This is a continuation from the contentions put forward last week on this subject matter. On the other suggestion put forward, the one having to do with farming, opportunities exist in the supply of fruits etc., and indeed those are good initiatives; but as far as this author is aware (and I stand corrected), no lands were transferred to the ownership of these workers, as was promised to them, to get into farming of other crops. This notwithstanding, while the idea sounds ambitious, in practice there are some completely different peculiarities altogether.
Again, hypothetically, if a few thousands of these people do get into farming, who will they sell to? The process to convert cane lands into alternative agricultural lands would attract a financial cost which sugar workers and farmers would certainly not be able to bear. Consideration must be given to what other crops will be planted. There is excessive production of the common provisions and cash crops, and lack of export market for these produce is another concern.
In addition, without value-added mechanisms in place, excessive production would ultimately lead to wastage and depressed pricing.
There is also the other initiative of training with new skills, such as carpentry, plumbing, and so on; as the sacked workers themselves said – speaking to the press not too long ago – how much work will they get as carpenters, and how often? Most of the homes already have plumbing. Ironically, too, the administration of the day has squashed the housing drive that was pioneered under the previous administration, which had seen thousands of homes being built and the development of huge housing schemes and other such like developments across the country – a time when there was virtually a housing or construction boom.
So it is very ironic that there is no substantive policy to fuel a construction boom in which carpenters and other tradesmen could have a steady flow of work, and ultimately income to support their livelihoods.
In the most basic sense, demand side policies versus supply side policies in the context of GuySuCo’s fiasco is such that, in order for there to be sustained and increasing demand for goods and services in an economy, the consumers need to have the spending power. More disposable income drives a demand which in turn propels economic growth.
On the supply side of things, if people don’t have the spending power, how will businesses get sales? Sales will fall, which could also lead to unemployment. If someone decides to invest $500,000 into a business, selling clothing or any other commodity or venture, if people don’t have money to spend and support that business/investment, then it will simply fail.
That being said, advising the sacked sugar workers to take their severance and invest in a business is totally nonsensical. Who will buy? Who have the power to buy?
This author understands that the sugar workers were also advised to invest in stocks; meaning, shares in companies on the local stock exchange. Again, this is hilarious. If one were to invest one million dollars in shares, first of all, companies are not necessarily obligated to pay dividends; that depends on the financial state and strategic plans of the company; and return on that would be very minimal or insignificant, bearing in mind that dividends are paid only once or twice a year. People invest in those kinds of investments only when they have excess cash or liquidity. This means that they have a steady flow of monthly income to maintain their normal lifestyles, pay their bills, travel, go on a vacation, party, have properties and vehicles, enjoy a good quality of life, could afford to send their children to school and university, and still have excess cash; which would more or less be in a savings account.
It is those savings – referred to as excess cash – that are usually invested in company shares and other financial instruments in the financial markets.
And last, but not least, this retrenchment will cost the economy approximately $10 billion in income distribution annually, which in turn is utilised for consumer spending. Consumer spending fuels economic growth; sustains the livelihoods of businesses, such as retailers, the fisher man, the taxi driver, hire car drivers, minibus operators, the vendors on the streets, the village shops, and the wider retail and distribution sector, in addition to spending in their own village economies; and the list goes on.
And this is how approximately 40,000 plus dependents are affected adversely in ways that will have far-reaching implications for the economy. Unemployment will increase, poverty will be on the rise, and social and economic hardships will be activated for a wide cross-section of the Guyanese people, and by extension the economy.