FIJI LABOR CONTROLS ADD TO ECONOMY’S WOES

Editorial

Fiji Sun

SUVA, Fiji (Jan. 5) – It is every business’ right to go broke. And they need neither help nor protection from governments in order to do so.

It's an aphorism widely recognized in this global economy of ours where governments are increasingly seen as facilitators and not regulators. Here in Fiji we have at least in part recognized the preferred role of government in its relations with the business and investment community. The present Government, in particular, has been active in encouraging investment.

So the conclusion reached by the Asian Development Bank that foreign as well as domestic investments are stagnant is all the more surprising. However, closer inspection of the regulatory environment reveals a veritable maize of "incentives" aimed at encouraging people to put their hard earned dollars here. We have tax holidays, appreciation acceleration, tax free zones, affirmative action - a whole plethora, in fact, of schemes and programs all of which require a host of civil servants complete with accompanying red tape to interpret and administer. One begins to wonder if these really are incentives in the truest sense. The business of attracting investment at the national level is perhaps one of the world's most competitive. And as the bank quite rightly points out, the encouragement industry promotes "nation shopping" in which investors pit one destination against another to obtain the maximum concessions.

And, as Fiji has seen, particularly in the garment industry, it is a fairly simple matter for whole factories to uproot and move on to an environment where conditions are more favorable for profit.

No matter how little a worker is prepared to toil for, there will always be another in another country willing to do the same job for less. In national terms, the process becomes one of rapidly diminishing returns.

So, as the Asian Development Bank points out, our incentives may not be all we consider them to be - especially when the company tax rate stands at a relatively high 31 percent. A reduction here would benefit not only foreign investors but domestic businesses as well.

At the same time, we in Fiji have been passed by in the globalization of the labor market. With our eyes fixed firmly on the past, we seek to regulate the inward movement of labor. If we could do the same for outward movements, we probably would.

At the same time, the rest of the world is moving away from labor market controls, at least one theory being that if business want to hire expensive people, that's entirely a matter for them. It is again, everybody's right to go broke.

The days of regulated labor are all but gone. Just ask the thousands of professionals who have left these shores since 2000. We can't afford to be left behind.

January 6, 2006

FijiSUN: http://www.sun.com.fj/

Rate this article: 
No votes yet

Add new comment