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Jamaica's productivity is the lowest in the Caribbean
Alicia Roache roachea@jamaicaobserver.com
Friday, November 06, 2009
It may take another 40 years before Jamaica's productivity increases to the level of its Caribbean neighbours.
Matalon. A declining labour productivity signifies a loss of competitiveness
This grim reality was outlined by Joseph A Matalon at the Jamaica Productivity Centre's (JPC) launch of their first Productivity Summary Report (1972-2007) yesterday.
Matalon, who is the chairman of the JPC, said that "Jamaica has recorded a progressive decline in labour productivity. In fact, amongst our regional trading partners we have the lowest Gross Domestic Product (GDP) per capita, way below Trinidad, Barbados and St Lucia. And they all have shown growth while Jamaica continues to show decline."
"At our current rate of growth at less than two per cent per annum, it will take Jamaica 40 years to reach Barbados' current level of per capita GDP," Matalon said.
Over the 35-year period of the report, the labour productivity of the Jamaican worker has declined at a rate of 1.3 per cent each year. The decline in recent years has doubled to 3.4 percent per annum.
The reality in the rest of the Caribbean is vastly different. Dr Peter-John Gordon, reseach fellow at the Sir Arthur Lewis Institute of Social and Economic Studies, and board member of the JPC, outlined in his findings that unlike Jamaica, countries such as Barbados, Trinidad and Tobago and St Lucia have experienced a 1.5 per cent increase in productivity each year since 1972 and over 2 per cent over the last ten years.
"Not only are we going in the wrong direction, we are actually speeding up in the wrong direction," Dr Gordon noted. "We are out of sync with the Caribbean. We have seen that the rest of the Caribbean is moving in the right direction but, also, speeding up in the right direction," he said.
"In 1997, the average worker in Trinidad was three times more productive than the average Jamaican worker," he said. "This gap has grown to approximately five times in the past ten years. This simply means that the average worker in Trinidad will be able to enjoy a much higher standard of living than his Jamaican counterpart." This difference is accounted for in the average amount of capital with which the worker in Trinidad and Tobago and other countries works as well as the differences in education and training attained by workers in the various countries.
Dr Gordon said that countries such as St Lucia and the Dominican Republic have also moved from being less productive to being more productive than Jamaica.
The presenters also indicated that the desperate times will persist for Jamaica if the country does not arrest this declining productivity. "The opportunity for expanding output from Jamaica, either for export or to compete on the local market, is being retarded. This restricts the ability of the economy to absorb additional workers and to pay them a decent wage. Without an increase in productivity the category of the working poor is likely to expand if not the category of the unemployed," Dr Gordon said.
"A declining labour productivity signifies a loss of competitiveness, with respect to both imports and exports, leading to a decline in market share, which leads to a decline in foreign exchange earnings and savings, and a decline in standard of living," Matalon added.
Jamaica's GDP between 1973-2007 grew by only 0.5 per cent per annum. Real GDP per person in Jamaica was only 90 per cent of the level attained in 1972. "In short, we are all poorer," Dr Gordon said, "to have a GDP per capita in 2007 below the level attained in 1972 implies that on average, each Jamaican is poorer in strictly material terms than they were in 1972."
The average annual growth in output over the ten-year period 1996-2005, was 0.62 per cent of which labour employment growth contributed 0.54 per cent, capital, 1.31 per cent and Total Factor Productivity (TFP) to -1.37 per cent. This occurred during a period when real investment in capital goods, including Information Communication Technology, grew by approximately ten per cent annually. TFP measures the combination of output which cannot be directly linked to either capital or labour. It takes into consideration things such as organisation, technology, and innovation.
"When we disaggregate our figures in this way, it gives us a clue as to where we need to concentrate our effort," Dr Gordon said. "The majority of the employed labour force is engaged in areas with very low productivity growth."
Over the period 2003-2007, output in six sectors grew faster than the overall economy average of 1.7 per cent annually. These sectors in descending order are: Construction and Installation at 3.6 per cent, Electricity, Gas and Water, 2.5 per cent; Transport, Storage and Communication, 2.4 per cent; Wholesale and Retail, Hotels and Restaurant Services, 2.3 per cent, Financing, Insurance, Real Estate and Business services, 2.0 per cent and Mining and Quarrying, 1.8 per cent.
However, mining and quarrying, construction and installation, wholesale and retail, hotels and restaurant services, electricity, gas and water and transport and communication were sectors in which employment grew at a faster rate than the average for the overall economy.
"The lowest productivity levels were in construction and installation, wholesaling and retailing, hotel and restaurant services, and agriculture, forestry and fishing. These sectors account for 72 per cent of total employment in the non-government sector," Dr Gordon pointed out.
"It is not that anybody has done anything to us, but it is that we have done something to ourselves," said Andrew Gallimore, state minister in the Ministry of Labour and Social Security. "The productivty statistics that are contained in this document are not statistics that we will be comfortable to stand up and proclaim to the world, because they don't show us as leading the pack, they show us as following the pack."
He said the report gives people an explanation of "why we live the way we live, in this beautiful country of ours." "The position that we stand in is not a position that we came in overnight, but it clearly indicates to us that we've been paying attention and giving focus to the wrong thing. If we are going about and not focusing on the things that matter most, if we are not focused on trying to achieve specifics, then we are wandering around aimlessly and we are beat out by competitors who have that single-minded focus," he said of the other Caribbean countries.
"If we want to be a developed country, if we want to be a wealthy country, if we want our citizens to enjoy a good standard of living there is a direct correlation between the level of productivity that we are able to output as a nation and all that we want and desire. It is within our direct span of control," Gallimore charged.
"Increasing the output per worker continuously over time is the only way to have sustainable increase in the standard of living of the population," Dr Gordon said during his presentation. "And recall that there are some elements of the population that will not be able to participate so those of us who are working will have to work that much harder so that they too can have an increase in standard of living."
Between 1973-2005, Jamacia's Total Factor Productivity contributed -1.7 per cent annually to GDP growth. In ten of the 33 years Total Factor Productivity made a positive contribution to economic growth. The data indicate that in most years, when TFP increases, GDP expands. The converse is also true. Despite this Jamaica's GDP growth has never exceeded 3 per cent without TFP growth also being positive.
http://www.jamaicaobserver.com/magaz...CARIBBEAN_.asp
Jamaica's productivity is the lowest in the Caribbean
Alicia Roache roachea@jamaicaobserver.com
Friday, November 06, 2009
It may take another 40 years before Jamaica's productivity increases to the level of its Caribbean neighbours.
Matalon. A declining labour productivity signifies a loss of competitiveness
This grim reality was outlined by Joseph A Matalon at the Jamaica Productivity Centre's (JPC) launch of their first Productivity Summary Report (1972-2007) yesterday.
Matalon, who is the chairman of the JPC, said that "Jamaica has recorded a progressive decline in labour productivity. In fact, amongst our regional trading partners we have the lowest Gross Domestic Product (GDP) per capita, way below Trinidad, Barbados and St Lucia. And they all have shown growth while Jamaica continues to show decline."
"At our current rate of growth at less than two per cent per annum, it will take Jamaica 40 years to reach Barbados' current level of per capita GDP," Matalon said.
Over the 35-year period of the report, the labour productivity of the Jamaican worker has declined at a rate of 1.3 per cent each year. The decline in recent years has doubled to 3.4 percent per annum.
The reality in the rest of the Caribbean is vastly different. Dr Peter-John Gordon, reseach fellow at the Sir Arthur Lewis Institute of Social and Economic Studies, and board member of the JPC, outlined in his findings that unlike Jamaica, countries such as Barbados, Trinidad and Tobago and St Lucia have experienced a 1.5 per cent increase in productivity each year since 1972 and over 2 per cent over the last ten years.
"Not only are we going in the wrong direction, we are actually speeding up in the wrong direction," Dr Gordon noted. "We are out of sync with the Caribbean. We have seen that the rest of the Caribbean is moving in the right direction but, also, speeding up in the right direction," he said.
"In 1997, the average worker in Trinidad was three times more productive than the average Jamaican worker," he said. "This gap has grown to approximately five times in the past ten years. This simply means that the average worker in Trinidad will be able to enjoy a much higher standard of living than his Jamaican counterpart." This difference is accounted for in the average amount of capital with which the worker in Trinidad and Tobago and other countries works as well as the differences in education and training attained by workers in the various countries.
Dr Gordon said that countries such as St Lucia and the Dominican Republic have also moved from being less productive to being more productive than Jamaica.
The presenters also indicated that the desperate times will persist for Jamaica if the country does not arrest this declining productivity. "The opportunity for expanding output from Jamaica, either for export or to compete on the local market, is being retarded. This restricts the ability of the economy to absorb additional workers and to pay them a decent wage. Without an increase in productivity the category of the working poor is likely to expand if not the category of the unemployed," Dr Gordon said.
"A declining labour productivity signifies a loss of competitiveness, with respect to both imports and exports, leading to a decline in market share, which leads to a decline in foreign exchange earnings and savings, and a decline in standard of living," Matalon added.
Jamaica's GDP between 1973-2007 grew by only 0.5 per cent per annum. Real GDP per person in Jamaica was only 90 per cent of the level attained in 1972. "In short, we are all poorer," Dr Gordon said, "to have a GDP per capita in 2007 below the level attained in 1972 implies that on average, each Jamaican is poorer in strictly material terms than they were in 1972."
The average annual growth in output over the ten-year period 1996-2005, was 0.62 per cent of which labour employment growth contributed 0.54 per cent, capital, 1.31 per cent and Total Factor Productivity (TFP) to -1.37 per cent. This occurred during a period when real investment in capital goods, including Information Communication Technology, grew by approximately ten per cent annually. TFP measures the combination of output which cannot be directly linked to either capital or labour. It takes into consideration things such as organisation, technology, and innovation.
"When we disaggregate our figures in this way, it gives us a clue as to where we need to concentrate our effort," Dr Gordon said. "The majority of the employed labour force is engaged in areas with very low productivity growth."
Over the period 2003-2007, output in six sectors grew faster than the overall economy average of 1.7 per cent annually. These sectors in descending order are: Construction and Installation at 3.6 per cent, Electricity, Gas and Water, 2.5 per cent; Transport, Storage and Communication, 2.4 per cent; Wholesale and Retail, Hotels and Restaurant Services, 2.3 per cent, Financing, Insurance, Real Estate and Business services, 2.0 per cent and Mining and Quarrying, 1.8 per cent.
However, mining and quarrying, construction and installation, wholesale and retail, hotels and restaurant services, electricity, gas and water and transport and communication were sectors in which employment grew at a faster rate than the average for the overall economy.
"The lowest productivity levels were in construction and installation, wholesaling and retailing, hotel and restaurant services, and agriculture, forestry and fishing. These sectors account for 72 per cent of total employment in the non-government sector," Dr Gordon pointed out.
"It is not that anybody has done anything to us, but it is that we have done something to ourselves," said Andrew Gallimore, state minister in the Ministry of Labour and Social Security. "The productivty statistics that are contained in this document are not statistics that we will be comfortable to stand up and proclaim to the world, because they don't show us as leading the pack, they show us as following the pack."
He said the report gives people an explanation of "why we live the way we live, in this beautiful country of ours." "The position that we stand in is not a position that we came in overnight, but it clearly indicates to us that we've been paying attention and giving focus to the wrong thing. If we are going about and not focusing on the things that matter most, if we are not focused on trying to achieve specifics, then we are wandering around aimlessly and we are beat out by competitors who have that single-minded focus," he said of the other Caribbean countries.
"If we want to be a developed country, if we want to be a wealthy country, if we want our citizens to enjoy a good standard of living there is a direct correlation between the level of productivity that we are able to output as a nation and all that we want and desire. It is within our direct span of control," Gallimore charged.
"Increasing the output per worker continuously over time is the only way to have sustainable increase in the standard of living of the population," Dr Gordon said during his presentation. "And recall that there are some elements of the population that will not be able to participate so those of us who are working will have to work that much harder so that they too can have an increase in standard of living."
Between 1973-2005, Jamacia's Total Factor Productivity contributed -1.7 per cent annually to GDP growth. In ten of the 33 years Total Factor Productivity made a positive contribution to economic growth. The data indicate that in most years, when TFP increases, GDP expands. The converse is also true. Despite this Jamaica's GDP growth has never exceeded 3 per cent without TFP growth also being positive.
http://www.jamaicaobserver.com/magaz...CARIBBEAN_.asp
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