Sun | Dec 17, 2017

Arnold Bertram | Are things falling apart? Can the centre hold?

Published:Sunday | November 26, 2017 | 12:00 AM
Michael, a craft vendor in Montego Bay, sells his wares by via boat in Montego Bay, St James. Despite optimism about five per cent growth in four years, there has been negligible success for the Jamaican economy.

One outstanding achievement of the present JLP administration is the success of the elaborate public-relations exercise and media campaign to rebrand Prime Minister Holness. Not even the PNP, it seems, remembers that it is the same Holness who succeeded Golding in 2011, and presided over the final push that brought the nation to the brink of bankruptcy.

Holness began his second term of office after the PNP Government's economic reform programme led by Peter Phillips. Jamaica's respect and credibility in the international financial community had been re-established by honouring the commitments in the agreement negotiated with the IMF.

The Holness administration did not create all the economic and social challenges it currently faces. However, it is becoming increasingly clear that neither public relations nor the re-branding exercise is of much assistance in the search for solutions.

The Jamaican economy has never been organised to compete in the free trade global market economy that obtains today. The phenomenal 6.7% annual average GDP growth between 1950 and 1970 was achieved when sugar once again enjoyed protection in the British market, the manufacturing sector, based on import substitution, was protected in the local market, and the wars in Vietnam and Korea drove the demand for Jamaica's bauxite in the US armaments industry. With a return to free trade, Jamaica has experienced anaemic growth for more than four decades.

Based on the platform for growth left by Phillips, the private sector became very optimistic, and Prime Minister Holness and his newly appointed Economic Growth Council confidently predicted five per cent growth in four years. However, GDP growth for the first fiscal year was a disappointing 1.3 per cent, and by the first quarter of the second fiscal year, the economy went into recession. We are still waiting on confirmation of the out-turn for the second quarter that was estimated at less than one per cent.

 

Deal with challenges

 

The problem is, there has been no real attempt by the administration to deal with the fundamental challenges faced by the sectors from which growth is to be realised.

There is no doubt as to the growth potential of the BPO sector. "Estimates by Jamaican economists in the United States indicate that capturing only one per cent of the global market would generate an additional US$1.5 billion in income as well as employment for about 170,000 persons." (Robotham) The problem is that the Jamaican applicants do not have the necessary certification and competence in English. As one leading Montego Bay entrepreneur reported as early as 2006: "The available resource in Montego Bay is really difficult. We are getting a one-in-12 success rate between applicant and the new hire ... ." The major challenge identified is the gap in the language skills of the applicants. Another challenge will come from automation, given the rate at which robots are replacing human beings in the labour force.

The collapse of the agriculture sector has led to a sharp increase in rural poverty and opened the door for the proliferation of crime in rural Jamaica. Sugar production has declined from a record 516,825 tonnes in 1965 to an all-time low of 79,300 tonnes in 2016, and the Chinese, who are now the major investors in the sugar industry, have abandoned the Monymusk factory.

The rural economy can only be rebuilt by modernising agriculture and the planned use of the government-owned sugar lands for the production of more globally competitive crops. Cuba has already converted more than half of the lands traditionally devoted to sugar to the production of fruits, milk, and vegetables; and Guyana is also successfully converting sugar lands to the production of milk.

However, the modernisation of agriculture cannot be achieved with the largely untrained and uneducated labour force that is being displaced from the sugar industry, and the rethinking of education and training for economic development must be put on the front burner.

Tourism is the leading sector of the economy and is expected to make a major contribution to the Government's GDP growth targets and the country's development. Are these expectations realistic in the context where earnings from the sector retained in the economy are estimated to be as low as 16.5 per cent? The contribution from this sector will decline even further if domestic agriculture is not integrated with the tourism product.

While it is generally accepted that growth and job creation will be generated primarily through the MSME sectors, both formal and informal, many of these entrepreneurs, for one reason or another, have not been able to access capital required to make a success of their enterprises.

 

Crime and unease

 

It is not only the spiralling murder rate, but the proliferation of rural crime islandwide, that is creating panic in the society. So far, the principal response has been the introduction of ZOSO. However, this can hardly be a solution when so little has been done to increase the size of the police force, enhance its mobility, and expand its training to incorporate the use of modern technology in the fight against crime.

Can we manage crime more effectively by focusing on special zones, one at a time, when the entire island has become one crime zone? Can we sustain social-intervention programmes without increased revenues from a growing economy, and can there be social cohesion without greater equity?

As the nurses have already shown, the public-sector workers, inclusive of the police and teachers, are not likely to be impressed by neither public relations nor the prime minister's new image. They are going to fight for the wage increases they are demanding.

Political opportunism is not going to help the deepening crisis of governance, hence the prime minister's calculated manipulation of parliamentary procedure to secure the passage of the National Identity Registration Bill through Parliament will only fuel public protests. The impact of the economic and social pressures on the society leaves one with the feeling that things are falling apart, and the inadequate response of the Holness administration gives the impression that the centre is not likely to hold.

- Arnold Bertram is a historian and former PNP minister of government. Email feedback to columns@gleanerjm.com and redev.atb@gmail.com,