Letters to the Editor

Low growth so replace Lee-Chin on EGC

Monday, February 19, 2018

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Dear Editor,

The International Monetary Fund's (IMF) financial targets continue to be met and tax revenues are above target, yet we see no positive effect on growth. In fact, meeting those targets may be the reason for growth still not escaping from around one per cent, where it has been for so long.

Be that as it may, the one positive social indicator, even if the poverty rate is again on the rise to over 20 per cent, is the increase in employment. However, comparing the growth in jobs with the growth of gross domestic product (GDP) these last two years reveals that productivity, already abysmally low, has fallen further. From October 2015 to October 2017, employment rose by 5.2 per cent, but GDP grew by only three per cent. That is 5.2 per cent more workers producing only three per cent more value-added, meaning that output per person (productivity) fell by 2.2 per cent over the two years. For October 2016 to October 2017 the corresponding figures for employment and GDP are 2.3 per cent and 0.8 per cent, indicating a fall in productivity of 1.5 per cent in the last year.

This seems to confirm what others have suggested; that the new jobs being created are of low value, including those in business process outsourcing (BPO) and tourism — the two sectors on which we seemed to have placed all reliance in recent years. In any case, we must remember that the hotel sector accounts for only six per cent of GDP, so to rely on tourism (or the much smaller BPO sector) to generate substantial overall growth is unrealistic, even with the much-heralded increases in arrivals.

It might be much better to pump resources into climate-mitigating measures for agriculture as that area accounts for seven per cent of GDP and, as had recently been highlighted by Jamaica's IMF representative, has driven most of the change in GDP (both up and down) in recent years.

The low growth and unrewarding new jobs surely contribute to the disillusionment, especially among our young men who look, not surprisingly, to other antisocial sources of income. Of the 5.2 per cent increase in employment over the last two years, (formal) male employment grew by only two per cent, against 9.6 per cent for females. Scamming, as has been highlighted by a researcher, leads to gang wars and much of the crime in St James.

The recent poverty figures are based on income of $3,371 per week for a single adult, or $12,741 for a family of five. At a 21.2 per cent poverty rate (up from 9.9 per cent in 2007), this means that 593,600 people are below the poverty line. The large number of people on the Programme for Advancement Through Health and Education (PATH) confirms this situation — the only programme that the IMF insists should attract more funding each year. The reason is obvious; without this support, little as it is, there would be much more chance of social upheaval and rejection of the IMF's austerity medicine, especially when it is hinted that little benefit will flow until 2025/26 when the debt-to-GDP ratio falls to 60 per cent (if in fact that does happen).

Given this unhopeful situation, the extension of the state of emergency becomes alarming. Is a police State the only answer whilst we wait for social renewal in our unequal society in which the top 20 per cent receive over half the national income, against five per cent for the bottom 20 per cent?

Inequality across the world has risen significantly since the 1980 neo-liberal turn with Ronald Reagan and Margaret Thatcher because of a failed trickle-down economic approach, whereby wealth in the pockets of a few is supposed to generate investment, jobs and prosperity. In fact, all that we have seen is indecent increases in wealth for the top 0.1 per cent.

Prime Minister Andrew Holness has had to admit that the Economic Growth Council's (EGC) “5 in 4” years was no longer a real target, but merely an aspiration. This year growth looks to be heading to little more than one per cent against 1.6 per cent last year. Perhaps Michael Lee-Chin, EGC chairman, needs to apply the strategies used in his business in which reported that profits grew by 28 per cent in the recent quarter.

Perhaps, more (much more) than the police commissioner, Lee-Chin needs to be replaced.

Paul Ward

Kingston 7





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