Article 78 (2) (a) of the Revised CARICOM Treaty which establishes the CARICOM Single Market and Economy (CSME), envisions the creation of a "... Single, unified and open market area ......" forged from 14 of the 15 separate national markets of the 15 CARICOM member states.(The Bahamas has not committed to participation in the CSME).
The fourteen member states comprising the CSME are Antigua and Barbuda, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, St Lucia, St Kitts/Nevis, St Vincent and the Grenadines, Suriname, and Trinidad and Tobago.
Within this market area, labour will compete in an integrated labour market with the same rights, and under the same rules and disciplines intended by the Treaty, irrespective of nationality or country of origin. The integration of national labour markets will present opportunities for labour, but will also present challenges to specific categories of labour, to the labour sector as a whole and to labour in the geographical constituent parts of the CSME.
Labour is a key stakeholder within the CSME and rightfully expects the CSME to progressively change the economic conditions throughout the market area such that -
(i) the promise in the Revised Treaty under Article 6 (a) improved standards of living and work, and Article 6 (b) full employment of labour and other factors of production will be realised;
(ii) there will be multiplication of job/ occupational opportunities as a direct result of the expansion of each national labour market through integration;
(iii) labour will be able to migrate from any geographical part of the market area to any other part (without restrictions) based on perceived opportunities to utilize skills/expertise fully;
(iv) there will be increasingly better pay and terms of conditions of work throughout the market area.
There will be complex changes in the economic setting within the Community as a result of the process of economic integration and labour's legitimate expectations will need to recognise and take account of the threats and challenges requiring specific responses.
This short paper focuses on two main issues, namely, coping with the reality and threat of increased competition and making labour ready for structural changes in the market.
Coping with the Threat and Reality of Increased Competition in the Labour Markets
Increased competition is an inescapable consequence of establishing the CSME. Indeed, it is impossible for the CSME to come into being without pervasive competition since the logical consequence of the removal of restrictions is to expose employed persons in those labour markets where specific commitments apply. There are several sources of competition in the CSME, some of which merit elucidation. This short paper identifies five sources of increased competitive pressures.
(i) Import Competition in Goods
One of the strongest sources of threat to labour is in the goods producing sector. While increased import competition within the CSME, arising from Chapter V, will continue, particularly with the integration of Haiti into the CSME goods regime , additional import competition will arise from the specific commitments to reduce or eliminate tariffs under Bilateral Agreements (Cuba, Dominican Republic, Costa Rica, Venezuela and Columbia), under Cotonou; under the Free Trade Area of the Americas (FTAA) and under the World Trade Organisation (WTO). Not much can be done about intra-CSME import competition in the goods sector, but labour should take great care and interest in the commitments which the CSME is making with non-CARICOM Third Parties, particularly those with advanced economies characterized by diversified industrial and agricultural sectors.
The weakest of domestic competitors could be eliminated at one end of the spectrum of the market for goods and services, while even the strongest competitors at the other end of the competition spectrum on the domestic market may face reduced market share. The consequence will be loss of jobs (at least temporarily) and possible dislocation over the medium-term.
(ii) Import Competition in Services
Import competition in services will be as pervasive as in goods within the CSME, given that the CSME liberalisation programme is comprehensive. It is based on a Negative List approach and embraces four Modes of Delivery with Modes 2 and 4 representing direct import competition and Mode 3 represented by competition within the domestic market space.
The first tranche of the CSME Liberalisation Programme is due for delivery by the end of December 2003. While the measures to be removed embrace both Horizontal and Specific Restrictions, the early harvest will affect mainly, specific industries and types of economic activity. The impact on labour in the beginning will therefore be highly localized. As the implementation of commitments progress on through 2004-2005, the ripple will be broader and deeper throughout the services sector of the economy of each Member State since services now hold a strong relative position in the national economy of each member state.
Competition through the Right of Establishment
It should be noted that there is a form of competition in both the goods and services sectors, which flows from the exercise of the right of establishment that is not necessarily a threat at all, although it is often viewed wrongfully this way by labour. Competing enterprises of Community Origin may reduce market share of establishments in jurisdictions into which they enter and cause reduction of operations or otherwise may replace such existing enterprises. To do so, they usually have to be more effective in the market, offering better conditions of work, pay higher wages and supply higher quality goods and services at more favourable prices to consumers. They are problematic when the intent of competing parties is purely predatory, but not when competition is based on legitimate market acquisition strategies.
(iii) The Specific Effects of Migratory Labour
While the implementation of commitments in the goods and services sectors, specifically the removal of restrictions to market access, will unsettle what we describe today as domestic industries thereby indirectly impacting on employed labour, direct competition will be faced in the labour market by movement of national persons. The Treaty names specifically those under Article 46, and those under Article 34. These will pose direct competition to what traditionally constituted labour in domestic occupations.
Migratory labour, which the CSME encourages, presents important challenges for labour organisations. Several matters arise with the phenomenon of geographically more mobile labour in the initial stages of the CSME and subsequently as a normal market activity throughout the CSME labour market when there is integrated access to all jurisdictions. Some of these are relevant immediately, such as -
(i) the social resistance to entry of non-nationals into a particular market segment and the matter of representation of 'foreign' workers;
(ii) assimilation into a new labour and industrial relations environment whenever migration takes place;
(iii) fair, transparent, and non-discriminatory representation of non-nationals;
(iv) differential terms and conditions of work and the scope for harmonisation across States, not only in the private sector, but also in the Governmental sector;
(v) differential labour standards, skill content requirements, systems or practices relating to merit increment, and so on.
More effective market regulation will increase the force of competition throughout the CSME (market area). This will be achieved in part by the regulatory actions of the Community and National Competition Authorities provided for under Articles 170, 171 and 174 of the Revised Treaty. Action by these authorities pursuant to Articles 177 - Prohibition of Anti-Competitive Business Conduct and 179 - Abuse of Dominant Position, which maintain an open and competitive market economy is certain to increase the pressure on domestic industries which depended primarily on national markets for their survival. The pressure to keep persons employed will be transmitted through entry into markets by new competitors who were previously excluded by restrictive practices by both public and privately owned enterprises.
(v) Action by the Caribbean Court of Justice (CCJ)
Municipal Courts to Uphold and Enforce Rights of Access
The Caribbean Court of Justice (CCJ), with its unique powers of original and exclusive jurisdiction, will, in exercising these powers, ensure that competition prevails through -
(i) causing States to deliver on Treaty commitments in respect of the fundamental principle of non-discrimination, and whether in the areas of National Treatment Article 7 or Most Favoured Nation Treatment Article 8;
(ii) causing States to remove restrictions which they have committed to remove; and
(iii) ruling on a case-by-case basis in instances where a right of access is excluded, restricted, limited or otherwise impaired, nullified or seriously prejudiced inconsistently with the undertakings of Member States or indeed by private parties where the nature of the matter to be adjudicated has to be resolved at this level.
Measures to Relieve Competitive Pressures
It is on the basis of the foregoing therefore that it is necessary to understand the threats and their potential and actual effects. It is equally important to appreciate what measures are available within the Treaty to deal with changing circumstances that may be unfavourable. Some of the responses may be - (I) measures to increase the competitiveness of labor and the goods and services they create for the markets of concern. Higher levels of labour productivity and contribution to lower cost output are clearly significant elements of the response. In this regard, labour would do well to build an effective working relationship with the Caribbean Regional Organisation for Standards and Quality (CROSQ), an institution which is designed with the type of technical competence to support a drive towards efficiency;
(ii) invoke the Treaty provisions on disadvantaged countries, regions and sectors and apply safeguards under Article 47: Restric-tions to Resolve Difficulties or Hardships Arising from the Exercise of Rights and Article 92: Difficulties Occasioned by Particular Imports;
(iii) enforcement against unfair trade practices such as dumping and subsidization which have the capacity to destroy domestic industries;
(iv) deliberate actions to secure expansion of exports as a necessary, effective and progressive solution and response to threats;
(v) special treatment of sensitive sectors threatened by both CSME and exta-CSME pressures -
(a) delay exposure to competition particularly in respect of extra regionally negotiated market access; and
(b) build in adjustment policy measures and financial and technical support programmes as part of any negotiated arrangement for including some sectors in market access and market integration arrangements.
Making Labour Ready for Structural Changes
The foregoing strategies will alleviate pressures on labour through impact on the economic units and the market circumstances on which labour's survival is contingent. However, part of the response to the CSME will involve direct treatment of and preparation of labour for the changing economic conditions and it is to this issue that this paper now turns.
A key priority of labour is, to understand, cooperate and support specific interventions and changes in domestic policy and which are designed to deal with structural changes, which are already in progress. One aspect of structural change which is in progress and likely to broaden and deepen with CSME liberalisation is the supremacy of services in relation to goods; not only in respect to their relative contribution to the domestic economy, but in respect of the composition of economic activity and areas for absorption of labour.
With the exception of some selected member states such as Trinidad and Tobago with its dominant primary, intermediate and final manufacturing goods industries, and Guyana with its significant agricultural industries, future labour absorption will have to take place in service industries, particularly taking into account continued contraction of public sector employment. The spectrum of occupations in services ranges from very simple jobs requiring very low skill content to very specialized occupations and professions requiring very high levels of training and expertise. Economic value added is greatest where skill content is highest. With a relatively small labour force by world standards both the range of economic activities within which member states can develop world class competition and the quality and depth of its human resource development are issues for strategic determination. The effective strategy seems to be concentration on skill development at the highest end of the skills spectrum. This would require higher output at the tertiary level and a higher standard of training and preparation at the secondary and TVEL levels and consequentially a significant increase in investment in education and training.
Resistance to the importation of skilled labour even where the domestic pool of skills cannot generate appropriate job matches, is one factor which labour organizations will have to address, in view of the fact that while such skilled labour may appear to substitute for home-grown skills, it is acquired without investment by the host country and is immediately productive, thereby contributing to faster growth. The CSME offers this as a legitimate benefit to member states.
Substantively, however, is the issue of preparing the domestic pool of labour to fit the emerging occupations. The traditional design of training and educational programmes at all levels emphasized public service and goods producing skills and occupations. A very serious examination and evaluation of the skill content of general and specialized service jobs and occupations is needed. The services economy is comprised of about twelve major divisions and hundreds of particular services. Given the population size and economic demand in the CSME today and in the medium term some consideration of industrial policy applied to services may be required since no state is likely to be capable of developing successfully in all sectors.
No industrial policy will succeed however without the active involvement of labour in both the development and implementation of such policy. It is immaterial whether the relevant industrial policy results in a national strategy that focuses on particular services or particular service sectors; whether it is advanced through micro, small, medium or large companies or requires forms of resource allocation that shifts emphasis from old to new or from a narrow to broad set of economic activities. It is sufficient that labour appreciates the necessity for and participates extensively in the process of adaptation of the labour force to structural changes in the market which requires particular intervention in developing the skill content necessary to respond to a given national industrial policy and strategic direction.
Electronic Commerce (E-Commerce):
A Prime Candidate of Industrial Policy
One particular dimension of the CSME deals with E-Commerce. Article 239 comprehends that this sector will be brought under the disciplines of the Treaty. E-Commerce/business is one of the areas of services which should be the subject of industrial policy; both because of its wide ranging business applications and because of the increasing clarity with which the skill content of jobs and occupations can be identified. In addition, it is at one and the same time a sector comprising many new and emerging job applications and presents itself as a vehicle for market integration across the CSME in goods, other services and capital markets. Labour must seize the opportunity in partnership with the educational/training sector to work on job specifications, standards and on education and training curricula and programmes to supply relevant employable skills to this sector.
Coping with Temporary Dislocation and Fostering Positive Industrial Climate as a Shared Responsibility
A digression but relevant point arising from the inter-relationship between competition and structural changes, which will flow from the CSME is a useful aspect of this discussion.
Without doubt some labour dislocation will occur in particular geographical areas within the CSME. Dislocations will occur in those areas where labour is least competitive and where retraining for new jobs is difficult because of (among other factors) the specialized nature of some existing primary jobs.
Major dislocations have already occurred as a result of the down-sizing of the state sector and the phenomena of widespread vending by previously employed labour is evidence of the effects of dislocation. Identification and assessment of the vulnerable areas and the specific measures to alleviate the impact of the fallout from competition and adjustment is a joint responsibility of Government and labour.
Without extensive treatment in this short paper, it only needs to be said that an industrial relations climate that does not suppress legitimate adjustment of the market and thereby postpone inevitable structural changes will best serve labour in adapting to a functioning market economy, characterized by common rights of entry and participation, responsibilities, rules and disciplines throughout the market area.
Conclusions:
Four essential elements of this short discussion may be isolated if one were to offer a conclusion. These may be enumerated as follows -
(i) no Single Market can emerge without pervasive competition; the relevant issue is how the speed of change can be managed to absorb the impact and benefit from a competitive environment;
(ii) a central question is whether and how soon the task of defining job specifications and adopting curricula and training programmes can begin and be completed so that employable labour will be delivered to a changing market which is influenced by changes in both structure and composition of economic activity, and where future demand will be for skills in services industries;
(iii) the importance of developing stakeholder consensus around a changed strategy characterized by the responses, adaptation and reforms that might be most successfully executed. The Treaty in Part I of Chapter IV offers the plausible vehicle of industrial policy among others; and
(iv) temporary dislocation, especially of the least competitive labour, is a virtual certainty and given the recent experience and impact of dislocation arising from the downsizing of the state sector, very deliberate study of the possible scope and duration of such dislocation needs to be undertaken and relevant measures for alleviation would need to be determined and deployed.