, ,

Last week, the Statistical Institute of Jamaica (STATIN) published the latest (April) unemployment rate figures–16.3 percent overall, and a staggering 38.5 percent for youth (aged 14-24); things were much worse for women with a rate of 21.3 percent, compared to 12 percent for men. This overall rate is the highest for a decade. Available data show, however, that the current rate is substantially lower than existed in the first half of the 1980s, when it was between 25-27 percent.

The world economy is going through a long recession, with significantly lower levels of economic activity, so it is very hard for countries like Jamaica, which are heavily reliant on trade with, and visitors from, industrial countries to not suffer.

Economists have identified four main types of unemployment.
Structural: This form of unemployment comes from an absence of demand for the workers that are available. Simply put, too many square pegs for round holes. This may occur mainly due to changes in technology or taste.
Seasonal: Seasonal unemployment is due to changes in the season – such as a lack of demand for agricultural workers depending on the growing season of crops. Seasonal unemployment is a form of structural unemployment, as the structure of the economy changes from month to month.
Frictional: This type of unemployment comes from people moving between jobs and locations. Timing problems are often behind this type of unemployment, as work time gaps occur when people change jobs, move around, and enter and leave the workforce.
Cyclical: Cyclical unemployment occurs when the unemployment rate moves in the opposite direction as the growth rate of the whole economy (GDP). So when GDP growth is small (or negative) unemployment is high. This happens as the economy goes through cycles of activity and reflects the employment and unemployment balance changing as jobs are created or lost on a national scale.

I have not seen an analysis of Jamaica’s unemployed which shows the significance of each of these different types of unemployment.

However, we know that the economy has been growing slowly or shrinking for years, according to official data. So, cyclical unemployment should be significant: firms are hiring less or cutting positions. To deal with that problem the economy needs to grow faster and, with it, confidence and profitability improve so that employers are willing to add to their payrolls. Of course, more jobs could be offered without the real economic growth being available to sustain and pay for them; government could try that. Likewise, non-profit organizations could offer work, but maybe without much, if any, pay.

Jamaica has a significant dependence on agriculture and tourism, both of which have large seasonal components. Therefore, seasonal unemployment in those sectors will be rising and falling as the crop cycles change and the flow of tourists ebbs and flows. Idle hands cannot work idle lands, indiscriminately.

Our skills mix is wrong. We have job seekers who have not kept up with market changes, and have structural unemployment due to that. Part of that results from levels and types of education and training that cannot command jobs, eg, basic tasks may now be done by a machine whereas they could have been done by someone with few academic or technical skills. What is worse, is that some of those people may not be able to price themselves into a job, because they simply cannot be fitted in. Jamaica still creates much demand for ‘traditional’ ways of doing things, much of the infrastructure is unmodernised, and some things just don’t change that fast. So, we have lots of welders and carpenters and gardeners. However, electronics and computerization have made significant numbers of jobs redundant, as have lower productivity. We may have mechanics skilled in fixing cars with manual transmission, but automatics rule the roads. Retraining will help deal with some of this problem, but some job losses are permanent. A simple way to understand this is to look at an area where we have had astonishing success–sprinting. We have produced many brilliant sprinters, but we cannot have all of them running for our team in any one international competition. So, some leave the sport (and try to ply their skill in another related field, say football, but may not get positions and are out of ‘work’). Some may decide to ply their prime skill with another employer (perhaps, they have options to change nationality); but, again, they are not certain to be picked, though chances may improve. But, what should Jamaica do? Cut back on the processes that create the excellent athletes? Cut some of them earlier, so that they make other choices earlier? Accept that a certain amount of ‘wastage’ is part of progress? It’s not simple.

Moving around Jamaica is complicated. Our frictional unemployment may be hard to fix. Finding and changing jobs is harder than it should be. A cane cutter in Westmoreland cannot simply beam himself to St. Thomas. Strong demand for certain skills sometimes has to face the fact that the worker cannot or will not move, not least because of housing difficulties. We have cultural factors at play here, too. Job search is not an even or fair process, if ‘friends’ get the best offers.20130820-090031.jpg

Unemployment is a complex issue for Jamaica and has to be dealt with by a wide range of measures. It also does not affect the country in ways that are similar to some industrial countries or even other developing countries. I won’t delve here into whether the problem is worse than the data show because of underemployment or total disengagement from formal work settings. I won’t touch, either, for the moment, how the informality of much of Jamaican life means that unemployment may be less of a ticking bomb than it could be. But, I will think about how fast Jamaica’s economy needs to grow to make a big dent in unemployment. It may be faster than it ever has been over any sustained period, and if so, then a host of other problems are just champing at the bit to bite us all.