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Ministry publishes rules in National Gazette

St. Maarten – The labor department will deny work permits to companies that refuse to hire “a counterpart found suitable by the department and made available to the employer.” This is one of the rules laid down in the counterpart policy the government published in the National Gazette last week. It will still take some time though, before the private sector is going to feel the effects of the controversial counterpart policy because the ministry first wants to do a pilot project that will last one year from the moment it begins.

“The quality of the execution of the policy by the labor department is a determining factor for the success of the counterpart policy. The department will have to play and active and guiding role towards the employer, the foreigner and the counterpart,” the policy states.

Implementation across the board is not the immediate objective: “The ministry has decided to let the broad implementation and associated activities and projects depend on the results of a pilot the department will execute.”

This pilot has to give an indication of the scope, integration and feasibility of the policy. Halfway through the pilot project the ministry is scheduled to receive an interim report that could give reason to adjust the policy. “Based on the final evaluation the minister of Public Health, Social Affairs and Labor will take a decision about the actual implementation of the counterpart policy. The Council of Ministers of the Wescot-Williams III cabinet approved the policy on August 12, 2014.

The policy leaves employers at the mercy of the labor department. If an employer dismisses a counterpart without prior permission, or if he does not train the counterpart adequately, the department will deny a work permit for the foreign employee, or deny a renewal of the work permit. The labor department is the sole judge of the training-effort.

Training of counterparts may last at most three years and all the costs are for the account of the employer.

The policy devotes one-and-a-half page to the points of departure of the executive order on foreign labor (Uav). From the explanatory notes of the Uav, the document quotes the following paragraph: “As far as the developments related to the local job market is concerned the explanatory notes point out that the labor market is being flooded with foreign workers at the expense of local job seekers, with all of its negative consequences. Examples are consequences for the social infrastructure, pressure on available housing, the education system and increasing criminality. In general it can be said that the informal economy is still significant.”

Part of the ordinance on foreign labor is that foreigners who have obtained a work permit are not allowed to change profession or employer. Granting work permits is furthermore dependent on passing an integration exam.

The explanatory notes furthermore point out that the process of selecting and placing counterparts is still a work in progress.

The Tripartite Committee has insisted on an addition to the definition of the term counterpart. It has to be a candidate “with the potential to be trained within three years.” It cannot be so that a counterpart remains in training forever at the expense of the employer, the explanatory notes state.

Furthermore, the employer will be duty-bound “to do everything that is necessary to make the foreign employee superfluous” during the three years that his work permit is valid.

The labor department gets an “active and guiding role” in the job interviews between employers and local candidates. These interviews will take place at the labor department.

If employers fail to train a counterpart during the three-year period, they are allowed to request a new work permit – but that will have to be for a new foreign candidate.

The policy expects that the counterpart costs (salary and training) will motivate employers “to make a larger effort to hire a local directly.”

The counterpart policy does not target all employees, the document states. “Certainly not low-educated employees. This does not tally with the legislator’s intention to prevent that St. Maarten is flooded with lowly educated employees.”

After the departure of the foreign worker, the employer has to offer the counterpart a permanent contract, the policy states. This contract has to be for at least 32 hours. Seasonal jobs are excluded from the counterpart policy.

The ministry wants to create a top-ten of functions to which the counterpart policy will apply. To arrive at this top-ten, the ministry will analyze the functions for which work permits have been granted and the database of job seekers that are registered at the labor department.

“This analysis will provide clarity about the sectors the counterpart policy will focus on. It is logical that these sectors will be knowledge intensive.”

The government is pushing its counterpart policy in the face of serious doubts expressed by the private sector, but also by the Social Economic Council (SER).

In its advice dated October 22, 2013, the SER informed the Minister of Labor at the time, Cornelius de Weever, of its concerns. The first point is that the national ordinance on foreign labor prohibits a foreigner to work in St. Maarten without a work permit. “An employment permit can be granted with restrictions and only when there is no suitable local candidate to fulfill the vacancy. Violation of this article is a punishable offense.”

Pointing to non-nationals holding positions within top organizations and businesses, yet having a minimum of secondary academic education as the reason to effect the counterpart article, appears to be the wrong policy to “solve” this problem,” the SER wrote in its advice. “Managing the influx of foreign workers can be done prior to issuing a work permit.”

The SER concluded that “proper implementation and enforcement of this law provides adequate safeguards to achieve its intended purpose.”

The council also pointed to a weakness in the system: “If there is no qualified local Dutch national to fulfill a certain vacancy, this confirms that Sint Maarten is facing challenges in educating its nationals to fulfill certain positions, or Sint Maarten suffers from a brain drain. In both cases one cannot expect employers to bear the additional costs, especially not when this is a consequence of an omission on the part of the government.”

The SER suggested tax breaks for employers that hire an unemployed local youngster. The council furthermore notes that the counterpart policy will have a negative effect on the business climate, “considering that the supply on the labor market is strongly dependent on immigration.”

The double labor costs, the random effect of the measure and the possibility that no counterparts are available are other stumbling blocks the SER mentioned in its advice. “The (unemployed) local candidates are simply too small in number compared to the number of foreigners employed. This will cause the counterpart policy to have an unpredictable effect on the cost of doing business. It will most certainly lead to unfair competition. This will negatively and unpredictably affect a business’s profit margin and could easily cause companies to go out of business, thus damaging the economy.”

The SER, at the time chaired by René Richardson, unanimously advised the minister not to implement the counterpart policy. So far, that advice has fallen on deaf ears with politicians.