Seychelles private sector responds to President Wavel’s State of the Nation address

SEYCHELLES HOTEL AND TOURISM ASSOCIATION AND SEYCHELLES CHAMBER OF COMMERCE AND INDUSTRY ISSUE JOINT STATEMENT

(Posted 25th January 2021)

SHTA AND SCCI ISSUE A JOINT RESPONSE TO PRESIDENT RAMKALAWAN’S FIRST SONA

The SCCI and the SHTA recognise that the pandemic is still rampant across our islands, and businesses of all sizes continue to experience severe challenges. The SCCI and SHTA would like to endorse the President’s recognition provided to the Minister of Health, the Public Health Authority and all health front line workers. We call upon the private sector to keep on supporting and recognising the amazing contribution made by our health workers to the health security of the nation.

COVID-19 Pandemic and the new opening measures

We jointly acknowledge the bold decision taken by the government in prioritising the tackling of the negative economic impact of COVID-19 through the establishment of new measures designed to explicitly accelerate the recovery of our economy.
We acknowledge the focus on the vaccination strategy, the support from the various private sector associations and businesses towards the COVID-19 Fund – which is a testament to the fact that the private sector stands ever ready to contribute to this fight – and the continued emphasis on being vigilant, responsible and respectful of public health regulations.

The SCCI and the SHTA, as has been the case since the pandemic started, have consistently welcomed effective consultation and collaboration with government. Only by working together can we fully understand and appreciate each other’s views and ensure that we are all on the same page and in agreement regarding the constructive strategies required to kick start the economy. Both the SCCI and SHTA share a track record of contribution to policy formulation at the highest level in conjunction with thorough and ongoing risk assessment of the evolving emergency situation.
We assure our President that while he faces historic challenges, he does not face them alone. The SCCI, the SHTA, other business associations, the private sector in general and environmental and professional NGOs stand ready to assist and contribute the views of the private sector and the community to the decision-making process whenever the need arises.

Public Service Transformation

During the course of the past few months the SCCI has been discussing with its members and various stakeholders, the need to build a sustainable and resilient recovery framework through a road map called the National Business Agenda. Similarly, the SHTA has engaged in sector-specific dialogue with key partners. Public service transformation and a review of excessively complicated administrative procedures to facilitate business, are activities captured within the framework, and we have recently offered to help the government in this matter. Hence, we acknowledge and support the announcement made by the President with regards to the transformation and rationalisation of public service. The SCCI & SHTA reaffirm their commitment to contributing expertise as we shape and deliver the contexts required for the economic recovery of our country.

Employment of Migrant Workers (GOP)

At times of recession or economic downturn, creating and protecting jobs is vitally important if we are to avoid high unemployment for our Seychellois workers. It is quite common during such a critical market scenario that governments consider revising policies applicable to the employment of migrant workers in order to focus on the fullest possible utilisation of the local workforce. Within this context the announcement made by the President is fully understood.

SCCI and SHTA acknowledge that more focus should be directed towards the employment of local workers. However, we stress that we should also ensure that there is a fair framework which allows the recruitment of migrant workers and a differentiation made between the categories of migrant workers (foreign workers and foreign talents), especially when there is either an insufficient local supply of workers or the lack of the specific skills required to meet market demands and deliver security for a resurgent economy. We jointly emphasise that we are here to support the Government by providing data and sharing projections which facilitate mutuality of understanding regarding the potentially serious and counter-productive impact of any sudden policy change upon employers and businesses.

There are clear pull factors that explain why employers at times have no choice but to employ migrant workers over locals, even though the expenses incurred by them in such a situation are considerably increased. The President has commented on a number of issues relating to this and has made it clear that our local workforce has to do better. Issues inclusive of higher productivity, appropriate skill sets and an improved, more professional attitude towards work have formed part of this agenda. We agree wholeheartedly with the President that a raising of standards within some sections of the local labour force will lead to greater cost-effectiveness, more value added, and higher production and service standards.

Similarly, we note that this statement should not be generalised. Both the SCCI and the SHTA know very well that there are many Seychellois who work extremely hard and are dedicated to their work. We feel that despite the fact that these hard-working people, who fully meet the expectations of their employers, are in the majority there are still – at this moment in time – not enough of them to enable our fragile economy to recover without imported expertise. Future collaborative government and private sector priorities will, we are confident, address this problem through initiatives such as better training programmes, stronger local talent support strategies and a revamped localisation programme, but this will take time and commitment from all of us. Our own Rome will not be built in a day, but as the engine of the economy the private sector will assist the government with the laying of every brick.

We advocate that in each case where an employer feels that the services and expertise of an expatriate are, at this time, essential in order to maintain productivity and service standards, each employer’s case should be considered individually. Whilst it is true that foreign workers impact negatively upon foreign exchange retention, it is also true that in many cases they contribute to the inflows of foreign exchange in the first place. If their value as foreign currency earners exceed the liability factor, then there is a strong case for their retention. We need to remain mindful of the balance between cost and return. This is of particular relevance to our tourism industry which, regardless of future moves to diversify the economy, will remain our principal economic engine for some time.

On the push side, we feel that there should be strong, pragmatic, cohesive and transparent policies and legislation that are directed towards addressing the current local labour issues and making local candidates more attractive and employable. The urgent review of the Employment Act is relevant within this context. SCCI and SHTA reiterate their commitment to work with the government on the Employment Strategy that is currently being formulated.

In undertaking all of this, we also advocate innovative policies in view of the fact that our working population has been ageing, resulting in the ongoing loss of able locals working after their notional retirement age. We also have to consider the high percentage of substance abusers of working age, and those in prison (and the high rate of recidivism) when considering this admittedly sensitive issue.

The Economy

Whilst we do take note of the current state of the nation’s financial affairs, we are of the view that the wage support (FA4JR) termination at the end of March 2021, announced in the SONA, will make it extremely challenging for our nation’s industries, businesses, and workers to survive until such time as the green shoots of our economy really take root.

As mentioned in the SCCI Budget 2021 submission last year, cutting taxes, increasing targeted public spending and securing investment to boost demand and create new jobs are crucial for the sustainability of the private sector.

Both the SCCI and the SHTA believe that international travel will not revert to pre-COVID levels even after herd immunity quotas have been reached, as international travel depends on the global situation more than it does on our own domestic scenario. When it does resume, it is likely to take place progressively, and through bilateral arrangements which could then expand into regional arrangements. This will in the short term increase the risk of increased bankruptcies and closures and, eventually, growing retrenchment. SCCI and SHTA encourage businesses, especially our MSMEs to carry on displaying the resilience which they have shown over the past year by staying open, adapting operations and continuing to serve their customers despite challenges few could have imagined before March.

We believe that for us to take maximum advantage of the global recovery the country’s productive base must remain intact. The risk of financial foreclosures must be minimised, for example through a timelier execution of the current private sector debt relief scheme or small business support fund (SBSF). This will also help to reduce technical impairment provisioning in the banking sector and therefore avert the systemic threat to the banking sector capital base which is currently looming. Businesses with commercial loans which ‘go under’ are of no use to either the economic recovery of the country or the banks which have supported them. Critical operators should be protected so that they do not financially collapse in the months ahead.

Conclusion

Whilst the SCCI and the SHTA recognise that consensus across the various stakeholders will not be reached on every issue, we have faith that an agreed road map – developed in close accord – is possible. We are all in Team Seychelles, with a shared objective of achieving an incremental normalcy on the path to full economic recovery.

However, terrible as the pandemic has been, we believe that, for almost all businesses, this is a temporary event. Much of the spending and investment forgone today will take place when the pandemic subsides. With regards to tourism, we are aware of the considerable pent-up demand and appetite for the renewal of travel presently evident in our traditional principal markets.
As stipulated by President Wavel Ramkalawan, it is critical at this moment that all parties – the government (all three branches), employers, workers and civil society come together for the good of the nation to overcome the challenges presented by this unprecedented and difficult time.

Mr. President, we acknowledge and applaud the delivery of your first State of the Nation address which we find to be bold, frank and passionate.

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