Friday, February 20, 2015

Understanding Jamaica's fundamental problem

This year we will have the opportunity for a one and a half month debate on the revenue and expenditure estimates before the start of the fiscal year. This is very good governance practice and the minister must be commended for this initiative. No doubt over this period there will be much talk about the fiscal accounts and the economic programme. Specifically there will be talk about taxation and the macroeconomic targets such as inflation and the exchange rate.

Going out to Hellshire on Ash Wednesday though, I was reminded that the fiscal accounts, macroeconomic targets, economic activity, and crime are nothing more than the symtoms of the underlying challenge we face as a country. In fact I would go further to say that given the progress we are making on the economuc front, that if we stick to our guns then the mjor problem we will face in a few years time will not be the economy or fiscal accounts. In fact it is very possible that we wll see a much more competitive economy.

The fundamental problem we face as a country is on the social front, as based on my observations, the primary problem we will be that a significant part of our workforce will not be equipped for a competitive economy. So that even if we are to see growth upwards of 3 percent consistently, there is still a part of our population that will be marginalized. In our 52 year history, the only time that we had actually tried to address the social issues were really in the 1970s, under Manley, and even at that time it was not done with the purpose of sustainable inclusion in the economy for all but rather fixing certain social challenges faced coming our of colonialism.

I was reminded of this when i went out to Hellshire, as I think the people out there are a representation of the ordinary Jamaicans, inclusive esepcially of young Jamaicans. And this culture, although I saw it at Hellshire, does not only reside with the persons there but permeates even our work environment. So the truth is that we could possibly see economic growth with little or no inclusion of some of the population because many persons do ot possess either the skills, work ethics, or social behaviour required to compete internationally. And the end product or service consists significantly of labour or thought input, which reflect the underlying problem of our economic challenge. That of labour productivity.

When one thinks about the crimes being committed (gang related and domestic in particular) it sends us a lear message that something is wrong with our socialization process. And we must remember that economics is a social science and so what happens in an economy is highly dependent on the social skills and behaviour of the persons in the economy.

So while at Hellshire today I noticed a few things. These included (i) a man driving a bus load of people while smoking a ganja spliff; (ii) young men smoking ganja spliffs on the beach; (iii) young men with their shorts falling off exposing their underwear; (iv) women with children around them inappropriately dressed; and (v) the suggestive music being played with the young children subconciusly absorbing all the sexually explicit and violent lyrics.

The behaviour also reminded me of the conversations I have all the time with a fellow cyclist, Dr. Sandra Knight, about the significat number of child abuse cases perpetrated many times by the father who goes unpunished and the generational cases of child abuse in a single family. These of course continue primarily because no one is held accountable in the main.

This also reminds us of the 14 year old girl that was rcently killed and placed in a bag and admitted to by a businessman, but also found out that at 14 she was pregnant. This again brought home a stark reality that there has been no report of accountability for the parents of this 14 year old, which should have been reported in the investigations also. A facebook discussion on the matter also revealed another weakness as some women were saying that the mother should be held accountable and I had to remind them twice that both the mother and father should be held responsible, bringing home the fact that we are only too happy to absolve the fathers of the responsibility, even though I can say that today many many fathers are stepping up to the plate even more than many many mothers.

It seems to me therefore that none of the economic and fiscal challenges can be solved without first looking at the social fabric of our beloved country. It is certainly not unique to Jamaica, as even the great USA seems to have some significant deviant social behaviour, and we certainly don't need to adopt some of those types of behaviour. I am for example reminded that children can still freely express their religious beliefs and read the bible in schools in Jamaica, which was recently reported as a problem in a US school.

In other words if we are to truly make Jamaica the place of choice to live, raise families, work, and do business it is not only important that we focus on macroeconomic and quantittive targets, but even more critical that we address the societal behavioural issues, which I really hear no one speaking about. So children under the age of 16 continue to have children without the appropriate accountability in many instances, and a signifcant number of young men find themselves "digging out their palms on the street corner". I must say though that in all of this I do find some very hard working and focussed young persons, and they will do well based on their attitudes. But similarly there are many coming out of the universities with very poor work ethics and attitudes.

I think that in many instances that leadership is to be blamed for this and the most important leadership is that of parenting. This I think is the fundamental problem we face. We have taught our children to be many things but for around two generations now we have seen a significant decline in parenting skills. When I was growing up parents taught their children how to behave around other adults, use a fork and knife, respect for other children, and other social skills. This I think is the missing in our social fabric that contributes to our labour productivity issues that cause our economic challenges.

Who will bell the cat?

Friday, January 16, 2015

Low-hanging development options

MOST times when we speak about economic and social development, many of us think about the cost of infrastructure or costs associated with the government providing stimulus to the economy. Or if we talk about reducing crime, then one of the first things discussed is the need for more resources for the police.

The truth is many things can be done that do not require a great deal of resources. This is the same as making positive changes in an organisation. In many instances, the really positive changes that are needed to kick-start a successful organisation do not have any costs attached to them.

In fact, spending money can make the situation even worse if the requisite action is not taken to set the stage for a new development path. Similarly, we often hear that the police force and the health sector need more resources, but putting money into a broken system does not necessarily fix the problem. Leading up to the 2008 recession, for example, we saw more and more funds being allocated to health, security, and education, but those sectors actually worsened over that period.

We face a similar situation in Jamaica today. We have a broken system, and putting more money into it without the necessary fundamental changes will only cause us to be in greater debt. This is why the adjustment under the economic programme is so important — not just throwing money at each and every outcry that we hear. We have done that in the past, where we have been in the middle of an adjustment programme and as soon as we near an election, or as a sector cries out, we resume the old ways of borrowing money to ease the cries before polling day. And so we start the whole process again and again. The only difference being that we start from a worse base all the time.

Low-hanging fruit can create significant change without any significant cost. There are four main initiatives that can be taken to bring positive development. They will require strong support from the citizenry, who regularly complain about the country's governance. This is an opportunity for us to turn around the country with little involvement from politicians. But are we willing to take the personal responsibility to do this? Much of a country's development rests in the hands of the people. It is only when the people decide they want a better country that any improvement happens.

The first initiative is the cost of health. Approximately 70 per cent of the cost of health in Jamaica has to do with non-communicable diseases (NCDs), otherwise known as lifestyle diseases. These include things like diabetes, high blood pressure, and even some cancers. Jamaica • billions on NCDs each year, much of it scarce foreign exchange for treatment drugs. In addition, much of the individual health costs relate to NCDs. But the fact is the great majority of these diseases are avoidable. If we behave differently when it comes to nutrition and exercise, then the country's fiscal accounts and balance of payments would benefit. In addition, the cost of individual health insurance would be significantly reduced. No government policy can force this to happen. It is a matter of personal choice.

The second initiative relates to our environment. We know the challenge of garbage collection, and we rightly hold the NSWMA responsible when they fail to perform this critical function efficiently. But a big part of our environmental challenge comes down to our own personal choices. The degradation of the environment has a deleterious effect on Jamaica, particularly because we are a tourist destination. Apart from the negative effect on tourism, it also can be the cause of natural disasters caused by flooding etc. The result of not taking care of our environment is that it can cost us billions in f o re g o n e revenue from tourism, and every time we have a natural disaster it costs the country tens of millions of dollars. The irony is that much of the cost from environmental effects is because of actions by citizens, who pollute the gullies and other parts of the environment.

The third area is law and order. If we are to achieve vision 2030, then it is going to be important to develop a society that is disciplined and adheres to the rule of law. Indiscipline on the roads and non-compliance with the Noise Abatement Act are two areas where citizens can exercise control. Even though the government is responsible for enforcement of these laws, the fact is much of the responsibility lies with the citizens, who are the ones who break the law. This is tied to enforcement, which is a primary responsibility of the government. Another area of enforcement that we disregard but which will lead to a more ordered environment is the zoning law.

The final area is a huge negative for investments and business — public sector bureaucracy. Even though the transformation of the sector will require some amount of funds, the fact is much can be achieved by just changing the attitude of the workers. An example of where this has worked is the Tax Authority of Jamaica, which has not only made legislative changes to be more effective, but more importantly is transforming the approach to customer service delivery.

These are some of the lowhanging fruit that must be picked, to cause serious transformation in the economy and social lives of Jamaicans. Even if we were to spend money on these areas, without the change in behaviour by us Jamaicans, these areas will not improve. The role of government is enforcement, but if we as Jamaicans truly want the country to advance, do we need to wait on enforcement or should we individually be making the change?

Therefore, even while we grapple with the need for funds, we should also realise that much of what is needed to transform our economic and social fortunes really comes down to the will of the government and of us the people to want a better country.

Friday, January 02, 2015

Think differently for a better future, Jamaica

Police Commissioner Carl Williams (right) and National Security Minister Peter Bunting have the right attitude for change.

2015 is here, and we celebrate a new year and new beginnings. But what does the turn of a new year really mean?

Traditionally, we have always celebrated a new year as a new beginning, but what makes the start of a new year any different from the old year? After all, we still have the same crime problem on January 1 as we did on December 31. We still have the same leadership issues. We still have the same problems with bureaucracy (which we were reminded of on the last day of 2014 with the statement from Omar Azan).

There are, of course, some things that are different, which we can speak to. We threw out the old calendars and put up the new ones. That is if you are still from the old school where you have a physical calendar rather than a digital version. For some companies and accountants it is significant because it is the start of a new accounting year, but then again, this is not consistent with everyone.

The truth is that there is nothing different between an old year and a new year, outside of the festivities and commercial activities. When we return to work on Monday, the workload and challenges will be the same as December 31 (unless you worked throughout the holidays).

Many of us make New Year resolutions, which we carry from year to year, and each year they need to be bigger, as we have, for example, gained more weight or have not done all that we wanted to do.

So in reality, there is really nothing different about a new year. The positive about recognising a new year is that it provides for us a measure of time, which we can use to measure progress or failure.

But this measure of time is only useful if we had goals, charted a path for those goals, and made sure that we followed our plan. So a company may do a budget and strategic plan for the year, but if the management fails to follow and monitor the plan during the year, then they could come to the end of the year and realise they have not achieved it.

Similarly, a person who has a health plan, such as weight loss, needs to monitor the steps every day to achieve that plan.

Therefore, while the new year serves as a significant measurement milestone, the achievement of that milestone is reached by actions during the year. So we really don't need a new year to do this, but rather it provides a yardstick and is a good way for people to check their indiscipline.

How many of us have made resolutions in the past to lose weight, but find ourselves putting on more each year? Or how many of us have said that we want to achieve something during a year but find at the end of the year that we are one year older without the achievement?

One thing we can agree on, however, is that the new year is not a magical solution to any challenges we have.

So how do we ensure that we achieve what we want during a year? The reality is that the only thing that will allow change is for us to change our mindset and approach to existing situations. In other words, actions are most times driven by how we think about the problems.

So, if you want to make health changes in 2015, then you have to change your attitude and behaviour that cause the weight problem, which may include getting new friends who do not encourage the bad behaviour.

If we also want a better country, then we also must change the way we approach and think about solutions. This I find to be a big part of the problem we have had over the years.

We have, for example, had many International Monetary Fund (IMF) agreements and promises by politicians in previous years but have always found ourselves back in the same economic quagmire or worse. This is simply because, until the current agreement, we had not adopted a new way of thinking and doing things. And this is why many are saying that the current path, in general, does not work.

Those people are slaves to the normal ways of doing things, which is a significant reason that companies seek younger talent all the time, as they come with a different perspective, which is needed for growth.

This is not limited to the politicians, many of whom need renewal. It also applies to the public. A big challenge for me resides with public sector leadership and rules. I think there are some excellent workers and leaders in the public sector, but there are also some people who think that the role of the public sector is to prevent rather than facilitate.

For example, one of the things we must confront in 2015 is that growing fiscal revenues is not just about squeezing every last cent out of businesses in the form of taxes, but also facilitating the growth of business, resulting in a much larger base of revenue, even if it means lowering the tax take from businesses.

If we are also going to deal with the crime and law and order problems, then we must also think of a different approach. Police Commissioner Carl Williams and National Security Minister Peter Bunting, I think, have the right attitude change that will see progress in this area, and we are seeing some progress, although many are not capable of seeing change while it is happening.

There is, however, still much to be done here.

Much of the responsibility for law and order also resides with the citizens, who don't see anything they do as wrong. My challenge to citizens is that they should not support any violation of laws such as the Night Abatement Act, or driving and talking on the phone, or disposing of garbage improperly.

We must also change our attitudes to child abuse and punish the perpetrators, and those who are complicit, severely.

This responsibility even extends to not protecting people who have done wrong and supporting the rules to be implemented by the JUTC. When they start implementing these rules we shouldn't be asking for people to be given a "bligh". We must support the rules and call out the JUTC if they are not implementing them to the fullest extent of the law.

So as we start the measurement period of 2015, let us all understand that irrespective of the great plans and wants we have, that these will only be successful if we change our mindset and approach to dealing with our challenges, as there is no magic wand that is waved at the start of a new year.

Happy New Year, everyone.

Tuesday, December 30, 2014

2015 prospects for Jamaica

        Agriculture has a critical role to play in our development.

AS we come to the end of 2014, it is traditional for us to think about what will happen in the New Year. Apart from tradition, however, the end of a year is always used as a mark to measure progress and look towards the future.

2014 has been a year of mixed fortunes, and indeed a transformative year. This is reflected in the progress made under the economic programme, as well as the many transitions in the legislative framework, and society. For example, we saw the following:

* Economy -- fiscal improvements. The foreign exchange market went from volatility to stability and further end-of-year movements; the stock market seems to have levelled off as expected; significant improvement in the Doing Business Report; and businesses experienced mixed fortunes and a new normal in the competitive market emerged.

* Legislative framework -- much change was made in the legislative landscape and we saw many proposed legislative amendments being made, based on public feedback. Overall, however, my own view is that much progress was made.

* Society -- improvement in policing methods and lowering of crime statistics; more vibrant civil society, resulting in greater input in policy actions (eg response to Mario Deane incident); reduced unemployment and also reduced real wages; and, I think, greater effort by authorities to come to grips with some of the societal challenges, although much remains to be done and enforcement is still not where it should be.

My biggest disappointment is that we were not able to make more progress in the public sector reform and bureaucracy issues, because although some movement has been made, this still remains a major stumbling block to businesses.

I think, as we go into 2015, however, we could see further improvements in our economic and social development. But this is going to depend to a great degree on how leadership deals with the issues that will face us.

In other words, we are going to need strong leadership, which must be equitable and come down on the side of justice and fairness, as this will be the only way to balance the competing interests in the society for the benefit of the entire country.

On the economic front, I believe that we stand a good chance of a more vibrant economy as we have dealt with many of the structural issues facing the fiscal and macroeconomic environment. Although there are some significant targets remaining under the economic programme, it is my view that the significant legislative and other reforms made have laid a foundation for us to move forward positively. But this is going to depend on how we handle the advantages we have gained. These include:

1) Fiscal -- I think that the Government has made significant strides in laying a foundation to continue fiscal discipline, and we have seen the benefits in our accounts. However, we must now realise that fiscal discipline alone cannot carry us much further, as all this does is control expenditures while what is needed now is growth. So it is going to be important that we implement policies and legislation that encourage businesses to grow, and particularly SMEs. Much of the infrastructure is still not conducive to a supportive business environment, and unless we are able to change these positively, then we will come to a standstill. This is going to require continued collaboration between the public and private sectors, as one hand can't clap.

2) Governance -- There have been some stormy discussions over governance in 2014, and we must continue the dialogue to address this, as governance is going to be key to building trust, which is the basis of economic and social progress. Governance, however, is much more than at the national level and includes things like enforcing simple laws such as those dealing with road usage, night noises, and littering. It also includes ensuring that public sector bodies follow proper board and reporting governance.

3) Energy -- Over the past few months we have seen oil prices falling significantly, approximately 50 per cent, but there is a concern that consumers have not seen the full benefit. This is important to take advantage of, as falling oil prices create an excellent avenue for providing economic stimulus as it will mean more disposable income in the hands of consumers for the local economy.

4) Macro economy -- The Bank of Jamaica has a critical role to play here, as with the adjustments happening in the economy it will have to know how to tweak money supply; for example, to balance the fear of a moving exchange rate and the need for adequate liquidity. Any miscalculation could put a spoke in the wheel of the economy's development.

5) Agriculture -- I think agriculture has a critical role to play in our development, as many new enterprises can emerge from this, particularly export-led ones. The problem with our agriculture is that it has been highly disorganised and is based more on subsistence farming than large-scale farms. This is unsustainable in a competitive market, and so the agro-parks are a critical component of a future industry. What is going to be important is that we ensure that the proper management is in place to ensure that agro-parks deliver on their potential. If we are able to maximise this area, then there is also a large potential to supply local produce in place of much of the US$1-billion food imports.

6) Tourism -- This is another area of significant potential. However, our inability to enforce environmental laws, deal with squatting, tourist harassment, and littering, and develop our infrastructure is not allowing us to maximise our competitive advantage. With the opening up of Cuba to the US market, it is even more critical to have a well-planned approach to deal with this. This, of course, includes crime, which is a scourge on not only tourism but also business in general.

These are some of the issues we will face in 2015, and whether we are successful or not will depend on what leadership is provided. We have certainly shown that we have the capacity to confront issues, as we have done with the economic programme, and must now ensure this infects other areas.

As we go into 2015, however, as citizens we must also reflect on our individual responsibility to ensure we are compliant with proper law and order and do our part to move the country forward.

Happy holidays and much prosperity in 2015.

Friday, December 12, 2014

Great need to transform Jamaica's labour force

JAMAICA seems set to pass the sixth International Monetary Fund (IMF) test, underlining the fact that we have, no doubt, been making progress in establishing the framework on which development must take place.

I say this against the background that the legislative and fiscal initiatives put in place have been successful in ensuring some amount of stability and confidence in the economy. We see that there is more acceptance of Jamaican debt, and businesses are expressing the view that goods have become more competitive with the depreciation of the exchange rate.

This has also culminated in an improvement of 27 places in the Doing Business Report 2015, which is a reversal of the movement in ranking that we have been seeing in the past few years. This positive change in ranking, however, is as a result of the improvement in the legislative framework in particular. However, it has not translated itself into meaningful improvement on the ground, and this is where the challenge lies for us.

The fact is that businesses still see bureaucracy as a major stumbling block, and people are seeing a real decrease in their disposable incomes. We also note that even though there are improvements in the macroeconomic numbers, and in particular the balance of payments, the fact is that this has come as a result of contraction and specifically a decline in both imports and exports.

The challenge facing the country then, is this: How can we achieve the real GDP growth needed, which will not only ensure greater levels of income but also bring sustained stability in the economic and social framework?

At the heart of this problem is productivity, and specifically the low levels of labour productivity we have been experiencing. This speaks to the unpreparedness of our labour force to adequately compete in a global environment. We face a daunting challenge: How do we transform the labour force from low productivity to one of high productivity?

This is the only formula that leads to sustained economic and social transformation, which should be our ultimate goal. It is also this transformation that will give us the real GDP growth needed to turn around our economic fortunes.

My own experience is that while we may have greater educational opportunities available, our labour force is neither innovative nor sufficiently focused on problem solving to effectively compete globally. And if you think about it, labour is the driving force behind every product or service that is produced.

So if labour is not competitive, in terms of innovation and value-added thought processes, then the resulting product or service will not have the desired competitiveness in a global market.

So how do we transform the labour force?

The first thing we must do is understand what role we want labour to play in a highly competitive economy and society. This also means establishing some societal goals such as income levels and standard of living.

We have never really, from a policy perspective, established what is labour's role in a competitive economy, and therefore there has never really been any link between economic planning and education planning. In other words, we have failed to put our people at the centre of our development.

Second, if you want labour to be competitive, then you must create the environment for productivity, thought, and innovation to thrive. Everyone who is involved in managing people knows that if you don't have a conducive environment to encourage productivity, then people are not going to produce at maximum.

The truth is that as a country we have not created that environment over the years, and this stems mainly from distrust between the citizens and the security forces, Government, the public sector and other stakeholders.

One of my pet peeves has always been that the way we set up our laws, and rules governing public sector workers, for example, assumes that no one is to be trusted. So we have procurement rules and tax compliance certificate regulations, which seem to assume, first, that everyone is dishonest and then they have to prove honesty.

Or we have an environment where the security forces over the years have failed to win the confidence of citizens. So how can we expect a productive labour force if we don't facilitate an environment to encourage it?

Third, it is important that we create a culture of pay for performance. And I speak specifically of the public sector, where reward is more based on seniority and connections in many respects. There is a lot of talent in that sector, which will not be maximised unless we adopt the model of rewarding performance.

Fourth, we need to incorporate education plans into our economic objectives. So the monies lent through the Students' Loan Bureau, for example, should be tied to what skills we will need to move the economy forward. Government should also offer scholarships in those skill sets, instead of using our scarce resources to fund skills that are highly unlikely to get a good job, given Jamaica's comparative advantage.

The last thing I will mention, but which is very important, is that we need to create an environment of discipline and rules. One of the major challenges with labour is that people have grown up with a lack of proper values and are generally undisciplined.

This has resulted, in large part, from the fact that we do not enforce laws, which may be as simple as night noise, littering, child abuse/protection, or the indiscipline on the roads. If we do not address this indiscipline, then we are teaching our children -- our future work force -- that it is acceptable to deviate.

And so it is important for us to understand that as we move into a critical phase of the economic programme, that economic and social transformation are necessary in order to create real sustainable growth. But this is only possible if we transform our labour force into a highly productive one, which means taking the necessary steps to do so.

Friday, December 05, 2014

Overcoming the challenge of poverty

Jonah Johnson shows the kitchen where he cooks for his family. (FILE PHOTO)

ACCORDING to the recently released 2012 Survey of Living Conditions (SLC), Jamaica has recorded an increase in poverty levels between 2009 and 2012.

"The all-Jamaica individual poverty prevalence increased by 2.3 percentage points relative to 2010 to reach 19.9 per cent," the survey stated. This was not totally unexpected, as the global recession hit us in 2008, and capital markets were closed to us amidst a stalled International Monetary Fund (IMF) agreement up to 2013. So it was unlikely that, without global capital market support, Jamaica would have seen any improvement in poverty levels.

One of the primary reasons for this is that , since the 1970s, Jamaica has managed to see improvements in poverty levels only as a result of increased borrowing rather than productivity improvement. That, however, was not sustainable as it was not based on earnings.

So, at the heart of our poverty challenge is the fact that since the 1970s, productivity levels, and labour productivity in particular, have been on a downward trend. As a result, Jamaican-produced goods and services have become less competitive globally, and this has contributed to the increased levels of poverty that we continue to experience.

The only way for us to overcome this poverty challenge is to increase productivity, and in particular labour productivity. For us to do this we have a lot of catching up to do. In developed countries robots are now being used instead of humans in warehousing, agricultural production, and many other industries.

In the meantime, we are grappling with an unemployment rate, hovering around 12 per cent, and relatively low literacy levels. Add to that equation the indiscipline of our labour force and the need for labour reform, and you see the challenge we have with labour and labour productivity.

It is important that we understand this, as the only way for us to sustainably reduce poverty, and even more if we are to improve per capita GDP to the levels of comparable countries, is if we are to significantly increase labour productivity. This is because earnings are a function of productivity, and therefore average wage levels will not increase (without debt) if we do not see first an increase in labour productivity.

The way we have chosen in the past to reduce poverty and increase earnings is primarily through the welfare influence of the State. What we have done is borrowed money (resulting in a $2-trillion debt today) and distribute it through government activity and programmes, with no relation to what the most productive use of that debt is. The result being that we are not able to pay back the debt, culminating in a debt burden that is fiscal, economic, and social.

Now that we have finally chosen the path to reduce our debt burden, and bring about the necessary fiscal reform, it was always going to be inevitable that we would see an increase in poverty levels. This is especially so during the period of the SLC, where we had no international capital support (debt) and there was an economic recession.

From 2012 to now, we have seen where the economy has made fiscal and monetary improvements, after the IMF agreement got back on track. The result has been improvements in the macroeconomic and trade indicators. But this improvement has not been as a result of economic expansion, but rather contraction. This, of course, was not unexpected, as there were so many inefficiencies in the system that it was inevitable that the economy had to contract before it started to expand, and particularly since much of the economy depended on debt, from which we are trying to wean ourselves, just like a drug addict going through withdrawal symptoms.

This, however, is not a sustainable path either, as we could contract to a point where it becomes difficult to start growing again. We are definitely not yet at that point, but you don't wait until you are weakest to try and regain your strength.

I believe the necessary legislative and fiscal reforms are being made, but the major challenge that we will face centres around labour productivity in both the public and private sectors.

The greatest challenge we will face to the turnaround of our economic fortunes is the labour force, and how we improve labour productivity. We must find a way to maximise the productivity of labour, especially in a world where menial tasks are being automated. This is also the only way to reduce poverty, as reducing unemployment by providing low-paying jobs does not reduce poverty, but institutionalises it instead.

So one of the first challenges we have is improving not just the literacy rate, but more importantly training our labour force to become problem-solvers and innovators. This must be one of the primary focuses of learning institutions.

Secondly, we need to use our scarce resources to focus education around the skill sets that we will require to expand our economy. It makes no sense using scarce government resources to educate people in a field where there will be very little or no demand for the skills.

Finally, as a general comment, we must quickly implement the labour market reform called for in the economic programme/IMF agreement.

There are many other initiatives I can think of that would contribute to improved labour productivity, but these are some main initiatives to focus on. What is important for us to understand, though, is that the only way to reduce poverty sustainably is to focus on improving the labour factor productivity to globally competitive levels.

Friday, November 28, 2014

Jamaica’s fundamental challenges

ONE of the things I pointed out early in my second book is that before we can solve a problem we need to understand what the fundamental issues are. I say that because over the years I find that we tend to address the symptoms of our problems rather than the underlying issues.

This is also true when we engage in debate about what solutions are to be applied. I guess that’s because some of us are not able to really understand the issues.

I do find that this is not only a national problem, but also manifests itself on a personal level. So, as an example, many people who are uncomfortable with their weight tend to try to cover it with clothes or undergo cosmetic surgery, or apply other solutions, when the real problem is getting proper nutrition and exercise.

However, humans tend to always seek the easier way out, and so the cosmetic solution is often preferred. This reflects the approach to our economic challenges where, for a very long time, we have delayed having to take the necessary decisions to ensure a better future.

The result is that the delay in acting causes tougher decisions later, both nationally and personally. In other words, it is better to maintain good health than to get it back.

So recently, more than ever I have been giving serious thought to what Jamaica’s fundamental challenges are, and why we have not been able to make any real progress in over 50 years of Independence. Maybe because I am getting older, I am even more distraught at the suffering that many Jamaicans have to endure, especially the children who are abused, and after so many years we are still unable to fix these ills of society.

Instead, what we have done is focus on many macro issues while ignoring the plight of individuals in general.

One thing I have learned is that no matter how much you try to address the macro environment, unless we deal effectively with the smaller issues we will never sustainably solve the bigger problems. This is very true for organisations, as many people try to implement policies and systems without giving due consideration to the environment that the staff has to work in.

In both an organisation and a country, the most valuable resource you will have is the people, as without people there is no organisation or country. This is an important concept to understand as the main reason behind every activity on earth is life, or people.

The other thing that many of us fail to understand is that economics is all about human behaviour. So too is social studies. And whether you have a successful economy or society depends on how people behave. In other words, the vibrancy of an economy is not fundamentally about the policies implemented, but rather how people react to the policies. Do they encourage people to consume or produce?

It would stand to reason then that if we are to truly achieve success, or to achieve the objectives of Vision 2030, then any policies that we formulate must put people at the centre.

After all, policies and laws mean nothing if people don’t support them and act positively towards them. In fact, one of the main reasons why we have failed to achieve prosperity as a country, relative to other countries, is that we have failed to consider the importance attached to the welfare of our people.

I know that we have enacted many laws and that various structures have been put in place. However, for me, the success of policies and actions is not based on announcements and implementation only, as we have become accustomed to, but rather on outcomes. In other words, with all that we have done, and all the investments made, have we seen the desired improvement in income levels and quality of life generally? At the economic level, after all the debt that has burdened us over the years, have we seen the desired economic growth?

If the answer to that is no, then it means that no matter how much effort has been made, we have not achieved what we desired. And it must mean that we have been doing something terribly wrong, and of necessity must relook at what we are doing.

This is why we had to make a seismic shift in how we approached our economic and fiscal challenges. Based on the past two years, it seems as if we have come to grips with what needs to be done in that area. However, this is just a part of the bigger problem, as a country’s development, in the final analysis, is about improving the standard of living generally and providing greater opportunities to people, not just meeting economic targets.

So even after we have successfully achieved the economic targets we still have work to do.

We have to accept that we have not done a good job as a country in this regard, and it is not only because of poor governance, but very importantly a lack of our own personal responsibility, and how we understand our roles as citizens.

I think that the basic problem we face is the lack of proper parenting, and that we live in a time when roles are confused, as children want to act like adults and adults want to act like children. Just like the mosquito infestation, which has contributed to the CHIKV spread, if we were to all address the actions of our own surroundings then we would have better citizens contributing to development.

This problem crystallises itself in social issues that, I think, are at the root of our problems. These include child abuse, poor parenting, unethical values and attitudes, general indiscipline and lack of enforcement of order by the people responsible, and the list goes on. The point is that if we have a society that does not produce good and productive citizens, then we will have economies and societies that are far from optimal, if we accept that economies and societies are nothing more than the interaction of people.

There is a lot more I could say on the subject, but suffice it to say that Jamaica’s fundamental challenges lie in how we build and maintain improved standards of living for our people.