By KEILE CAMPBELL

kcampbell@tribunemedia.net

FORMER director and CEO of the Bahamas Chamber of Commerce and Employers Confederation (BCCEC) Edison Sumner said when National Insurance Board contribution rates increase, businesses may offset costs by increasing prices, service fees and firing employees.

Last week, Alfred Sears, the minister responsible for NIB, said the contribution rate will increase by 1.5 per cent on July 1st.

Although Mr Sears initially said contribution rates would increase by 1.5 per cent every two years for the next 20 years, the Office of the Prime Minister later reversed this commitment.

Mr Sumner said businesses would complain about such increases.

“Naturally, it will be hitting their bottom line because they gotta be responsible for paying the NIB rate and then, of course, the employee would pay their portion as well, but even if the employee pays their portion of the NIB contributions, there’s still a percentage of that that’s gonna be borne by the employer, so employers are gonna see this as hitting their bottom line indirectly,” he said.

“Unfortunately, in many instances the first casualty as it relates to reducing cost of operation is human capital,” he said. “We start cutting people off or releasing people from their employment if it’s something that we think is necessary to maintain your cost of operations.”

 Mr Sumner said not only is it necessary to raise National Insurance Board (NIB) contribution rates, but the government must also pay NIB arrears.

 “The government is one of NIB’s largest debtors and we need to pursue recovering the funds from the government, not a PLP or FNM government –– the government of The Bahamas owes NIB significant sums of money from what I recall,” he told reporters after an unrelated event.

 Last year, then State Minister in the Office of the Prime Minister Myles Laroda revealed that government agencies owed NIB $8m. He did not specify which agencies were behind on their payments. 

 Mr Sumner said a comprehensive review of NIB operations is needed.

 “It’s my view that if we’re able to correct and improve in some of the operation efficiencies, then we might find that there might not be a need to adjust the rate as high and for the extended period that’s being suggested,” he said.