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Bisram got it wrong

Now that some of the elections’ debris seems to be settling, I thought it might be a good time to review Vishnu Bisram’s pre-elections poll findings and compare these with how the electorate actually voted on November 28. In the following Table, I set out the share of the votes by region, as well as and the overall share of the votes which according to Mr Bisram would be in favour of the four parties contesting the elections. The table then compares these with the actual voting as reported by Gecom and highlights the significant differences.

Despite having a margin of error of 6% – high by any polling standard – Mr Bisram got it wrong in seven (3,4,6,7,8,9 and 10) of the ten regions. For good measure, his poll also had the overall result for the APNU off target by 9 percentage points. That is an error rate of 70%! As readers would note from the table, these are by no means small percentages and in six of the seven regions where he was wrong by more than the margin of error, the difference in percentage points was in the double digits. Indeed in those cases, the error ranged from 10% to 27% percentage points.

These huge margins are rare for any credible pollster and may vindicate those who have criticised NACTA and Mr Bisram for less than professional, objective and impartial polling. His last pre-election poll carried only in the Guyana Chronicle not only caused Mr Bisram’s reputation considerable if irreparable damage but quite possibly adversely affected the PPP/C’s electoral success as well. One day before the elections, the Guyana Chronicle converted his poll and its margin of error into a “landslide” for the PPP/C with APNU and the AFC trailing.

Maybe Mr Bisram should take some time out to review his methodology and in future offer to Guyanese polls that are more reliable, objective and useful.

Finally, while Mr Bisram got it wrong, the voters got it right. They have shown that no one party has a lock on the electorate and for the first time have given the country shared governance between two major arms of the state. I am more than just hopeful that our politicians will rise to the occasion and we will have balanced growth and development over the next five years.

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The plight of the labour movement, through the prism of the teachers deal

Introduction
Even as mainly organized labour assemble at their various points today to march in silent resignation, listen to flat speeches from their leaders, numb their plight and pain with music, food and liquor produced by their colleagues for the profits of the investing class, the evidence so overwhelmingly confronting their membership on this Labour Day points to a movement that is in complete crisis, their numbers in decline, their leadership in disarray, their unity in tatters, and their very survival in question. Almost every issue that has faced workers recently, be it RUSAL’s attempt at union-busting; the teachers’ union imaginary giant leap; government’s withdrawal of Critchlow Labour College subvention; the de facto abolition of collective bargaining in the public sector; the CLICO-induced six billion dollar hole in the NIS financial statements, or politicking by some of the movement’s leaders, would make an excellent case study for any thesis on the Collapse of the Labour Movement in Guyana.

Yet, a country whose first two modern-day leaders came out of the bowels of the labour movement cannot find a single person with the interest and inclination to engage in such an exercise or produce a leader with the capacity to heal the rift, stem the tide, deliver hope or start the debate. Indeed even an intellectually curious economist, touting past working class credentials and harbouring future presidential ambitions confesses to an ignorance of the number of unemployed, while more truthfully demonstrating insensitivity to the plight of that class. The state of the workers is probably mirrored in the paucity of statistics compiled by the movement, academia, and the national institution with the duty to produce such data. We are after all in a market-based, low-wage economy in which the users of labour care only about the maximization of profit, whether at the expense of the state, the consumer or labour.

Physical and psychological blow
The Economic Recovery Programme introduced by Mr. Desmond Hoyte and his team dealt a physical blow to the public sector. The PPP/C has added the psychological coup de grace, crudely using the carrot and stick to compromise and destroy the leadership, not caring about putting even their own supporters on the breadline. In the not too distant past, the interest of the worker and the leader coincided to such an extent that leadership in the movement was merely a function, as they collectively and individually faced the same struggles and felt the same hardships. Now, the only thing they share is as occupants of George Orwell’s Animal Farm, the interests not only having diverged but sections of the leadership having become the instruments of the exploiters, sorry I meant employers. What hope is there for those destined to remain workers or to be part of that pool of the unemployed or near unemployed – the unwaged housewife and single mother, the Amerindian made to depend on handouts from the coast, the rural poor on the goodwill of the “plantation” owners, the petty trader from meagre sales, and even the employed on remittances from abroad.

With such challenges facing the country, what prospects are there for the transformation of the economy into one that is competitive by regional and international standards, where businesses benefit from an expansion in aggregate demand, the economy from new investments, workers from new opportunities and the state from additional taxes? How do we escape the trap of having proudly marketed ourselves as a low wage economy characterized by low demand and low investments into a new and dynamic one, capable of delivering the standard of living compatible with basic human needs? How do we re-invent our educational system to make it serve their own advancements and the needs of industry and commerce, and yes, where would the resources come from? And how do we stem the migration of our brightest and even those not so bright?

Every issue or challenge that faces the worker or the member of the working class – whether employed, unemployed or under-employed – has direct and immediate implications for the employer, the economy and the country. A worker who is underpaid or undernourished is hardly likely to be a productive worker; the single parent earning no or low pay cannot provide for a learning child; the unemployed cannot contribute to enhancing aggregate demand. It is such a huge challenge that no one seems willing to admit, let alone confront it. Failure to recognise or confront it is more likely to lead to migration than solution and while with each person migrating the number of unemployed will fall by at least one unit, so too will demand for goods and services. It is the classic case of Catch 22.

The effects of the ERP, the money-driven privatization process that threw workers to the wolves, the introduction of a market-based economy in which social benefits are assigned no value, where the private sector is permitted not only to exploit labour but to corrupt and bribe public officials and the state, to evade taxes with impunity and to ignore laws and rules at their leisure, have combined to inflict a stifling effect on the economy.

The teachers union did not learn
As we approach elections 2011, the evidence is that the votes of the working class can either be bought or taken for granted. Economics or workers’ own personal circumstances it seems do not alter the voting dynamics, perhaps the only thing about labour that the political leaders seem to understand and then exploit. The teachers “settlement” is a classic case on this Labour Day. Let us look at it. In 2006, the government and the teachers union signed their first five-year pact (2006-2010) that included an annual 5% plus a one percent performance-based incentive, some non-cash benefits such as scholarships to 100 teachers each year, clothing allowance and duty-free allowance for one-off duty-free concessions for vehicles for 100 head teachers per year. It also included a housing revolving fund of $40M.

What was not given any prominence was that the Union was paid some money, the sort of sum given to GAWU last year as part of a “dispute settlement” resolution. President Jagdeo, who had been driving the negotiations for the government, found this was a small price for the government to pay for the union’s weakness and capitulation. It is not known how many head teachers benefitted from the duty-free concessions or teachers from the scholarships but what is certain is that the revolving fund was never set up.

For those teachers who were below the threshold for the payment of income tax at thirty-three and one third percent, the settlement will keep them in poverty. For those above, the net increase – assuming they all received the 1% incentive – was 4%, i.e. two-thirds of six percent. Over the five years, inflation averaged 6.5 %. In other words, the teachers at the end of the 2006-2010 deal were worse off than they were before, notwithstanding a gift made to them by Jagdeo in 2007. You would think that teachers would learn but clearly not their leaders.

Giant step – backward
Having been taken along in a game described by the union’s leadership as “tough negotiations” in which Jagdeo again played the leading role for the employers, the union which had sought a 15% increase, accepted a new five-year agreement providing for an annual five percent pay hike. On this occasion the goodies were a renewed agreement for the non-cash benefits that the government had failed to pay under the previous five year deal. Mr. Colin Bynoe, the union’s president in a clear slip of the tongue described the deal as a “giant step”. He left out the word “backwards”.

As Mr. Earl John, a human resources specialist pointed out in a letter in Friday’s Stabroek News, no negotiations were needed to get five per cent. That has become the standard gift from Jagdeo, confirmed by him at a press conference in October 2007 when he said of negotiations then taking place with the public servants: “If they are not concluded [soon] we are going to have to do like what we did in other years and make a payout to the public servants.”

With Mr. Bynoe’s giant step, 100 teachers will get house lots each year so that in one hundred and thirty years all teachers will have earned a house lot. And with the $40 million housing revolving fund, at even an average loan of $2 million per house, twenty of those teachers will be able to access the fund. Every other Guyanese it seems, their brother and their friend, is entitled to a house lot. For the teachers they have to agree to what in real terms is a five year wage freeze.

The result is that for the next five years, Guyana will continue to have the lowest paid teachers in the region; will invest hundreds of millions each year preparing Guyanese teachers for migration; both teachers and students will continue their high rates of absenteeism from the classroom; students will pass through the classroom rather than pass their examination; and the leadership of the teachers union can take a five-year sabbatical until just before the current agreement runs out.

Better leadership
Our teachers deserve better leadership and a more enlightened attitude from their employers than the kind of success Minister of Education Shaik Baksh could crow about. But the same can be said of many other unions, in the public as well as private sector. Ask any public servant of any achievement of their union in the past five years and they would be at a loss for a charitable answer. Ask the workers in the low paying shops, factories and farms what the labour movement has done for them and the instinctive answer will be nothing.

Ask the bauxite workers and you will be told that the government and the Minister of Labour Manzoor Nadir have colluded with RUSAL in union-busting. Ask other workers seeking union representation and they will tell you of impediments rather than empathy from the Trade Union Recognition Board. Ask the United Minibus Owners and they will tell you how the government brazenly engages in blacklegging operations. Ask the lecturers at the University of Guyana and they will tell you that like the rest of the public service, they too accept imposed salaries and conditions rather than defend their rights to bargain for adequate compensation for their services. For the workers, there are only questions and hardships. It is a short-term gain from an unfortunately near-sighted strategy by the government. In the end, the whole country loses, excepting the ruling class and the exploiters for whom the strategy seems designed.

The past decade has not been a good one for the workers. Today’s Labour Day will not change anything.

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The private sector and development objective

Introduction
2010 has turned out as a bumper year for some of Guyana’s leading businesses. With several public companies having a September 30 year end, the results are welcome for the shareholders of Banks DIH Limited and its banking subsidiary Citizens Bank Guyana Limited, the DDL associated banking business Demerara Bank Limited and Republic Bank Guyana Limited.

Republic Bank, a subsidiary of the Trinidad and Tobago giant of the same name, and always the first of Guyana’s public companies to hold its annual general meeting, reported to its members profit after tax of $1.982 billion for the year ended September 30, 2010. This 8.8 % increase over 2009 turned out to be modest when compared with the results of some of the other businesses.

Citizens Bank had a whopping increase of 37% in net profit while the Demerara Bank Limited reported a more modest increase in net profit over 2009 of 4.2%. Banks DIH Limited, the beverage giant showed increases in before-and-after-tax profits of 21% over the corresponding period one year, inclusive of dividends from its banking subsidiary.

Contributing to these impressive results of the commercial banks is an 11.6% increase in credit to the private sector. Categorising the credits by economic activities, the September 30 report of the Bank of Guyana shows a 77.9 per cent increase to the mining sector, 36.5 per cent to agriculture, 22.1 per cent to manufacturing and 16.9 per cent to real estate (mortgage loans). Credit to the distribution and personal sectors reflected growth of 11.7 per cent and 4.1 per cent while the rice milling sector recorded a marginal growth of 0.3 per cent. Conversely, the other services sector reflected a decline of 8.9 per cent.

Taxes and corporate Guyana
It is interesting to see the effective tax rates paid by these businesses as the government continues to ignore tax reforms in which the private sector under its current leadership show little interest. For this purpose I include the other major domestic commercial bank – Guyana Bank for Trade and Industry whose year end is December 31 and for which the 2010 financial results will not be available for some time.

Tax Table

Source: Annual Reports of companies

Why the PSC is not taking any real interest in tax reform – an integral element in any developing economy – is really hard to understand, unless its priority is to avoid the public castigation one of its leaders received from Mr Jagdeo for daring to ask for a reduction in the corporate rates of taxes. As the table shows the effective tax rates have climbed quite significantly in some cases, with one bank almost up to the nominal rate of 45%. The Chairman of the PSC has said that tax reform has now been placed on the agenda of the National Competitiveness Council (NCC), of which he is the Vice-Chairman. This is an entity on which huge sums have been expended but it takes some effort to see if there have been any returns on those investments.

In fact even as the Chairman was disclosing to Stabroek Business the new responsibility on the NCC for tax reform, he was reported as giving no indication of the state of play regarding the tax reform discourses, alluding instead to what he said was a partnership between the government and the private sector to engage a consultant “to review the tax study that had been commissioned by government and to recommend appropriate changes to the country’s tax structure with the objective of formatting a new tax structure that would be friendlier to the business community and the average employee without compromising government’s tax collection.” This is quite a mouthful that really means very little.

Share prices and the Stock Exchange
The annual reports have one other limitation running through them. None of them even mentions the movement in their company’s share prices as reported by the local Stock Exchange. Whether this is because they do not take the Stock Exchange seriously or do not consider share prices relevant to their members is a matter for speculation. This is clearly wrong since people buy shares not only for dividends but also for capital appreciation as reflected in the price for shares.

What is also interesting is how the ‘market’ seems to ignore the companies’ reported results. As the following table shows the increases in earnings are not reflected in the share prices, an indicator of an inefficient market which can be due to a range of factors including as an extreme but unlikely cause, market manipulation.

Share price analysis

Source: Annual Reports of companies

The disappointment with our still fledgling Stock Exchange must be tempered by the fact that the regional exchanges are also facing difficult times with some companies choosing to de-list rather than face scrutiny and bear the cost of listing. There is no indication that the situation in Guyana will improve any time soon and the public’s lack of interest in the shares of Trinidad Cement Limited (TCL), the only regional company to list on our exchange will almost certainly discourage other regional companies for fear of repeating TCL’s experience. That would be unfortunate.

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Predictions 2010

Introduction
Accustomed only to the arcane drudgery of a calculator and a columnar pad, I turned to the Angel Gabriel and the Deity Ganesh for divine guidance in looking at the world in 2010. They point to a different world in 2010 from the one predicted by the Economist’s publication of that name. But then what can one expect from someone who thinks that Guyana is on the African coast? Inspired by such dual divinity I see for Guyana the best of times and the worst of times, spectacular winners and catastrophic losers, drug pushers and soup drinkers, strike-breaking employers and spineless unionists, ambitious turks and aging politicians, their sell-by dates long past. With predictions, the probability of success is 50/50 – either right or wrong. Accordingly, mine come with the usual exclusionary clauses about non-responsibility – the type clients receive from their accountants and policy-holders from insurance companies. With this in mind, let us look into Guyana 2010 in which there will be several developments in politics, the economy and the government and private sector to comfort Guyanese bracing for tough times ahead.

The economy
Fed up with the bureaucracy and transparency of Norway and the EU, the government will advance and rename the Low-Carbon Development Strategy to the Loving Chinese Democratic Systems. Same LCD S… Chinese logging companies will replace Barama as the bête noir of the forestry sector. The Indians will give a further loan to the country to help maintain the traffic lights and to promote culture. Venezuela will provide PetroCaribe funds to help us police our ‘shared’ territory. The boys from Brazil will help finance the Road to make it easier for their illegal exploitation of our forests and gold-mining activities, while their female siblings will take over our social scene, creating more unemployment for our ladies.

To align its logo with practice, the PPP will trade its emblem, the cup, for a set of environmentally-friendly, bio-degradable plastic bowls – the large one for begging and several smaller ones for soup drinking. China will provide the bowls under a Grant Aid Agreement with the Ministry of Finance under which the Chinese will be permitted to compete locally with our merchants of ‘pirated everything,’ and will be exonerated from any liability for the mess-up with the Skeldon Factory. Their consultants will help us with our electricity – funded of course by the Chinese currency. The Grant Aid Agreement will be submitted to the United Nations as the model for non-transparency and non-accountability for resource-rich, low-income countries willing to submit to new age exploitation by the new rich and powerful.

The Minister of Finance will publish his biggest ever Budget within the three month deadline. He will make the decline of the first half year of 2009 into a full year growth – all due to the export of “non-traditionables.” The Minister of Finance will assist the Bureau of Statistics in compiling the GDP and the inflation rates – they will both be favourable, the numbers I mean. Clive Thomas will see red. There will be no available statistics on unemployment and no disclosure statistics on VAT. Inquiries on the absence of related numbers in the areas will be attributed to the high probability of bias in observers.

Dr Ashni Singh will, for the first time, read the Bank of Guyana half-year report before tabling it in the National Assembly. His own mid-year report will be several months late but stamped several months earlier. No change. The Auditor General’s Report for 2008 will be released one year late. Again no change. The Public Accounts Committee will again not notice.

The GRA will announce a tax amnesty, to be followed by a partial one for illegally imported vehicles; automatic and full amnesty will be granted for vehicles found housed in politically connected residential compounds. Not to be outdone, the Ministry of Home Affairs will broadcast its own amnesty for illegal firearms. It will pay $10,000 for every handgun surrendered, and $50,000 for each Kalashnikov-type weapon. Funds will come from the police budget, which will be replenished by the secret results of a resumption of talks with the Brits. If the British talks collapse, patriotic business elements will fund the programme from VAT and/or Customs duties and/or NIS not paid to the government.

The amnesty will be accompanied by the removal out of existence of all records related to taxes; the opposition will be supportive since there will be a removal of its own 100 million dollar debt from all associated files and papers.

To ensure consistency, in 2010 the government will award the same single digit raises (3% for sugar workers, 6% for public servants, and so on) that it offered in 2009 to workers in various sectors. To ensure the same consistency, it will vote and award to itself the same near 100% increase package that it did in 2006. The opposition will, once again, be on the receiving end, which will reiterate the new spirit of inclusion and sharing.

Politics
Despite an easily explained haemorrhaging at the Local Government Elections, the PNCR’s life will be prolonged due to intensive financial care by Dr Jagdeo.

Ravi Dev, pushed by Freddie and helped by Donald Ramotar, will take off his toupee and his mask and join the PPP. GAP-ROAR will read of this slow-breaking news in the press. Carvil Duncan of the GLU will move formally into the Office of the President while Komal Chand of GAWU will be described as a “private trade unionist” responsible, along with the weather, for the continued decline in sugar.

Jagdeo will not get a Nobel mention and blackouts will continue. Several areas of the country will experience unusual weather patterns leading to flooding. There will be no Freedom of Information Act but the President’s friend will be granted a radio licence to help anonymously and financially with the Third Term. He will fail. Ramotar will be named the PPP/C presidential candidate with the slogan ‘More of the Same.’ Robb Street will replace Vlissengen Road as the Centre of Power.

The Minister of Destruction will demolish the Cenotaph for impeding the flow of traffic. He will also facilitate the removal and retirement of long-suffering politician-turned-mayor-turned-letter-writing evangelist Hamilton Green who will take up residence in one of the many vacant rooms at Sophia.

Business initiatives
Guyoil will become a subsidiary of GWI. This will ensure a guaranteed supply of high quality, designer water additives for its fuel pumps. Guyanese consumers are free to demonstrate their now legendary adaptability by utilizing this enhanced fuel for potable purposes, as circumstances warrant.

The Lotto Company under direction from the government will have a new management team drawn from PNC ranks. It will be seen as another example of ongoing government outreach to the main opposition and, given the latter’s history of rigging and fooling everyone for decades, of aligning the right people with the right job. This Lotto shakeup is a contingent arrangement. If the PNC is successful in this assignment, it will be awarded by CGX a management consulting contract to provide it with proven expertise on its oil rigging setup.

One man’s pudding is another’s poison will find very visible proof in 2010. On the one hand, the suitcase businesses will reap a bonanza on sales of customized cell phones, radar detectors and telecommunications scrambling devices, as citizens seek to neutralize the government’s advantage relative to speeding and eavesdropping. On the other, the Bureau of Standards will be overwhelmed by nervous owners trying to obtain official confirmation of sellers’ adherence to truth-in-marketing standards on equipment purchased. The bureau will not concern itself with frivolities surrounding legality and appearances. It will simply limit itself to the sellers’ statements and assurances of performance and physical condition.

A long overdue development will be the partial re-engineering of the GGMC. The units responsible for oversight of miners and producers will become part of a revitalized CLICO offshoot. Experts will reason that this makes perfect sense given CLICO’s now well known proprietary early warning system. Miners will be alerted when to play by the rules and not tamper with troy declarations; political powers will be guided by protective leaks to withdraw from costly surprises produced by whistleblowers, the media, or dogged auditors; and in-house parties will retreat into bureaucratic shelters of ignorance and amnesia. As such, the CLICO system will relay timely information to major stakeholders searching for any edge or advantage.

Several monuments to money laundering will rise to the sky and the trade in non-prescription drugs will gain recognition in the national accounts “in appreciation of its contribution over two decades to the national economy, parties’ coffers and the stability of the Guyana Dollar.”

In other developments, insurance companies will decline coverage to any party that identifies GPL as an official energy source. The same insurance companies will go on record to stress that they have no concerns with illegal connections to the same disputed energy source. Super salaries remitted will be justified as a response to local cost of living realities. There might also be a blurb about the cost of attracting and retaining qualified help along the lines of the once highly publicized Bernard Kerik recruitment foray.

Governance
The President will prove to be very prescient, that stresses in advanced economies will have consequences in Guyana. It does not matter that his prescience is three years late, for the delayed effects will be felt in major areas of commercial activity. There will be consequences, and sacrifices must be made all around. Customs bodies will experience a decline in charitable contributions, and law enforcement ranks will feel the pinch through a decline in involuntary tipping traditions. Tender board people will share the pain.

In an attempt to assuage the critics, there will be presidential releases about a push towards more transparency in government accounting. Contracts will be executed with unemployed accounting alumni from Arthur Anderson, Enron, Madoff and Stanford to avoid any allegations of domestic taint. People from NBS, Republic, and CLICO will be quietly persuaded not to apply. The government will express confidence that all Guyana will be reassured.

The GRA will declare the President non-resident for tax purposes under section 2 paragraph … of the Income Tax Act Cap. 81:01 which requires minimum residence of 183 days in the tax year. This will have no effect on taxes the President traditionally does not pay, since he will claim exemption under section 6, arguing that he exercises his employment abroad and that the thousands of US dollars per trip he receives for staying at friends and relatives, arises outside of Guyana and is therefore exempt.

The head of state will alone burn more dollars in aviation fuel in 2010 than the rest of the nation will expend on gasoline.

Sports
Two top Guyanese spinners – Prem and Randy – will be included in the West Indies team for the World 20/20 championship.

They will perform well on home turf prepared by their side-kick at NCN, but fail outside – taking the team’s chances of success with them. Considered a high risk for this gentleman’s game, another top spinner from the same local club will have to stay at the Office to man the telephone. Brazil will not win the World Cup. Woods will return with a new logo – a hungry looking cheetah – with a warring bevy of waitresses awaiting him at the 19th hole.

Conclusion
Finally, as an indication of its vaunted strategic planning capabilities, the government has already identified several factors that will be rolled out for anticipated business distresses in 2010.

They include: El Nino (La Nina is on standby); foreign terrorist masterminds (wherever located); unattractive US dollar (ugly Americans); lowered overseas demand for local products (except pharmaceuticals); decreased remittances from overseas-based Guyanese (cheap and unreliable); and rising oil prices (whichever year they occur).

In other words, the government is not responsible and has an exit strategy that lays the blame elsewhere. Anywhere else, but not with the government. It seems that 2010 promises to be the best of times and the worse of times.

Next week, it’s back to reality.