Friday, August 10 2012
WE are keen to know whether the supposed lowering of TT’s unemployment rate is due to the actual creation of new jobs, or whether it is explained otherwise such as by some sort of statistical fluke. The Government Information Service (GIS) issued a statement on behalf of the Central Statistical Office (CSO) saying the average 2011 unemployment rate was 4.9 percent, which is statically regarded to be “full employment”.
Some support for the validity of these figures comes from the Central Bank. On the heels of the Central Bank’s July 2012 Economic Bulletin showing unemployment in 2011 falling from 5.8 percent in the first quarter to 5.2 percent in the third quarter, the CSO data says that by the fourth quarter it had dropped to 4.2 percent.
Yet despite the alignment of Central Bank and CSO data, we again ask, does a lower unemployment rate mean more real jobs?
For example, we notice that a supposed fall in unemployment from 5.2 percent to 4.2 percent between the third and fourth quarters of 2011 actually came against the backdrop of an increase in the size of the labour market or the number of persons available for work, from 609,000 to 621,000 between those two quarters. It is entirely possible that an apparent improvement or lowering of the unemployment rate could simply be brought about by having a larger labour pool, regardless of any reduction in the number of persons unemployed.
Alternatively, the supposed fall in unemployment might be explained simply by persons giving up the search for work, or opting for temporary jobs, part-time jobs, “make work” jobs, “a lil’ hustle” in the informal economy, or other forms of under-employment. This may well explain the “disappearance” of 7,000 construction-sector workers from 2010 to 2011, in the CSO data. While no-one wants to be a party pooper, nonetheless we must plainly ask whether the “good news” from the CSO’s Office is due to the creation of new jobs, or not.
Since 2008, TT has been in a prolonged economy lull, and there is nothing to suggest to us that this country has suddenly leapt out of its economic sluggishness. That said, we ask where is the surge in Government spending that is creating all these “new jobs” that are being suggested by the CSO report? Where is the sudden boost in private sector confidence that reverses years of them sitting on their hands despite cheap credit from banks afforded by an ever-falling repo rate? Where is the tsunami of foreign direct investment (FDI) to create activity and jobs in TT? We are simply not seeing it. In fact the modest previous prediction of a 1.5 percent growth in TT’s GDP this year has been revised downwards to just 1.0 percent, by several agencies, in line with a general lowering of expectations of growth globally, so we wonder where any new jobs are coming from?
Whilst the Central Bank’s bulletin indicated a slight rise (year on year) in borrowing by businesses, peaking at 6.9 percent last December, it is probably still too soon to see whether such a show of optimism can be sufficiently sustained to translate into real jobs. Further, data in the bulletin suggests that almost half of this credit actually went to large oil and gas firms, an industry which sadly usually creates very few new jobs, as opposed to say the agriculture sector.
Finance Minister, Larry Howai, was surely to be expected to make murmurings in support of this low-unemployment figure, but his anecdotal evidence of one employer being unable to find skilled workers must be taken with a pinch of salt as it probably does not spell out the full picture for non-skilled labour, or indeed other types of skilled labour. We’d like to get more details of the TT job market. For example, two ways to tell if more jobs have been created since the third quarter of 2011 onwards is to see if the National Insurance Board (NIB) has seen an increase in the number of persons submitting monthly contributions, or whether the Board of Inland Revenue (BIR) has likewise registered an increase in personal income tax deductions. And of course, ordinary people will surely be making their own anecdotal assessment of the job scene. Is my niece working, is the neighbour’s son home unemployed, and am I earning a decent living in a sustainable job, many will surely be asking themselves?