In a recent Substack article, rhetorically subtitled ‘Lessons from Jamaica’s post-Melissa budget speech cycle and our 50-year experience in not getting public sector reform with particular relevance for developing countries’, I quoted economist Gerard Johnson with regard to Prime Minister Andrew Holness’s speech.

“The performance-based approach needs to be linked to [former Minister of Finance] Nigel Clarke’s very important reform of the public servant pay system. More must be done, but the simplification and standardisation of the pay mechanism was a fundamental part of building the new performance-based system. This opens the door to considering the two competing performance monitoring systems (Cabinet office and Ministry of Finance and the Public Sector). It may be too hot to handle, but this discussion cannot be separated from Holness’s momentous shift in the level of remuneration for senior public officials.”

When he was finance minister, Dr Clarke was very clear that if we want to improve the productivity of the public sector in Jamaica, one of the things that we must do is pay people properly “so we could get the people to do the work”. Indeed, it could be argued that he got surprisingly little credit from the public sector for the largest public sector pay increase in many decades. Previously, with some notable exceptions, the public sector would lose the highly skilled or technical people required to implement information technology systems, accounting systems, and the like, to the private sector, which continually reduced the Government’s implementation capacity.

The problem was that some public sector entities always seemed to want to implement some huge information technology (IT) project (usually financed by multilaterals, often paying overseas consultants) which even some of the largest local private sector companies would have had great difficulty implementing. This was particularly troubling when the people tasked with implementing would leave halfway through (if they even existed in the first place) and, therefore, the project would be delayed. Unsurprisingly, these projects were almost always delayed, sometimes by decades, but always with very long implementation periods. Of course, this was often also true for the actual regulations required to implement our laws after they had been passed.

Nevertheless, while the skills deficit still exists in many areas, the argument that the public sector is still grossly underpaid no longer holds water, as in many areas you now see skilled people returning to the public sector from the private sector (this hardly ever occurred before), and, today, the public sector is effectively setting the minimum salary scale for graduates and others, particularly in technical areas.

Moreover, what former Planning Institute of Jamaica (PIOJ) head Gladstone Hutchinson called the “tax price” of public services — the portion of taxes as a percentage of gross domestic product (GDP) required to run the government — has gone up significantly over the past few years, as noted in another way by the concerns of our Fiscal Commissioner Courtney Williams about the 50 per cent of our budget now represented by wages.

It was, therefore, unfortunate that the main issue the media focused on in the budget debate on pay and performance was the prime minister’s salary rather than the section of his speech entitled ‘People, Skills and Productivity’, which admittedly was right at the end of a very long speech.

Importantly, Prime Minister Holness started by defining productivity as “the value produced per hour of work — not how hard you work, not how long”. He added that International Labour Organization (ILO) data suggested that “Jamaica produces approximately US$8.81 of output per hour worked” versus a Caribbean average of US$20.50 — in line with the Latin American average — while high income Latin American countries produce US$38 (Panama surpasses this at US$43 per hour).

He was careful to make the point that, “This is not a judgment on Jamaican workers. It is a diagnosis of our economic structure.” The latter sentence is an important, even critical point, that by itself needs a much longer speech than even the prime minister’s budget speech, or even several such speeches. It is not much of an exaggeration to say that Jamaica’s economic structure is essentially the same as it was 50 or more years ago in terms of the economic complexity of the economy and the near total absence of the creation of new industries.

We have a larger financial and tourism sector and a smaller manufacturing, bauxite, and agricultural sector, but essentially no major new industry creation beyond the business process outsourcing industry, with the normal ladder of industrial development, the export textile manufacturing industry of the 1980s, having essentially vanished without a trace.

To move Jamaica forward requires a totally different emphasis on implementation, akin to the focus of Singapore and Rwanda on getting things done, on which we will say more in another article.

One of the starting points for the economic transformation could be a national e-government strategy modelled off Estonia and supported by our multilateral development partners. Rather than trying to digitise decades of physical records, one could start where we are today, utilising the recently implemented National Identification System (NIDS) (most will not know it has moved beyond a pilot stage). Its main office is now located at the old post office sorting office downtown.

It would be particularly useful to have mobile NIDS teams supplying identification to the inhabitants of St Elizabeth and Westmoreland as a special focus on those who have lost everything, including their physical IDs. A regulatory sandbox could be created around the NIDS project to allow new private sector NIDS-supported services, such as fintech start-ups, perhaps as part of the creation of a Jamaican venture capital ecosystem.

A more critical issue, touched on but not settled in the budget debate, is the weighting of financial and physical resilience in terms of the allocation of fiscal resources. The recent Sygnus Breakfast last week Wednesday dubbed ‘Building Resilience – Mobilising Capital for a Sustainable Caribbean’ emphasised the role of the private sector in financing physical resilience, showcasing Minister Mathew Samuda on that issue most essential for life — water.

The Caribbean Policy Research Institute (CaPRI) event the next day, on Thursday, with Dr Damien King interrogating Finance Minister Fayval Williams, emphasised financial resilience in its accompanying report ‘Budget Breakdown 2026 — Paying for Hurricane Melissa”, including increasing insurance and other buffers for the next shock. Both, of course, are needed, and the issue is how to pay for them. More anon.

Keith Collister