What's Going On?

I'm not totally crazy after all. I'm supposed to have some understanding of how the big pieces of an economy fit together. Now, a former Cabinet Minister of the previous Barbados Labour Party (BLP) was ready to lay into me yesterday because he said my understanding was merely that of an IMF economist. I begged to differ, and he let me keep the BLP pen anyway. A topping gesture.

But, I have been more than a bit bewildered with the comments that I was hearing about developments in the Barbadian economy and what some people dealing with the economy were saying.

The latest data on the economy show that unemployment has risen (10.1% at March, some 2.2 percentage points over the same period in 2008). Retail prices fell by 0.4% in March to bring the annual rate to 6.6%. The combination of rising unemployment and falling prices brings forth an ugly spectre.

With the world in recession and its effects supposedly being felt in Barbados too, I had read some reports that Barbados was weathering the storm and not seeing much of a downturn.How could that be? The broad economic data show, unfortunately, that is not true (see Sunday Sun, June 14, page 17A). It will be useful to see how that unemployment increase is spread across the economy; the natural supposition is that its rising faster in construction and tourism. The loss of spending power of that group of workers has not yet had its main impact on the economy, I suspect, and may be less given some tendency for foreign workers to be important, so the bigger impact may be on their ability to remit funds abroad. That's an odd saving grace for Barbados.

What else is being affected? Take housing. (see Sunday Sun, June 14, page 5A). At last evidence is showing a slow down in that sector. Rents are falling, properties are not moving. Whether foreigners or locals are involved, people now want to get value for money, but people are clearly less willing to pay top dollars or pounds for a property of any sort and some of the inflated prices for luxury properties appear to have burst.The report indicates that prime seafront rentals that could have fetched B$2,200 a month are now down to B$1,500. And for B$1,500 people are seeking the best they can get. Also notable is that properties are remaining unlet for a long time, even about a year, Large properties that made for good executive rentals (perhaps B$10,000 a month) have seen prices slashed (to say B$8,000-7,000). But the lack of rental income will have repercussions, and it will be worth watching the 'for sale' signs. But one immediate repercussion is on jobs for people who provided domestic services for the properties: gardeners are still active, but less so while the houses are unrented; other staff are probably not needed at all unless the properties are occupied.

Another piece of the puzzle is tourism. I must admit that I think the sector has its head in the sand. "Staycation", which now seems to be the word of choice, meaning getting locals to stay in country and enjoy tourism facilities, should always have been a major part of the picture. When you have a clear seasonal pattern to foreign visitors, how could you not make a major effort to fill the gap with locals? I hear that a lot of foreign visitors are repeats, but that suggests to me a static rather than dynamic market. My naive view is that it's better to have 'bums on seats' as the English would say than empty chairs. In other words, do all you can to sell rooms, including to locals. I have a nagging suspicion why local hotels do not do this and it smells of a sort of classism.

The staycation idea, where family stays at home and relaxes at home or takes day trips from their home to area attractions, works better on a small flattish island like Barbados, I think, given that it's no big effort to get from anywhere to one of the luxurious coastal resorts or the few too-few attractive sites that are here. Is is the case that some of the select hotels do not want to be seen as places for locals rather than foreigners? I have heard many unpleasant stories of how other Caribbean nationals have been treated at one of the major hotels when making business trips over several years. I will test this a bit myself with a weekend package at a small west coast hotel.. Admittedly, my treatment may be good as I have a passing acquaintance with a manager, but that may not wash away some general staffing attitudes that come over as a negative experience for other Caricom visitors).

I hope that the release of these new economic statistics start to remove the scales from some people's eyes.

The cost of living is not just higher for the individuals.

Another Barbados blog, Bajan Reporter, posted an article on the well-known south coast roti house, Ackee Tree, stating that the restaurant would put on Facebook details of outstanding meal tabs, in a kind of "name and shame" way of getting paid (see link to Facebook). Failure to pay would lead to the debts being passed to a debt collection agency, it was reported. I am not really an investigative journalist, but I thought I would approach the owner of Ackee Tree, Martyn Field, to hear from him what was going on.

Martyn indicated that the report is true, and that over B$10,000 is outstanding. He has decided that rather than name and shame to start discussing with other bars and restaurants on the south and west Coast and to circulate the names of the debtors between them. He is sure that many of the same names are going to pop up. He has also been well informed that many of the culprits have formed a "Boycott the Blue Bench" group, wishing that the establishment suffers the ultimate ill-fate of closing down. Some even boast of owing other bars for well over a year and have no intention of paying their debts. Martyn reports that the circulation of the list has created quite a stir, both whipping up support and drawing wrath, in the middle is the bar with a low customer count at the worst time of the year.

I know how convenient it is to run up a tab with a favoured restaurant, but I also know that I am getting credit, and that prompt payment is essential to help that enterprise stay in business. It's the first time that I have come across this idea of "doing a runner" and not paying for meals.

However, Martyn then went on to discuss a different matter, that is further reaching, that of how small enterprises such as his are coping with increased costs. His restaurant faces a huge challenge with the price increases for flour, gasolene, rice, beef, rum and most everything else and soon to be chicken. He decided that rather than pass the price increases on to the customer at this time that Ackee Tree rotis, which are supposed to be 1lb should be that instead of the near 2lb version that was served before.Now the customer is getting that which is advertised. But wait. Now the complaints are abound that the rotis have gotten small and the prices have gone up. How do we win? he asks. Should he just pass on the price increases and put more pressure on the customer or stick to our advertised product.

He mentions that BS&T, which boast of million in profits is so price sensitive it has already increased the price of milk and other sundry items that has caused the pressure on the wider public. One would think that they are the ones who could absorb the increases for a bit longer than they have. It is indeed a challenge.

I have mentioned before that the prices of so many restaurants in Barbados were absurdly high that I have decided to boycott most of them. Ackee Tree is one where value for money really seems to have been the case. But it's easy to see that they are on a thin thread. It's hard enough to give good quality food and pleasant service. It's really hard to do with some of the price increases recently announced in Barbados. It's doubly hard when customers fail to do their part and just don't pay: it's theft. I look forward to seeing the list circulated, on Facebook or elsewhere, and would gladly help disseminate it.