Jamaica’s unemployment rate has hit an all-time historic low of 4.5%. This figure represents the percentage of the number of people in the labour force who do not have a job but are actively looking for work. While this development is, at face value, something to celebrate (which the representatives of the government are doing), we need to examine this issue closely.
An examination of this 4.5% unemployment rate in and of itself, would be necessary, but is even more necessary given another piece of news that the poverty rate has increased by 51.8%, between 2019 and 2021, growing by 5.7 percentage points from 11% to 16.7%.
An examination of this 4.5% unemployment rate in and of itself, would be necessary, but is even more necessary given another piece of news that the poverty rate has increased by 51.8%, between 2019 and 2021, growing by 5.7 percentage points from 11% to 16.7%.
Unsurprisingly, the government does not wish that there be conversation of this latter piece of statistic and argues that the growth in poverty was caused by the COVID-19 pandemic. While it is an arguable point that the 51.8% increase in poverty is attributable to COVID-19, this is only in part, for prior to COVID-19 which begun in March 2020, the Jamaican economy was in decline, experiencing four consecutive quarters of decline between April 2019 and March 2020, as shown in Table 1, below:
Table 1
Jamaica’s economic performance April 2019 – March 2020
| FISCAL QUARTER | GROWTH / DECLINE | DESCRIPTION |
| April – June | 0.3% | Growth of less than 1% |
| July – September | -0.2% | Contraction by two-tenths of 1% |
| October – December | -0.5% | Further contraction which more than doubled the contraction of the previous quarter |
| January – March | -1.7% | Continued contraction more than three times the previous quarter |
The key lesson from Table 1 is that the seeds of economic decline were already in motion before the pandemic and thus the resulting poverty level was not exclusively a result of COVID-19. To use a popular COVID-19 expression, the economy had “pre-existing conditions” which were exacerbated by the pandemic.
Interpreting the unemployment rate
As was stated above, the unemployment rate is measured by looking at the number of people who are out of a job but who are actively looking for work. There are a few key things to consider in this regard, namely:
- Workers who have given up actively seeking a job, are not counted in the unemployment rates.
- With freelancing being more popular, more people who are occasionally employed, but who at the time of the survey may not be employed, may report that they are not looking for work, but that does not mean they are employed.
- The data do not differentiate between people who are employed part-time or full-time, thus a labourer who is employed for a short time whacking grass is placed in the same category as a teacher who is employed full-time.
To be clear, these interpretations of what low unemployment means are applicable to the unemployment figures regardless of the political ideology of the party in power.
To be clear, these interpretations of what low unemployment means are applicable to the unemployment figures regardless of the political ideology of the party in power. But the most important questions as to whether unemployment figures really represent good or great news are determined by:
- The types of jobs being created,
- The impact of those jobs on the economy, and more specifically, the country’s gross domestic product (GDP) and by extension GDP per capita (which is the average earning of citizens), and
- Whether there are improvements in people’s quality of life, which relates to the issue of poverty.
Types of jobs being created and impact on the economy
Most of the jobs being created in Jamaica are in the services sector. The service sector accounts for 63.9% of the employed labour force and estimates suggest that it contributes between 58% and 64% to Jamaica’s GDP. This means the services sector is at one and the same time the largest employer and the largest contributor to GDP. The main sub-sectors of the services sector are tourism, financial services, restaurants, distributive trades (shops and supermarkets), customer service, and call centres. Since 2019, most of the new jobs being created are what the Statistical Institute of Jamaica (STATIN) has described as “elementary” jobs. These are jobs which require basic knowledge, low skills, typically no tertiary education, and thus attract low salaries, in most cases, the minimum wage.
Thus, the record low unemployment does not represent a remarkable improvement in either the quality of life for the majority of the newly employed, or the country’s overall economic health as the wages being earned by a majority are low. Jamaica’s GDP per capita has averaged 4,652.97 USD from 1966 until 2021, reaching an all-time high of 5,590.31 USD in 1972 and a record low of 3,615.19 USD in 1985. It currently stands at just under 5,000USD.
This stagnated GDP per capita figure is existing in a context of substantial increases in the salaries of some segments of the public sector and comparative high wages in top jobs in the private sector.
With GDP per capita not increasing, it means that the larger salaries are not based on increased production or productivity and thus, what the large salaries mean is that income inequity is worsening.
With GDP per capita not increasing, it means that the larger salaries are not based on increased production or productivity and thus, what the large salaries mean is that income inequity is worsening.
Quality of life
The cashier at the checkout counter closest to the exit at one of the supermarkets I frequent often looks vexed and distressed. I was not surprised therefore when I turned up a few weeks ago and not seeing her, I asked the person in the space what happened to her. I was told she no longer works there. I ran into her on the corridor of another shopping location and asked her what happened. She said, “it nah work out, most of what mi earn go back ina taxi fare and lunch money”.
There is a professional childless couple close to me who tell me that they spend on average $30,000.00 per week at the supermarket, plus another $6,000 at the market, and at least once per month they buy fish at the fish shop and meat at the meat shop. They eat modestly. My experience is pretty much the same. When I see the price of groceries, I wonder how people taking home $200,000 per month and caring for two children with mortgage or rent and transport survive. Most Jamaican workers earn less than $100,000 per month. With most new jobs being created being at the lower end and in the zone of $13,000 per week, the picture is a dismal one.
The government’s excitement about a 4.5% unemployment rate, in the context of harsh economic realities, is an unfortunate piece of (customary) political gimmickry which has been practised by both political parties.
Solutions
Low GDP per capita has affected Jamaica like a chronic disease. The solution is not increased construction activity or periodic intensification of agricultural output. We have seen those, and the situation has remained unchanged. The solution lies in exponential investments in education to transform the structures of the economy. While services will remain a leader in demand for new jobs, if the Jamaican economy is to realize sustainable development the investments in post-secondary and tertiary education must increase.
Remedial / second-chance education is not an adequate response. The former LEGS (Learning, Earning, Give back, and Save) programme of the Holness administration represents, which was a renaming of the National Youth Service Programme (from the 1970s), and which was recently renamed LIFT (Learning and Investment for Transformation), must take on a much more systematic and sustained mandate, but must not be seen as an alternative to investing in research and development to generate new technological solutions, value-added food production, renewable energy, quality healthcare, and the promotion of greater environmental protection.
Canute Thompson (PhD) is Professor of Educational Policy, Planning, and Leadership at The University of the West Indies (UWI) and Project Director of the UWI’s Governance Recommendation Implementation Committee. He is author of eight books, eighteen journal articles, and over 200 newspaper columns.
His most recent academic achievements include:
2023: Principal’s Award: Research Activity generating the most funds made to the Caribbean Centre for Educational Planning.
2022: Bronze place winner in the 2022 Independent Publisher Book Awards for the book, Education and Development: Policy Imperatives for Jamaica and the Caribbean.
2021: Finalist in The Vice-Chancellor’s Award for Excellence for all-round excellent performance.
This is quite a thought provoking and informative article.
How unemployment is interrupted is interesting, as there is differentiating between people who are employed part-time or full-time, and so a labourer who is employed for a short period of time is placed in the same category as a teacher who is employed full-time. I am wondering why would the govt reveal statistics based on such an interpretation. And, is this a good measure? Also, how accurate would this interpretation be, when compared to other countries for example the U.S.A., that does a monthly census since 1940 to produce a primary estimate of unemployment, thus strengthening the reliability of the estimates, and to the best of my knowledge, does not use a similar category.
Your frank statement on the government’s excitement about a 4.5% unemployment rate as political gimmickry practised by both political parties is commendable. But more importantly you have included salient points about how unemployment is interpreted, while highlighting firsthand experience of persons and their quality of life.
The solutions put forward are timely, and realistic.
Thanks for an engaging article Prof. Thompson. Your work is commendable.
Thanks for your detailed analysis and comments Marsha. We really need an onslaught on low wage employment. The quality of life for many is poor, and many newly employed and many employed long time ago are struggling due to both qualifications, income inequality, and a weak economy
This is commendable Prof. A very engaging and relevant approach to profer solution to the nation’s problem.
Absolutely beautiful article, your explanations were excellent. I had a conversation with a coworker the other day who said the 4.5% unemployment rate could never be correct and I explained what it meant and the obvious pitfalls of taking this information at face value without deep diving to uncover the meaning. Clearly the government would highlight this as it is to their benefit as they would have had to explain if we had growth but had a corresponding high rate of unemployment. I have always wondered about the fate of big agriculture and agroprocessing in Jamaica, is there any hope for tertiary graduates to once again be employed in this sector because we are making something more complex than what has left the farms. We have too many idle lands and our rural folk have not been able to truly be a part of the economy if they are not able to commute to the larger towns or cities to earn and to spend. BPO’s are important but college grads are not going to enjoy the full fruit of their education if their only choice is working at a call centre after completing their first degree. I am aware of graduates of universities and colleges who have not gotten a job for 3-4 years after ending their studies. I can only hope that with remote work becoming more popular, that some of the specialized skills can be marketed to a wider audience so that our people can be more appropriately employed and again more from their investment in education.
“Without a vision the people perish”. Very insightful article Prof. Thompson. It would seem to me that success in politics presently runs counter to true national development. We need a level of education which allows leaders the leeway to make investments with long term benefits to the nation, not just those which count towards another term in office.