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Jamaica’s productivity challenge and the revolution to come
KELLIER… sees need for a productivity revolution in Jamaica ifwe are to achieve sustained growth and development for theremainder of the 21st century
Columns
Everton Pryce  
May 11, 2013

Jamaica’s productivity challenge and the revolution to come

Over the past 12 months, Labour and Social Security Minister Derrick Kellier has been pounding the pavement extolling the need for a productivity revolution in Jamaica if we are to achieve sustained growth and development for the remainder of the 21st century, much less attain the goals of Vision 2030.

He has been telling various audiences throughout the country that our productivity index, which measures the ratio of real output to real input vis-à-vis other countries in the region and throughout the world, is in the doldrums, 50 years into Independence from Whitehall.

His passionate exhortations are informed by some rather convincing data that leave no doubt as to the depth of the crisis we face and the consequences for this and future generations if we continue to pander to inaction.

As a relatively young independent country struggling to be itself on the global stage, our sluggish and poor economic performance over the past 35 years is a direct consequence of negative productivity growth, notwithstanding the stated intentions of successive Administrations to bring results of material betterment to the poorer hordes.

Table 1 below demonstrates Jamaica’s dismal labour productivity growth rate in contrast to Barbados and Trinidad and Tobago for the period 2003 and 2011:

Clearly, our relative levels of poverty, income inequality, inequitable tax burden distribution, and generally below par standard of living among far too many of the vast majority of the people are related to the fact that sustained productivity improvement has not been given serious consideration by the political parties in our two-party political system.

Consequently, our goods and services have remained relatively uncompetitive globally, and the levels of investment in the country dismally poor, for far too long.

Against this background, the conversation started by Kellier is not only heartening, but must be viewed as something much more than rhetoric; if only because the stubborn facts demand this.

Because, over and against the downward trend of labour productivity growth, our Total Factor Productivity (TFP) — how we use energy, invest our resources, treat with the environment, appropriate capital, etc — has not been performing well either.

Table 2 demonstrates the averages of yearly TFP growth rates for the period 1996-2012.

In addition, only three sectors of the economy recorded positive growth in labour productivity for the period 2002 and 2011. Hotels and restaurants recorded 2.09 per cent; agriculture, hunting, forestry and fishing 1.5 per cent; and construction 0.98 per cent.

In this context, one of the good things about the labour minister’s intervention and call for a productivity revolution is that it explodes at the outset the oft-repeated but misguided view held by some that it is the Government’s agreement with the International Monetary Fund (IMF) alone that will lead to growth in the economy, positive changes in our material well-being, and improvement in our productivity levels.

Not only does this false view represent a great disservice to centuries of Jamaican struggle for self-management, but it masks the reality that measures like the realignment of the public sector, increases in the tax rate, and aggressive taxation generally, can only be reversed in the current climate of austerity by rapidly increasing the struggle for productivity improvement in the country.

But we are running out of time in this regard — and this is the real challenge for the country going forward.

For while our productivity is falling, the world’s productivity is rising. In 1995 it rose to 43.4, moving to 44.0 in 2000, 47.7 in 2005, and 48.6 in 2009. What is more, the world input per capita in 1990 was 41.7, while the world productivity for the same period was 42.7. In fact, since 1995 there has been a steady rise in the levels of world input per capita and growth in productivity.

Studies published in the OECD’s Productivity Manual also reveal that in 2000 the G7 economies accounted for more than 50 per cent of the world’s GDP, while “developing” Asia accounted for less than 20 per cent. But within nine years, the corresponding figures for 2009 were 41.4 for the G7 and 27.5 for the “developing” countries of Asia.

A more recent study published in the Journal of Policy Modeling entitled ‘The Rise of Developing Asia and the New Economic Order’ (2011) by DW Jorgenson and KM Vu, predicts that within the next decade “China will overtake the US” in terms of GDP because it is growing faster than the US.

The study posits that: “The second major trend is that developing Asia will overtake the G7 in 2018… The final trend is that India will overtake Japan, Russia will overtake Germany and Brazil will overtake the UK, leading to a new World Economic Order in 2020: China, the US, India, Japan, Russia, Germany, and Brazil.”

It is important to stress all of this at this time when a relatively young democracy (and a relatively new Government) is trying to determine the modalities of development for itself, after some 300 years of misuse and abuse of human and material resources in this former outpost of empire.

As such, our public and private sector managers have less than 10 years in which to institute a new growth paradigm to stave off a ruinous future based on improvement in our productivity growth levels, the maximisation of the competitive advantage of our goods and services globally, and the success of our native growth strategy.

Now, more than ever, the tri-partite machinery — Government, the trade unions and the private sector — will have to work overtime in crafting a road map for improving productivity along the lines outlined by Kellier in February this year to the board of managers of the Jamaica Productivity Centre (JPC) and reported in the media.

In addition to a renewed emphasis on education and training of our human resource, investment in ICT, protection of the welfare of the people by improvement in the Human Development Index of the country, and an intelligent clampdown on crime and violence, there is the need for a massive and urgent public education campaign spearheaded by the JPC that will seek to focus on sensitising Jamaicans to the prerequisites necessary for improving our levels of productivity.

Much of this will involve unravelling the conundrum that faces every people whose very existence was predicated on nothing other than commercial profit. The Jamaican forebears who had their being on the plantations have bequeathed to later generations a whole repertoire of sabotage, or how to make things not work.

And because our history has shown that the people have worked hard at exercising this capacity rather than at producing, our system has suffered from its own underdevelopment.

Delivering on the benefits of a productivity revolution, along the lines being championed by Minister Kellier, will be a mammoth task, but the sooner the revolution finds its bayonets, the better will be the future for all concerned.

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