Editorial | Good jobs, productivity, and growth

When Richard Byles, 14 months ago, raised the issue of the quality of the jobs in the Jamaican economy and the pay that goes with them, he was furiously rounded on by the big cheeses of the business process outsourcing (BPO) sector who felt gratuitously attacked. After all, their industry employed 30,000 people and grossed around US$450 million a year.

Mr Byles, then the chairman of the Jamaican arm of Sagicor Financial Group, did, indeed, single out BPOs, and the mostly telephone-answering-type jobs they delivered. “… We want the BPO business where lawyers are given a part, where accountants are doing work, where paramedics are giving advice. We want to be in the high-level BPO business.”

The point that the dive-bombing honchos missed, however, was that while their sector was central to Mr Byles’ remarks, BPOs were used, essentially, as a metaphor for a larger problem in the economy, especially deficiencies in education and training. In any event, Mr Byles had also mentioned the insufficiency of Jamaicans in high-end jobs in the tourism industry.

Richard Byles is now the governor of the central bank, where his mandate is to ensure stable and, presumably, low inflation, to the benefit of employment and growth. And he has again been talking about the low value-added, low-paying jobs being created in the economy, where unemployment, at 7.8 per cent, is at its lowest in decades.

That, he concedes, is good. “But they are the same jobs that we produced 20 years ago, whether it is in the hotel sector (or) in the BPO business. It’s the same kind of low value-added jobs.”

Rather than having to dodge the barbs of, and reaching for salves for, wounded egos, this time, hopefully, Mr Byles’ observations will ignite a deeper, meaningful debate of what is to be done to create a globally competitive workforce fit for the challenges of the 21st century.

Implicit in Mr Byles’ observations was an appreciation that high-paying jobs are unlikely to be had, at least in substantial numbers, in a low-growth, low-productivity economy, of which Jamaica is an exemplar.

Indeed, despite the reforms of the past seven years that have produced relative macroeconomic stability, including reducing the debt ratio from nearly 150 per cent of gross domestic product (GDP) to 94 per cent, growth continues to lag. The economy is currently on track to deliver GDP expansion of 1.3 per cent this year, a rate at which it will take around 54 years for the economy to double in size. Things could get worse, given the serious hiccups in the bauxite-alumina industry. Moreover, labour productivity has, over the past four decades, declined by around one per cent a year.

A dramatic reversal in labour productivity is unlikely to occur in a situation where an estimated 70 per cent of the workforce lack training, or training for the jobs to which they are employed, and in which only 15 per cent of the population has tertiary education, which often is required for industries driven by science and technology.

But people won’t readily matriculate to universities and colleges if less than a fifth of the grade -11 cohort passes five subjects, including maths and English, in Caribbean Secondary Education Certificate exams.

Focus on longer-term goals

This is part of the context against which Mr Byles underlined the need to focus on longer-term goals, including building a strong foundation for primary and secondary education, where “the good schools are all over the island and are in multiples”, rather than the current scenario of too few elite institutions. Continued reduction of the debt, he noted, will free resources to invest in education.

But, as Mr Byles understands, people are disinclined to wait for a slow, transformative process. So, measured macroeconomic adjustments have to be accompanied by policy stimulants to agitate growth, with the Government supposing that it is better at allocating resources than the market.

While, for instance, Jamaica is only now beginning to extrapolate data on research and development’s (R&D) specific contribution to GDP, the estimate is that the island spends only around 0.3 per cent of GDP on R&D, or half the amount for Latin America and the Caribbean as a whole. In most developed countries, the expenditure is around three per cent, or above. Driving R&D must be a matter to which we pay attention. Additionally, labour-market reform, about which we have talked forever, should be linked with education and be at the centre of a national conversation.