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Union leader: Pay rise awards were a precursor to rise in unemployment

Union leaders reaped “dire consequences” for the Island by winning inflated pay increases for workers, Bermuda Trade Union Congress past president Maynard Dill conceded yesterday.

Mr Dill said unions had been guilty of naive mistakes and a lack of understanding of economics as they fought for social justice for workers.

Speaking on behalf of the TUC at Bermuda Public Services Union's fourth triennial delegates' conference, Mr Dill said unions had:

l negotiated deals lifting wages and benefits to an unsustainable level a precursor to unemployment and a decrease in GDP growth;

l encouraged workers to be content in their current positions due to above-market wages, instead of urging them to train and develop.

“It is now time for truth and consequences,” Mr Dill told the conference of about 100 people at Fairmont Hamilton Princess.

“Unfortunately, as unions we find ourselves in a Catch-22 position. Negotiated settlements over time have elevated wages and benefits above the sustainable level that the market can bear.

“This is a precursor to unemployment, a reduction in the spending power of workers and corresponding decrease in demand.

“This decreases real GDP growth, and jeopardises all the gains society as a whole has benefitted from.

“However, it has been proven that when unions encourage members to levels of high productivity, and significant improvement in production, this has justified wage levels and as a result the economy benefited.

“The second problem we have helped exacerbate is the propensity of workers to be content in the positions they hold, based on the sometimes inflated, above-market wages we have won for our constituents.

“Do not misconstrue or misinterpret these comments. We fought hard for these gains in our quest for economic and social parity. However, if hindsight was 20-20 was it really in the best interest of our constituents? Was it in the best interest of our Country?

“The answer to this question is yes as long as the cost can be justified by the returns and no if returns are less than marginal costs. This is economic fact.

“In our zeal to ensure economic parity and social justice for workers did we in reality achieve the opposite and in doing so perpetrate a disservice to workers and Bermuda, albeit not intentionally, but naively through a lack of understanding of economics and the dire consequences this would reap.

“In short we have in some cases overvalued some positions and by doing this devalued others.”

Mr Dill said unions had tended to concentrate on methods which would improve wages, benefits and conditions of employment in the short-term.

“That is not to say we would not be enjoying the fruits we enjoy today, but it does mean we could and should have been more economically savvy while producing the same results that would not have produced unsustainable levels of costs,” he said.

“We should have encouraged those on lower pay scales to accept and participate in training and more important, development.

“These are the main instruments that prepare individuals for increases in remuneration, through either horizontal or vertical promotion.

“Globally we exist in a knowledge-based economy that is predicated on the more you learn the more you earn. The ability to create a knowledge-based business environment is dependent on training and development.

“We spend a lot of time discussing training but very little on development. The encouragement of participation encourages learning, enhances training, and ensures development.”

Also at yesterday's conference, Government's Assistant Cabinet Secretary Judith Hall-Bean stressed the importance of civil servants working for the people.

“How many times have you heard, ‘They are getting a salary but doing no work'?” said Mrs Hall-Bean.

“Government and the people of Bermuda are demanding more efficiency and we are going to have to work intelligently. More savings have to be made.

“We can see that drastic cuts and savings are required if we are to retain jobs in the public sector.”

Saying a new tone is being established under Premier Paula Cox, she said: “We have a new sheriff in town. We have a new Premier very concerned about a new level of service in the public service. We are mapping out a plan to address that.”

BPSU president Armell Thomas, who leaves his position this week to be replaced by vice president Kevin Grant, said greed was the catalyst for the economic crisis.

“There are cases in Bermuda of landlords who are motivated by the desire for money and charge unreasonably high rents on properties that their parents worked hard to leave them debt-free; employers taking money out of employee's pay cheques for benefits but do not pay to the relevant agencies, thereby impacting workers' health care and social benefits,” he said.

Mr Thomas listed a number of suggestions to ease Bermuda out of its economic crisis, including food vouchers and meal programmes for the poor, and using cash seized from drugs and money laundering.

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Published March 11, 2011 at 9:00 am (Updated March 11, 2011 at 8:59 am)

Union leader: Pay rise awards were a precursor to rise in unemployment

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