By Elvin Bailey

A remark that was made during one of my overseas assignments penetrated my foggy mind and set me thinking: that Social Security can be used as an instrument of disaster preparedness. Cuba did. But Cuba is a one of a kind phenomenon, not easily replicated anywhere else in the world. 

I call to mind the disaster brought on Grenada and the Grenadines by Hurricane Ivan that caused the economy to come to a virtual halt and the fact that the Government introduced measures to ensure that money continued to circulate in the economy through the payment of a temporary unemployment benefit. I also recall the situation in Montserrat where the active volcano severely affected the Montserratian economy – at least in the short run and the impact on Social Security. But is there, should there be, a direct role for Social Security in disaster preparedness?

To consider such a role for Social Security, a disaster must be carefully defined. A disaster is a serious disruption of the functioning of a community or a society causing widespread human, material, economic or environmental losses which exceed the ability of the affected community or society to cope using its own resources. A Disaster, in this context, occurs when the country becomes so damaged that it loses its capacity to generate income. The country becomes “sick” and needs to be made well. This declaration must then be made by the government and unanimously (?) verified by Parliament – roll call if needed.  If the country had an unemployment benefit, then it would be easy to bridge the divide to become a disaster fund.  Regular work as we know it would either cease or diminish and all hands would be required for the new urgent tasks of clean up, assessment and rebuilding. Such work can never be paid work – it would be National Service. In such a case, it then may be palatable to use national savings for national recovery. But we should not be expected to go it alone. All other able bodied institutions must play their part.

Based on data at Social Security, the economy of the Federation is underpinned by five main industries - Public Institutions, Hotels/Restaurants, Construction, Manufacturing and the Wholesale/Retail trades.  The Construction industry has already been examined in an article called Learning Trade, and we are now compelled, by circumstances entirely beyond our control, to more closely examine the impact of the Hotels/Restaurant sector, commonly referred to as the Tourism sector.

As of 2007, there are just about 170 institutions registered under this industry sector in the Federation, representing about 10% of all employers.  These institutions have 4,300 persons on staff or about 17% of the working population.  Nevis is perhaps more dependent on this sector in that it has 38% of this sector in its employer base and employs approximately 42% of the dedicated workforce.  It is this infrastructural base that allowed St Kitts-Nevis to house and feed 119,000 stay-over tourists in 2007. (data supplied by Planning Unit, St Kitts)

According to the Planning Unit, the sector contributed over EC$325million to the economy in 2007.  Of this, Social Security received EC$9.26million in contribution income.  This amounted to 14.4% of our collections from the working public.  Understand, however, that much of the successes of the other sectors are closely intertwined with the successes of this sector – Construction, Real Estate, Wholesale/retail, Financial Institutions, Agriculture, Fishing etc.

The passage of Hurricane Omar was significant for the damage it caused to one of the leading hotels in the Federation.  The operations of that hotel are, and will be, disrupted for a while. This is an institution which accounted for 10% of the hotel rooms and a significant amount of the villa sales and rentals of the country. This facility has brand name recognition that has rubbed off on the Federation, and attracts brand name stars. In other words, it attracts high-end tourist and it has world class status. An international television programme that I saw ranked the hotel within the upper half of the top ten island resorts worldwide. No mean feat at all!

Here is an institution that for the past few years yielded about 5% of the contributions collected in the Federation (and 23% of that of the one island’s).  Here is an institution that has been directly putting approximately EC$2 million per annum into the Treasury through the Housing & Social Development Levy (HSDL) – that is, 21% – 25% of all HSDL collected in the island.  Here is an institution that has been yielding over EC$300,000 to the Severance Fund (23% -28% of that collected in the island).  Here is an institution that employs roughly 700 full time employees of the workforce of the island.  Here is an institution that impacts 16% – 20% of the labour force, and so much more of the residents and citizens of the Federation.  In short, here is an institution that is hurting; and whose hurting hurts us all, some of us doubly so! 

That hurt will not be much lessened by the payment to workers of severance payment, regardless of the size of the payment. It will help in the short run, but what people really want to do is to go to work.

We note from the Budget Speech for 2009 and from subsequent statements by the Prime Minister, of the intention to introduce an Unemployment Benefit.  This is a position that found favour during reform discussions but with a stern warning that it must never become a “Laziness Benefit”.  My interpretation of that warning is that an applicant must be seriously in search of work, must subject themselves to re-training/re-tooling, must be registered with an appropriate agency and must have no or little right of refusal of a proffered job.  The Agency must also have credibility as a job placement institution.

Barbados is the only Caribbean territory that operates an Unemployment Benefit. Their experience as well as that of Grenada and Cuba should be carefully studied to inform our final decision.