Mon | Apr 24, 2017

Government needs to refocus

Published:Sunday | November 16, 2014 | 11:00 AM

Claude Clarke, Columnist

It has been almost three years since the publication of my article 'Balancing people's lives', which proposed that "the Ministry of Labour's preoccupation with industrial dispute resolution is an anachronism in the context of a development-focused economy and its attention should now be placed on playing a really meaningful role in job creation and economic development."

In its editorial last week, The Sunday Gleaner seemed to be supporting the idea. Now, with the endorsement of the country's leading newspaper, it is hoped that our political leaders may at last act to reorganise this important ministry to reflect the economic imperatives of the 21st century.

At the time of my article, just two weeks into the life of the present administration, I was full of hope that the new prime minister's mantra of "balancing people's lives while balancing the books" would have been given substance and that action capable of opening the doors of genuine economic opportunity for our people would have been taken.

My hopes were bolstered by the belief that given its philosophical antecedents, the new PNP administration would be guided by a compass set on the goal of maximising the productive employment of the Jamaican people.

And while given the hopeless state of the economy at the time, the help of the International Monetary Fund (IMF) was needed, it should have been clear to our economic stewards that IMF assistance, in and of itself, is never enough for a country to achieve economic development. To realise that objective, the economic programme agreed with the Fund must be able to create conditions that will lead to the employment of people and the growth of their productivity. Contracting the economy, using 7.5% of each year's GDP to pay down debt, as the present programme does, will not achieve that result.

After almost three years in office and a third of the way through an IMF programme, the Government is unable to offer any tangible evidence to convince the average citizen that there is a real prospect for improvement in his economic circumstances. This suggests that the deal agreed with the Fund has failed to inspire Jamaicans' confidence that it is either capable of delivering its promised economic gain or worthy of the pain they have endured.

Recent improvements in Jamaica's ranking on some global indices reflect little more than the implementation of IMF-mandated changes. And the Government's exhilaration over them suggests that it values imagery over substance.

While these IMF-directed changes are important, and accepting that they cannot instantaneously produce better business and economic performance, they cannot be confused with real economic gain or even the prospect of it. If people are not seeing evidence of economic development to give them hope, their confidence in the Government's economic leadership will wane.

Of course, the IMF, and those invested in its programme, will see things quite differently. In any economy, there are conflicting interests. The pain felt by the ordinary people from the Government's IMF programme is real, as is their fading hope of economic betterment, but many of the more privileged are shielded from it. It is, therefore, not surprising that the finance minister's success in implementing the programme so far stands in such sharp contrast to the prime minister's failure to convince the people, whose loyal adoration she enjoys, that the economic pain they feel is justified.

As seasoned politicians, these government leaders should know that it is the people who will ultimately determine the fate of the economic programme they are seeking to implement. And the people will need to perceive real signs of economic gain to see it through.

In light of this, Government has to move
quickly to ensure that its economic management, while observing fiscal
tidiness, results in increased economic output before long. They must
also be aware that output will only increase when our production becomes
competitive; and this will only happen when more Jamaicans are employed
and our labour productivity is consistent with those with whom we must
trade.

It is trade that will enable our economy to
grow. Without dramatic improvement in our export performance, the
economy will not grow in any meaningful way. But exports have continued
their devastating decline under the IMF programme. Rapidly reversing
this trend is essential if Jamaica is to have any hope of economic
recovery. For even if the Jamaican market were supplied entirely with
local production (if that were even possible), it could not provide the
dynamic demand needed for sustainable economic
growth.

No effort should be spared to increase
Jamaica's exports. The enormous potential of non-traditional export
opportunities like business process outsourcing, as outlined by this
year's PSOJ Hall of Fame inductee, Glen Christian, should not be allowed
to go to waste.

Government, even at this late stage,
must convince the IMF to revise its programme to accommodate these
efforts at economic growth.

Recognising that the
necessary increases in employment and productivity depend on capital
investment, it should be prepared to lengthen the country's debt
repayment schedule in order to allow Government to use a portion of the
7.5% of GDP primary surplus (perhaps 2.5%) to provide incentives for new
private-sector investments in production and productivity. The Fund
should be prepared to permit Government to change the tax code to
attract as much corporate and personal wealth as possible to invest in
production and productivity-enhancing activities as distinct from
granting incentives merely for paying taxes on
time.

The increased economic activity that investments
induced by these incentives could generate would yield tax revenues far
greater than the cost and is what we need to capitalise on the benefits
of the exchange-rate competitiveness the IMF and the Government have
been trying to achieve.

Government's focus should
shift to employing and maximising the productive capacity of the people.
That is why it is so important for the Ministry of Labour to go beyond
dispute resolution and focus on employment creation and to establish an
effective interface with the investment promotion agency,
JAMPRO.

JAMPRO itself needs to be further empowered to
engage with our educational institutions to influence their course
offerings and to benefit from their advice in packaging projects and
targeting investments. JAMPRO also needs to have trans-ministerial
effectiveness, which is only possible if it bears the authority of the
prime minister. No agency of government is in greater need and could
make better use of prime ministerial authority than that which shoulders
the responsibility of attracting development capital to the
country.

The penchant of recent prime ministers to
hold the NHT close while leaving JAMPRO to a line minister can only be
explained by political, not economic, logic. And while politicians can
be expected to be political, there is a point at which leadership
requires that the national good supersede political
manoeuvrings.

Most important, the prime minister
cannot delegate economic development to her ministers. While ministers
have their individual roles, only a head of government can provide the
leadership and coordination needed for overall success. In Jamaica's
case, the prime minister must begin by taking charge of the economic
development and investment promotion agency,
JAMPRO.

Although the task of economic development must
be pursued on multiple fronts, the effort needs to have a unifying
focus. Ours should be our people: investing in increasing their
productive capacity and expanding markets for the output of their
efforts.

Claude Clarke is a businessman and former
minister of industry. Email feedback to
columns@gleanerjm.com.