Editorial | A different conversation on productivity 

For the second consecutive time at a conference of members of the island's diaspora, Prime Minister Andrew Holness lamented the low output of Jamaica’s workers and called for a “revolution” to lift national productivity.

This time, however, Dr Holness went further. He appealed for the intervention of Jamaicans living abroad in encouraging friends and family at home to work harder and more efficiently.

“Our value system must change,” he told attendees of last week’s 11th biennial Diaspora Conference in Montego Bay. “We must move from seeing work and service as servitude. We must move from victimhood to agency. We must believe that we have it in ourselves to take charge of our destiny and chart our course and achieve for ourselves.” 

Dr Holness added: “We are … fighting a battle here of culture, and we are going to need your help in guiding the conversations about the changes that are needed at every level of the society to become a more efficient player on the global stage.” 

SIMILAR FRAMING

This was a similar framing of the island’s productivity problem to when he addressed the issue at the same conference two years ago. The PM complained then that whenever he spoke of productivity “a large part of the country hears hard work or more work. They think, ‘They want us to work more and aren’t paying us more’.”

There are, indeed, socio-cultural issues to be addressed, such as people’s attitude to work, in transforming the landscape of Jamaica’s productivity.  However, Dr Holness, in his public statements on this question, continues, for the most part, to focus too narrowly on the time-and-motion element of workers rather than the range of factors that drive efficiency and productivity in economies.  

Indeed, his drive for enhanced productivity should be within a national framework - sometimes referred to as an industrial policy - for lifting the Jamaican economy from its old trap of low wages, low value-added and limited growth.

In that regard, the administration must urgently broaden the dimensions of the conversation ahead of the Government’s delivery on its policy “on how to improve our low level of productivity”, which the prime minister promised during his contribution to the Budget Debate in March. 

Except for Haiti, Jamaica lags behind its Caribbean peers - and the global average - in units output per worker, measured in purchasing power parity (PPP) dollars of GDP.

The US$8.81 per hour in GDP equivalent, Jamaican workers produced was 43 per cent of the Caribbean average of US$20.5. Further, as the data quoted by Dr Holness showed, a Panamanian worker, measured by contribution to GDP, was approximately five times as productive as her Jamaican counterpart. Compared to The Bahamas, the gap was four times, while the Jamaican worker produces only 28 per cent as one in Trinidad and Tobago.   

Only Haiti, with US$3.3 per hour per worker in GDP, was worse than Jamaica. 

NOT SOLE DETERMINANTS

These figures, however, do not, without more, provide a full or nuanced story. While “culture and socialisation”, as Dr Holness observed, impacts labour productivity, they are not the sole determinants of an economy’s efficiency.

So also critical to the discourse on national productivity, and the measurement of the efficiency of labour, is the matter of total-factor productivity, the measure of all the inputs - labour, capital, machinery/technology, et cetera -  in an economy against the output they produce.   Indeed, an investment in a new or innovative bit of technology might improve the efficiency of workers, leading to gains in labour productivity. 

Yet in the 15 years between 1957 and 1972 Jamaica improved its Total Factor Productivity (TFP) by approximately 58 per cent then went into a long period of descent or only mild upticks.  By 2026, the TFP index was approximately 37 per cent below the 1972 level, or annual decline, over a half a century, of 0.7 per cent.

At the same time, gross fixed capital formation (GFCF) - investments in the things, including public infrastructure, that generally support growth and efficiency in economies - has steadily declined.  Since 2010, it has fallen from 27 per cent of GDP to 16.24 per cent in 2022.

Meanwhile, labour’s compensation share as a proportion of GDP has shown significant volatility.  From a peak of 65 per cent in 1970, it collapsed to under 50 per cent in the mid-1980s but rebounded to 64 per cent in 2001.  By the 2010s, it had fallen back to 57 per cent before recovering in 2023 to around 61 per cent of GDP, which was probably reflective, in part, of the significant rise in public-sector compensation. This was a part of the government’s reclassification of public-sector jobs.

COMPLEX ENGINE

The bottom line is that national economic productivity is not dependent on a single factor.   It is like a complex engine with several movement parts.   

Which is why it demands a serious and deep discussion, leading to overarching policies that will, among other things

• vastly improve education outcomes. 
• channel investment research and innovation. 
• identify strategic areas for investment. 
• is cognisant of and adaptive to new and emerging technologies, including artificial intelligence; and 
• flexible and nimble in responding to the trends of a volatile global environment for trade and investment and building relations.

These are among the elements for an industrial policy for the 21st century, which needs the consensus of key stakeholders.