Price volativity is forcing trade unions to be more protective of members engaged in lengthy wage agreements, and Bustamante Industrial Trade Union(BITU) president, Kavan Gayle, thinks it will become a major issue unless employers accept protective clauses in the agreements.

"We can't predict the future, so we will have to make provisions to ensure that if inflation rises above certain levels, we can adjust the agreement," Gayle said.

According to him, while there are some concerns about the second year of a two-year wage agreement, because of singificant increases in food and oil prices over the past year, the real concern is about the third year of 3-year agreements which, is so far down the road, workers become nervous about the possibilities.

"Any contract beyond two years must have a clause to protect the workers against significant cost of living increases. What the clause does is to guarantee that, if inflation exceeds a predictable figure, the parties can re-open the discussions, or the employer can simply agree to match the movement in inflation," he said.

"This is necessary because today you can't predict the future, you can only make provisions to protect you against excesses," he added.

Gayle gave as a case in point a current dispute with the Jamaica Pegasus Hotel, New Kingston,which has now been referred to the Ministry of Labour and Social Security for conciliation.

The parties had a three-year agreement up to October 31, 2007.The hotel wants to continue with 3-year contracts, but the BITU says it cannot do so without a provision guaranteeing an adjustment of wage increases for the third year to meet any excessive inflation.

The trade unions have met resistance from employers who wish for a 3-year agreement, but are not willing to agree to the cost of living provision.

"Nobody knew that inflation would have gone to this, they don't know how high it will go and they are afraid that they will have to match it," Gayle explained.

Companies, like bauxite mining firms and hotels, welcome triennial negotiations because they usually ensure 36 months of industrial peace, basically, between negotiations. But,the current level of price volatility has made both workers and employers nervous.

But, Gayle insists, "we can only settle on a figure for the third year, if the company accepts a provision that if inflation exceeds that figure we will be able to renegotiate the third year,and this is consistent with our approach to this situation."

The Business Observer was unable to contact anyone at the Jamaica Pegasus who could comment on the current dispute, but Minister of Labour and Social Security, Pearnel Charles, said that the ministry is willing to conciliate an agreement.

"We are aware that there is some level of concern about how inflation will impact on contracts like these, down the line, but we don't want it to be seen as a renegotiation of the agreement, because that is where the problems arise. All they need to do is to look at the value of the dollar when the agreement was signed, compare it with the value at the time when the issue arises and reach a compromise," Charles suggested.
He said that, fortunately, most local collective agreements are not for three years and that in the areas where they are most prevalent, like in bauxite/alumina, the employers were willing to accept the COL provisions.

"In most cases, by the time the negotiations are completed, they are well into the first year of the agreement or at the beginning of the second year, so the real problem is the third year. But, it shouldn't be a problem if both sides compare the value of the dollar at the time of signing against the value when the issue arises," he insisted.

Gayle says, however, that if inflation remains as volatile as they are, 2-year agreements may also come into question in the near future.

The Internaitonal Labour Organization (ILO) has confirmed that the trend towards rising food prices, as observed over the past three years, accelerated significantly in 2008 to the extent that the global food crisis now has serious implications for the United Nation's Millennium Development Goals (MDGs), especially Goal 1 on the eradication of extreme poverty and hunger and the global goal of achieving decent work for all.

"This is principally because the poor, typically, spend a larger share of their incomes on food and are, therefore, the most vulnerable to increases in the prices of food," the ILO said.

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