THE Planning Institute of Jamaica (PIOJ) reported a 1.9 per cent growth for the Jamaican economy in the first quarter of 2024. Notable growths occurring in the Mining and Quarrying industry, 25 per cent, and Agriculture, 7.7 per cent, indicate an uptick in the business cycle.

However, these outcomes have been inconsistent. Flood and drought episodes affect agriculture and poorly negotiated contract agreements, and other factors impact mining. This volatility in output ought to be replaced by steady increases. The construction industry that previously displayed stable growth declined by 4.5 per cent for this quarter, affected by higher raw material prices, a decline in demand that has tied up cash flow and a fall in private investment. From the services point of view, the Electricity, Gas, and Water industry grew by over 7 per cent. It along with Financial Services and Insurance have been Jamaica’s most productive industries. The Hotel and Tourism industry, Jamaica’s biggest investment, grew by 6 per cent. Overall, Jamaica has witnessed 12 quarters of consecutive growth. However, the average man on the street continues to complain that his standards of living has not improved significantly.

Jamaica is at an economic crossroads, facing a significant dilemma between achieving good macroeconomic performance on paper and fostering real economic progress for its citizens in real life. Astute fiscal management over the past decade has helped to effectively reduce the islands debt burden from 146 per cent to 72 per cent of gross domestic product (GDP). A shift towards inflation targetting, a less volatile exchange rate, and a B+ credit rating, show signs of economic stability. However, the country continues to grow at its usual 1-2 per cent on average. With the Government’s focus on job creation, Jamaica managed to historically lower its unemployment rate to 4.2 per cent, bringing the economy close to full employment. But with low growth in output, most of these jobs pay close to minimum wage; roughly $100 USD per week or $2.50 per hour, not enough to empower them economically. The socio-economic structure is a triangle with a very small tip for the upper class, a very small per cent of the population is considered middle class while the vast majority are lower class at the bottom. This should be a diamond, whereby the broad base middle class is in the middle and small upper class to the top and a small lower class at the bottom.

A major issue is that 83 per cent of Jamaicans have not attained any tertiary level education, thus restricting their ability to move into the middle class. This lack of education coupled with widespread corruption have been identified as two of the biggest hindrances to labour productivity growth on the island. As a result, we see a range of issues: low wages, a low standard of living, low output, low technological adoption, low business sophistication, low innovation, and low self-esteem among the populace. We are stuck with industries and economic structures that have not significantly evolved since the 1960s. For instance, producing low-value goods like banana chips while other countries produce high-value items like microchips puts us at a disadvantage. The microchip may take a longer time to understand how to produce and might require more effort and educated labour to produce but offers exponentially more income than banana chips. Our education system also needs a major overhaul. We need targetted educational programmes and policies that emphasise technology and innovation, equipping our citizens with the skills needed for the modern economy.

An over-reliance on inefficient utilities, such as expensive energy and poor water management, has also limited our growth potential. Jamaica must look into the future and identify growth opportunities in both existing and new industries, calculate their potential based on local parameters, and implement the correct measures to facilitate real growth. Take a calculated approach that embraces cheaper energy, better water management, technological advancement, and diversifies the country’s economic base. By fostering an environment that encourages business sophistication and innovation, Jamaica can move towards a more balanced and sustainable economic future in which the benefits of growth are more equitably distributed across the population. Unsophisticated planning has hindered Jamaica’s economic expansion pursuits.

Jamaica has the potential to become a tech-savvy nation, but this requires a departure from the current talk shop format to proactive planning and execution. Consider the potential impact of smart technology investments in public services. We must build on the Keynesian model of the 1930s when government investment in key infrastructure fuelled growth. Roads alone are not enough; we need comprehensive infrastructure development that includes smart technologies. Imagine if every police station, hospital, and school in Jamaica were equipped with advanced technologies. This would not only enhance their efficiency and productivity but also contribute significantly to our GDP. In the era of artificial intelligence (AI) and the Internet of Things (IoT), many countries have swiftly adapted, diversifying their economies and modernising their workforce. Jamaica must follow suit.

Furthermore, we must address the inefficiencies in our workforce. Research indicates that many industries, including the Government, employ more people than necessary to produce optimum output. Streamlining these excess workers into technology-driven sectors would optimise productivity and spur economic growth. For example, our Government could lose up to 30 per cent of its current labour force and still maintain its output. These excess workers should be retrained and redirected into emerging tech sectors to prevent idleness and economic stagnation. By focusing on technological integration and strategic economic planning, we can stabilise economic growth and position Jamaica for sustainable growth and prosperity. It is time to move beyond identifying problems and start implementing solutions that will lead us into a modern, diversified, and sophisticated economy.

Dr Andre Haughton is a senior lecturer in the Department of Economics at The University of the West Indies, Mona. He is also the People’s National Party Shadow Cabinet Minister to Commerce, Innovation and Technology. He is the author of Developing Sustainable Balance of Payments in Small Countries and Overcoming Productivity Challenges in Small Countries. You can contact him via social media at @drandrehaughton on Instagram, Facebook, Twitter, and Linked-In.