BEHIND THE HEADLINES: Britain climbing out of slumber
“Britain isn’t helping.”
Add Barbados and its Caribbean neighbours to complete the observation made by Richard Francis, Standard & Poor’s economic analyst who keeps his fingers on the pulse of Barbados’ economy, and it would become clear why Wall Street isn’t jumping with joy over two developments. Those two developments are the Barbados Central Bank’s projection that the island’s economy may grow this year by less than one per cent and the indication that as improbable as it appeared a year ago, Britain is, in the words of The Economist publication, “the envy of the rich world”.
Asked by BARBADOS BUSINESS AUTHORITY to paint a brief picture of the economic fortunes of Barbados and many of its Caribbean neighbours, Francis said that Britain wasn’t helping the Caribbean by imposing a travel tax that was hurting the flow of tourists to the region.
“We have seen economic deterioration across the Caribbean in the last few years,” said Francis. “However, what we have [also] seen is a bottoming out. There seems to be a picking up in tourism and it seems that some of the investment projects are getting up and running.”
The two examples of a “bottoming out” and where there was an uptick in investments were Aruba and The Bahamas, he said. In those two countries, major tourism projects had moved forward. Unfortunately, that wasn’t the case in Barbados, which remained in the economic doldrums as its Government moves to lay off thousands of public workers in order to narrow the deficit.
The timing of Barbados’ troubles couldn’t be worse. For as the country battles high debt, economic recession, double digit unemployment and other woes, Britain is emerging from a deep slump and more of its people are in a position to travel to warm destinations, Barbados and Jamaica among them.
For instance, the International Monetary Fund has predicted growth in Britain in the vicinity of 2.4 per cent this year. Among the world’s advanced economies, only the United States is expected to perform better.
Corporations in Britain are in a sustained rush to add more workers to their payrolls, causing unemployment to fall, going from almost eight per cent in May to 7.1 per cent in October and could decline even more by March possibly to 6.9 per cent. In effect, the unemployment rate is perhaps two years ahead of schedule.
While Barbados’ jobless rate is expected to rise in 2014, remaining in double digits, a far cry from 2007, Britain’s continues to stay below the ten per cent high water mark. Inflation has dropped to the Bank of England’s target of two per cent, not enough, though, to force an increase in interest rates.
Wage growth isn’t much to write home about. There is increasing shift away from part-time work in Britain to full-time employment, so much so that the part-time positions which fuelled job growth have been overtaken by more secure work that now accounts for four-fifths of the jump in employment.
In all, 30.1 million across Britain were working in the three-month period ending late last year. Between the summer months and last November more than 280 000 people had found jobs than say the comparable period of 2012. “The recovery is impressively robust,” noted The Economist.
That impressive record sends some key messages to Barbados and other countries within CARICOM, which have been suffering ever since the bottom fell out of Britain’s economy and the global financial crisis that began in 2007 in the United States spread to the European Union.
The first is that business confidence has returned to corporate England and that can easily translate into a rejuvenation of investment abroad. Whether that would involve Barbados and the stalled Four Seasons project remains to be seen.
Secondly, the rise in the share of permanent employment as compared with part-time positions places Britons in their best position in about four years to go on vacations in the Caribbean. That may be the easy part. The unanswered question is whether the size of their take-home pay would give them enough cash to spend abroad.
If the job picture looks bright and dandy, that’s only part of the story about what’s taking place in Britain. The other part is the “productivity puzzle”, the relatively low growth in output across Britain.
“Output per worker remains substantially below the pre-crisis level and fell again from the second to the third quarter of 2013,” The Economist pointed out.
The productivity conundrum should strike a familiar note to Barbados’ employers, who have been complaining that Bajan workers just aren’t giving value for money. In other words, far too many of them eagerly pick up their pay cheques but abhor working for them.
To that complaint, Sir Courtney Blackman, the first governor of the Central Bank of Barbados says, the fault lies not in the stars of the workers but in the laps of managers.
“It’s the responsibility of management not the workers to increase productivity,” he told this paper.