The Central Bank has said nearly 3,000 people were retrenched last year due to the economic fallout brought on by the covid19 pandemic.
Its 2020/2021 Annual Economic Survey said this was a result of businesses having to adjust by using a variety of strategies to manage their wage bill through temporary layoffs, reduced working hours, salary cuts or retrenchments.
“Data on retrenchment notices filed at the Ministry of Labour showed that 2,744 persons were retrenched during 2020, much higher than the 1,528 people retrenched during the previous year.”
The survey also noted that within the sectoral distribution of employment, most of the retrenchments occurred in the finance, insurance, and real estate and other business services, the manufacturing and distribution sectors, and the restaurant and hotel sectors.
“The energy, manufacturing, construction, transportation and other business services such as hospitality, entertainment, and tourism sectors were hardest hit by these public health restrictions.
“Labour market slack was also evident by fewer man-hours worked during the first three quarters of 2020. The index of hours worked, inclusive of both the energy and non-energy sectors, declined by 2.5 per cent year on-year over the period.”
It also said the largest increases in domestic production occurred in the food processing industry (28 per cent), and assembly-type and related products accounted for 23.9 per cent.
In the energy sector, production declined in both the upstream and downstream industries, with domestic production falling by 11.1 per cent, 16.2 per cent, and 8.5 per cent in the petrochemicals, natural gas refining, and exploration and production of oil and natural gas industries.
The slowdown in economic activity slowed headline inflation in 2020 to an average of 0.6 per cent, down from 1.0 per cent in 2019. Core inflation, which averaged 0.1 per cent, was relatively muted when compared to 2019, when it was 1.1 per cent.
However, food inflation accelerated through the year, averaging 2.8 per cent, when compared to 2019, which averaged 0.6 per cent.
“Food inflation was predominantly driven by increased international food prices and supply disruptions brought about by lockdown. Accelerated prices were noted in several sub-indices such as meat, fish, vegetables, and oils and fats sub-indices."
A fiscal deficit of $16.8 billion was recorded for 2019/2020, “primarily because of lower revenues and higher expenditure due to the covid19 pandemic, was financed from a combination of external and domestic borrowings, as well as a withdrawal from the Heritage and Stabilisation Fund (HSF),” the Central Bank said.
It forecast that budget estimates for 2020/21 would show a smaller deficit of $8.2 billion, with total revenue expected to amount to $41.4 billion, of which $13.4 billion is expected to be collected from the energy sector and $27.1 billion from the non-energy sector.
Capital revenue, it said, was estimated at $905.1 million, with aggregate expenditure projected to reach $49.6 billion at the end of 2020/21, reflecting lower spending when compared to 2019/20 owing to the covid19 pandemic.