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Business Bureau proposes heavy cuts to Public Service in economic recovery plan

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Posted: Thursday, April 23, 2020. 3:46 pm CST.

By Aaron Humes:  A document with the lengthy title “Resolving the Solvency Crisis and Restructuring Our National Economy for Survival and Growth” is calling for a near-radical shift in the distribution of the economy in the wake of the COVID-19 pandemic.

The Belize Business Bureau, headed by economist Arturo Lizarraga and claiming to speak on behalf of the private sector, proposes the creation of 60 thousand new jobs and making the private sector the engine for economic growth, focused on the productive sector, while reducing the size of the public sector, fiscal deficit and debt and tax obligations.

The Bureau projects that as many as 4,250 public service employees including contract officers of a total of 16 thousand must be sent home, reducing the wage and pension bill by a quarter. It proposes that “Each department must be scrutinized to see if its existence is necessary and if not then people need to be reassigned or become redundant. BTB [Belize Tourism Board] comes to mind. An audit and restructuring is needed. Even Airbnb saw a huge reduction in equity and they will restructure. Why not the tourism tax collector? Contract workers should be sent home and public servants need to begin paying social security and this free public service pension discontinued so we have one pension system for public and private sector, both workers and employers paying the same amount.”

The last major reduction of the Public Service came at the start of the second Sir Manuel Esquivel administration between 1993 and 1998 and was considered a factor in the United Democratic Party’s heavy defeat in general elections called in August of 1998.

As of the writing of the report, some 62,700 persons were claiming unemployment relief (though it must be noted that this is a combination of workers laid off as a result of the COVID-19 pandemic and closure of establishments and longer-term unemployed persons offered some assistance).

What the Bureau refers to as the “COVID Coalition” (the COVID-19 National Oversight Committee/Task Force) has “shored up the banks and hotels” but risks “the people will go hungry in lockdown,” which we now know will be extended for two months. But the greater threat, the Bureau warns, is “the economic threat of trying to keep the government solvent as we invest in a new economy structured for survival and growth.”

The Bureau claims that “Government needs about $95 million a month to stay in the same place. With tourism gone (-40% of GDP); government is collecting only 25% of taxes per month; 62,700 unemployed claiming relief; a (-50%) drop in food purchases by consumers from local producers; employers forced to decide to keep or drop workers due to collections by social security and the tax collector. To believe that we will go back to normal is a fallacy. Tourism will be gone for six months or even a year as most US companies are telling their employees not to travel for one year in order to protect their workforce. While one of the Czars of the Covid Coalition was rattling numbers and suggested a 10% reduction in GDP, it seems more like a 25% reduction in GDP.”

And it argues that the “let them eat cake” response is a sign that the dominoes are falling,” citing producers dumping milk and meat because of lack of shelf life and cold storage instead of distributing them to needy people.

The Bureau concludes that Belize must “start by investing in agriculture, education, energy, health, industry, supply chain and transportation. We also must make born-Belizeans owners. Belize needs to structure its tax system to promote the productive sector and not importers, as it currently stands.” We will have more on its proposals in subsequent stories.

 

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