Productivity challenge ‘highly prioritized’
Guardian Business Editor
Published: Oct 18, 2013
Low productivity is a “challenge we have to address”, according to the minister of state for finance, who argued that The Bahamas cannot afford to fall further behind with respect to this metric if it hopes to attract international investments.
Commenting on recent discussions with International Monetary Fund (IMF) and World Bank officials at the Annual IMF/World Bank meetings, held last week in Washington, D.C., Halkitis told Guardian Business that addressing “structural” challenges in the Bahamian economy was one of the points raised during talks which place between The Bahamas and officials from these institutions at the annual event.
The meetings came as the IMF, in its World Economic Outlook, lowered growth forecasts for The Bahamas and the world by 0.8 and 0.3 percent respectively for 2013.
“Generally there was an endorsement of our program to sort of bring the government’s finances back in line, and a recognition that growth needs to be a part of this, not just a concentration on budget cuts and austerity, but some streamlining of expenditure and growth,” said Halkitis.
“There’s a need for us to
really look at the structures of our economy, for example the structure of our labor market. Regionally we’re facing these issues such as high labor costs, high energy costs, ease of doing business, so those are some things structurally which we have to address and clean up to assist with the growth so we don’t fall behind.”
Halkitis said that productivity is a high priority for the government. He pointed to initiatives such as the National Training Agency, launched in July with the intention of training 2,000 to 2,500 workers annually in job-related competencies, and to move The College of The Bahamas to university status, as efforts which are intended to increase productivity levels.
Funding has been obtained from the Caribbean Development Bank to aid with the transition of COB to university status.
“[The issue of productivity is] very highly prioritized because we have the minister of investments out there trying to attract people, they come and sit down and say these are some of the issues we see, and they can present you charts and reports and say, ‘this is how much it costs here, and this is how much it costs elsewhere, in terms of labor productivity; this is what we can do here compared with elsewhere’. So from that standpoint when you are competing for development, it is a high priority, and secondly, just when you are looking at the development of your people, it’s a high priority because it enables them to have better opportunities.”
His comments come after the IMF presented findings at the Caribbean Growth Forum indicating The Bahamas had the worst results in a survey of productivity levels in the Caribbean, registering a one percent decline in productivity between 2001 and 2011. This was blamed in part on “excessive wage growth” and the “flight” of tertiary educated workers abroad.
Halkitis said an advantage of the meetings was the chance for Caribbean officials including those from The Bahamas to sit with IMF Managing Director Christine Lagarde to discuss the region’s unique development challenges.
“We talked about issues that affect the Caribbean and how they can use their expertise to assist us, and high on the agenda are things like productivity.”