Tue | Aug 22, 2017

Security costs helping to stifle productivity, says UN report

Published:Tuesday | August 16, 2016 | 8:00 AMClaudia Gardner

The effect of crime on investment in Jamaica has been the subject of research for at least the past decade.

A 2007 joint report by the United Nations Office on Drugs and Crime and the World Bank on the costs of crime to businesses in Jamaica said lawlessness had the potential to not only be damaging, but also be a big discouragement to investors, as it results in the diversion of company resources to crime prevention, among other things.

"Unsurprisingly, security clearly dominates the impact of crime, with more than half of firms reporting that crime increased security costs," the report said. "Managers also indicated ... that crime affects business decisions in ways that are likely to affect output in the long run."

 

DISCOURAGING INVESTMENTS

 

Thirty-nine per cent responded that they were less likely to expand their business because of crime, and 37 per cent reported that crime discourages investments that would improve productivity.

"The steps taken by businesses to protect themselves from crime are varied and not limited to security measures narrowly defined ... . Physical security measures are the most common: 58.3 per cent have installed protective grilles on buildings, 49.3 per cent have special fencing, and 31 per cent have installed alarm systems. Nearly half have unarmed guards, and a remarkable 30.8 per cent of firms have armed guards. Many firms (36 per cent) have opted to close before dark," the report stated.

The report said, based on the data collected, security costs pose the largest burden for small firms, which was 17 per cent of their revenue, on average, as compared to just two per cent of revenue for firms overall.

"This practice has especially high costs in the manufacturing sector, where second shifts are not used and productive capacity consequently sits idle," it said.