Productivity problems in Jamaica—Jamaica Observer article

I did some more thinking about low productivity in Jamaica, which I think is one of our grave persistent socioeconomic problems. Others have been pondering this, recently, and I was spurred by two commentaries last week. On May 6, Delroy Warmington in a Gleaner article ‘Growth: No more excuses, Mr. Holness’ took the government to task for its failure to produce faster growth in Jamaica—it’s struggling to exceed 2 percent a year against a so-called ‘aspirational’ target of #5in4 (ie 5 percent a year within 4 years). One of his points was that ‘Productivity is the elixir for the economy. I couldn’t agree more. On the same day, Everton Pryce was also on the productivity trail in the Observer, ‘Productivity and the need for political action‘. Mr. Pryce noted that ‘Part of the problem, perhaps, is that there is no sure way to fix our sluggish productivity, hence it is not given the mega political and media attention it needs.’ 

What’s really of concern to me is that this problem has been evident and well-documented for most of the last half-century, yet its real costs haven’t been understood by the vast majority of the country, in part because wealth transfers from abroad (foreign loans and grants and remittances) have helped us not have to recognise how we’ve been impoverishing ourselves.

My thoughts led to a longish article, that was published today in the Observer, Productivity problems in Jamaica, which I reproduce below.

Productivity problems in Jamaica

BY DENNIS JONES

Wednesday, May 16, 2018

Jamaican sugar cane workers in the field. 

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“Productivity is an economic measure of output per unit of input. Inputs include labour and capital, while output is typically measured in revenues and other gross domestic product (GDP) components such as business inventories.”

While we should be concerned about total productivity, we spend more time on trying to understand why the labour component performs how it does, because usually that is the part over which a government and individuals have greater control.

What two recent commentators have flagged is that without improving that, we are doomed to fail, and because governments have put raising productivity as a low concern, they have doomed Jamaica to decades of poverty or, being more generous, decades of being poorer than we should be. That can be seen more easily in a few statistics of trends over the past 40-50 years.

Jamaica Productivity Centre reported that since the early-1970s, Jamaican labour productivity has declined an average of nearly 1.5 per cent a year, meaning the average Jamaican worker has become progressively contributing less to national economic wealth over the past 40-plus years.

Unit labour cost grew by about 0.5 per cent a year over the period from the mid-1970s through the mid-2000s. This increase was, however, not caused by wage increases, since real wages declined on average by 1.25 per cent a year.

Still, the most damning statistic and, perhaps, one which sums up the whole issue of productivity in Jamaica is the one which shows that the combined productivity of Jamaica’s resources (that is labour, capital, energy and other inputs) declined by an average annual rate of 1.75 per cent over the same period.

These developments do not have one simple cause. One could argue, plausibly, that Jamaica has never recovered from the loss of higher-quality labour of working age as a result of mass emigration — mainly to the UK, USA and Canada — from the late-1940s through to the early-1970s.

 On top of that, it’s known that Jamaica struggles to retain its best-trained people after they graduate from tertiary studies. A study conducted by the World Bank found that roughly 85 per cent of its tertiary-level graduates migrate to countries such as the US, UK, Canada, and other developed countries.

Finally, the supply of educated people is relatively poor, and the Ministry of Education has acknowledged the dearth of ‘quality’ secondary school places available, both in terms of actual spaces as well as quality of teaching.

The Global Youth Development Index (YDI), an initiative of the Commonwealth Secretariat, ranks 183 countries according to the prospects of young people in employment, education, health, civic, and political spheres.

Looking at 18 indicators, including literacy and mental disorder rates, financial inclusion and voter engagement, the index both showcases the best-performing countries and serves as a warning light for low-scoring countries.

The top-performing Caribbean countries are Barbados (28), Jamaica (46), The Bahamas (67), Antigua and Barbuda (72), and Grenada (73).

For context, the top 10 countries, with the exception of Australia and Japan, are from Europe. The 10 lowest-ranked countries are all from sub-Saharan Africa: The top 10 are: Germany (1), Denmark (2), Australia (3), Switzerland (4), United Kingdom (5), Netherlands (6), Austria (7), Luxembourg (8), Portugal (9), Japan (10).

The top 10 Commonwealth member countries are: Australia (3), United Kingdom (4), New Zealand (11), Canada (14), Malta (20), Barbados (28), Brunei (31), Sri Lanka (31), Malaysia (34), and Cyprus (38).

So, on various measures, Jamaica is way down the pack in terms of preparing its young people to compete on the world educational stage.

What these have resulted in is the fact that real GDP per capita in the mid-1970s was greater than it was in the late-2000s. At the same time, Jamaican workers have become poorer in real terms. So, the notion that many often observe that our parents seemed to have managed better on relatively “less money” than we earned appears true.

A recent World Bank overview http://www.worldbank.org/en/country/jamaica/overview noted Jamaica is “one of the slowest growing developing countries in the world”.

Put together, those numbers mean that the average worker is producing less each year and costing more in real terms to do that, so the only way that the average Jamaican will be better off is through a massive redistribution of income. We are not doing much to make the country wealthier.

Of course, there is no quick fix for this. While many Jamaicans lament the country for having poor productivity, I’m not sure if people understand what is wrong with how our country works and how things can change to give us higher productivity and faster growth.

The broad solutions requires creating a much better national workforce than exists at the moment.

Simply put, we need to invest in people — as the IDB has pointed out. If we don’t do that, and we want to grow, then we must accept the need to import that better workforce. This is what many dynamic economies have had to do.

A better-educated workforce is part of a long-term solution. We don’t have enough people who are well-enough educated to more easily use the widening range of technology that can take any country higher up the growth ladder. Moreover, we have an economy with a poor mix of skills to give us faster growth.

Dennis Chung, then the CEO of the Private Sector Organisation of Jamaica, noted in the December 2017 ‘Fixing Jamaica’s labour productivity problem’ the need to train more technical people.

But, in the short term, we need to make the current workforce do a much better set of jobs than they do now. What that means in many instances is that the interaction of workers and their production has to be much better — simply put, we need to get better performance from everybody every day.

For some, that could be as simple as understanding that time is money and eliminating all the time-wasting activities that go on daily.

The short-term fix also means employers and workers need to understand better how they can positively and negatively affect those who depend on their services. Let’s call this better customer service.

We don’t need to list all the complaints about poor customer service —they are legion and their recurrence tells us about poor management as well as about poor worker attitudes. If some of these attitudes are really about ‘job preservation’, they often turn out to be ‘job destroying’ tactics.

Poor customer service creates a drag on the performance of the enterprise directly and on the performance of the customer directly and indirectly. For instance, a customer spending time trying to resolve poor service is taken away from performing other tasks. As someone noted on Twitter this week, arguing with a rude Dominos pizza operative has many bad outcomes, not least a potential sale that was lost, but also a customer who may never return and discourage others from buying the product, affecting future revenue potential.

When we look at how poorly we ‘serve’, we should not let our eyes be shut to every aspect of that. I cite a current problem to highlight that point: the Jamaica Constabulary Force and their use of body cameras. This is what Commissioner Anderson said on the failure to use body cameras some two years after they were introduced:

“When you introduce new things and new capabilities, it’s a process. You don’t just buy something to stick them on. There’s a training component, there’s an equipment backup component, a logistics component, a command and control component to it. There’s a whole thing that you used to deliver capabilities, but we haven’t been that good at it.”

That sums up how in many areas we don’t plan, which is the same as planning to fail. We fail to see the importance of things being done with great urgency — which is not the same as speed, because it goes to the matter of purposeful action. Part of that reflects a poor understanding of the true costs of delays, and how one affects so many.

When National Works Agency fails to advise in a timely fashion of road closures or expected delays, a large swathe of the national workforce then has to absorb the delays caused by that lack of information, and the costs and lost output is forcibly shared by all.

When a business advertises its hours as 9:00 to 5:00, but no one is present before 9:30 and gone by 4:30 the costs to customers is clear both in terms of wasted time expecting to be served and time available to be served.

When partygoers see no problem in parking on the Palisadoes Road blocking the only road to the airport.

When staff see no problem doing personal affairs during work time.

Not having consistency in work practices, so service quality is a function of personal interaction, reflects both poor management and oversight as well as poor training. Even in our justice system, where the justice minister has to implore the sector to render swifter justice.

Low productivity is deeply engrained into Jamaican life, but it does not have to stay that way.

Dennis G Jones is an economist.

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Productivity in Jamaica–Sunday Observer column

I was suprised to see this additional column based on my submission to the Jamaica Observer, which ran in the Sunday ‘Agenda’ columns, with some other commentaries on productivity in Jamaica. It’s the fuller version of my original submission, which had been edited down for publication last Friday.

Productivity in Jamaica

Dennis Jones

Sunday, May 06, 2018

There are always questions of productivity in roadwork.

Henry J Lewis wrote an interesting piece, ‘Jamaica moves…slowly’, published in the Jamaica Observer on May 1 2018, on productivity in Jamaica. It set me thinking about his final lament — “Jamaica, let’s move ‘fasser’!”

We are often quick to argue that service and productivity are poor in Jamaica — and that may be so — but it’s possible that we are not really seeing things clearly. But if we are to use speed as our measure, surely we must first ask if that can be the criterion we use when we generally have little regard for timeliness. In the land of soon come, but never reach, what are we really seeking?

I’ll just highlight a couple of instances:

We see a group of workmen beside a roadwork site and one is active and others are not, and we assume they are idle. But we don’t know that each person has the same task and whether each is dependent on the others before they can perform. To set that context better, think of a football team. Just because the goalkeeper is doing nothing is no indication of how effectively the team is working. In fact, the goalie’s inactivity is perhaps a sign of how well the team is doing. He is insurance for when forwards and midfield cannot dominate the opposition. If he were to start running upfield to ‘help’ all could be lost. So, sometimes, all we see are people ‘staying on task’. That’s good, not bad.

We are in line at a bank and see four of 10 teller windows operating and assume the bank is being inefficient by not having more windows manned. But do we have any ideas what other functions are being performed, and/or the estimated costs and benefits of either reallocating current staff or employing more? Our focus is on how our personal needs are being met and our perception of what ‘work’ is. To meet our perceptions, though, how much more would we be happy for banks to charge to give us what we want?

I would be glad to argue that many things in Jamaica could be done differently, and more efficiently, but our anecdotes need much of nuance and understanding.

However, part of service quality and efficiency depends on customer willingness to act in certain ways and employees’ willingness and ability to work differently. The Registrar General’s Department (RGD) offers a time frame for certain basic services, say 10 working days, and for a higher-fee ‘expedited’ service in, say, five working days. Imagine if everyone opted for expedited service, would RGD be able to deliver and, if so, could we argue that five days should become the basic service? Before we can answer, we need to know what happens and does not happen to allow some processing times to be halved. Is the counterpart that some other processes are lengthened? If so, how significant are they?

When service speed is slow it may be despite the best efforts of the provider. The bank is again a good place to look. I rarely go into a bank, finding I can do almost all my business electronically. When I have visited banks I’m often amused to notice how many transactions are lengthened by activities not to do with core banking. Some of these activities are great from a social viewpoint, such as some extended small talk, but they cost time for other customers. Some reflect lack of understanding by customers and the need for them to reprocess their requests; for example, someone is depositing cheques that need countersigning, but that had not been done, and it would be better for the customer to move away and do that, but he/she insists on staying at the window. If the customer is the cause of slowness or inconvenience, how should we deal with that?

Banking again: I’ve often seen complaints about how long some people spend at an ABM, and disbelief that more than 2-3 minutes are needed. What would we prefer? That the machine sets off a siren or a shower of water if it senses a person’s presence beyond three minutes?

How are we to be convinced that service is better? Is it truly speed alone? Faster with a smile and a greeting? Is there a measure of quality or quantity that is more or less universal, or can be applied to a specific area of provision? Do we want doctors to be faster with their consultations? Taking care to do things right takes time and can save lives. We may also have to accept that not all have the same proficiency. If ability is the issue, what do organisations do if, despite excellent trainers, they cannot find good enough candidates? The best service may demand much more automation, but are we going to be happy with the implications for those who seek jobs but cannot outperform machines or technology?

I spent part of my weekend at a police lock-up and saw what is common practice for Jamaica Constabulary Force — everything was handwritten in log books. No backup, hard to cross-reference, etc. We can point to such practices as part of a general inefficiency in police operations, no doubt. But to whom can we turn to fix that? Is it the worker to blame, or the employer, in such simple situations? What would need to happen for that to change, not even to a Utopian state, but just better record-keeping? If we cannot answer that across a range of functions, that is really the problem.

Dennis G Jones is an economist. Send comments to the Observer or dennisgjones@gmail.com.

 

Lack of speed not the problem with Jamaican service–Jamaica Observer column

I wrote a response to a column published last Monday, by Henry J. Lewis, ‘Jamaica moves…slowly‘, whose concluding comment was ‘Jamaica, let’s move ‘fasser’! I wondered if this was really what we needed. My retort was published in today’s Jamaica Observer, ‘Lack of speed not the problem with Jamaican service‘:

We are often quick to argue that service and productivity are poor in Jamaica, and that may be so, but it’s possible that we are not really seeing things clearly.

If we are to use speed as our measure, surely we must first ask if that can be the criterion we use, when we generally have little regard for tiemliness. In the land of soon come, but never reach, what are we really seeking?

I’ll just highlight a couple of instances:

We see a group of workmen beside a roadwork, and one is active and others are not and we assume they are idle. But we don’t know that each person has the same task or whether each is dependent on the others before they can perform.

To set that context better, think of a football team. Just because the goalkeeper is doing nothing is no indication of how effectively the team is working. In fact, the goalie’s inactivity is perhaps a sign of how well the team is doing. He is insurance for when forwards and midfield cannot dominate the opposition.

If he were to start running upfield to ‘help’ all could be lost. So, sometimes, all we see are people ‘staying on task’. That’s good, not bad.

We are in line at a bank, and see four of 10 teller windows operating and assume the bank is being inefficient by not having more windows manned. But do we have any idea what other functions are being performed, and/or the estimated costs and benefits of either reallocating current staff or employing more?

Our focus is on how our personal needs are being met and our perception of what ‘work’ is. To meet our perceptions, though, how much more would we be happy for banks to charge to give us what we wanted?

I would be glad to argue that many things in Jamaica could be done differently and more efficiently, but our anecdotes need much of nuance and understanding.

However, part of service quality and efficiency depends on customer willingness to act in certain ways and employees’ willingness and ability to work differently.

RGD offers a time frame for certain basic services, say 10 working days, and for a higher fee ‘expedited’ service, in say, five working days. Imagine if everyone opted for expedited service. Would RGD be able to deliver and if so, could we argue that five days should become the basic service?

Before we can answer we need to know what happens and does not happen to allow some processing times to be halved. Is the counterpart that some other processes are lengthened? If so, how significant are they?

When service speed is slow it may be despite the best efforts of the provider.

The bank is again a good place to look. I rarely go into a bank, finding I can do almost all my business electronically. When I have visited banks I’m often amused to notice how many transactions are lengthened by activities not to do with core banking. Some of these activities are great from a social viewpoint, such as some extended small talk, but they cost time for other customers. Some reflect lack of understanding by customers and the need for them to reprocsss their requests: for example, someone is depositing cheques that need counter signing but had not been done, and it would be better for the customer to move away and do that but he/she insists on staying at the window. If the customer is the cause of slowness or inconvenience, how should we deal with that?

Banking again. I’ve often seen complaints about how long some people spend at an ABM, and disbelief that more than two to three minutes are needed. What would we prefer? That the machine sets off a siren or a shower of water, if it senses a person’s presence beyond three minutes?

How are we to be convinced that service is better? Is it truly speed alone?

Faster with a smile and a greeting? Is there a measure of quality or quantity that is more or less universal, or can be applied to a specific area of provision?

Do we want doctors to be faster with their consultations? Taking care to do things right takes time and can save lives. We may also have to accept that not all have the same proficiency.

If ability is the issue what do organisations do if, despite excellent trainers, they cannot find good enough candidates? The best service may demand much more automation, but are we going to be happy with the implications for those who seek jobs but cannot outperform machines or technology?

I spent part of my weekend at a police lock-up and saw what is common practice for Jamaica Constabulary — everything was handwritten in log books. No back-up. Hard to cross-reference, etc. We can point to such practices as part of a general inefficiency in police operations, no doubt. But to whom can we turn to fix that? Is it the worker to blame, or the employer, in such simple situations?

What would need to happen for that to change, not even to an Utopian state, but just better record-keeping? If we cannot answer that across a range of functions, that is really the problem.

#PassingInterestJamaica #April2018

My theme for last month was just to capture those things or moments that flashed before me on the move or on the roads of Jamaica. Some caused me to back up and blink before I grabbed my images.

Enjoy the glimpses and look for the fuller set on my Instagram page (@dennisgjones).

My May theme? Not yet decided.