Nothing new
Economist says skills shortage existed years ago
Prime Minister Andrew Holness triggered a debate last week when he said the country might have to consider importing construction workers with certain skill set because of a shortage locally, but one economist says the matter is not new.

PRIME Minister Andrew Holness recently indicated that the country could be forced to import labour to cover for a skills shortage in the construction sector, triggering a lively debate ahead of new data from the Statistical Institute of Jamaica (Statin) which showed the unemployment rate fell to 6.2 per cent in January, its lowest on record in Jamaica.

The January labour figures show 22,300 jobs were added to the economy in the three months covered by the data. That’s an average of 7,400 more people being added to the ranks of the employed for each month. By comparison, only 6,700 jobs were added to the economy for the entirety of the first three months of 2021. Statin reports jobs data on a quarterly basis. The data for January 2022 cover people who were engaged in economic activities for at least one hour during December 12-18, 2021 (reference week).

Excluding the pandemic-induced job losses in 2020, the last time Jamaica recorded declines in the employment level was in the third quarter of 2019, six months before the first case of COVID-19 was detected on the island. The tightening labour market is not an issue at the moment and is expected as the economy rebounds strongly, according to former International Monetary Fund (IMF) economist Dennis Jones.

His main concern is that the skill shortage could become a problem, “especially if the mismatch lasts long”.

“The current focus has been around construction,” Jones told the Jamaica Observer.

Most people will have seen buildings going up at a rapid pace all over Jamaica. While much of the work involves unskilled labour, the important element is quality work is the role of skilled tradesmen. Jamaica has these, but [as is often the case here] they are not all [or mostly] certified. Because informality is rampant, many people never need certification to be able to get jobs or prove their skills, which are often shared by word of mouth. However, as focus shifts to quality not just quantity, assurances given by certification matter more.”

For Jones, the prime minister’s call for imported skilled workers may be good for the short-term to deal with ongoing projects or those in the foreseeable future.

Howver, he said, “For the sake of good social order, it would be better if such imported workers were clearly shown to be temporary. Labour shortage can occur anytime in an expanding economy, so the option to bridge the gap with imported labour is common.”

“The skills mismatch is trickier. While construction may be feeling the pinch now, it’s been clear for years that tourism has had similar problems. In part, that has been dealt with by importing workers and improving training. However, the latter is slower in fixing the gap. The other issue with any skills gap is how permanent it is. Construction today, what tomorrow?” he questioned.

Jamaica’s labour market problems are deeper, though. Because the school system is ‘failing’ to produce well-educated or -trained people, the quality of labour has been low for decades. Data show about two-thirds of those able 25-55 year olds are without any school certification. That reflects a process that has been going on almost since Independence. It means that Jamaica really can’t attract ‘good’ jobs or if those jobs start to appear, Jamaicans are less able to fill them.

“Our labour market may also have its quirks, example, whether people see jobs in areas such as construction as careers or if they are always stopgaps or stepping stones. Anecdotally, we may be in a new era. If most construction work had been smaller scale, then finding workers for such jobs was likely easier, and crews could be assembled and retained and even moved around to deal with the nature of demands. If now bigger projects are coming on stream, they may have to compete with the smaller/settled crews and struggle to do so within acceptable time frames. We would need to see and learn a lot more about how things are being organised within the industry to really understand better,” Jones added.

Many specific things can help the labour market find its balance between demand and supply. Raising the general level of education and training is best for making the country more resilient to changing economic conditions. Creating administrative solutions such as skills registers may help in general or with specific sectors, though such things are only as good as the information they receive and must be kept up to date. Early indications of labour needs as projects are approved may help, but could easily be cumbersome or limited if timelines are not firm.

The other side to labour shortages is what local workers want to do, whether its about job preferences, wages, or other things. If they prefer other options, the shortages may disappear only slowly, if at all. A good example of that is the UK construction and haulage industries, in which skills work depended on a strong input from foreign (from other EU countries) workers, which now have to deal with the problems of supplying those workers after Brexit.

The other twist is whether people want to do hard-labour jobs like construction or other soft jobs such as in the business process outsourcing industry or service industries, especially if pay and working conditions make the latter more attractive. That’s an interesting conundrum as it’s good to see greater job diversity, but not at the expense of needed tasks.

It’s worth noting that the “shortage” cry has been heard from several sectors for some time, but maybe none seemed to be at a critical juncture.

Dashan Hendricks

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