In the last year I have witnessed the Central Bank of Barbados change the way it reports the country’s foreign reserves, change the reporting of the fiscal numbers and question the Barbados Statistical Service’s nominal gross domestic product (GDP) and unemployment rate for the second quarter of this year.
But what it did on Tuesday in reporting an unemployment rate for September makes me wonder about the institution and its leadership.
From October 1975, the Statistical Service has conducted a continuous labour force sample survey. The survey is done under the provisions of the Statistics Act Cap 192 of the laws of Barbados.
It was started with technical assistance from the United Nations Development Programme. Since its inception, the survey has been done in each quarter with short breaks in the population census years of 1980, 1990 and 2000.
Over the years, the survey has gone through some changes with the most significant coming after the 1990 census when “the sample design was modified to include stratification of the 11 parishes.
The island was divided into four strata, mainly along geographical lines”. In so doing, it covers a sample of about two per cent of the total private households in the island.
The methodology used is internationally accepted and covers about 1 800 households. It is one thing to question the numbers, but to put together an unscientific sample and then have the audacity to report an unemployment rate from it is highly unacceptable.
It is the more recent of a pattern of behaviour that is truly disturbing from an institution that had built an unquestionable reputation since 1972.
A detailed listing of the concepts and definitions used in the survey, the description of the sample design, the statistical issues associated with the sample’s standard errors and analysis are on the Statistical Service’s website. What could have motivated the governor of the Central Bank of Barbados to concoct a survey among companies to compete with the BSS’ scientific survey of 36 years?
This attitude toward Government departments perhaps is reflective of the height of the towers, but this is no barometer of knowledge in matters for which the bank was not designed and for which it has no legal authority. The behaviour more than borders on the political!
According to the Statistical Service, “the survey seeks to obtain current socio-economic data from persons in randomly selected households across Barbados. This data is used to generate an estimate of the island’s adult population, 15 years and over, who may be in the labour force (employed and unemployed) or classified as inactive (not in the labour force)”.
The importance of the unemployment rate is clear from the public attention it receives. It is also important because it is a key indicator of the cyclical performance of the economy and in the context of the Barbados economy; it is known that the third quarter of the calendar year is the weakest.
Therefore, it is typical for the unemployment rate to be at its highest between July and September, especially when the hotel sector is not witnessing tourist spending consistent with arrivals.
Furthermore, there is no doubt that the BSS survey for April to June picked up the private sector’s shedding of labour in the aftermath of the November budget in which no relief was forthcoming.
The same private sector was praised across the board for its corporate spirit of holding workers for as long as possible.
The unemployment rate is also important as a measure of economic efficiency. Following on the decline in the spending of Barbadians and tourists alike in 2010 that was picked up the Statistical Service’s decline of nominal GDP (total spending), it is not unreasonable that the unemployment rate rose this year, especially since the Central Bank itself reported that tourists were not spending.
The drastic action of the Central Bank to conduct its own unscientific survey suggests that there is more in the mortar than the pestle. Perhaps time will reveal the magnitude of the economic problems confronting Government and, by extension, its chief economic adviser.
Whatever the magnitude of the problems, the solution certainly cannot be to question an institution with years of experience and expertise. Such questioning is for politicians!
Clyde Mascoll is an economist and Opposition Barbados Labour Party spokesman on the economy. Email: clydemascoll@gmail.com
