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SCCI reacts to President Ramkalawan’s address to the National Assembly on the 17 November | 19 November 2020

The Seychelles Chamber of Comerce & Industry (SCCI) has given its reactions to the address made by President Wavel Ramkalawan on Tuesday before the National Assembly.

The following is SCCI’s comments:

“The current economic climate is one characterised by uncertainty and numerous challenges. The SCCI’s basic assumption is that the economic recovery will be ‘L- shaped’, meaning that after the sharp economic decline observed in 2020, the process of recovery will be long and gradual. As per current IMF forecast, the economy is expected to reach 2019 levels only in 2025.

“Nonetheless, the new administration has to take certain decisions which will impact on current business operations and also have an impact on future business performance. From a private sector’s perspective, we welcome the measures of some critical policy intervention by President Wavel Ramkalawan in his address to the Nation in the National Assembly on November 17, 2020. We summarise our views below:

13th month salary

“The decision to remove the need for employers, be it private or government, to disburse the 13th month salary is of course welcome by the SCCI due to severe cash flow constraints that is currently being felt by all businesses in the private sector.

“The SCCI acknowledges the sensitivity of this bold decision taken by the President and supports the notion that an organisation must be encouraged to formulate a framework to reward its employees based on merit and productivity. This is currently a widely adopted practice in the private sector.

While the 13th month salary was pitched as a way to reward workers and help employees, the legal obligation had to be paid (just as salary) regardless of employer’s business condition and the employee’s performance. It has been a burden for employers when the business is not making profit or operating at a loss. Under the current executive council, the SCCI has always maintained that employers must reward workers with discretionary bonuses when businesses are doing well, instead of being legally compelled.

 

FA4JR

“We understand that the government's biggest priority has always been jobs – helping Seychellois to keep their jobs, or find new ones. This is also our priority to minimise job losses and to keep jobs.

“This is why we support the principle of the extension of the job scheme, as mentioned by the President in his address, albeit in a much more sustainable manner in view of current economic constraints as well as being more equitable and transparent. We need the FA4JR to help us survive and to recover and be strong as we come out of the economic crisis. This is for both businesses that employ workers and for those that are self-employed.

“We urge the government to engage with all business associations to capture the views and challenges of the current FA4JR mechanism and the current state of affairs with regard the reality for businesses and its respective obligation to pay its workers moving forward.

 

Employment situation

“While the SCCI needs to advocate for business interest it must also consider policies and measures that are also in the interest of the wider community especially in current times. In that sense creating jobs for local and employing local is a fair statement made by the President especially in the current situation of foreign exchange unavailability, high unemployment, and new graduates entering the labour market.

“It is quite common that pronouncements are made that would revise policy on migrant workers so that priority is given to locals seeking employment.

“However, we would like to stress to the new administration that the increasing demand for migrant workers in recent years was due to the shortages of local workers and skills to meet the growing needs of the economy. Under the current government policy, foreign expatriate workers should be recruited only when there is a lack of local skills and the recruitment of non-Seychellois in jobs are aimed at imparting required skills and know-how to Seychellois workers. We recommend that there is no disruption to this process until a thorough deep dive analysis is done with regard to understanding the challenges being encountered within the employment domain. These will include but not limited to understanding the education policy, training and development framework and overall employment legislations.

“Despite the above we look forward to discussing policies that should be directed towards addressing the issues with our national workers and make them attractive and employable for employers, while regulating the recruitment and employment of migrant workers. We would like the new administration to engage with tripartite partners which includes the union of employees and employers to formulate the revised framework for employment and unemployment moving forward.

 

Concept of free market

“The SCCI’s perspective is that the new administration must resist the temptation to distort the market with control mechanism such as bans, pricing, enhanced subventions to SOEs and prioritisation, that disrupt and distort trade and investment within our market.

“A sustained march to ever-higher levels of economic freedom will contribute towards a higher living standards – a feat few other nations in the developing world have been able to replicate.

“However, the SCCI does recognise that there are various market failures within the economy. These must be identified, studied and consensus reached on the necessary solutions. This will be critical for us to ensure that we support our local industries and production while protecting the rights of the consumer.

“The SCCI is of the view that the lifting of the ban of importation of vehicles and the resistance to intervene in the market will enhance the foundations of Seychelles’ economic resilience and competitiveness going forward. The President’s pronouncement will bring a huge sigh of relief to our colleagues in the automobile sector as finally they can re-activate their sector, something they have been proactively requesting since the ban was effective.

 

Conclusion

“As we approach the consultation process for the Budget going forward we highlight to the new administration the urgent need for an efficient government that provides good public services with low tax rates. It is imperative that we continue the work to have a regulatory environment that is flexible and transparent, encouraging vibrant commercial activity.

“It is imperative that we formulate a mechanism that will serve as the basis for inclusive and effective consultations and dialogue to forge consensus around principles and guidelines in policy areas. The most recent survey that was performed by the SCCI demonstrated that a large number of respondents confirmed that there is a need for a better structured dialogue platform with government on how to respond to current challenges and also in the formulation of a framework to develop, transform and innovate current and emerging sectors.

“In conclusion, we fully understand that IMF's view of an L-shape recovery is the crux that should define the government's policy response in terms of fiscal impetus. This rules out the viability of running fiscal deficits of the level to sustain economic activity at current rate. The SCCI is of the view that the focus must be on serious real cost contraction in line with the decline in real income. This will mean redefining poverty level downwards, driving down real wages and reducing wastage nationally in order to re-align real costs to the new economic realities. “This is also not the time to increase tax rates in order to reduce the fiscal deficits as doing so will kill the incipient recovery. The reality is that the situation ahead is not going to be pleasant with tourism unlikely to reach even 50% of pre-pandemic level by end-2021. The conversation for these frank and honest dialogue must start now and the speech of the President reasserts this.”

 

Press release from the SCCI

 

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