Artificial labour in Jamaica

Putin is recently on record as saying that whoever has a competitive advantage in Artificial Intelligence (AI) will control the future of the world. Elon Musk agrees with him.
Whether or not this will be so (and it does sound logical), what is clear is that the environment for labour is changing. In fact, a recent article suggested that because robots are being used more and more to replace labour, especially blue collar workers, governments should consider making a minimum payment to all their citizens. In other words, a minimum “welfare payment”, which would substitute for the displaced employment caused by robots and AI in the future.

What this onward march of technology means is that, in the very near future, most blue-collar and some white-collar jobs will be replaced by robots and AI. For me it doesn't necessarily mean that there will be no jobs, but that for people to gain employment they would have to be employed in areas that require higher-level thinking.

So recently I purchased, and have been using, a vacuuming robot at home, which can be scheduled to clean the house when no one is there. So even while on vacation the house can be cleaned.

There are also Wi-Fi camera systems that not only allow you to monitor your home from another country, but also allow you to speak through the camera to someone who is in your yard, or in your house, which I also have installed.

But this doesn't mean that you don't need household help or security companies to monitor your house. What it means is that their role changes to more critical and higher-level thinking. So the household worker now needs to understand how to utilise and monitor these house robots, and the security guard must now be familiar with the technology.

Another article pointed to the dominant economies projected for 2050. The similar track for the top 10 was that they all depended on infrastructure development, and very important growing and productive labour. So even in 2050, labour is still being seen as a competitive edge for development.

What must be noted, though, is that labour can only be competitive, and can only raise its value when it is constantly increasing in productivity. But labour can only increase in value, and be competitive, when it is allowed to compete with labour productivity in other countries.

This for me is the biggest impediment that Jamaica faces to our development and competitiveness, which I have been saying for some time.

The fact is that Jamaica's lack of international competitiveness and development is being stymied by our low labour productivity, and has been declining since the 1970s. The only way to increase real labour compensation is by increasing productivity.

However, up to the 2013 IMF Agreement, public sector wages were increasing (in real terms) at a pace faster than productivity. Indirectly also, overall labour compensation has been doled out through government welfare programmes, labour laws, and tax breaks. The result is that products and services do not increase in competitiveness, and as a result labour compensation loses value, resulting in declining standards of living.

If the Jamaican economy is to develop and become internationally competitive, it also means that our labour has to become competitive. Just like in a private sector company, the competitive edge is always labour productivity, such as customer service levels.

But for this to happen, Jamaica must face some facts and address them. The first one is that our policy must recognise that robots will eventually take over and be much more productive in jobs that we cling to for political reasons. These include street sweeping and sugar cane cutting.

This does not mean that we will displace these workers, but rather that we will employ strategies to ensure their training for higher-value thinking jobs, and hence more compensation because of increased productivity.

It also means that we must face the reality that our current labour laws actually end up creating a worse future for labour than the present we are trying to protect.

So I consider the IDT and labour laws major stumbling blocks to productivity, because they allow labour and capital to remain unproductive. This has resulted in more informal labour and less hope of pensions and health benefits accruing to workers.

So eventually the fiscal accounts will be caught with these gaps, which will mean greater taxes in the future.

This is not to say that unions are not relevant in protecting against any advantage being taken of workers, but they must be provided with an environment that promotes productivity and prosperity for their charges.

It is only by taking bold actions to address our present labour and industrial environment that we will begin to see an increase in labour productivity. And if labour productivity increases, then capital and labour compensation will increase. This will in turn increase standards of living.

But this cannot happen with just tinkering at the edge of the problem. Government must take the bold and decisive decision to do so, just as the decision was taken with the ZOSO.

Jamaica's growth and development can only happen when we accept the future of what will develop with labour markets and start to think about how we will make the Jamaican worker more productive, and not rely on “artificially created labour” and short-term impact measures.

Jamaica's lack of disruptive thought

The Jamaica Observer's editorial on Tuesday appropriately addressed the issue of the lack of “big” thinking, which has plagued Jamaica and resulted in a lack of development.
The Observer yesterday reported on the PIOJ press conference, which announced an estimated growth of 0.3 per cent for Q2 2017 (April to June), which followed a 1.4 per cent decline in Q1, as reported by STATIN.

The editorial, in my view, is fully supported by the PIOJ press conference. Dr Henry reported that in the short term, the reliance on growth would be on the expected construction on the Alpart plant, and that the risks to growth remain weather conditions and any oil price shocks, primarily.

This is the same thing we have been saying from as far back as I can remember, even while the world has, and is, changing around us.

In other words, for 40 years or more, Jamaica has been doing the same things, in a rapidly changing world, but expecting different results. Governments come and go, and they make grand announcements, but the same growth and market inefficiency issues remain.

So one could look at the last 10 years of the Global Competitiveness Report, and crime, bureaucracy, tax rates and corruption would feature among the top five impediments to doing business.

What is more, these four consistently account for upwards of 40 per cent of challenges to doing business.

It is this same attitude to governance that has caused the problem, not only with the Hip Strip, but with tourism decay in general. One may say that we have been increasing the number of tourists that visit the island every year, and that may be so. But within the context of a growing tourist market, cheaper and more accessible air travel, greater income levels and spend by tourists worldwide, and importantly, very good tourism offerings, particularly by our all-inclusives — have we really kept pace and achieved what and where we should be?

It is the attitude that ignores indiscipline (including illegal vending and harassment); the attitude that ignores infrastructure maintenance and development (because of our short- term fiscal thinking); and the attitude that ignores the foundations of crime (squatting and lack of order), that have kept us back and have us talking about negative 1.4 per cent growth, followed by 0.3 per cent growth.

SHAMEFUL GROWTH

Let us be clear: 0.3 per cent growth, based on the sacrifices we have made, the potential we have, and the growth we are seeing in the global economy, is shameful.

In fact, one could say it is within the margin of error, and when STATIN reports the final numbers, it could very well be negative.

With all of this, we still keep doing the same things and expecting different results. And maybe it is because successive governments think that even if the fiscal accounts do not perform well, all they have to do is raise taxes. Well, they have basically been doing so every year, and still we are reporting — 1.4 and 0.3 per cent growth rates.

Another example is the recent announcement by TPDCo to instal anti-harassment officers, which is being done for maybe the third time. But after a while you see the officers blending in with those doing the harassing, and as usual, “Jamaica - no problem”.

I am not saying that we have not had development in Jamaica, but I am saying that we are underperforming significantly compared to where we need to be. This is primarily because of the mindset that we have, and have had, towards governance.

In other words, what we need in our governance is “disruptive thinking”. And we had that when we put EPOC and ESET in place. Both teams have seen tremendous success, and made Jamaica the “poster child for IMF reform”.

This means that we are more than capable of moving the economy forward, and one has to therefore wonder why we can't achieve more.

Sadly, this is because of what the Observer editorial referred to as “lack of big thinking” or I would say “lack of disruptive thinking”.

If we are going to go for significant development and growth, and by extension improved living standards for all, then we must change the way we do things.

We cannot continue to be impeded by a set of procurement rules that cause more opportunities to be lost than costs saved; we cannot continue to ignore the indiscipline on the roads, such as the traffic lights that have become mini shopping malls and centres of harassment; we cannot continue to ignore the zoning laws and night noises; we cannot continue with labour laws that encourage an unproductive environment and the resultant loss of incomes; and we cannot continue to blame and restrict capital from working to develop the lives of Jamaicans, and as soon as someone starts to do well we tax them back down to a level of mediocrity.

And if we are going to achieve consistently high levels of growth, we have to recognise that the world is changing around us. So our growth strategy cannot continue to be to rely on “big” one-time projects, and not realise that we have to change our approach to agriculture because of climate change; we have to change our approach to growth inducement strategies; and we have to stop incentivising where we do not have a comparative advantage and build infrastructure to support those areas where we do.

Our fiscal policy must begin to recognise that the more productive capital is, the greater the returns for the economy. If we keep increasing the tax burden on capital and people, if we keep putting more and more stringent regulations in place, it follows that our fiscal accounts will fall, leading to further negative growth.

One ridiculous suggestion I heard recently was the recommendation by the National Road Safety Council that a tax be imposed on motor cycle imports to reduce the number of motor cycle accidents.

So, if we are to move beyond the growth we have seen in the first six months of 2017, we must understand that we need to have a mindset change from small thinking to big thinking, or from safe thinking to disruptive thinking.

Otherwise, in 40 years we will still be having the same press conference as the PIOJ did on Wednesday.