Globalisation pains in Samoa

By Terry Bourke, in Apia

Wjthin the next month, some 240 jobs may

disappear from the Apia

town area through economic necessity.

This is the number we are sure of. There may well be more. The jobs will be lost when two corporations begin restructuring their operations to become more efficient, to

increase profits.

This is their right. Their shareholders those whose investments matter - would be upset if the companies did not do this.

Both Samoa Communications Ltd. and the Pacific Commercial Bank are relying on voluntary redundancies, with incentive packages being offered to staffers who wish to take them. Based on present salary and

length of employment, these packages are

being negotiated by two staff unions with assistance from the Samoa Trade Union Congress, the umbrella organization for all trade unions in Samoa.

All very well. But it means that 240 people will soon be looking for jobs in a job market where few exist Also, many are breadwinners for their families. So the redundancies will have spillover effects, which could well affect the lives of whole families, their health, through changes in diet and perhaps education opportunities for their children. This downsizing of workforces has been a worldwide trend aimed at making businesses more competitive. It has been active in developed countries over the past 20 years, and has resulted in major changes to the employment market, worldwide.

There has also been a downsizing of public services in many developed countries, together with the outsourcing of duties from the public service to the private sector.

In addition, there has been the introduction of a user pays system for services previously supplied by governments, either free or at a nominal fee.

The government’s present plan to restructure Samoa’s public sector is a policy in line with those being pushed by the International Monetary Fund (IMF) and the

Asian Development Bank (ADB). Many think

this could lead to a reduction in numbers of public servants and the introduction of a user pays system for services provided by, or through, the public service.

Certainly, over the past few years here in Samoa, the user pays principle was being implemented. For example, it now costs 25 Tala to obtain a police clearance report

Some argue that if

people are “rich” enough

to own cars, TV sets and

other so-called luxury

goods, they should be in

a position to accept the

user pay principle

often required by employers from those

applying for jobs. And we have seen the introduction of a 25 Tala ‘Parking Fee” for vehicles for purposes as yet to be explained. (NOTE: US$l.OO = Samoa Tala $ 3.0893 on May 24, 2000) Some argue that if people are “rich” enough to own cars, TV sets and other so called luxury goods, they should be in a position to accept the user pay principle. For example, the price of petrol in Samoa is cheap compared to the ones in many countries overseas, about 0.50 Tala per litre cheaper than in Australia. In Samoa, non vehicle owners, by paying taxes, including GST, are subsidising vehicle owners.

Last year, 40 million liters of fuel were imported into Samoa and 14 million Tala was spent by the government on road maintenance. One local economist suggests that those who own vehicles - private, public, buses, taxis - should bear the cost of road maintenance through a charge (tax) on vehicle petrol and diesel prices.An increase of 0.30 Tala per litre on vehicle petrol and diesel would just about cover the cost of road maintenance. It may lead to a reduction in taxes for those in the lower income levels, especially those in the rural areas. While government accepts these pressures from the IMF and ADB to

conform to the “world economy” which the Samoan prime minister is so keen to do, are they in the best interests of the Samoan

people?

We have seen how the IMF and the World Bank’s strict conditions placed on the financial rescue of Papua New Guinea and Indonesia in the past few years were not acceptable to either country. In fact, many economists suggested that the conditions were far too harsh, unrealistic and harmful to the general public in those countries.

Their adoption could have worsened the economic and social conditions prevailing in both countries. And so, the conditions were subsequently withdrawn and changed.

Will Pacific Island countries benefit from joining the World economy?

The IMF and ADB are having much influence on the economies of Pacific Island countries. But in the long run, will this benefit the people of these countries? Will it narrow the gap between the rich and the poor, the haves and the have-nots? If anything, the worldwide gap between the rich and poor is increasing, and at an ever increasing rate.

The economies of nearly all, if not all Pacific Island countries are too small to have any influence in shaping or influencing the world economy. Even if a Pacific Island Common Market was formed as some countries and people are pushing for, this will not improve the situation.

The reduction or removal of tariff and other trade barriers leads to overseas consumer goods flooding into the Pacific Island counties, often at the expense of local produce. Look at the situation here in Samoa where the import of overseas vegetables has, to an extent, been at the expense of the local vegetable farmers.

What Pacific Island export markets have been aided by tariff and trade barrier reforms? None to my knowledge. What about vehicle parts “manufacturing” and garment industries which are presently exporting to the US and Australia? These are at present aided by tariff barriers in Australia

Continued next page

Continued from previous page and a quota system in the US Tariff barriers in Australia are to be progressively lowered over the next few years, SPARTECA notwithstanding, in line with the World Trade Organisation’s agenda. No doubt the US quota system will also be removed, if the US honours its commitment to that body.

With the removal of these tariffs and quotas, these industries are likely to find Asia

a more attractive place to base their operations and they will be lost to the Islands.

And, of course, we see some of the major players in the world market and World Trade Organisation looking after their own interests when they think it politically necessary to protect their own industries.

What’s more, they have economic and political clout that Island countries do not.

Look at how the US introduced tariffs on Australian and New Zealand lamb to satisfy their own lamb farmers.

Look at how the European Union subsidises their farming industries to the extent of 80 percent?

These subsidies increase the price that EU farmers receive for their produce and can lead to the dumping of produce on the World market. (Samoa Observer) ■