Express Business Filler #1

Trinidad and Tobago’s unemployment rate tumbled from 22.3 per cent in 1987 to 3.8 per cent in the second quarter of 2018.

This is a significant decline and it means our unem­ployment rate was one of the lowest in the world.

For example, the average unemployment rate among OECD (Organisation for Economic Co-operation and Development) countries in October 2019 was 5.2 per cent. In October 2019, the unemployment rate was 5.3 per cent in Australia and 5.5 per cent in Canada.

However, in analysing the unemployment rate for T&T, one must also indicate the country’s labour force par­ticipation rate has been declining. The labour force participation rate in 2018 was 58.7 per cent, the lowest since 1991.

The Government of Trini­dad and Tobago will have to pay close attention to the negative trend in the labour force participation rate and make interventions that would modify the value of this variable upward, so a greater proportion of people from the non-institutional population actually takes part in the labour force.

One of the reasons for the low labour force participation rate is the increase in the size of the “out-of-the-labour-force” category of the population, defined here as the non-institutionalised labour force less the population (the non-institutionalised population above 16 years may be defined as the population above 16 years that is not in an institution such as jail or hospital or infirmary, etc).

Observe (See Table 1 below) that the population of T&T was 1,262,400 in 2000 and this increased to 1,359,200 by 2018, an increase of 7.7 per cent. The non-institutionalised popula­tion 16 years and over increased by 14.6 per cent between 2000 and 2018, with the labour force increasing by 9.5 per cent in the same time interval. This group increased 22.5 per cent between 2000 and 2018.

It is critical to decompose this “out of the labour force group” into two parts—that aspect above 60 years and those below 60 years—to determine the extent that ageing affects the size of the “out of the labour force” group.

In 2000, the over 60 years element of the “out of the labour force” group stood at 126,500 and by 2018, this subset grew to 181,800, an increase of 43.8 per cent. The segment of the “out of the labour force” group younger than 60 grew from 236,700 in 2000 to 263,100 in 2018, an increase of 11.1 per cent.

Of significant note though is in the recent past, defined here as 2010-2018, the aspect of the “out of the labour force group” which was under 60 years old grew by 6.9 per cent as compared to a mere 1.4 per cent growth for the labour force in the same time period.

Inefficiencies in the

employment of workers

CEPEP (Community-­based Environment Protec­tion and Enhancement Programme) was introduced in 2002, at which point in time the number of people employed in all of T&T was 525,081, and in the personal services/other services sector, the number of people em­ployed was 72,700 (where CEPEP workers are recorded).

Partly on account of the coming on stream of CEPEP, employment in the personal services sector escalated by 30.6 per cent to reach 94,200 in 2016. By contrast, in the national economy, the number of persons employed increased to 618,200, an increase of 17.7 per cent. Surplus labour in the personal services/other services sector is measured here as the difference between actual employment in the personal services/other services sector less the number of people that would have been employed in this same sector if its employment had grown at the same pace, as national employment.

On this basis, the personal services/other services sector was found to have over 9,000 surplus workers, (9,072 to be exact). If these 9,000 workers were transferred into the manufacturing sector as unskilled workers, then the level of employment in the manufacturing sector would increase to 58,000, which is similar to the level of employment in 2004, i.e. if the sector was not deindustrialised. If his adjustment is made, the adjusted GDP (gross domestic product) of the T&T economy would increase to $1.365 billion.

Furthermore, it is possible to show the national underemployment rate for T&T in 2016 was 8.4 per cent (the national unemployment rate for 2016 was four per cent).

Clearly, the State has managed (by partly manipula­ting the amount of make-work programmes it offers) to bring down the national unemployment rate, but the underemployment rate in the country is significantly higher.

The State will have to carefully monitor this trend (focus is placed on 2016 as after that, the change in the way GDP data is recorded makes it a more difficult to determine output per worker in the make-work sector). (See Graph 1 at left)

Given the fragile state of the economy as shown by the growth data above, all hands will be needed on deck and pulling in the same direction.

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