MORE THAN 1,700 workers were retrenched from July-November 2020, the Central Bank said on Thursday in its Economic Bulletin. The bulletin also reported a contraction in domestic economic activity and reduced revenue, which contributed to a larger deficit in the last half of 2020.
The bank said through its monitoring of retrenchment notices, it counted 1,728 retrenchments in the five-month period. For the same period the year before, there were 577 retrenchments. The report said the number represents a 200 per cent increase.
The finance, insurance, real-estate and other business services served the most notices, with 802 people getting pink slips. Distribution, restaurants and hotels jettisoned 285 people, the energy sector let go 176 people and manufacturing let go of 171 people.
“The ongoing covid19 pandemic has caused considerable labour market ‘slack’ throughout 2020,” the bulletin said.
It cited the border closure, travel and dining restrictions at bars and restaurants, as well as the closure of places of leisure as reasons for the retrenchments.
Job advertisements dropped by 37.8 per cent, indicating that the demand for labour may have waned.
There were also rampant contractions across the energy sector, attributed to the planned maintenance of two large facilities, Atlantic LNG trains two and three and a fall in demand for TT energy exports owing to covid19.
As demand fell, production of natural gas and related energy-sector products fell also, and eventually several downstream petrochemical plants were shuttered.
Over the second half of 2020, the report said, natural-gas production was reduced by almost a quarter (23.6 per cent).
The dip in natural-gas production set off a chain reaction that dragged down the rest of the energy sector. Mining and quarrying declined by 14.9 per cent, thanks to a 19.9 per cent decline in natural gas production and a 2.3 per cent reduction in crude oil during the third quarter.
The fourth quarter also saw a drop in LNG production because of the controversy surrounding the future of Atlantic’s train one facility.
Between October and November LNG production fell by almost half (46.9 per cent). Methanol dipped by 29.4 per cent.
Government registered a deficit of $16.8 billion, four times higher than the year before ($4 billion), mainly due to lower revenues and increases in expenditure.
Government financed the deficit, however, through loans from local and international lenders, and withdrawals from the Heritage and Stabilisation Fund. The non-energy fiscal deficit also expanded over the period, reaching $24.6 billion from $19.9 billion a year earlier.
But there is good news. Inflation held relatively steady during the second half of 2020, in part because of the restriction of economic activity and measures to mitigate the spread of covid19. Between July and December last year, headline inflation remained low, averaging a 0.7 per cent year-on-year.
Food inflation measured 2.3 per cent in July, but by the end of the year it had accelerated to 4.5 per cent. Core inflation, which subtracts food inflation, remained at zero.
“The acceleration in food prices was driven by strong price growth in most sub-indices, most notably in the butter, margarine and edible oils; sugar, jam, honey, chocolate and other confectionery; vegetables; and fruits sub-indices.”
Retail prices for building materials, considered a positive indicator of construction activity, increased by 3.2 per cent during the fourth quarter compared to 2.4 per cent during the previous quarter.