2.8 Labour Laws Reforms
The Government has commenced this process and consultations are ongoing through the TNF Forum, including Business and Labour – a three way stakeholder consultative process. Comprehensive labor reforms are necessary to align wage costs to productivity, within the context of a mutually agreed all stakeholder driven framework.
This way, the country optimizes on the benefits of a mutually shared and consensus framework for employment and remuneration, in a changing environment. There is need to embed flexibility and social responsibility within the agreed framework, allowing firms facing a temporary downturn to vary employment costs in alignment with business conditions.
2.9 Maintaining the Multicurrency
Notwithstanding the current liquidity and cash challenges, commendably, Government has maintained the Multicurrency that ushered price stability since 2009. It is not expedient for Government to introduce the local currency, as present conditions do not support its introduction.
The current liquidity challenges can be resolved in the medium and long term through growth of exports, which is a function of production and productivity. Hence the need to review the costs of doing business to enhance competitiveness, production and productivity growth. Over the past 18 months, the US dollar has appreciated over 40% against most major currencies and this has considerably undermined the country’s exports growth potential.
2.10 Foreign Exchange Generation and Incentivising Exporters
The Manufacturing and other sectors of the economy are net importers of raw materials, machinery and equipment. The large current account deficit has adversely impacted on the country’s capacity to build up foreign exchange reserves for imports. As a result of the current foreign exchange shortages, industry imports requirements are now subject to a long waiting list, often for several weeks before approvals. This has impacted on production and productivity in key sectors that were now experiencing increased production due to the promulgated SI 64. Business supports ongoing efforts by Monetary Authorities to incentivize exporters and promote Value chain business linkages across the productive sectors. Going forward, these initiatives to generate foreign currency through exports growth need to be expanded for sustained growth of the economy. The focus must be on productive sectors and productivity. This will also sustain the Multicurrency.
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