Non-energy sector drives growth: More jobs coming

With the non-energy sector leading the country to economic recovery, the Central Bank’s annual economic report, released on Tuesday, predicted more jobs coming in the sector.

“The non-energy sector is expected to remain buoyant,” the report said. “This may have further positive implications for labour market conditions, including an increase in the labour force participation rate as more people are encouraged to enter the labour market.”

The cautiously optimistic outlook posed by Central Bank came a day before Labour Day, which commemorates the anniversary of the Uriah Butler oilfield riots in 1937.

Overall, the economy showed significant growth, with headline inflation down from 5.8 per cent in 2022 to 4.6 per cent in 2023. The overall domestic economy grew by 2.5 per cent.

Central Bank recorded gross official reserves amounting to US$6.3 billion with 7.8 months of import cover.

This was echoed in the International Monetary Fund (IMF’s) country report.

The IMF’s report said real GDP rebounded in 2022, and it expected further growth in 2023 while headline inflation decreased.

More jobs, higher participation in 2023

The report, which highlighted labour statistics for the past five years (2018-2023) from the Central Statistical Office (CSO), predicts a rebound in employment after employment fell during covid19.

For 2023, Central Bank recorded 578,800 registered jobs. This was out of a total labour force of 602,800 for the year.

This marked an increase over 2022, which, out of a total labour force of 594,600, had 565,300 jobs recorded.

Labour participation in 2023 increased for men, with the Central Bank recording a 64.6 per cent labour participation rate, compared to a 47.1 participation rate among women.

In 2022, the participation rate for men was lower, at 62.7 per cent. But the rate was incrementally higher in 2022, at 47.6 per cent.

The unemployment rate also showed a disparity between genders, with unemployment among males recorded at 3.5 per cent and unemployment among females recorded at 4.6 per cent.

In 2018, employment was at a five-year high, at 609,100 jobs out of a total workforce of 633,900 for that year. The unemployment rate for that year was recorded at 3.9 per cent, with 3.2 per cent of the total labour force who were unemployed being male and 4.9 per cent of the total workforce who were unemployed being female.

In 2021, out of a labour force of 592,200, only 560,400 people had jobs. The unemployment rate for that year was 5.4 per cent overall, with 4.8 per cent being male and 6.1 per cent being female.

The report added that retrenchment notices reported to the Ministry of Labour for the period January-December 2023 indicated that 465 people were retrenched, compared to 980 people in 2022. This showed a 515-person reduction in retrenchments year-on-year.

Retrenchments were reported mainly in the transport, communication and storage sectors, distribution, finance, insurance, real estate, petroleum and other mining and personal service sectors.

While the number of retrenchments went down, the average number of job advertisements published daily in the print media showed a slight increase of 0.6 per cent year-on-year.

The report said despite a decline from 12 per cent in 2022 to 9.5 per cent in 2023, the youth (ages 15-24) unemployment rate remained disproportionately higher than the national average.

“Youth unemployment remains a significant social challenge, with statistics revealing a high incidence of criminal offences perpetrated by persons within this age group. A number of government initiatives, such as the Youth Agriculture Homestead Programme and others by the Ministry of Youth Development and National Service, seek to offer targeted solutions.”

Workers more productive, wages getting better

The report said labour productivity improved in 2023, with high jumps in productivity being recorded, again, in the non-energy sector.

“Excluding the energy sector, the index of productivity increased by 83.5 per cent in 2023, primarily due to elevated levels of production (83.7 per cent) alongside a 0.2 per cent in the index of hours worked,” the report said.

It said increases were recorded in the assembly-type and related products sector at 177.9 per cent and the food processing sector at 10.5 per cent.

There was a recorded growth in the processing of fruit and vegetables by 11.4 per cent and processed meat, poultry and fish by 5.3 per cent. The report said the boost was largely influenced by an uptick in food processing.

Assembly-type and related products got its growth from the production of metal furniture, which increased by 183.2 per cent.

Central Bank also reported declines in production in the printing, publishing and paper converters sectors as well as electricity.

In contrast, the energy sector productivity declined because of reduced levels of production across the domestic energy sector.

“In 2023, the index of domestic production recorded a reduction of 6.2 per cent in the exploration and production of oil and natural gas industry (upstream),” the report said.

As a result, petrochemical production fell 20.3 per cent, but man-hours worked in the industry increased by 0.4 per cent. Increases in man-hours in exploration and production of oil and gas were also recorded at 3.4 per cent.

Central Bank also marked an increase in wages in the non-energy sector, with the manufacturing and wholesale and retail trade sectors receiving the highest average wage increase in 2023, each recording 2.6 per cent increases.

“Wage growth was contained in 2023,” the report said. “Collective bargaining agreements filed with the Industrial Court revealed that the average wage increase in 2023 measured 2.3 per cent, up from two per cent recorded in both 2022 and 2021.”

“In 2023, wage increases ranged from one per cent to four per cent compared to a range of two per cent to three per cent in 2022,” the report said.

Non-energy leading the path to recovery

The report said domestic activity showed signs of revival, with the non-energy sector giving the country an economic boost.

But the energy sector slowed growth.

The report, taking data from the CSO, said real GDP expanded by 2.5 per cent year-on-year.

According to CSO’s figures, the sector grew by 4.2 per cent.

The trade and repair sub-sector, as well as transportation and storage and accommodation and food services, provided significant buffers for the sector overall, the report said.

Central Bank’s quarterly index of real economic activity said the second half of the year showed healthy activity in the sector.

Local sales in cement boosted the construction sector; increases in air and water transportation provided growth for the transportation and storage sector and the wholesale and retail (excluding energy) sector also showed expansion.

In contrast, the energy sector contracted by 1.3 per cent, hampered significantly by reduced production.

Production in crude oil fell by -8.1 per cent, and natural gas fell by -3.6 per cent. The reduced production had a ripple effect along the downstream sectors, which led to declines in refining and petrochemicals.

“Refining activity was set back by contractions in the production of natural gas liquids (NGLs) (by) -8.7 per cent, as well as liquefied natural gas by -3.3 per cent.”

Petrochemical production was impeded by the shutdowns of several plants at the Point Lisas Estate, a symptom of challenges with natural gas availability, the report said.

Methanol production remained resilient, improving by 5.2 per cent, but ammonia declined by 13.3 per cent.

The IMF report suggested that while TT is not back to pre-pandemic levels, it expects even further growth for 2024, noting several energy projects that would be expected to come on stream in the coming months.