Keith Collister, Gleaner WriterSINCE NOVEMBER of 2003, representatives of a number of key stakeholders in Jamaican society including the major trade unions, the major private sector organisations, academia, agriculture and key non-governmental organisations such as Jamaicans for Justice, loosely called the 'Partnership for Progress', have been meeting with Government representatives with the objective of creating a social partnership.
The group's primary objective is to build a sufficiently broad-based coalition to create the necessary consensus in the society to design and implement tangible measures to move the economy forward and to achieve an improvement in governance overall.
At its essence, the 'Partnership for Progress' is simply a process to achieve a shared vision of a better Jamaica, with its first step being the signing of a social partnership agreement whose key goals are clearly stated in the name of the agreement, "A Programme for Growth with Equity". The first paragraph of the agreement describes the aims as "a social dialogue and partnership agreement designed to build trust and seek consensus on issues of national importance, with the objective of promoting a climate which will foster sustained economic growth, equity and social justice for the benefit of the widest cross-section of the Jamaican people".
BACKGROUND TO THE INITIATIVE
The 'Partnership for Progress' initiative began as the outcome of a collaboration between the economic policy committees of the Private Sector Organisation of Jamaica (PSOJ) - under its new Chairman Colin Steele - and the Jamaica Chamber of Commerce (JCC), at the beginning of 2003, as a result of their mutual concerns over the economic situation at the time, particularly the threat of a financial crisis. The initiative was strongly supported by JCC President Michael Ammar - who had been convinced of the virtues of private-public sector collaboration during his efforts to revive downtown Kingston - and the then new PSOJ President Mrs. Beverly Lopez.
It is important to note, however, that the Partnership for Progress (PFP) was intended from inception to be a collaboration between the wider private sector and the major unions, and was able to build on the improving relations between the two sectors, particularly the efforts of the private sector/union Acorn group. I am advised that the Jamaica Confederation of Trade Unions (JCTU) initially responded very favourably to this private sector initiative, with their paper 'Towards a new vision for Jamaica's Socio-Political Survival and Economic Growth' showing that they were already thinking along similar lines.
This had not in fact been Jamaica's first attempt to create a social partnership in Jamaica. The main difference with this and previous attempts at partnership is that this was meant from the beginning to be a bottom-up approach, with the proposed signing of the agreement with the Government on August 18 merely being a first phase in a planned debate with Jamaican society on the way forward for the economy and the general governance of the country. The wider context for the proposed agreement is the general disappointment with the economic performance of Jamaica since independence, and the widespread desire for the country to return to the first rank of developing countries in terms of growth and other key aspects of development. The group believes that lack of trust - and consequently a process to create consensus - in the society is a key impediment in creating the agreement necessary to achieve a sharply-increased level of economic growth - and consequently job creation - and to deal effectively with critical issues such as crime.
THE PSOJ ECONOMIC SEMINAR
The PSOJ's economic seminar of April 16, 2003, (impeccably timed as it occurred just after Jamaica's foreign exchange crisis) gave a public platform to the Irish team responsible for Ireland's 'Programme of National Recovery' in October 1987. The members of the private sector - and the Irish delegation as it happens - who attended this seminar, were struck by the similarities between Jamaica's economic problems in 2003 and Ireland's fiscal crisis in 1987, and there were follow on meetings with Government officials.
The JCC/Conference Board's closed-door session of April 17, 2003 acted as an immediate follow up to the seminar as requested by key sponsor, Digicel owner Denis O'Brien. The Irish team included Matt Connolly (Director, MECA, Ireland), P.J.Mara (Press Secretary to PM, Ireland), Padraig O'Huiginn (Secretary General to the PM Ireland), Kieran Mulvey (CEO Labour Relations Commission, Ireland), Bill Attley (Director, European Union's Economic Social Committee). This private session, moderated by leading developing country economic consultancy On the Frontier who are currently partnering in an exciting project with the JEA involved representatives of Government, unions and the private sector in discussing the practical issues involved in creating a social partnership.
The overall initiative appeared to get official blessing approximately one month later when the Prime Minister's Development Council called for a "coalition of the willing" on May 14 to create a social partnership.
In October 2003, a Jamaican team, comprising the private sector, key Government technocrats, Opposition, trade union and civil society representatives, visited Ireland to study their social partnership experience, meeting all the key Irish policy makers involved in their turnaround including the current Irish Prime Minister.
In January 2004, the PFP working committee made its first recommendations in the form of a draft memorandum of understanding, to the Government. These, and subsequent drafts over the past year and a half have included among other things:
Fiscal stringency, particularly a call for the Government to achieve its fiscal targets for 2004/5, and subsequently for 2005/6. The grouping has uniformly supported the balanced budget target from inception as a critical part of the economic turnaround.Creation of a monetary policy committee (MPC).Privatisation.Tax reform.The debt swap initiative.Education reform.Crime initiatives, including recommending the implementation of New York's crime management system COMPSTAT.OUT OF THE CRISIS
The signing of the Government's MoU by the major trade unions in February 2004, was a critical element of the Government's fiscal turnaround. This wage restraint agreement was not formally part of the Partnership for Progress initiative, having been negotiated directly with the Government in return for a no-lay-off policy. Nevertheless, it was heavily informed by the Partnership initiative, particularly by those representatives from the union movement who had gone on the Irish trip and the crucial efforts of Mr. Dwight Nelson, and appeared also to be motivated by a spirit of shared sacrifice at a critical point in the finances of the country.
During this same critical period of November 2003 to January 2004, the banking sector excluding BNS which it could be argued had already made a critical contribution in the form of US$100 million loan from its parent company was in the process of finalising a debt swap agreement to replace high-cost debt with low-to-zero coupon debt so as to reduce the Government's interest cost and thus its fiscal deficit.
This message of strong local financial sector support for the Government, communicated to the international market mainly through U.S. investment bank Bear Stearns, ultimately meant that the Government was able to refuse the 17 per cent interest rate offered by the banks in return for higher interest rate debt. The Government thought correctly as it turns out, that interest rates would fall to even lower levels.
It is important to remember that not long before, rates had been more than double this level. International capital market access was regained in February with the issue of a Eurobond, ironically during a meeting with then Opposition leader Edward Seaga.
The other critical element was the Government's commitment to a balanced budget in the 2004/5 Fiscal Budget and the subsequent 2005/6 Budget, a target also supported by the private sector and other partners as part of the initiative.
In that critical regard, Jamaica has followed very closely Ireland's Programme for National Recovery, with a huge increase in international and local investor confidence, as shown by increase in our international bond prices and the doubling of the Jamaican stock market last year. This allowed a sharp reduction in domestic interest rates at the time critical for a highly-indebted country like Jamaica. The recent further fall in rates has also created the possibility of a balanced budget this year, although that target is under increasing pressure. If we achieve a balanced central government budget this year as is currently anticipated, we will have achieved one of the most radical corrections in public finances in Jamaica's history.
Keith Collister is a director of the Jamaica Chamber of Commerce, and represents the chamber on its Economic Affairs and Taxation Committee.
