.JPG)
Lambert Brown, Contributor
THE RECENT announcement of plans by Alcoa to expand its Jamalco alumina refinery at Halse Hall, Clarendon, from 1.25 million metric tonnes per annum to 2.65 million tonnes represents an ideal opportunity to review the role of the bauxite/alumina industry in the economic and social development of Jamaica.
Our policy makers would wish us to believe that they have properly positioned the industry and have maximised the benefits to Jamaica over the last three decades from this industry. Is this really the case or have we missed the boat truly to ensure that the Jamaican economy enjoyed sustainable growth from this irreplaceable natural resource?
At the end of 2002, Jamaica produced 13,141,800 metric tonnes of bauxite. This was the highest level of production in 28 years. In fact this increased production of 757,000 metric tonnes of bauxite over 2001 earned the country US$16.3 million less in foreign exchange inflow.
It is my view that as a country we have missed the boat on several occasions because of bad policy decisions. While the announced Alcoa expansion and all other investments in the industry must be welcomed and applauded, it is important that we realistically assess the extent to which Jamaica stands to benefit. We should discourage unrealistic expectations among our people.
The Alcoa expansion of 1.4 million metric tonnes of alumina annually will require approximately 2.8 million tonnes of bauxite more being mined to meet the Alcoa needs. At the end of this expansion there is likely to be fewer workers employed at Alcoa than the current figure of 620. The expansion, like previous ones at Halse Hall, will be based heavily on new technology and be capital-intensive rather than labour-intensive.
JOBLESS GROWTH
In 1994 Jamalco produced approximately 850,000 metric tonnes of alumina. At that time there were 1,020 employees. Today, Jamalco produces at a rate of over 1,200,000 metric tonnes per annum but with only 620 employees. That is 41 per cent more production with approximately 50 per cent less employees. Jamaica will lose future earning from the reduced work force in the long run.
This a classical case of what is called jobless growth. This trend is not unique to Jamalco. It affects not only all the other bauxite-alumina companies in Jamaica but most other Jamaican companies. This is the very phenomenon that faces the American economy, which is growing while its people are losing jobs. The U.S. presidential candidates are being forced to grapple with this reality during the current election campaign.
I recalled a few years ago being told by a Government minister that when the expansion takes place in the industry more jobs would be created in the companies' operations. I had to inform him that this would not be the case. I am therefore not sure that the policy makers are conscious of this jobless growth reality.
Identifying the jobless nature of the growth is not aimed at criticising the Jamalco expansion but instead to point the authorities to the need for job creation policies to deal with the impact of future job losses in the economy. Every dollar spent by an employed worker has a multiplier effect in the economy. When that is removed the grief will be felt all round and we will be showing growth with high unemployment levels as was the case in the 1960s. So while Alcoa will benefit immensely from their investment I am not sure that the people of Jamaica will do the same.
USE OF BAUXITE EARNING
Maybe this is what Dr. Carlton Davis [the Cabinet Secretary] had in mind with his recent comment that "The trick is to use the earnings from bauxite to prepare the next generation for new things". This sounds wonderful. Indeed if this is done, Jamaica could really get some lasting benefits from this irreplaceable natural resource. But wasn't this what was said 30 years ago when the bauxite levy was introduced? Then, in 1974 the Government established the Capital Development Fund to use the increased earnings from the bauxite levy to develop new industries, create jobs and ensure that the bauxite resources of our people contributed to the building of a prosperous nation. That never happened. Successive political administrations placed the expediency of winning elections ahead of nation building. The over US$3,300 million received in levy payment since 1974 was utilised to do house-keeping in a rented house rather than building a house on our own land. This was the effect of using the Capital Development Fund for recurrent budgetary expenditure rather that genuine capital formation which could have lead to growth in business opportunities. It seems the 'trick' is therefore once again to promise the nation great things, while failing to develop real and sustainable policies to make Jamaica prosper from our God-given natural resource.
LEVY POLICY FAILURE
The bauxite levy introduced in 1974 was the Government's answer to the problem of inadequate earning by Jamaica from the industry. It was a popular decision and taken with the best interest of the country in mind. Some of the key players in the levy negotiation of 1974 are still key policy makers today. Over the years these players have steadfastly defended the levy policies allowing for some modification but essentially holding to the views that influenced the 1974 decision.
While our policy makers were standing firm, the bauxite companies were taking their own decisions in response to the levy. Production of bauxite plummeted from a peak of 15,070,877 metric tonnes in 1974 to a low of 6,031,636 in 1985. Investments went elsewhere. During the period 1974 to 1996, investments in Jamaica stagnated, while Australia and Brazil became the preferred countries for investment.
A comparison between Alpart in Jamaica and QAL in Australia is a very good example of how Jamaica lost and Australia gained. QAL was started in 1967 and Alpart in 1969. In 1972 Alpart was producing at 1,180,000 tonnes per year and QAL at 1,275,000 tonnes per year. Today QAL is well over 3,000,000 tonnes per year (TPY) while Alpart is just trying to expand to 1,650,000 TPY. Industry sources blame the levy for this difference in investment flow.
Having lost out on the investment flow and having failed to use the increased revenue from the levy to enhance the productive base of the Jamaican economy it is time for the policy makers to admit that the levy policy was a failure. If the policy has failed can we as a nation continue to entrust the development of our bauxite policy to the same few hands that have directed it over the years? It is well past time for serious changes in the who and how our bauxite policies are developed. In 1997 Mr. Jeff Smith who was in charge of Kaiser interests in Jamaica (Alpart and KJBC), in an article in The Sunday Gleaner of December 29, stated "I would characterise the current Jamaican industry situation as being as a crossroads. Our strategic direction is likely to put us on a 'dead end' path and we must develop a new set of strategies for the industry to prosper and grow." The trade union leadership representing workers in the bauxite industry has generally grasped this need. That is why people like Norman DaCosta of the National Workers Union (NWU), Trevor Munroe and myself of the University and Allied Workers Union (UAWU), agreed to encourage our members to support the Manley Accord among the bauxite companies, the Government and the unions. Among its objectives were the development of the bauxite/alumina industry and enhancing its international competitiveness so that it could prosper and grow as well as ensure environmentally-friendly and safe operations for the benefit of all the parties. Additionally, the parties to the MOU were committed to strengthening all round co-operation in the bauxite/alumina industry and establishing a framework for consensus thereon.
Unfortunately, the Government has not lived up to its commitment to develop all round co-operation. It has chosen to operate on a basis of secrecy and has gone off on a frolic of its own, ignoring the rights and interests of the Jamaican workers. This is bound to backfire and hurt the national interest unless the Government changes its negative approach to the bauxite workers.
The industry cannot be built on the exploitation of the Jamaican workers. The companies must earn reasonable returns on their investment. However, it is not necessary to force workers to work overtime without compensation to earn such returns on investment. Neither is it right to have employees working in hazardous conditions in an alumina plant without life insurance coverage. Equally it is not necessary for Jamaican employees to work without paid vacation leave, more so in a company in which the Government of Jamaica is 50 per cent owner.
FOUNDATION
This is the foundation on which our policy makers have negotiated for the expansion of Jamalco. No wonder Kevin Lowery, director of corporate communications at Alcoa Pittsburgh head office, described Jamalco as 'unbelievably low cost'. Indeed this is building a castle on sandy ground. I hope that good sense will prevail and the Government will change its anti-worker policies in the bauxite/alumina industry. It is also important that the Government pays attention to problems in the communities surrounding the bauxite plants. It is unbelievable that over the last eight years less than $200 million was spent in total on community projects under the Bauxite Community Development Programme. Clearly the communities are not benefiting as significantly as they should from hosting the companies.
It is not only the workers and the communities who are being short-changed by current policies but the nation as a whole. Our intake from levy and tax is falling. In 2000 with production of 11,283,100 metric tonnes of bauxite we earned levy/tax of US$74.6 million. However in 2003 with record production of 13,444,529 metric tonnes we earned only US$56.4 million. This is a downward trend that has continued over the last three years.
It is high time that given the importance of our bauxite/alumina industry that a National Industry Policy with the involvement of all the stakeholders be developed and pursued. It is time for the industry to be removed from the hands of the select few and that broad national consensus be developed so that Jamaica may negotiate from a position of unity and strength rather than be limited by those who are trying to correct the errors of their past miscalculations.
Lambert Brown is a vice president of the University and Allied Workers Union.
