Sat­narayan Ma­haraj

Part 1

In writ­ing my re­cent ar­ti­cles, I have at­tempt­ed to fight off word­mon­ger ten­den­cies and al­so to be as non-po­lit­i­cal as pos­si­ble. A col­lab­o­ra­tive ap­proach is need­ed at this time to fight the fi­nan­cial chal­lenges fac­ing us.

Ba­sic prin­ci­ples of eco­nom­ics pre­dict that when a re­ces­sion bites and com­pa­nies and jobs go un­der, there is an in­evitable de­mand for gov­ern­ment in­ter­ven­tion to coun­ter­act these ef­fects. Some econ­o­mists (such as Joseph Schum­peter who built up­on Karl Marx's "cre­ative de­struc­tion") be­lieved that re­ces­sions and their ef­fects are how cap­i­tal­ism moves for­ward, weed­ing out the in­ef­fi­cient and mak­ing way for new growth.

Key­ne­sian eco­nom­ics (es­poused by world renowned econ­o­mist John May­nard Keynes) claimed that the an­swer was for gov­ern­ments to spend more in the econ­o­my so that the over­all de­mand for prod­ucts would rise. This would en­cour­age firms to take on more work­ers and as prices rose, re­al wages would fall, re­turn­ing the econ­o­my to full em­ploy­ment.

Ac­cord­ing to Keynes the­o­ry, it did not mat­ter how the state spent more as "the Trea­sury could fill old bot­tles with ban­knotes and bury them... and leave it to pri­vate en­ter­prise on well-tried prin­ci­ples of lais­sez-faire to dig the notes up again." As long as the gov­ern­ment in­ject­ed de­mand in­to the econ­o­my, the whole sys­tem would start to re­cov­er.

Last Thurs­day, the In­dus­tri­al Court de­liv­ered a rul­ing which or­dered that work­ers, who were re­cent­ly laid off by Steel Com­pa­ny Arcelor­Mit­tal, were to re­turn to work on March 14, 2016. From in­for­ma­tion aris­ing in the me­dia (In­dus­tri­al Court Judg­ment not yet avail­able) it ap­pears that Arcelor­Mit­tal would have prof­fered sev­er­al rea­sons for mak­ing jobs re­dun­dant save for be­com­ing vir­tu­al­ly in­sol­vent.

Some em­ploy­ers of­ten com­plain that the In­dus­tri­al Court is a "Work­ers Court" and that its rul­ings are tipped in favour of the unions. In the ab­sence of em­pir­i­cal da­ta to sup­port such a con­tention, one must pre­sume that the dis­pute brought by the union against Arcelor­Mit­tal was prop­er­ly con­sid­ered on the mer­its and that the Court was not sat­is­fied with the rea­sons giv­en for lay­ing-off the work­ers or the pro­ce­dure adopt­ed in do­ing so.

The very next day, Arcelor­Mit­tal an­nounced clo­sure of its op­er­a­tions re­sult­ing in the im­me­di­ate job cuts of some 700 work­ers, in­clud­ing those work­ers who were or­dered by the Court to re­turn to work. There can be no doubt that Arcelor­Mit­tal and oth­er multi­na­tion­al com­pa­nies have been se­vere­ly af­fect­ed by the re­cent glob­al eco­nom­ic down­turn. Steel prices have dropped, whilst op­er­a­tional costs have re­mained the same.

The cost of labour do­mes­ti­cal­ly is high in com­par­i­son with oth­er parts of the World. Ac­cord­ing to Arcelor­Mit­tal, it has been heap­ing up a debt which to date amounts to ap­prox­i­mate­ly $1.3 bil­lion. At this point I am pre­pared to give full cre­dence to the com­pa­ny's man­age­ment. How­ev­er, fault must be as­cribed to it for the man­ner in which it ar­rived at its de­ci­sion.

There would nev­er be a "right" time to tell work­ers of a po­ten­tial re­dun­dan­cy sit­u­a­tion. But there is a Rec­og­nized Ma­jor­i­ty Union with whom there ex­ists a du­ty un­der the law and prin­ci­ples of good in­dus­tri­al re­la­tions prac­tice, to con­sult with. Arcelor­Mit­tal's man­age­ment must have known for some time that it was go­ing to im­ple­ment the dras­tic step of clo­sure of its op­er­a­tions and pur­sue in­sol­ven­cy pro­ceed­ings.

Yet it ap­par­ent­ly took no steps to con­sult with the Rec­og­nized Ma­jor­i­ty Union and it clear­ly failed to con­sult with the Gov­ern­ment of T&T. In these cir­cum­stances, we will nev­er know whether con­sul­ta­tion with the rel­e­vant stake­hold­ers could have di­vert­ed the present course of events or its ef­fects up­on the hun­dreds of work­ers and their fam­i­lies.

Against this back­drop, Prime Min­is­ter Dr Row­ley stat­ed that, "This far-reach­ing ac­tion, tak­en with­out ref­er­ence or dis­cus­sion with the Govt of T&T, af­fect­ing thou­sands of our cit­i­zens, we view as puni­tive and dis­re­spect­ful in the ex­treme." Quite frankly, I agree with the Prime Min­is­ter.

A com­mon sense ap­proach will re­veal that clo­sure of Arcelor­Mit­tal will not on­ly af­fect its work­ers and their im­me­di­ate fam­i­lies. It would al­so af­fect those near­by ven­dors, par­lours, roti shops, busi­ness­es etc, where work­ers would have fre­quent­ed.

On an­oth­er lev­el, all busi­ness en­ti­ties (eg T&TEC) would be great­ly af­fect­ed by loss of con­tin­u­ing trade and busi­ness prospects with Arcelor­Mit­tal. Af­ter all is said and done, such a large num­ber of cit­i­zens los­ing their jobs in one fell swoop can even be de­scribed as a hu­man tragedy.

I start­ed this ar­ti­cle with his­tor­i­cal eco­nom­ic the­o­ries cit­ing in par­tic­u­lar Key­ne­sian prin­ci­ples (gov­ern­ment in­ter­ven­tion cre­ates a vir­tu­ous cir­cle by stim­u­lat­ing de­mand). Un­for­tu­nate­ly, there can be no prac­ti­cal ap­pli­ca­tion of these the­o­ries ow­ing to the sim­ple fact that we con­tin­ue to pro­mote an un­di­ver­si­fied econ­o­my which is large­ly de­pen­dent on oil and gas.

What we are ex­pe­ri­enc­ing in our econ­o­my is not a once-in-a-cen­tu­ry event. In terms of Arcelor­Mit­tal's clo­sure, even the Prime Min­is­ter is quot­ed as es­sen­tial­ly say­ing that we should not get car­ried away with think­ing that this is a one-off sit­u­a­tion. Oth­er com­pa­nies may be head­ing in this di­rec­tion.

�2 Next week we con­tin­ue the dis­cus­sion.