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OUR CLASS HAS NEVER HELD POWER

posted 3 Feb 2014, 11:15 by Gerry Kangalee
The paper published here was presented by Comrade Alva Allen, Education Officer of the Banking Insurance and General Workers Union (BIGWU) to the seminar on privatisation organized by the Joint Trade Union Movement (JTUM) held at Cipriani Labour College on January 31st and February 1st 2014.
 
  

POSITION PAPER PRESENTED BY BIGWU ON SATURDAY 1ST FEBRUARY 2014 TO JTUM SEMINAR TITLED: PRIVATIZATION = FROM PUBLIC PURSE TO PRIVATE POCKETS 


Our union has been asked to speak on the topic: “Social and economic fallout of privatisation and its impact on the workforce in the public service and state enterprises.” 

 
When we talk about privatization, let us understand upfront what is at stake here. The state enterprise sector has assets worth over $120B, with annual revenues of $48B, combined annual profits of $3b and $1.2b in annual dividends to the Treasury. The state enterprise sector has well over 16,000 workers. 
 
WHY? 
 
Privatisation is part of the policy of international capital known as neo-liberalism, propagated by the International Monetary Fund (IMF) and the World Bank. Its intellectual justification came from the right wing think tanks in North America- the Cato Institute and the Heritage Foundation.

The policy promotes:

privatisation/divestment;

downsizing of the public sector;

job elimination and VSEP

private sector provision of public goods and services (private public partnership);

outsourcing;

wage suppression;

de-regulation 

assault on workers’ rights, benefits entitlements and on their unions. 

BUT MOST IMPORTANT OF THEM ALL, PRIVATISATION PUTS THE PUBLIC WEALTH INTO PRIVATE POCKETS

Such measures have widened and will continue to widen income inequality globally and locally. Recent UN figures on income inequality estimate that the world’s richest 1% own 40% of all wealth. This is according to a UN report (http://
www.guardian.co .uk/ money/2006/dedc/06/ business. International news). In Trinidad & Tobago, according to CSO data, the poorest 10% get 2.1% of National Income, while the richest 10 % get 29.9% of National Income 

As we speak here today, the Transnational Institute (TNI), which is a worldwide network of scholar activists, just revealed that coming out of the recent financial collapse, the rich actually got richer. The wealthiest 100 people now control 2 trillion dollars (US). Out of this group, the top 25 billionaires have a total wealth of 930 billion dollars (US).

TNI’s 2014 State of Power Report
[1], reveals that in the past year, transnational corporations (TNCs), particularly gas and oil industry and banking have continued to benefit extraordinarily from the ongoing economic and financial crisis while ordinary people pay the costs. Despite their responsibility for the financial and ecological crises, bailouts and “austerity packages” work to the benefit of the 0.001% and squeeze the income and tighten the pressure on the 99%.

Let us now examine our own experiences of privatisation.
 
FIRST WAVE OF PRIVATIZATION AND JOB LOSSES

The selling out of our national patrimony really began during the NAR Administration (1986 -1991) and continued under the successive PNM Administration (1991 -1995) and the UNC/NAR coalition (1995-2001). During this period TTPPI, MEAT PROCESSORS, TANTEAK, CROWN REEF HOTEL and others were closed down and sold out while ISCOTT, T&TEC Generation, FARRELL HOUSE, WASA TSTT, NGC, FERTRIN, NATIONAL FISHERIES and others were also privatized through outright sale, joint ventures and the management function was outsourced to big business.

During this period of privatization that was coupled with restructuring of the state sector over 8000 jobs were lost.

WASA- over 1000
ISCOTT- 600
TTPPI-I68
MEAT PROCESSORS -100
POWER GEN - 69 
 
Employment in the public enterprises in 1991 stood at 41,673. By 1997 it was cut to 33,236. Employment levels in the Public Utilities were the hardest hit. In 1988 it stood at 14,490. In 1997 it was slashed to 5,757. In PTSC, it fell from 3,192 to 252 over the same period. 

Privatisation has not only led to massive job losses; it also brought about the increase in the costs of services like electricity which had mulitplier effects on the costs of other goods and services. 

In addition, we have seen the entrenching of obscene working conditions including the introduction of the infamous contract worker on 2 year contract to replace permanent workers. 

Many Permanent job functions were contracted out. These included security services, cleaning, secretarial etc. “Permanent temporaries” and casuals were also hired to replace the permanent permanent. All of this was to cut labour costs and maximize profits. This impacted negatively on union membership and union bargaining power. 
 
AND THAT IS NOT ALL 

But all of this job loss is not an isolated event. It took place at a time when the debt service ratio crept up from 23% in 1988 to 37.7% in 1992 and stood at 34.8% in 1993. While such a financial leakage was taking place because of this high debt repayment, public sector workers were subjected to an across the board cut of 10% and a wage freeze from 1993. Their COLA WAS TAKEN AWAY. 

Government's expenditure in the period of adjustment on the social services fell by almost 10% from 1987 to 1989; for example, expenditure on health which was 17% of recurrent expenditure in 1982 fell to 8% in 1989. Put another way real per capita expenditure on health fell from $519 in 1981 to $197 in 1991 (IADB Working Papers Report 1993). Similar declines were registered in education, infrastructure and on public transportation (Maharaj 1992: 75-79). It became the norm for Government daily rated workers not to get their pay for 2 months straight. 
 
I am suggesting that the rise in the criminal elements in Laventille and the Beetham Estate is a direct consequence of the Structural Adjustment Program. A study conducted by the University of the West Indies (UWI) indicated that in 1991 almost 25% of the population was living below the poverty line. The figure for those living in absolute poverty moved from 3.5% in 1981-82 to 15% by 1988. 

Let us go back to 25 years ago when the program of privatisation and other structural adjustment policies was being implemented. Can you imagine the devastating effects it had on the already poor in these areas? Can you imagine what it was like for these people to pay 15% VAT on food items? It was under these conditions that our young gangsters were born and grew up in. What else can we expect of them? According to the CSO Report, of the 15,000 persons who are between the ages of 20-30 in the San Juan /Laventille area, less than half of them went to secondary school and only 400 had post secondary education. It is because of these failed economic policies, that the rest of us now have to live behind steel bars in our own homes and still cannot feel safe. 
  
With this second wave of Structural Adjustment Policies, there will certainly be more Laventilles, Beethams and other hot spots 20 years down the road. That’s the impact and fall out. 

At that time, the working class was faced with a future of pauperization. That was the net effect of privatization, restructuring and the Structural Adjustment Programs. 
  
True to its history, the working class waged bitter battles during this period including the great Day of Resistance on 6th March 1989 when all of Trinidad and Tobago stood still. We saved our country once again from the ashes. Today they are at it again with their same old diatribe to justify privatization. 
 
THE NEW WAVE OF PRIVATISATION 

Against the backdrop of an austerity policy to systematically drive down the wage bill from 33% of Total Current Expenditure to 16% of Total Current Expenditure in 2012; against the backdrop of high inflation and IMF orders to restrain transfers and subsidies, the current privatisation policy of the PP Government continues to be based on the advice given by the IMF. 

In its December 2010 Article IV consultation report, the IMF advised the government to strengthen the public enterprise sector by inviting private sector participation, and to accelerate privatisation, with assistance from the International Finance Corporation (IFC), the private sector arm of the World Bank. 

The IFC has been in the country since November 2010 and according to Minister Dookeran has done assessments on state enterprise rationalisation and worked on the actual mechanisms for privatisation. 
 
The roll out of their plan has now begun. Let us understand however, that this is not just a new wave of privatisation, it is in fact a new wave of structural adjustment taking place. 

Having said that let us look what they are doing in the financial services sector 

FCB – FIRST CITIZENS BANK 

This bank has over $29.5B in assets. 20% of the shares were divested on the pretext by some that Government needed more cash and therefore had to sell its assets to raise cash to build a school and a hospital. When the televised debate began between Minister Beau Tewarie and our President, the Honourable Minister unashamedly declared as justification for privatising a bank worth $29.5b in assets: “I am fed up of owning a bank.” 

Listen to Sharon Christopher, Deputy CEO of FC Holdings Ltd. in an interview with the Business Guardian on Thursday 20th October, 2011. 

“We felt quite a long time ago - certainly by 2004 when the bank had become the third largest in T&T in terms of assets and profits - that the bank was ready to be returned to the private sector…” 
 
“The intention always was, when a government is going to own the bank, that we are forced to do something to protect the financial system. We will do it. We will give what assistance we can give and then the bank will go back to the private sector. That was the intention from day one.”
 
 
Like Christopher, the business community has reacted positively. It’s about time, they have told FC’s management 

The ruling class, the Government and the IMF are 100% clear about what has to be done about FCB – IT MUST BE HANDED BACK TO THE PRIVATE SECTOR!!!! 
 
All their propaganda about spreading the wealth to the little man as well was nothing but a puerile attempt to mask their objective to return the bank back to the private sector. 

What is absolutely and equally scandalous about this divestment is that those who own 20% of the shares will now benefit from as much as 45-55% of the profits according to the IPO. In the interim, the workers whose labour contributed to those profits cannot get a decent salary increase after 19 months of negotiations and are forced to live on 2011 salaries in 2014!! 

We must ask aloud: what is going to happen when the treasury gets less in dividends, cuts in labour costs, less money for health care, no money to fix the roads in the communities? Will they increase taxes? 
 
TRINIDAD & TOBAGO MORTGAGE FINANCE CO (TTMF) and HOME MORTGAGE BANK 
 
With combined assets of $4.82B, THE Government proposes to establish a new Holding Company – T&TMORTGAGE BANK with TTMF and HMB as subsidiaries. The new Mortgage Bank will buy out the existing shareholders of the subsidiary companies and offer an INITIAL PUBLIC OFFERING on the Stock Exchange “Allowing for more extensive ownership of this very important aspect of the nation’s financial and social well- being.” 
 
With the demand for housing at 143,000, this demand is worth over $65B in mortgages.

With the establishment of a new Bank not only is the job security of the workers on the line, but the Collective Agreement, the workers’ Pension Rights and the Union’s Recognition Certificate as well. Of course, once again the Treasury will be deprived of the profits from this entity as it will be siphoned off to private pockets. When the government gives up access to that kind of revenue, expenditure cuts are next in line. 

IMF PUNITIVE MEASURES AGAIN 
 
Let us make no mistake about what will happen. For, while the IMF has congratulated the Government for these plans, they are also under more orders from the IMF to “contain increases in transfers and subsidies” as outlined in the ARTCLE IV Consultation. The IMF also told the Government that: “In particular, subsidies are on an unsustainable path, with fuel subsidies particularly difficult to justify. … the ability to invest in productive capital and infrastructure is constrained by inefficiencies in the public service and by bureaucratic impediments to private investment in the non-energy sector… Increasing public and private sector investment will thus require a thoroughgoing rethink of the public service. Among other things, staffing processes and institutions need to be modernized…” 
 
I don’t have to spell out what these measures mean. Workers are already placing on their placards the slogan: “THE WORKING CLASS IS NOW THE WORKING POOR.” With these measures we will be worse off than the working poor. 
 
The social and economic fall out will only exacerbate the existing social crisis that is bound to explode as it recently did in Greece, Spain, Portugal, Canada, the UK and the US. The privatisation bonanza we are witnessing in Europe is in direct response to the mounting debts owed by Greece, Spain, Portugal, Italy etc. State enterprises including banks are being put on fire sale while thousands of workers are being axed. 

The Greek population suffered through pension cuts and an increase of the retirement age, civil service pay cuts and job losses, higher taxes and privatization of the Greek government’s assets including banks ports, utilities and even the state lottery system. 

According to the Job Loss Survey which was completed by UNI Finance in September 2012, more than 300,000 people have lost their jobs in the finance sector since the beginning of the financial crisis in 18 countries, 

CLOSING 
 
I think I have said enough on this topic, but I cannot conclude without reminding all of you that the JTUM COSSABO held a special session on 23rd March 2013 on this matter and recommended a course of action: 
 
1. build support and solidarity amongst workers directly affected by the immediate threat of privatisation (TSTT, FCB, TTMF, Petrotrin, MTS, City Corporations etc) through a series of workplace meetings; 
 
2. develop a Public Relations campaign using traditional and nontraditional mass media e.g. social media, publications, purchase of media time, flyers, poster campaign etc.; 

3. embark on a series of community meetings and protest demonstrations similar to the campaign against the 5% wage cap; 

4. conduct a series of in-house workshops, seminars, panel discussions and debates with various stakeholders on the issue of privatisation; 

5. establish an anti-privatisation committee; 
 
Let us resolve to continue to go forward. In so doing, let us never forget that all the others have had their chance and their say and their sway. It always went their way. Our class is the only class that never held the reins of power. 
 
The other classes have held power and look at the mess they have made of our beloved Trinidad & Tobago. The time has come for those who labour to hold the reins of power so they can build a just and fair society. Power must be in the hands of the people so that they can determine for themselves the way forward. 
 
I THANK YOU.
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