One year after legislators passed a package of labour bills, 67 percent of the local businesses canvassed in a Coalition of Private Sector Organizations survey report that their labour costs have increased as a result of the legislation.
The Employment Act reduced the workweek from 48 to 44 hours per week as of February 2002, with a further reduction to 40 hours per week, effective February 1, 2003. This provision proved to be one of the most controversial, with a number of employers already claiming that it has shaved their profit margins.
Fourteen percent of the businesses surveyed report a significant increase in labour costs while 53 percent report a marginal increase.
The businesses reported that in an effort to reduce the impact of increased labour costs they reduced their hours of operation; reduced overtime; and contained other labour-related costs including bonuses, raises, and employee benefits.
President of the Bahamas Employer’s Confederation Brian Nutt said the new labour laws have increased the cost of labour for businesses because of two principal reasons. The first, he explained, is that employees work fewer hours per week, which means a decreased amount of work that can be done each week. This translates into reduced revenue for the business, he said.
The employer’s fixed costs, however, would remain the same, Mr. Nutt said.
The other factor contributing to increased labour costs, he said, is salaried workers who are now working fewer hours, but earning the same pay.
“In other words, whatever rent, or mortgage or other payments the employer had on a monthly basis, they were not reduced, however the employer’s ability to generate revenue was reduced,” Mr. Nutt said.
He added that because the labour laws reduced the work week from 48 to 40 hours per week, paying an employee the same salary when he works eight hours less per week amounts to a 20 percent increase in pay.
Some employers report that the labour laws have created other problems for them and their clients.
Manager at Sun Manufacturing Limited Maggie Cartwright said some of her customers, like restaurants and nightclubs, require deliveries late in the day.
“If a customer needs a delivery at 4 o’clock, our driver gets off at 3 o’clock so when the order comes in the driver is already gone,” Mrs. Cartwright said.
She said her company requires customers to monitor inventory levels more closely and place orders early enough to receive supplies on time.
Inevitably, Mrs. Cartwright said, customers will run out of supplies and call requesting an immediate delivery.
In such situations a manager would have to make the delivery or a driver would have to be paid overtime, she said.
By Darrin Culmer, The Bahama Journal
