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Productivity is the key
Henley Morgan
Thursday, October 04, 2007
Which word beginning with the letter "P" most occupies the thoughts and actions of the Jamaican worker? Depending on the audience to which the question is put, one may get laughter and some blushes. When this happens, it does not take a genius to figure out the particular "P" that the collective mind of the audience has conjured up. Writing in a recent newspaper article on the topic of why Jamaican men feel they can get by without having to work as hard as women, Mr Edward Seaga referred to that same "P" as the essential tool that serves as the great social leveller.
From a more serious audience, one may get some other words beginning with the letter "P"; words such as prosperity, profitability, and pay. I am willing to wager a bet that the one "P" that will never surface is productivity. And yet, it is the one without which none of the other desirable "Ps" would be possible at a high or sustainable level.
Over the last several years, there has been a noticeable absence of meaningful focus on productivity coming from workers, managers and especially from government. This is lamentable. Compared to our main trading partners, Jamaica ranks near the bottom in this vital statistic. This is so for several reasons. Space will only allow me to mention two.
The first is government's preoccupation with eliminating the fiscal deficit and achieving a balanced budget. Before Omar Davies, Ralston Hyman and others schooled in conservative economics have a heart attack let me say, controlling the deficit is a good and necessary thing to do. However, the costs outweigh the benefits when, for example, investment in the country's human capital (education and training) is allowed to lag behind that of more progressive economies. I have likened indiscriminate cost-cutting by government (and private sector companies) to cutting a man's vas deferens (sperm duct) and then telling him to produce. You may get a whole lot of action and energy, but don't expect a baby. That unfortunately is the sad situation in which Jamaica finds itself today.
The second reason is somewhat related to the first. Inadequate investment in the country's social capital (human welfare, safety and security) has led to one of the highest rates of violent crime in the world. In relating this to productivity, I like to refer to the 7-Eleven stores that are found across America. As the name implies, opening hours of these stores is 7:00 a.m. to 11:00 p.m. Compare this to retail businesses in Jamaica, which typically lock down soon after 6:00 pm, out of fear of being robbed, and you get a measure of what crime and violence is doing to earnings and productivity in this country.
Like a business, a country competes on productivity. By this we mean how much saleable output is produced by a given amount o.f input; be that input labour, fuel or raw material. The JLP manifesto displays a refreshing understanding of this simple but profound concept. Under the caption, "Creating a productive workforce", we find these words. "Our most important factor of production is our human capital. our people. They contribute significantly to the productive process and are direct beneficiaries of that process. A trained, motivated workforce is an essential component of our strategy for investment, growth and job creation".
The prime minister has been saying Jamaica needs increased investment to create more jobs. As he himself alluded at the Jamaica Employers' Association CEO breakfast, the country is caught in a chicken-and-egg situation. There is no shortage of investment, certainly not Foreign Direct Investment (FDI), which is in the range of 3 per cent to 5 per cent of GDP. Our dilemma is that we do not have the productive workforce or small and medium-sized enterprises offering technical services to convert the FDI into stronger GDP growth and hence higher levels of employment. How we get out of this bind is not a problem for the faint-hearted, but overcome it we must.
For the time being, we can celebrate the resurrection of productivity by the new government. Giving productivity primacy among other policy issues intended to move the country forward is a sure sign that balancing the books will not be at the expense of those areas in which resources must be invested if we ever hope to grow ourselves out of deficit position.
Countries with low rates of productivity also have low per capita income, which for Jamaica is a shade under US$4,000. Readers will readily deduce that low productivity leads directly to poverty, the most condemning of all the "Ps". Surely, it is in the interest of every Jamaican to submit to the leadership of the government in finding the only path to our economic redemption.
hmorgan@cwjamaica.com
Henley Morgan
Thursday, October 04, 2007
Which word beginning with the letter "P" most occupies the thoughts and actions of the Jamaican worker? Depending on the audience to which the question is put, one may get laughter and some blushes. When this happens, it does not take a genius to figure out the particular "P" that the collective mind of the audience has conjured up. Writing in a recent newspaper article on the topic of why Jamaican men feel they can get by without having to work as hard as women, Mr Edward Seaga referred to that same "P" as the essential tool that serves as the great social leveller.
From a more serious audience, one may get some other words beginning with the letter "P"; words such as prosperity, profitability, and pay. I am willing to wager a bet that the one "P" that will never surface is productivity. And yet, it is the one without which none of the other desirable "Ps" would be possible at a high or sustainable level.
Over the last several years, there has been a noticeable absence of meaningful focus on productivity coming from workers, managers and especially from government. This is lamentable. Compared to our main trading partners, Jamaica ranks near the bottom in this vital statistic. This is so for several reasons. Space will only allow me to mention two.
The first is government's preoccupation with eliminating the fiscal deficit and achieving a balanced budget. Before Omar Davies, Ralston Hyman and others schooled in conservative economics have a heart attack let me say, controlling the deficit is a good and necessary thing to do. However, the costs outweigh the benefits when, for example, investment in the country's human capital (education and training) is allowed to lag behind that of more progressive economies. I have likened indiscriminate cost-cutting by government (and private sector companies) to cutting a man's vas deferens (sperm duct) and then telling him to produce. You may get a whole lot of action and energy, but don't expect a baby. That unfortunately is the sad situation in which Jamaica finds itself today.
The second reason is somewhat related to the first. Inadequate investment in the country's social capital (human welfare, safety and security) has led to one of the highest rates of violent crime in the world. In relating this to productivity, I like to refer to the 7-Eleven stores that are found across America. As the name implies, opening hours of these stores is 7:00 a.m. to 11:00 p.m. Compare this to retail businesses in Jamaica, which typically lock down soon after 6:00 pm, out of fear of being robbed, and you get a measure of what crime and violence is doing to earnings and productivity in this country.
Like a business, a country competes on productivity. By this we mean how much saleable output is produced by a given amount o.f input; be that input labour, fuel or raw material. The JLP manifesto displays a refreshing understanding of this simple but profound concept. Under the caption, "Creating a productive workforce", we find these words. "Our most important factor of production is our human capital. our people. They contribute significantly to the productive process and are direct beneficiaries of that process. A trained, motivated workforce is an essential component of our strategy for investment, growth and job creation".
The prime minister has been saying Jamaica needs increased investment to create more jobs. As he himself alluded at the Jamaica Employers' Association CEO breakfast, the country is caught in a chicken-and-egg situation. There is no shortage of investment, certainly not Foreign Direct Investment (FDI), which is in the range of 3 per cent to 5 per cent of GDP. Our dilemma is that we do not have the productive workforce or small and medium-sized enterprises offering technical services to convert the FDI into stronger GDP growth and hence higher levels of employment. How we get out of this bind is not a problem for the faint-hearted, but overcome it we must.
For the time being, we can celebrate the resurrection of productivity by the new government. Giving productivity primacy among other policy issues intended to move the country forward is a sure sign that balancing the books will not be at the expense of those areas in which resources must be invested if we ever hope to grow ourselves out of deficit position.
Countries with low rates of productivity also have low per capita income, which for Jamaica is a shade under US$4,000. Readers will readily deduce that low productivity leads directly to poverty, the most condemning of all the "Ps". Surely, it is in the interest of every Jamaican to submit to the leadership of the government in finding the only path to our economic redemption.
hmorgan@cwjamaica.com
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