistic tenor and is nothing more but a public relations gimmick which really does not attract the sincere and profound consideration it deserves. This should not be the approach especially, taking into account, the urgent need to lessen the burdens our people have to carry now-a-days.

We nevertheless remain optimistic that Budget 2019 would give positive consideration to the reducing the difficulties our people must contend with. As we prepared our submission this year we could not ignore that our engagement takes place, at the same time, that our nation‟s teachers have taken industrial action to press their demands for increased pay and improved working conditions. FITUG must reiterate that it stands with our teachers and all our workers who are being weighed down by the heavy burdens of life in Guyana. While we have recognized that the Government has deployed the usual ability to pay argument regarding the teachers justified demands, we also could not ignore several suggestions advanced that demonstrated that there is indeed an ability to meet the demands of the nation‟s teachers. We urge the Administration to really consider the suggestions advanced and seek to arrive at a consensus with our teachers and their union.

The FITUG also recognises that the 2019 Budget may be the last budget before our nation becomes an oil producing nation expectedly in 2020. The Federation has seen explanations about the substantial sums our country would earn from oil extraction. We also cannot ignore the concerns that have been shared with regard to the arrangements regarding oil production. While we are of the firm view that indeed our country should have secured a better deal we also cannot overlook the fact that large sums will flow to our national coffers especially as extraction is heightened in coming years. On this score, we must, once more, reiterate our deep concern regarding the lack of arrangements regarding the utilization of the funds that would come our way. We are aware of the intention to establish a Sovereign Wealth Fund (SWF) with the objective using the income from our oil resources for future generations. This, on paper, is a good initiative and we compliment the Administration for looking in this direction but we are, however, concerned with the arrangements regarding the fund and the lack of a clearly defined plan to use our oil resources to ensure that it benefits our people even after oil would have been

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exhausted. Certainly, we believe, there is strong need for institutional safeguards and appropriate policies if we are going to avoid the pitfalls that many countries have faced and are facing.

Budget 2019, like the last two (2) budgets, will be presented some weeks before the financial year commences. While we have seen the Government‟s promotion of the positives of an early budget, we have seen too the wide variances between the assumptions made and the realities recorded. For instance, when the 2018 Budget was presented, we were told that in 2017 growth would be higher than the actual 2.1 per cent that was recorded. Several other noticeable variances were also noted and this gives serious doubt to the data being used for forecasting. We hope that the Ministry of Finance will bear these factors in mind when preparing Budget 2019.

There is no need to give us pie in the sky hopes.

The FITUG must also express its dismay that despite promises there has been, as far as we are aware, no further Guyana Labour Force Survey beyond the inaugural edition which reflected on the situation at the end of September, 2017. Our body found that report useful and certainly it would be a good guide for our policymakers. The lack of timely releases of the statistical bulletin is another cause for concern and we noticed the Ministry has for many months ceased production, at least publicly, of the Monthly Economic Bulletin which reported on several useful indicators. We urge that efforts be made to have the timely release of these important reports which are useful guides in assessing the times we live in.

Taxation Budget 2019 comes at a time when there has been a marked increase in tax revenues. From Ministry of Finance data, we recognized that tax revenues have risen from $136.5B in 2014 to $171.5B in 2017. This, for us, is a massive increase in a fairly short period. We contend that the adjustments to the income tax regime and the value added taxes have had no effect as tax revenues have continued to expand. The Ministry‟s data has advised the VAT and Excise receipts grew by nearly 25 per cent whereas Income Tax revenues rose by the just over 31 per cent. While we suspect that the Government may well argue that the higher tax revenues are being spent through ever larger budgets and higher allocations.

Though we cannot deny the facts that larger sums are allocated, at the same time, we cannot fail to note concerns being expressed about those increased allocations reaching the ordinary people whose quality of life has been on a downturn of recent. The FITUG recognized from a report prepared by the Guyana Budget and Policy Institute said that in relation to the 2018 Budget “…more than $12 billion of the $17 billion in new tax revenues [went] to shore up the government bureaucracy instead of better aligning public investments with social and economic needs. The total cost of running the government increased by 29% for a total of $54 billion, the second largest share (20%) of the total budget”. That report went on further to say: “…the budget cuts the investment to improve the country’s poor and aged infrastructure by 8%.

Likewise, it cuts the investment in the agriculture sector for the third consecutive year by 7%.

These cuts will hurt agriculture and infrastructure labourers, most of whom are low-skilled workers from low-income households. Moreover, unemployed and displaced workers from the closure of multiple sugar estates and those subject to private-sector payroll cuts are unlikely to find gainful employment in these sectors”. Clearly this is a less than pleasing situation and we

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seek that in preparing Budget 2019, the Government gives serious attention to re-aligning its expenditure with the needs of the country.

As bothersome as those facts are, the frightening increases in tax revenues tell a worrying tale of illustrate how much taxes have eaten into workers income in spite of across-the-board, imposed, increases which have been awarded over the last few years. Clearly, the increases awarded have to some extent been eaten away by the taxation. On this matter, we seek that Government consider, in view of the developments, the following:     

Increasing the income tax threshold to $100,000 per month; Introduction of tax relief for taxpayers with dependents; Removing the 1/3 tax threshold for income earners who earn in excess of $180,000 per month and having a second tax tier set at $200,000 per month; Removing Value Added Tax (VAT) on electricity, water, and private health care; Widening the income tax base by capturing several high income earners and professionals who may have avoided taxation, and Re-looking at tax exemptions and write-offs provided to private enterprises. We urge that such exemptions/write-offs be predicated on job creation and aligned with national development goals.

Our suggestions are not vastly different from those which were articulated by the Tax Reform Committee that was set up by the Government soon after its election to office. We urge that given the straits our people find themselves in now-a-days, profound consideration be given to the suggestions advanced.

Unemployment/Employment situation We are disappointed that we do not have more recent unemployment data, the FITUG, using the inaugural Guyana Labour Force Survey was concerned by the unfolding situation. From that report, we were not happy to learn that less than half of the working-age population is actually employed and the sad fact that females earn 36 per cent less than their male counterparts, in salaried jobs. In those instances where a woman has become their family‟s breadwinner, their family, depending on its size, at best, has become vulnerable to slip into poverty or, at worst, find themselves in an impoverished state.

We also noted that the unemployment rate stood at 12 per cent at the end of September, 2017 bearing in mind the mass redundancies in the sugar industry, an up-to-date position is a critical piece of information for budgeting. We are disturbed to see too that youth unemployment is alarmingly high and stood at 21.6 per cent at the end September, 2017. For our young people, who comprise about half of the population, it does not portend a good future and this, we contend cannot escape the Administration‟s attention. On this score, it is indeed lamentable that 42.5 per cent adult unemployed population and 36.9 per cent of the youth unemployed population have been without work for over a year. This seems to illustrate that jobs are becoming more difficult to come by.

For us it is very vexing that notwithstanding a national 40-hour work week, workers are working beyond the stipulated time. It is especially bothersome for males who are working, on average, Page 3 of 8

more than 10 hours per week above the stipulated working-week. The fact that workers are forced to work beyond their normal time seems to indicate that low rates-of-pay are being offered and the workers must work the extra hours in order to make ends meet. Certainly, when the correlation is taken with the underemployment data that the report revealed, our conclusion seems to be corroborated.

The report also pointed out that about 50 per cent of those employed work in the informal sector.

The ILO has generally warned that such situations should not be encouraged as workers tend to be exploited and such precarious forms of employment tend to lend to increased impoverishment. On this score, we were very surprised, and at the same time upset, to learn that 8.8 per cent of public sector employees appear to have an informal job. If this is indeed the reality it is sad that our Government is encouraging such employment relations and should take every step to formalize the situation.

Taking those findings into account, the FITUG urges that Budget 2019 gives serious thought training or re-training programmes for those who are unemployed. This, we believe, could be done through extant agencies like the Board of Industrial Training for instance. Priority work should be given to the establishment of a National Job Bank to allow employers and prospective employees a central point to meet. While we are aware of the Central Recruitment and Manpower Agency (CRMA), we believe, this institution is falling woefully short of its mandate and is hardly utilized by job seekers. The unemployment situation should also give rise to consideration regarding unemployment benefits for those who have lost their jobs. This is something long touted in Guyana and a considered study maybe appropriate at this time.

Cost of Living While FITUG, earlier drew reference to the pay rises being eaten away by taxes, the remainder, in all likelihood, is being consumed by the ever rising costs of goods and services. The FITUG has observed that the prices of several staple and important commodities are also on the rise.

Data from the New Guyana Marketing Corporation with respect to Stabroek Market, FITUG has noted that between January, 2016 and January, 2018:- the price of squash has gone up by 84 per cent; eggs by 36 per cent; cabbage by 33 per cent; cassava by 25 per cent; boulanger by 11 per cent; bora by 8 per cent, among other things. In terms of other goods, the FITUG doesnâ€&#x;t have ready data at hand and information available from the Bureau of Statistics website is dated.

Bearing those factors in mind we hold the view, it is not hard to imagine that there have been other increases in the prices in recent times.

There is also the soon-to-be-implemented hike in water rates which would require workers to find thousands more per annum for water – the source of life. In addition to the rate increases, as tall as they are, consumers would have to pay an additional 14 per cent as VAT since their bills, in all likelihood, will exceed the VAT threshold. When taken together, an unmetered consumer is asked to find $18,456 more per year for the provision of water. For a public servant, for instance, earning at the basement level, the increase in the water rates alone is equivalent to 31 per cent of the pay rise they received in 2017. For the old-aged pensioner, though exempted from the fixed charge, the proposed water rate hike is 194 per cent of the increase the Government approved in the 2018 Budget.

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Added to those woes, workers also have to find extra sums for rates and taxes. Already, some workers who reside in Georgetown have been asked to pay additional sums of rates and taxes this year. As far as FITUG is aware there has been no official announcement of such increases but citizens are confronted with a higher bill when they visit City Hall to address their payments.

Added to this seeming „mysterious increase‟ is the garbage collection fee which is touted and which could amount to $10,400 per annum which is 17 per cent of the 2017 increase in the public sector minimum wage or 173 per cent of the increase in the Old Aged pension.

Additionally in various areas, city citizens are already paying to weed their parapets and clean their drains. For those who live outside of Georgetown, they fear no better and looming over them also is an increase in rates and taxes that would follow the property re-valuation exercise announced in the 2018 Budget.

More recently, our workers have been confronted with a $20 increase in minibus fares. While looking insignificant on the surface, our workers and their families, depending on the number of buses they would have to take, could find themselves spending several thousand dollars more per month on transportation. We expected the Administration would have sought to see what assistance the State could have lent to easing the woes of the bus operators without placing additional burdens on our people. This is the approach any responsible Government would take as it seeks to protect its people well-being.

To help our people to confront these heavy burdens, we seek the Government, in addition to what we previously proposed, to give positive consideration to:    

Increasing the rate of Old Aged Pension to $30,000 per month; Reducing the excise tax on fuel towards having a reduction of public transportation fares and the cost of transportation of goods; Reintroducing electricity and water subsidies for Old Age Pensioners; Utilizing the Government school buses, when not transporting students, used to transport pensioners to uplift their pensions and to visit hospitals, health centres, etc, and Examining the introduction of 24-hour state-operated day care for single parents

Sugar Industry The FITUG cannot help but be concerned by what is taking place in the sugar industry. Our body heard just days ago, at the GAWU-organised conference, the cries of pain and the stories of struggle and survival the now jobless sugar workers face. It was painful and saddening to listen to those workers share what their lives have become since the jobs they worked at for years have been snatched away. The FITUG believes that the Government cannot and, in fact, should not ignore the plight that the workers, their families and their communities face as we see in months ahead we can very well be facing a humanitarian tragedy which we believe no one wants to occur. State help to citizens in such situations is not unusual and rather is more the norm than the exception. Moreover, in the Guyanese context, there has already been an established precedent and practice and on this score we call on the Government to:

An income support mechanism to ensure families can meet their obligations and send their children to school, among other things;

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    

Introduction of school bus services to transport all school-aged children from their homes to school and vice-versa To establish an enabling mechanism to promote investment in the area with a view to spur job creation; To introduce or expand the school-feeding programmes; To establish skills training programmes to allow the former sugar workers and the youth to receive skills that are demanded by the labour market and matching them with available vacancies, and To provide social counseling and other require social programmes to assist in reducing depression and other social anxieties that have gripped the people.

With regard to the operable estates, we also recognise that there is some degree of confusion regarding their operations. This is not a healthy development and does not inspire confidence or serve to motivate those employed. We should not forget nor ignore that still tens of thousands of Guyanese are linked to the industry‟s operations, and, therefore, we need to comprehensively address the remaining state-owned sugar sector. The FITUG looks to the Government to quickly address the appointment of the board recognizing that competent leadership is needed at this time. We need also that a clear plan for the industry‟s future be shared with the public.

Recently, we saw President David Granger informing that the Government has a clear perspective and that should be shared with the nation. The need for a motivated workforce cannot be underscored. We believe this is something the Government also recognizes too. In the last years, sugar workers nominal and real earnings have declined markedly and there is a strong need that the Government, through the process of collective bargaining, award the workers a pay rise this year taking into account that they are the only group of workers within the State‟s umbrella to have their wages frozen since the Administration took office.

Supporting workers organisations – promoting equality in society Many studies have concluded that countries with higher levels of unionization have higher income equality and better standards-of-living. Such studies have confirmed the important role trade unions play in ensuring happy and stable societies. Undoubtedly, it was in recognition of such factors that the State has granted trade unions tax exempt status. For us, it is disappointing, that our work has been stymied since many Unions are unable to afford vehicles or in some cases do not have a sufficient complement of vehicle. The work of trade unions are spread throughout the length and breadth of Guyana and the possession by Union of vehicle is critical. On this matter the FITUG must, again, represent that the Government amends the necessary legislation to ensure that Trade Unions benefit from duty-free concessions. This was a benefit that unions enjoyed until it was withdrawn a few years ago.

Another important element as we pursue our noble task revolves around the training and education of workers. Far too many workers are at sea when it comes to their rights, benefits, responsibilities, and obligations. We recognize that the Government has taken note of this situation and approved a subvention to unions for such work. It is disheartening that despite satisfying the requirement set out by the Ministry of Social Protection, some unions have not been able to access the allocated sums, though they engaged in training activities which utilized scarce union funds with the hopes of being reimbursed. We seek that the Government seeks to Page 6 of 8

correct this sad situation. Alongside this we also seek that the Government considers positively, through the 2019 National Budget, that the subvention be increased to $750,000 from $500,000 per annum for trade union centers in order to further our educational work. Consideration should also be given to widening the use of the monies for the organization of conferences and symposiums on matters which are of critical concern to the workers.

Crime This is a matter that is of deep concern for our people generally. Despite the releasing of statistics which say that crime is on the decline, those numbers bring little solace when people are genuinely afraid to leave their homes unoccupied or to go out in the evenings for fear of being attacked, mugged or robbed. Banditry and criminal activities, from our interactions with workers, have been on the rise.

From the 2018 Budget, we recognized that $34B was allocated towards public safety and security. This is a massive sum which works out to a per captia allocation of just over $45,000.

In spite of the massive expenditure our people remain fearful and see little tangible results that would provide them comfort and reduce their apprehensions about being the next victim.

We urge that the 2019 Budget, on this score, take a critical look at the allocations in this area towards improving crime fighting capabilities, intelligence gathering, and expanding emergency response. We also recognise that criminal activities cannot be divorced the rising unemployment and the lack of job opportunities and our suggestions in this regard need extra consideration.

Public Infrastructure This is another matter workers have shared their concern about with us. Budget 2018 advised that some $40B was allocated to this area this year. We recognized that several massive infrastructural projected were targeted to be executed and we noticed the rehabilitation of main roadways, the building of major bridges, the rehabilitation of stellings, etc. These are indeed positive developments but many communities, at this time, suffer from very poor infrastructure.

We hear and see complaints daily about impassable roads, poor drainage, crumbling bridges, among other things. These realities have resulted in additional costs for our workers whether it be more regular repair to their vehicles, the higher possibility of contracting a vector borne infections, or their resort to utilizing makeshift arrangements to traverse to their homes. This situation, we believe, cannot be ignored and we suggest the Budget 2019 seeks to strike a balance towards allaying these difficulties our people face.

Public Health This is another thorny issue for our nationâ€&#x;s people. We recognise too that significant sums have been allocated towards keeping our people healthy. This is indeed a noble intention but is sorely undermined when our people approach our public health facilities and are told they are no drugs available; or made to wait hours to see a doctor or told to return another day; and neither can we forget about the several horror experiences Guyanese have shared in the media. This, we believe, cannot be the Administrationâ€&#x;s desire especially noting the large sums it is providing to the sector. Clearly, as Budget 2019 is being put together there needs to be an urgent review of spending in this area to ensure that efficient and effective services are provided to the populace, procurement systems are geared to ensure the availability of drugs and there is an equitable Page 7 of 8

spread of resources to ensure that our health centers and hospitals can adequately deliver services to a population in need.

Improving efficiency – releasing resources for the people FITUG recognizes that finances are finite and, therefore, a delicate balance must always be struck in meeting needs and wants. We hold too that our proposals are in the interest of the Guyanese working-people and are strongly needed at this time.

The Federation recognizes, too that Government needs to examine the way to deliver its functions in order to promote an efficiently functioning bureaucracy. Better allocation and more proper utilization of resources could also be reached through consolidation of services across the Government in an effort to save monies which could be better spent in other deserving areas.

The FITUG urges that the Government looks at the utilization of technology, as far as practicable, in delivering state services. The reduction of paper work, need for voluminous files and associated equipment and accessories could be greatly reduced and lend to greater efficiency at the same time. The reduction of paper-based transactions also reduces our environmental footprint; The Government should consider actively the consolidation of services such as printing and stationary, refuse collection, vehicle maintenance, public relations, computer purchasing, servicing and maintenance, and other such ancillary functions and services in specialized Government departments or through tendering to capable and reputable agencies.

Our list is by no means exhaustive but provides, we believe, a good road map for the Government to pursue in reducing wastage and inefficiency.

Conclusion The FITUG believes that work towards the preparation of Budget 2019 must take account of the challenges are people are facing now-a-days and requires a different approach to the task of budgeting and planning. While previous budgets have told us that “The Good Life Beckons” or the “The Journey to the Good Life continues” our people do not see nor feel that way. This for us is particularly worrying and disconcerting. We believe our suggestions are rational and can be taken on board and with those suggestions being implemented Budget 2019 can rightly be deemed “The first step to the Good Life”.

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