New PLP MP Walton Brown believes Island is entering a period of ‘strained’ labour relationsBy Ayo JohnsonGood labour relations will be critical to Bermuda’s success, observers agree. But does the new political dispensation mean that Government-labour relations is in for a rocky ride?Progressive Labour Party MP Walton Brown believes Bermuda is entering a period of “strained” government-labour relations.“Firstly, this is due to the fact that this conservative government believes inherently in smaller government and this necessarily will mean fewer jobs.“Secondly, whatever goodwill existed immediately after the election was rendered impotent by the contrived ‘consultative process’ with labour on term limits.“Thirdly, there does not seem to be a genuine commitment to working with labour to address issues that are high priority for unions — witness, for example, the absence of Bermuda Industrial Union representation on the Board of Immigration.“Fourthly, centre right governments, which the One Bermuda Alliance government is, will always put the interests of business and the wealthy first; this will only ratchet up tensions among workers.“An excellent example of this is the decision to give employers of new employees a waiver on payroll tax, yet still require the new employees to pay their share.“The OBA response to this inequality that ‘employees should simply be happy to have a job’ is indicative of their entire approach to labour: be happy with the peripheral benefits as we give priority to business concerns.”In his very first press conference following the December 17 election, Bermuda Industrial Union President Chris Furbert made it clear that he would have preferred a Progressive Labour Party win.“The BIU is extremely disappointed that the PLP was not able to retain the government,” he said on December 19.Subsequent decisions by Government did little to mitigate his disappointment — Mr Furbert was not happy about the union being dropped from the Immigration Board, and the row over the term limits consultation did little to smooth relations.Kevin Grant, President of the Bermuda Public Services Union, said that there is room for pessimism given the new Government’s own stated desire to engage in more consultation.“I’m not saying that the previous administration was the champion of consultation but this is something that the BPSU have been asking for sometime now. And I am not talking about consultation where memos are sent and a response is required within five days.“I am talking about consultation where there is meaningful dialogue and a clear understanding by all stakeholders so that there is buy-in and a true concerted effort to get this country back on its feet.”Keith Jensen, President of the Bermuda Employers Council agreed there appeared to be a “growing public chasm between the new Government and the Union(s)”.“The last Government had from time to time a rocky road with trade unions — June 2008 march on Parliament springs to mind — but differences were worked upon.”And Mr Jensen warned that labour strife would not be good for the economy and would drive away investment.“To be successful as a country we have to ensure our labour relations systems are effective. Proper dialogue has to be part of our process to find solutions, ensure respect, find new approaches and work together.“Bermuda alone is responsible for labour/management relations.“It is not whether we have disagreements that will affect our future but how we resolve them. Government, trade unions and employers are all in the same economic boat.”Exacerbating tensions between labour and business is the economic need to lower labour costs.According to economist Craig Simmons, Bermuda’s success will depend on its ability to contain local business costs — of which labour is a key component.“Bermuda’s economy is an export oriented one. The economy needs constant injections of funds from overseas.“Folks from overseas — international business people and tourists — care about the price of Bermuda’s exports. If our prices are too high, then they will shop elsewhere for the services they desire,” he said.Mr Simmons said that Bermuda’s labour costs increased by over 50 percent between 1996 and 2006.“Recovery is more likely when our labour costs decline in relation to those of our competitors,” he continued.“As a first step, labour relations should be seen through the lens of us (Bermuda residents) versus them (our competition in the Bahamas, Ireland, Barbados, London, Florida, Cayman, etc.). They are the enemy!“As we sit around the tripartite table of employees and unions, employers, and Government, we must find ways of improving our competitiveness by depreciating the real exchange rate.”The “real exchange rate”, Mr Simmons maintains, is the ratio of local to overseas labour costs.“Labour costs should respond to market conditions in as predictable a way as possible.“The implementation of structures that decrease incomes when economic activity slows and increases them when it quickens can go a long way to maintaining jobs when the economy slows.“Income flexibility is crucial, to the survival of businesses as well as to the Government’s ability to cut costs and its deficit.”About half of Government’s annual spending goes to salaries and employee benefits.Government has promised not to cut public sector jobs but is hoping that its workers will agree to pay cuts.