Finance Minister Ryan Straughn has sought to give moral backing to any credit borrowed by newly laid-off government workers.
And given that Government was in preparing to allocate one-fifth of its procurement budget to the displaced workers as contractors, they should not be of any adverse risk to banks and other lenders, he said.
Under its restructuring exercise, the Mia Mottley administration is severing some 1,500 public sector workers in an effort to cut back on government spending and drive down the fiscal deficit.
Government is also in the process of amending laws to establish what it calls an affirmative action programme to allow for the 20 per cent quota for its goods and services purchases.
Government’s procurement bill is approximately $400 million a year.
“We have given a commitment via the social partnership and agreed that 20 per cent of Government’s procurement over the next four years will be reserved specifically for persons who have been retrenched. That equates to about $80 million a year. So there are opportunities for those persons to engage in that as a mitigation measure. It means then there is a soft landing for those persons,” said Straughn.
Critics have suggested that retrenched workers could face difficulties in repaying outstanding loans or in accessing new loans to start up a business.
But Straughn countered that its recently launched $10 million Trust Loan Fund would give additional financial backing to former Government workers.
Under that programme, entrepreneurs can access loans of up to $5,000 at a minimal interest rate of between 1.5 and two per cent. Clients can also borrow twice this amount once they fully repay their initial loan.
“Lending to these persons, given what we intend to do with respect to the procurement, should not be of any particular adverse risk,” said Straughn.
“Persons that have been unfortunately laid off, there are clear opportunities for not just mitigation but to help build some businesses and the level of entrepreneurship that we would like to see going forward from that initiative,” he said.
He also pointed to Government’s planned training exercise under the Barbados Economic Recovery and Transformation (BERT) programme, saying the restructuring of Government entities, which should begin in January, should also result in the retooling and retraining of workers who will have the opportunity to find new jobs.