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Raffique Shah


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Addressing income inequality

By Raffique Shah
August 8, 2018

Whereas the poor in the society are very visible, tens of thousands of adults who can best be described as the "working poor" remain largely invisible, barely surviving the purgatory-like existence the majority of them are condemned to live in for their life spans.

While there are entire ministries and government agencies established to address poverty through multi-pronged programmes, hardly anyone spares a thought for the plight of the working poor, who would probably be best categorised as the wretched of the earth, to borrow a term coined by Martinique-born intellectual Frantz Fanon.

Last week, I was chatting with a young woman, likely in her mid-40s, whom I have known for many years. She holds what can be perceived to be a decent job, has been a stable, productive worker (as far as I know), but who, through unfortunate circumstances, was cast in the role of sole breadwinner in her household of three. After tax and other deductions, she takes home just around $7,000 per month.

"I can barely make ends meet," she told me. "I live from pay-cheque to pay-cheque, and often I have to borrow money before month-end to pay for unplanned expenses. It's tough out here."

Now, if you see her commuting to and from work, or watch her anywhere in public, you would never believe the trauma she must endure in her day-to-day existence. You would assume she's a successful middle class woman who holds a good job and enjoys a happy life.

When I thought about her plight, I realised that tens of thousands of lower middle-income workers, quite possibly 200,000 or so—teachers, public servants, police officers, soldiers, ordinary employees in banks and other financial institutions, media workers, administrative staff in manufacturing and commerce, and many more who we might think are happily employed, but who fall in this category.

People in the upper-middle-income bracket and above whose take-home pay is at least $20,000 per month, can hardly imagine what life must be like for those trapped in the twilight zone, above the poverty line but below ceiling of comfortable living.

And I'm referring to persons who have sound education at the secondary school level, often a tertiary-level degree or diploma, are as productive and diligent as is possible, responsible in terms of size of their families, and who do not blow their meager incomes on trivial pursuits or common vices.

Most of the working poor start their days at no later than 4 a.m. since, even if they own vehicles, they must be on the traffic-clogged roads by 5 a.m. in order to be at their desks or stations by 8 a.m. On afternoons, when they leave work at 4 p.m. they face another traffic ordeal. If they have children, the demands on their time are multiplied several times.

With food, rent/mortgage, day care, transportation, utility bills and other expenses whittling down their monthly incomes (in households that have two working adults), how can they hope to save a little something that all of us were taught to do by our parents? Like the person whose plight prompted me to write this column, they live in a netherworld that lies between the "haves" and the "have-nots" where no one notices them and few government programmes mitigate their misery.

Sure they enjoy income tax exemptions on the first $6,000 of their monthly incomes. But so do the elites who earn $100,000 per month or more. And yes, they qualify for low interest mortgages and HDC housing units—if they ever get to the front of the miles-long queues, or better still if they know persons of influence.

The politicians will also point to heavily subsidised utilities, fuels, public transport (such as it is, including the inter-islands services and water taxis) and more. But these billion-dollar State-funding benefit the wealthy more than the poor and the working poor as the politicians are well aware.

Improved salaries will help, but their impact is invariably negated by increased prices of goods and services. For the working poor to enjoy their just dues requires creative policies and strategies formulated by government, employers and labour, as well as the affected workers themselves who must have thoughts on what measures might mitigate their pitiful plight.

I have previously addressed one aspect of the economic downturn that has negatively impacted mostly middle-income workers who invested in their first homes, but have been retrenched (Mittal steel workers, for example) or otherwise dislocated.

Having witnessed the disaster of the recession in the 1980s—hundreds, maybe thousands of houses seized by the banks or abandoned by owners who could not meet their mortgage payments—we do not want a repeat of that horror. It benefits no one, not even the banks.

I suggested that Government, through the Home Mortgage Bank or some similar institution, place a moratorium of maybe up to three years on payments even as the families occupy the homes. The breadwinners should find employment during that time, and the properties are not left to deteriorate.

Such policy may cost Government a few billion dollars, all recoverable, and it saves families from fragmentation or worse.

Unprecedented, you say? A bad idea?

Hey, successive governments pumped $23 billion into CLICO and CL Financial nine years ago. To date, they have recovered only $8 billion. No interest was charged and we are still uncertain of the outcome of this issue. And you, Mr Politician, Mr Economist, are telling me I'm crazy for suggesting help to keep the roofs over the heads of a few hard-working citizens?

Take a hike!

I rest my case.

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