by TONY BESTin New York

PRICES AND WAGES UP. Productivity down.

That snapshot of Barbados by the Inter-American Development Bank, (IDB), in Washington, shows wages and productivity going in opposite directions, the recipe for Barbados' uncompetitiveness in the regional and international markets.

It stated: "Although data on productivity (in Barbados) are limited, available indicators suggest productivity has failed to keep pace with wages," was the way the bank put it in its country strategy document on Barbados.

It went on: "In addition, prices for Barbadian products have risen relative to those of trading partners."

In a report prepared last year, the bank pinpointed a relationship between the real unit labour cost, and the real effective exchange rate – two Barbados dollars for each United States dollar – and spotted "a deterioration in the former since the early 1990s and in the latter since the late 1990s.

"Although the trends have not been sharp, they have been sustained," stated the IDB document.

But it was quick to explain that workers can't be blamed for all of the island's problems.

"Many factors lie behind the competitiveness challenge in Barbados," it stated. "These include high utility costs (e.g. telecommunications and electricity costs), inadequate transportation infrastructure, difficulties of small firms in accessing finance, public and private sector management weaknesses, labour market rigidities, the low integration of information and communication technology into firm activity, and inadequate availability and use of statistical information by both public and private sectors)."

But the bank stated that Barbados yet had several things going for it.

"Barbados has many advantages on which it can build a stronger competitive position in the world economy, particularly its high levels of social development and stable government, institutions and economy.

"The challenge for Barbados is to identify and reinforce its strengths and implement remedies for its weaknesses so that its competitiveness and living standards can be improved."

As for the labour market, the IDB said it was "relatively sound", reflecting the engagement of the major social partners in a tripartite arrangement since 1993.

Still, it urged Barbados to "increase flexibility" in the high-tech environment.

It noted that there was another factor affecting productivity and competitiveness – the existence of major gaps between labour skills and productivity.

"Despite an overall surplus of labour, with unemployment standing at nine per cent, there are critical shortages of labour in specific areas," the bank said.

"This suggests the vocational training and tertiary education institutions are not properly aligned with the needs of the business sector."