Figure 1 shows labour productivity as measured by Purchasing Power Parity GDP per hour worked for St. Luica and three major countries in the CSME. The gap in productivity between St. Lucia and Jamaica on one hand and Barbados and Trinidad on the other underscores the reason for concern. The unfortunate reality is that, at this moment other OECS member states do not possess the informational ingredients to execute this basic assessment.
Another unfortunate consequence of this data gap is the difficulty in developing meaning structural economic models , as precious little data exist on which the labour market equation can be calibrated. Sound or unsound economic models directly impacts policy makers’ ability to correctly anticipate the consequence of policy decisions.
Apart from the handicap in macroeconomic enquiry and policy making, absence of detailed information about the labour markets also affects understanding of distributional and socio-economic conditions, such as gender (sex) -wage disparities, public-private sector-wage disparities, firm size and inter-industrial wage differentials. Within the wider Caribbean context there has been limited investigation of these phenomena , among these are: Reilly and Bellony (2011)who highlighted public-private sector-wage disparities ( as well as a wage bias in favour of non- indigenous workers) in their investigation of the 1999 Dominica LFS; Marcelle and Strobl (2003) and Mounsey (2014) investigation of firm size-wage differentials in Trinidad and Jamaican respectively; as well as Mounsey and Polius (2011) investigation of inter-industry wage differentials in Trinidad and Tobago.
These investigations all suggest the existence of significantly segmented labour markets that do not operate in a textbook ‘market-clearing’ fashion. The implication being that a country’s labour market is far too complicated a phenomenon to be a largely ignored 'irrelevant black box', whose contents can be divined (at least qualitatively) by the standard economic text. Furthermore the performance of the macroeconomy cannot be properly documented or modeled without at the very least knowledge of the key labour market aggregates. It is time that this handicap to economic enquiry and planning be removed.
References
Marcelle, M, and Strobl, E 2003, 'Do Smaller Firms Pay Less in the Caribbean? The Case of Trinidad and Tobago', Journal Of Development Studies, Vol.39, No.5, pp. 181-198,
Reilly, B, & Bellony, A 2009, 'The determinant of labor market earnings in a earnings in a small Caribbean island: the case of Dominica’, Journal Of Developing Areas, Vol. 43, No. 1, pp. 65-85.
by: Mr. Allister Mounsey
Macroeconomist, OECS Secretariat