EDITORIAL - Review of redundancy law does make sense

They may not have liked the unvarnished tone with which Mrs Ethlyn Norton-Coke addressed the issue. Nonetheless, we are surprised (or are we?) at the rash dismissal by trade unionists of her proposal, which is one that this newspaper has previously placed on the table for serious discussion.

Mrs Norton-Coke is a skilled accountant, who specialises in taxation policy and its effect on businesses. At a forum in Kingston last week, she argued for the repeal of the redundancy law and its replacement with an unemployment insurance scheme.

The law, as it now stands, demands that a firm, if it eliminates a job, compensate the displaced employee with two weeks' pay for each year of service, up to 10 years. For service beyond 10 years, the worker receives three weeks' pay.

"Many persons don't employ people anymore because they have redundancy payments," Mrs Norton-Coke said. "It is a deterrent to employment."

Disincentive and death knell

We agree with Mrs Norton-Coke. But the impact of the current legislation, as we previously noted in these columns, is often more profound than a disincentive to new hirings. It is frequently the death knell for potentially viable businesses, especially during tough economic times, such as those to which trade union leader Mr Lambert Brown referred in a February 8, 2009 article in this newspaper.

In periods such as Jamaica has been traversing for the past three years, firms need to manage costs and enhance efficiency if they are to survive. The problems of recession, of course, are exacerbated by the pressures of competition from globalisation.

Unfortunately, a firm's quest for efficiency sometimes inevitably means a shedding of jobs. Yet, firms at their most vulnerable, and with shallow pockets, often face redundancy bills. Many, in the circumstance, do nothing. They limp to a slow, agonising death. Or, if they survive, they add little value to the economy.

It is in this context that, as Mrs Norton-Coke has now done, this newspaper proposed an "employee-contributed unemployment insurance scheme, operated by the National Insurance Fund".

We said on January 6, 2009: "Staff who never call on the Fund could perhaps redeem a portion of their contribution in additional retirement benefits."

That idea was not engaged then. But a gaggle of trade union bosses has now rounded on Mrs Norton-Coke. Mr Brown, the president of the University and Allied Workers Union, deemed her suggestion "foolish" and insisted that it "should be soundly rejected".

Blinkered from reality

We were alarmed at Mr Brown's vehemence. For while he was not specifically addressing the redundancy legislation in his 2009 article, in focusing on the need for workers to be prepared for a changing and harsher economic environment, he alluded to the problems faced by firms in times of recession.

Indeed, Mr Brown looked askance at those workers who demand "more pay increase, irrespective of the economic realities facing the business".

"The options of prudent spending, saving and investing are not the course on which they embark," he wrote.

Indeed, a properly structured and managed unemployment insurance scheme would, in our view, be congruent with Mr Brown's perception of the need for prudence and preparedness by employees. Against this backdrop, Mr Brown and his union colleagues may wish to review their blush of intemperance.

The opinions on this page, except for the above, do not necessarily
reflect the views of The Gleaner. To respond to a Gleaner editorial,
email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no
longer than 400 words. Not all responses will be published.