Dear Editor,
I refer to an article carried in SN on Friday April 10 (‘No significant job losses in the commercial sector yet – Chintamani’) where President of the Georgetown Chamber of Commerce and Industry (GCCI) Mr Chandradat Chintamani said that while the downturn in the “economy is yet to result in significant job losses in the commercial sector,” there was an “uneasiness” as “evidence of job losses in other sectors continues to curtail consumer spending.” Furthermore, he said that the implications of what was happening in the rest of the economy meant that job displacement in the commercial sector may well be a matter of weeks away.
As far as I am concerned poor consumer spending has been a problem in Guyana for years, even with existing levels of unemployment. This is minus the recent, albeit small, numbers of people becoming unemployed which I assume occurred from the effects of the global financial crisis. I recall reading various articles from one newspaper last year and the year before, all of which talked about low consumer spending in this country.
Our economy is too small and insignificant for any small movement in the economic variables to affect the entire economy in any alarming way.
I would argue that only if major industries experience major setbacks with massive layoffs, (40 or even 100 people becoming unemployed is not considered massive) would the economy be affected in the way referred to by Mr Chintamani. So far the unemployment figure resulting from the financial crisis was given as over 500 persons, but how is this figure and other job displacement significant enough to curtail consumer spending? To suggest then that “there was an understandable uneasiness…” is in my view, misleading.
I have heard those same sentiments expressed by some businessmen, but Mr Chintamani should be careful not to assume that the views and thoughts of some people are reflective of the wider society. They are referring to their personal and individual experiences. I agree with him that consumer spending is low and we need to increase that; who wouldn’t want higher consumer spending to increase profitability? We all do, but to imply that the current job losses is responsible for this, is unsubstantiated. The variable that determines consumer spending is wages and salaries. Guyana is a low income country and if salaries were higher then the purchasing power of consumers would be greater and so would consumer spending. Unless wages and salaries increase, consumer spending will always be low.
Mr Chintamani’s argument may hold if the following perhaps took place. Let us assume that Guysuco decides to close down some of its operations and retrenched about 18,000 workers countrywide, obviously, we are going to have a serious problem in our local economy as this is the figure from only one major employer (and it will have spin-off effects which will extend to other sectors). The 18,000 unemployed reflect 2.4% of the country’s population, which I have taken to be 751,233 based on the last census. If I had a close-to-accurate figure for the labour force, then I would be able to show that the percentage would be higher (relative to the labour force, that is). Since the unemployed have no money or alternative jobs, we will see a dip in consumer spending.
The 500 figure cited by Mr Chintamani is very insignificant and is spread out across the sectors instead of being confined to one sector so is it really significant enough to curtail consumer spending in the entire economy?
Guyana’s economy needs assistance, and I agree job creation is important and we all know that it is the main factor driving consumer spending, but importantly, salary levels are a significant variable in all of this and therefore, if calls were made for salaries to increase so as to increase consumer spending then that might have been more plausible than what Mr Chintamani indicated.
Other than that, I agree with his other points, about government needing to expedite the delivery of its promises. But the other part is that many businessmen are lazy.
The private sector has a responsibility to drive growth and development in the country. Why is this not being addressed? If we have more investments then that would help in job creation too, and if they set the example by paying even higher wages and salaries then that would also have a great impact on the economy. This is not a one-way street.
Yours faithfully,
Brian Ghani
