Prime minister David Thompson and his senior economic advisers and consultants are going on a merry, inebriated walk around a funeral pyre like drunken sailors on shore leave..

Somehow they seem to believe that if they play the three monkeys — see nothing, do nothing and pretend to be dumb – the world will be a better place.

The reality is that to reduce the mammoth public sector deficit the government must cut spending, increase taxation or generate inflation — or a combination of the three.

But for the past two years, ever since the global economy went in to meltdown the government and senior public officials have been in denial about the real consequences of this for the Barbados economy.

Somehow, almost like New Age religious believers, they have been repeating a mantra that the Barbados economy is sound and that, in time through some miracle, it will recover and business will continue as usual.

Yes, the global economy has been in serious trouble; yes, there is a spectacular shift in economic power from the Anglo-Saxon economies to the Far East and oil-producing ones; and yes, the better managed economies are restructuring themselves to cope with these changes.

Unfortunately, neither Barbados nor the dysfunctional Caricom Secretariat seems not to realise if it is day or night.

The bottom line is that the economic gridlock which has catapulted Barbados in to a steady decline has nothing to do with the global recession, although that single event might have speeded up the process.

The reality is the country is in the grip of serious structural problems which the government and its advisers seem oblivious to.

Let us start with the basic: the most important policy issue during a recession is the creation of jobs. Keep people in jobs and the economy will keep turning over.

Yet, although it has all the fiscal and monetary levers, the government has failed to innovate.

To keep the jobs market moving all the government had to do at the very basic level was to introduce a policy of job sharing in the public sector for all entry-level jobs.

Although this is a short-term solution and not the fundamental answer, a young school leaver having a job for two and a half days a week is in a far better position than being unemployed.

Then, using its fiscal might, it could incentivise the private sector to do the same through income tax and national insurance relief.

Having done this, government should concentrate on wealth creation and expanding the small and medium business sector through innovative policy developments.

Government also needs to take a scalpel to the bulging public sector work force: out of the 110000 or so workers in Barbados, ten per cent of whom are official unemployed, about 50 per cent of those in jobs are on the public pay roll. This is a scandal.

About 28000 work in the main civil service, and the others are made up of transport workers, police, defence force, doctors, nurses and ancillary staff at the hospital, employees in subsidised hotels and other private businesses, port and airport workers, and anyone employed by those badly managed hotels which go cap in hand to the government.

At present the government has a portfolio of property, including hotels, a long list of peripheral government departments and state-controlled corporations that it should sold off at market valuations.

It should also think seriously of selling of the port, airport, Transport Board, Government Printery, and its long list of unproductive share holdings in the Trinidad-owned Barbados National Bank, LIAT, and others. Such a simple decision would provide the liquidity which it badly needs to pare down its debt.

To comment on this, email Hal Austin at: hal.austin@ft.com

About the Author

Peter N. Boos
Peter N. Boos - Chairman Emeritus, Ernst & Young Caribbean

Chairman Emeritus Ernst & Young Caribbean (since 2004); Founding partner Business Barbados publication (1999) and the Barbados business web portal BusinessBarbados.com (2009); Co-Founder, Chairman and CEO Substance Abuse Foundation Inc. (1996 to date); Founding Sponsor (2009) and First Chairman (2009-2014) Barbados Entrepreneurship Foundation Inc.; Founder of the Peter Boos Foundation (2004), (supporting youth development, entrepreneurship, education, addiction treatment, environmental protection, arts & culture development, relief of poverty and support of various community and charitable causes); Founder, Patron and first chairman ASPIRE Foundation (Barbados) Inc. - 'helping charities help' to strengthen and expand the Barbados Third Sector (2014 to date).