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By NEIL HARTNELL
Tribune Business Editor
A RULING by Chief Justice Sir Michael Barnett might deter Bahamian workers with "marginal claims" from pursuing employment cases in the Supreme Court, rather than the Industrial Tribunal, a leading law firm arguing that it dramatically reduces the 'costs' leverage they can exert.
Higgs & Johnson, in its latest client bulletin dealing with the award of legal costs in employment actions, said a March 2010 ruling by Sir Michael could "remove a tool from the arsenal of the vexatious litigant" seeking to pressure a company into settlement, as he declined to award legal costs to a wrongfully dismissed employee who one their case. ...
The founder of a new online brokerage firm says he will be the largest trader in the country within six months.
By removing many of the regulations governing traders in Canada, the U.S. and Europe, the idea is to create an attractive offshore trading hub to short sell and trade penny stocks.
Guy Gentile, the CEO of SureTrader.com, is also the creator of SpeedTrader.com, the U.S. online trading broker with $20 million per year in annual revenue. Inc. Magazine ranked it 703 on its 2011 list of fastest-growing private companies, with a three-year revenue growth of 451 percent.
However, Gentile told Guardian Business that SureTrader should be able to surpass its U.S. sister company through unique service offerings and the absence of regulations.
"We have been in business for three months and we should run in the black shortly," he said.
"There is no question we will be the largest broker dealer within six months time in terms of the number of transactions per day."
A veteran of the brokerage business for 15 years, the offshore brokerage markets primarily to tourists and
individuals that live in The Bahamas but possess other nationalities.
"I came to The Bahamas because I wanted to build a brand here, as other businessmen I know have done the same on other islands," he said.
Gentile said his online platform has 30 active accounts and more than 100 in the process of being opened. At present, SureTrader facilitates 500 transactions per day and anticipates up to 20,000 in the near future.
One of the many attractive points, according to Gentile, is clients are not subject to the Pattern Day Trader Rule. Imposed by the Securities and Exchange Commission, investors with less than $25,000 are prevented from performing more than three day trades in any five-day rolling period.
Another advantage is the wide margin or leverage it offers clients.
"In Canada you can leverage 3:1, while in the U.S. it's 4:1," Gentile said. "We offer 6:1 to give our clients an edge. We're also introducing a new product called Flexi-Leverage. It will give clients 20:1 leverage but forces them to diversify and hedge themselves. If you're getting that kind of leverage, we don't want you betting the farm."
SureTrader.com charges $4.95 per trade for up to 1,000 shares, he said, making it a cheaper option than conventional online brokerages. Gentile told Guardian Business the platform is open to all international investors.
He called the business a "numbers game", with the focus on the quantity of trades rather than large sums of cash. There are currently five people employed at SureTrader, but Gentile expects this number to rise.
Timothy Sykes, an author, educator and celebrity Wall Street enthusiast, has emerged as a valuable ally of both SpeedTrader and SureTrader, sending the thousands of casual investors he had trained over the years to the online platforms.
"What we have done is ally ourselves with educators online, such as Timothy Sykes, and they push trainees our way. We prefer not to be involved in investment advice. It doesn't pay for us," he said.
Today the trade liberalization commitments made by the Government of The Bahamas in the areas of trade in services and investment were formally incorporated into the Economic Partnership Agreement between CARIFORUM and the European Union (EPA). The Ministerial Joint Council of the EPA, the highest decision making body under the EPA, made the decision to incorporate the commitments. The decision formalizes agreements reached between The Bahamas and the European Union in 2010.
Minister of Financial Services Ryan Pinder, who has responsibility for international trade, advised that though the decision by the Joint Council was procedural, in the sense that it memorialized the understanding reached in 2010, the event of The Bahamas' investment and services commitments being incorporated into the EPA is of considerable weight and importance in the nation's history of trade liberalization and regional integration.
In the context of The Bahamas being a services-based economy and its current bid to accede to the WTO, the minister noted that a liberalized services regime will be the platform from which The Bahamas will become fully integrated into the global marketplace. The Bahamas will leverage its expertise in the area of services to become a world leader in this economic sector.
The investment and services commitments will now be provisionally applied pursuant to the provisions of the EPA.
One small business comparing itself to David is out for the Goliath of its sector, looking to the National Job Readiness and Training Programme (NJRP) to load its sling with trained young Bahamians.
For Alfred, being a butler means keeping the Bat Cave and Wayne Manor tidy. He gets Bruce Wayne up in the morning, prepares Batman for night and generally serves as a sage to the billionaire superhero.
For Vincent Saunders, Sandals Royal Bahamian employee of the year 2010/11, being a butler also requires some special abilities.
Championing his country, his guests and his children's future, Saunders describes his career as dynamic, with each day presenting a new set of challenges.
"Don't knock it until you've tried it," Saunders said. "It is the most rewarding job ever...once you try it you will realize that it is rewarding mentally, physically and financially."
Saunders started in hospitality at the front desk of the Atlantis Paradise Resort, spending about eight years there. Eventually, he said, he grew to crave a bigger role in the guest experience, beyond the check-in's and check-outs that typify front-desk work, and moved on to become a butler.
He got what he was looking for. Saunders said he's now a part of his guests' entire vacation experience. When Saunders isn't greeting a new arrival, he's busy walking guests to dinner, following up with housekeeping or food and beverage to ensure his guests' expectation are met or exceeded, booking tours and excursions, or sharing information about the property or The Bahamas.
Saunders has been at Sandals Royal Bahamian in Nassau for the last six years, distinguishing himself through service. This year he was nominated for Sandal's International Resorts International's "Ultimate Team Member of the Year Award", scheduled to be held in Jamaica this month.
The transition to the new career brought one particular challenge, Saunders recalled. The nature of the job, which involves anticipating guests' needs and managing their vacation experience, demanded that he knew the resort and its various departments intimately, particularly those with a direct impact on the guest experience.
But Saunders said it was one of those challenges that, once licked, has proven an invaluable experience.
"The challenge for me was having to know the entire hotel and now I have turned that challenge into something that has really worked well for me. I know everything about the hotel. Now, I have that - wherever I go," the butler said.
When it comes to his guests' satisfaction, the buck stops with him.
Saunders says he leverages that knowledge of the hotel to his guests' advantage. Fortunately, the buck often starts with him too - increasing the impact he can have on their Bahamian experience. The initial contact he has with guests is the favorite part of his day.
"Vacation begins when they see Vincent, and Vincent is there to greet them. I love to be the first person that guests meet when coming to Sandals. This is my time with them now, and I get to mold their thoughts and ideas about their trip.
"First impressions are the most powerful, and I get to be there the minute they get out of that Mercedes Benz or Rolls Royce," Saunders said.
The luxury car service is a part of the Sandals experience.
The close interaction with guests at Sandals - a couples resort - means Saunders often finds himself not only at the start of a love affair with The Bahamas, but at the heart of unforgettable moments for his guests, too.
For example, a few weeks ago, a guest wanted some help proposing to his girlfriend.
"Leave it to me," Saunders told him. He went on to set up an evening complete with champagne, chocolate covered strawberries, roses, and of course a Bahamian sunset at the beach. The proposal was made, there were some tears, and a very happy lady became a bride-to-be.
For this super butler, it's all in a day's work.
By NEIL HARTNELL
Tribune Business Editor
RoyalFidelity Merchant Bank & Trust is seeking to develop and launch mutual fund products into the wider Caribbean market, leveraging the joint venture relationship it has with Royal Bank of Canada - and the latter's Royal Bank of Trinidad & Tobago (RBTT) merger - for sales and distribution channels throughout the region.
Michael Anderson, the Bahamian-headquartered investment bank's president, told Tribune Business in an exclusive interview that RoyalFidelity was especially interested in developing US dollar-denominated investment fund products, targeting the extensive US dollar stocks accumulated by businesses and individuals region- ...
Prime Minister Perry Christie yesterday appealed to "international financial institutions" to adjust their positions with regard to gross domestic product (GDP) per capita as a measure or means of determining the cost of financial assistance.
"We are all now called middle income countries," said Christie in his address at the Commonwealth Heads of Government Meeting (CHOGM) in Sri Lanka.
"This means that when we look to the markets and the international financial institutions, there is a measure which is used to determine what level of interest will be offered to us as the price of borrowing money.
"We are no longer able in many cases to get concessional lending because of the measure used to determine our level of wealth and ability to pay."
Christie said that in this regard The Bahamas supports the efforts of the Commonwealth "to leverage the number of our voices to bring about change in this area".
He also identified with the call from the young people of the Commonwealth for action to ensure that they are trained and can participate more fully in the world economy.
"The young people are the future of the world," Christie said.
"In my own country, we came to office with a specific promise to support young people and to reduce youth unemployment.
"We pledged to double the investment in education during our term. We believe that specific programs for youth development are essential to the future success of our country. I would encourage all leaders to lend their support to youth development. There can be no better investment than to engage the youth of our respective nations."
Unemployment among youths (people 15 to 24) has risen to 30.8 percent from 30.7 percent according to the Labour Force Survey, which was released last month. The survey was conducted in May with a reference period of April 29 to May 5, 2013.
Unemployment among youth in The Bahamas is "considerably higher than any other age group" according to a statement from the Department of Statistics.
Christie said, "As part of our commitment to young people and to the Commonwealth, The Bahamas is pleased to be able to host the next Commonwealth Education Ministers Conference in Nassau.
We are hoping that there is a full turnout and that this body commits itself to the policies which will enhance and train our people, especially our youth. I look forward to seeing you in Nassau."
The prime minister also said that heads were meeting at a special time in the life of the Commonwealth.
"Our people often question, what are we doing here? We answer that we are here to reaffirm our values, our commitments to democracy, to diversity, to tolerance, to the rule of law. And if that is not enough, we are now here in Sri Lanka to call for growth with equity," he said.
"I would wish to place The Bahamas firmly in support of this general call. I wish to place The Bahamas firmly in the column that calls for a more just order. I wish to place The Bahamas firmly in the column of standing up for the human rights and dignity of all peoples.
"I wish to support the rule of law. It is a long list of wishes. I think that we are all as countries and leaders capable of ensuring that all of the values of the Commonwealth are upheld.
"So that is the first thing for The Bahamas: We are here to uphold the values of the Commonwealth. Secondly, we are here to reinforce historic ties. Thirdly, we are here to get an opportunity to exchange views with people and nations from theaters far away from our own place in the North Atlantic and by that exchange of views to help our own growth and development."
The basic principle that underlies the minimal wage is that workers should be treated fairly and compensated for their contribution to the businesses that they work in. Usually, workers are compensated based on their productivity which, in turn, depends on their level of education, knowledge and work ethic. This is why in each business, the level of compensation that each worker receives is commensurate with his or her level of productivity. Workers' compensation is also influenced by the different skill set requirements, the supply and demand for labor, the overall profitability of a business and the monopolistic status of a business.
The more productive any business is, the more money it makes. In most countries, business earnings are directly related to the state of the economy, and thus, there is a direct relationship between business earnings and GDP. Business earnings are a manifestation of the total productivity of the business and GDP, as the name implies, is the sum of the productivity of all businesses in a country. As a general rule, the growth in earnings in any business cannot outpace the GDP growth rate.
Generally, the profits of each business entity are shared between business owners (shareholders), the management, the workers and the government (in the form of taxes). The question is, in any given year, to what extent should the workers share in the profits of a business. This is sometimes referred to as the balance between capital (owners) and labor (workers). Ideally, workers should be compensated based on their contribution to the overall productivity of a business. However, in most countries over any period of time, this balance can fluctuate in favor of either capital or labor.
In the U.S., there has been a large disparity between the compensation of management and workers to the point where, in some cases, management compensation is 300 times that of the average worker. There has been much debate as to whether this level of management compensation is fair or an example of gross inequality and greed. Really, the only way to justify such a disparity would be to estimate the productivity of any given CEO, compared to an average worker.
Although some people may be envious of the profits made by business owners during good economic times, there is no reciprocating sympathy for owners during hard times when they may actually lose money. Owners take the risk to start a business and, depending on the success or failure of the business, they either make or lose money. However, irrespective of economic conditions, the workers who have not taken any risk, expect and should be compensated for their contribution. One of the problems with the unions in The Bahamas is that often, when they are in negotiations concerning workers' compensation, they appear to be insensitive to prevailing economic conditions and the level of productivity of the workers.
On another level, there is always the question as to whether the government's share of business earnings, otherwise known as taxes, is fair or equitable. And this always leads to the age-old question as to whether businesses are paying their fair share of taxes or whether they are being over-taxed. I think it's probably fair to say that businesses in The Bahamas are under-taxed and somewhat inappropriately taxed by government as a percentage of their profits. But on balance, because of core inflation, their effective tax rate is exceedingly higher than their counterparts in the U.S.
Thus, there is an ongoing four-way struggle for the distribution of business earnings. However, at any point in time, there are a number of forces at play which ultimately determine business wealth distribution. The government determines the level of business taxes and, thus, its share of the distribution. Businesses that have a global presence have the option of moving their operations to another lower tax jurisdiction when faced with high levels of domestic taxation. But governments can also impact business wealth distribution through policy initiatives that favor industry over households, as is the case in China and Germany. In these countries, the distribution of wealth is very much in favor of industry over households, and thus employees' share of productivity is limited by government policy.
Over the past five years, in the U.S. there has been a tremendous amount of attention paid to management compensation of business/corporate executives, especially those in the financial services sector. The problem in this case is that the compensation of the executives is usually determined by the boards of directors of the companies, who are usually appointed by the CEO and are, often, personal friends. The problem is that shareholders have no say in the matter and thus the system has been abused. In Switzerland, however, laws have been passed that limit the compensation of CEOs to a certain multiple of the average worker.
In the case of the average worker, compensation is primarily determined by four factors: inherent productivity, government policy, inflation (consumer price inflation and core inflation) and the existence and strength of the unions. I have already discussed the impact of productivity and government on labor compensation, but the impact of the two types of inflation is equally important. For example, when the economy is going well and there are low levels of unemployment, workers have more leverage over owners and options. In this case, employers, usually, have to raise the wages of employees which, in turn, increases their buying power which leads to more demand in the economy (more consumption), which leads to an increase in prices, which leads to a higher cost of living, which then leads to workers demanding higher salaries. Of course, the opposite cascade occurs during an economic downturn, such as now is the case in The Bahamas.
Core or structural inflation has an even greater impact on the effective income of workers. For example, in The Bahamas, even though the consumer price index (CPI) has been reasonably moderate, running around two percent, the level of core inflation has been horrendously high. The primary causes of core inflation are the high cost of energy, the high cost of money (high interest rates), the high cost of real estate and real estate transaction costs, exchange control and the tax structure (import duties). Core inflation has essentially reduced the real incomes of all Bahamians and reduced our national productivity (GDP) and thus also our global competitiveness.
Another way of looking at this is to compare the average worker's income in The Bahamas, which is $16,500, to the GDP per capita which is $22,500. This disparity would imply that there is productivity gap in dollar terms of some $6,500 between the average income of workers and their productive input into the economy. Moreover, the living wage in The Bahamas is around $45,000 per person. The difference between this figure and the average worker's annual income of $16,500 is $29,500. This figure is representative of the impact of core inflation on the income of workers. This difference is also the reason why the average Bahamian is forced to beg, steal and borrow in order to sustain him or herself. Notice also that the primary reasons for core inflation were energy costs, the cost of capital, real estate exchange control and the tax structure. This would imply that every year in The Bahamas there is a massive transfer of wealth from both the workers and businesses to the oil wholesalers, the banks and the government. This, in turn, has significant economic consequences as both the oil and bank related wealth transfers are expatriated each year, which means that these funds are not available to grow the local economy and thus provide the opportunity for more employment. The wealth that accrues to government is seldom used in a productive manner that creates productive employment.
The third factor that helps to determine the income of workers are the unions. The unions' primary role is to negotiate on behalf of the workers to ensure that they are paid fair wages and receive all of the associated benefits. For the most part, Bahamian trade unions have done a good job in negotiating on behalf of their memberships for salary increases and benefits. However, in some cases there has been no associated commensurate increase in the productivity of some workers with the increase in salaries and benefits, and this has had a stifling impact on certain businesses, especially the fast food industry. In aggregate, union leaders could have better improved the standard of living of their membership had they pressed government to implement policies that could have reduced core inflation.
Over the past several weeks, most of the discussion about the minimum wage has been primarily focused on the two opposing traditional, but somewhat one-dimensional views, on the impact of changes of the minimum wage level on the economy. Those (government and the unions) in favor of an increase, argue that increasing the minimum wage will improve the standard of living of workers. This view is supported by the thought that the marginal propensity to spend money is far greater for low income workers compared to higher income workers. This will, in turn, increase overall consumption in the economy and thus all businesses will be better off with a corresponding increase in GDP. Those who hold this view are not wrong about the economic consequences, but like President Obama they often confuse the minimum wage with a living wage, and as described above the two are quite different.
The opposing argument is that, with the introduction of VAT, and potentially, a new healthcare tax and a mandatory pension scheme, businesses will be unable to bear the added burden of these expenses. They further posit that with an increase in the minimum wage, owners will be under pressure to increase the salaries of existing employees, and as a result, will be inclined to release some of their current employees and will potentially hire fewer future employees. If the later two outcomes were to occur, this would result in less future consumption and thus a decrease in GDP. Moreover, they speculate that during an economic recession, there are many people who might be willing to work for a lower wage, but because the employers cannot by law pay this lower wage they cannot be employed.
The overall impact of these opposing economic views depends of course on what percentage of the work force is impacted by any change in the minimum wage level, the state of the economy and the level of unemployment. Estimates vary as to how many employees would be impacted by the increase in the minimum wage level, but the consensus of opinions is that there are about 40,000 people who are currently earning less than the proposed $7 per hour. I would guesstimate that most of these individuals work in the food services (restaurants and fast food establishments), housekeeping and groundsmen services, or as gas station attendants or in the underground economy. If one assumes that each of these persons is working 40 hours per week, and the minimum wage is increased by $3.0 ( $4.0 to $7.0) then the collective annual payroll of businesses would be increased by approximately $250 million. The impact of a mandatory increase in payroll of this magnitude, especially during the current economic recession, could be the death toll for many of the aforementioned businesses. None of these businesses have the advantage of being a part of a monopoly or oligopoly, and thus cannot increase their prices to offset the increase in expenses associated with the increase in the minimum wage. Furthermore, in many instances like the gas stations and the fast food industries profit margins are very thin and any increase in expenses would certainly result in closure and a further increase in unemployment. The underground economy would not be impacted, because being out of the formal system, underground owners would not have to comply with the new policy. Paradoxically, there might be an increase in the supply of labor available to the underground economy because there could be so many persons desperate for work who might not be employed because of the increase in the minimum wage level, many who are prepared to work at the present minimal wage but cannot find jobs in the formal economy and those who will be released from the formal economy because of the increase in the minimal wage. The net effect of this would be to drive down wages even further in the underground economy.
Not the desired impact
Thus any increase in the minimum wage given the current set of circumstances would not have the desired impact of increasing the incomes of workers, but would lead to an increase in unemployment levels and a decrease in the aggregate (collective) income of workers. The increase in unemployment would result in more welfare payments, fewer National Insurance contributions (payments) and more crime. This, in turn, would result in lower levels of national consumption, a decrease in GDP and an increase in the debt; GDP and the negative economic cascade associated with this.
However, if the government were to focus on reducing core inflation then there would be a transfer of wealth from the banks, the oil wholesalers and the government to households and businesses. This would result in a positive economic cascade because there would be an increase in the real income of workers at all levels, all businesses and government. Moreover, there would then be more consumption, investments and new businesses resulting in an increase in GDP and a reduction in the debt to GDP ratio.
There are many factors that determine the wages and incomes of all of the stakeholders in any economy. When any change is contemplated, those contemplating the change must carefully review the possible intentional and unintentional consequences of such change on the overall economy. To a large extent it's a balancing act between what is fair and equitable and what is economically feasible.The question is will government implement the increase in the minimum wage without seeking any local advice on all of the possible economic consequences? If it's management of VAT and the numbers industry is any indicator, then I would assume that they will consult with at least three foreign economic consulting groups, two multinational entities, and some $2 million later in expenses, come to the conclusion that this is not the most opportune time to take such action. But, true to form, having put the proverbial political foot in their mouth, government leaders will still proceed forward with their plan and consequently further increase the number of business and home foreclosures, raise unemployment levels and further increase the debt to GDP!
o Dr. Jonathan Rodgers is a Bahamian opthalmologist, businessman, and author of two books on the Bahamian economy, "The Bahamian Dream" and "Is it really better in The Bahamas for Bahamians?"
MIAMI - MasterCard Latin America and the Caribbean announced yesterday the appointment of Ray Merceron as the vice president and territory head for the Western Caribbean, which includes Belize, Bermuda, The Bahamas, the Turks and Caicos Islands, the Cayman Islands, Jamaica and Haiti. As territory head, Merceron will hold overall responsibility for expanding MasterCard's market in the sub-region.
"Ray brings with him nearly ten years of experience in the payments industry, together with strong a background in financial analysis and a range of international financial experience, having held positions for MasterCard in Europe and Latin America and the Caribbean," said Mario Perez Jr., General Manager for MasterCard in the Caribbean. "As the head of one of our most significant markets in the sub-region, Ray will be tasked with providing leadership and necessary support in connection with delivery of advanced products and services to meet the demands of the market."
Having held positions for MasterCard in Europe, Latin America and the Caribbean, Ray brings with him nearly ten years of experience within the payment industry. Merceron first joined MasterCard in 2004, and has since held positions in finance, as well as in the area of customer delivery, where, through continuous customer interaction, he was instrumental in the establishment of MasterCard's Maestro brand as the predominant brand in the Netherlands.
Prior to joining MasterCard he held an account management role at Avaya, a global provider of business communications and collaboration systems, where he was responsible for identifying business opportunities with new clients in Europe, Middle East, and Africa.
"I am very proud to become part of the Caribbean team at MasterCard, leading a group of markets with as much potential as the Western Caribbean," said Merceron. "I look forward toward working on implementing effective strategies and plans in these markets while leveraging our innovative company culture that continues to offer solutions that are safe, simple and smart".
Merceron was born and raised in Haiti, where he received his secondary education, and later attended Vrije Universiteit Brussel in Belgium, where he received his Bachelor of Science degree in business and technology.
By NEIL HARTNELL
Tribune Business Editor
DeVry University is still exploring "how best to leverage" its Ross University medical school in Freeport as part of its overall international expansion strategy, it was revealed yesterday, the facility having hit another snag over financial aid for students.
Unveiling its half-year results for the period to December 31, 2010, yesterday, DeVry said the medical school its Ross University subsidiary had established in Freeport had won licensing approval from the Medical Board of California in November.
However, the US Department of Education had raised questions about the eligibility of students attending the Freeport, Grand Bahama, school to ...