Economist says: TT economy shrinking
Thursday, September 20 2012
THE recent release of data from the Central Statistical Office (CSO) which claims the country’s unemployment rate for 2011 stood at 4.9 percent suggests the economy may be shrinking. According to economist/ consultant Dr Dhanayshar Mahabir “this may mask deep underlying problems in the overall economy.” He also said the 4.9 percent unemployment figure “omits to highlight youth unemployment which is estimated at around 50 percent of the youth cohort
In an interview with Business Day, Mahabir said it was good news that the country’s unemployment rate had fallen. However this news aside, Mahabir expressed the view that greater analysis needs to be done into what exactly does this mean for Trinidad and Tobago’s economy.
“We need to know however in what sectors the jobs were created. It must be determined that the employed are in permanent jobs and not temporary make work programs,” Mahabir said. When commenting on the unemployment rate last week, Finance and Economy Minister Larry Howai said Government would look at the Unemployment Relief Programme (URP)and CEPEP in respect to concerns by business persons in the manufacturing sector about challenges to obtain the skilled labour they need.
Funding and future plans for URP, CEPEP and other key social sector initiatives will feature prominently in the 2013 Budget which Howai will present in the House of Representatives on October 1.
Expressing the view the unemployment data suggesting the economy is shrinking, Mahabir said, “I expect growth this year to be negative making it four years in a row of straight economic decline.” He further stated, “In a shrinking economy with falling national income it means that the labour force is sharing in a smaller wage bill.”
“Are workers who are employed therefore working just a few days of the week. Are they settling for lower paying jobs or are they working part time? Is there a rise in underemployment with this fall in the unemployment rate? he asked.
Mahabir continued, “It must be determined that workers who were previously unemployed are now no longer looking for work and are therefore not in the labour force.” He expressed the view that “a rise in this type of behaviour will cause the unemployment rate to drop without an increase in labour demand.”
Explaining this is called the “discouraged worker syndrome,” Mahabir said,
“We need to know how many unemployed persons actually created their own jobs by being self employed in the informal sector of the economy.”
He also said attention must be paid to “the expansion of this informal /hidden/ parallel economy which may or may not be legal” because this can “cause the rate of unemployment to fall.”
“It includes such things as nuts vending as well as the vending of not so legal substances. As you see the unemployment rate itself is only a guide but it may mask deep underlying problems in the overall economy,” Mahabir stated.
In a statement which was released by state-owned Government Information Services Limited (GISL) last week, the CSO claimed: “The Total Labour Force for the fourth quarter of 2011 was 621,900 persons, representing an increase of two percent over the total labour force of 609,500 persons for the third quarter, 2011.”
“While males continue to comprise a larger share of the total labour force (59.1 percent), there was an increase in the female labour force of 3.8 percent between the third and fourth quarters 2011,” the CSO added.
The increase in the labour force between the third and fourth quarters of 2011 occurred mainly among Craft and Related Workers, where the labour force increased by 8.1 percent and Elementary Occupations where the labour force increased by 3.9 percent.
The unemployment rate fell from 5.2 percent for the third quarter, 2011 to 4.2 percent for the fourth quarter, 2011. In the fourth quarter of 2010, the unemployment rate was 6.3 percent.
In 2011, the total number of persons in the labour force in 2011 was 611,600, the CSO claimed. This, according to the CSO represented a decline of 1.2 percent from the level recorded for the year 2010 of 618800 persons.
The decline in the total labour force was observed mainly in the age groups 15 – 19 and 20 – 24, which declined by 13.7 percent (2,800 persons ) and 10.6 percent (8,200 persons) respectively. These decreases were somewhat compensated by increases of 6.1 percent in the age group 35 – 39 and 1.8 percent in the age group 30 – 34.
An analysis of the annual data by occupational grouping, according to the CSO, revealed declines in the annual labour force of craft and related workers and the labour force of elementary occupations between 2010 and 2011. Craft and related workers fell by 2.4 percent from 101,300 persons in 2010 to 98,900 persons in 2011 while elementary occupations declined 2.1 percent from 125,900 persons in 2010 to 123,300 persons in 2011.
On the other hand, the size of the labour force of the Professionals Occupation Group, increased 9.2 percent between 2010 and 2011 moving from 27,100 persons in 2010 to 29,600 persons in 2011.
Analysing the annual data for 2011 by industry, reveals that the size of the labour force of the construction industry declined 6.5 percent from 107,700 persons in 2010 to 100,700 persons in 2011. The industry group: wholesale and retail trade, restaurants and hotels also recorded a decrease in the size of its labour force over the same period moving from 114,800 persons to 111,000 persons or 3.3 pecent.
These decreases were somewhat moderated by a significant increase of 8.6 percent in the finance, insurance, real estate and business services industry group, where the size of its labour force increased to 56,600 persons in 2011 from 52,100 persons in 2010.
The unemployment rate, (which is calculated as the number of unemployed persons as a percentage of the total labour force) declined over the period, for both males and females. The male unemployment rate fell from 5.2 percent in 2010 to 3.9 percent in 2011. The unemployment rate for females also showed a decline, falling from seven percent to 6.3 percent over the same period.
The unemployment rates for the 15 – 19 and 20 – 24 age groups continue to be the highest of all age groups. Significantly however both age groups recorded larger decreases in their unemployment rates. The unemployment rate for the 15 – 19 age group in 2011 was 15.3 percent, down from 20.1 percent in 2010.
Likewise, the unemployment rate for the 20 – 24 age group fell from 12.4 percent in 2010 to 11.3 percent in 2011. The age groups 30 – 34 and 35 – 39, which have significant shares of the Total Labour Force, also fell from 5.2 percent to 4.2 percent and from 4.1 percent to 3.1 percent respectively between 2010 and 2011.
Most of the broad occupational groups showed declines in unemployment rates. The unemployment rate for elementary occupations was 8.4 percent in 2011, down from 10.4 percent in 2010. The rate fell because of a 2.1 percent fall in the total labour force that was more than compensated by a 20.6 percent decrease in the number of persons unemployed which fell from 13,100 persons in 2010 to 10,400 persons in 2011.
The unemployment rate for craft and related workers, the second largest occupational group, also declined from 6.5 percent in 2010 to 5.2 percent for 2011. Here again, a 2.4 percent decline in the labour force of craft and related workers was more than matched by a 22.7 percent fall in the number of unemployed persons in that occupational grouping.
Also noteworthy was a 1.5 percentage point drop in the unemployment rate for Clerks which saw the rate falling from 7.9 percent in 2010 to 6.4 percent in 2011.
An analysis of unemployment rates by industry revealed a significant drop in the unemployment rate of the Construction industry, where rates fell from 12.9 percent in 2010 to 10.4 percent in 2012. The size of the labour force in Construction fell by 6.5 percent but was accompanied by a 24.5 percent decline in the number of persons unemployed for this industry resulting in the 2.5 percentage point drop in the unemployment rate.
The Community, Personal and Social Services industry recorded a fall in its unemployment rate from 4.1 percent in 2010 to 3.6 percent in 2011. The Wholesale and Retail Trade, Restaurants and Hotels industry also saw its unemployment rate drop from 6.3 percent in 2010 to 5.9 percent in 2011.