Recently some information was published that showed that the population’s participation rate in the economy was dropping and that unemployment was rising. Further, we are well aware that many of our graduates cannot get jobs commensurate with their qualifications, so much so that sometime ago an IDB report demonstrated that 70-plus per cent of our graduates emigrate in search of better jobs.
Still, the petroleum-based plantation economy that we run, wherein it is necessary to import much of what we consume, employs three to four per cent of the workforce. This oil and gas sector produces the bulk of the foreign exchange (85-90 per cent) needed to fund these imports.
The on-shore private sector economy is generally about import distribution, mark-up and sell and local service, activities that cannot gainfully employ 96-97 per cent of the workforce. Hence, given the rents from exploiting the petroleum resource, the Government has become the biggest employer, providing URP, CEPEP, public service, public utilities and State enterprises that are generally overstaffed. Hence the Government’s action in employing this part of the workforce is a reaction to the inability of the on-shore private sector to provide such employment.
Alas, there is trouble in the energy sector, caused first by the emergence of cheap shale oil and gas in the US, the shortage of gas in T&T and its uncompetitive price and the continued depletion of the oil resource. We are probably seeing the demise of the local energy/petrochemical sector and the need to create new globally competitive export companies.
Coupled with this, if we are to relieve the Government of the task of providing employment, there is the need for a plethora of jobs to employ the on-shore labour force.
Hence the chorus for job creation and foreign exchange generation. The discussion then proceeds towards what kind of jobs should we provide, especially as the impact of the new technologies of automation, robotics, artificial intelligence etc is seen as destroying jobs even as they increase the productivity in their applications.
There is an IDB report that examines this concern of job shift because of these technologies, climate change, renewables and even the ageing population in certain countries. However, my concern is that the prime objective should not be simply job creation; it should be wealth creation in this changing economic environment.
Real and sustainable growth—economic development—is related to the creation of wealth. Wealth creation is about the generation of capital resources, goods and services to the population and other clients such that jobs/income are provided to and by the population and returns are sufficient to continue investment in such economic and wealth development.
However, in T&T the on-shore economy depends on the use of the rents left in the country by the exploitation of the petroleum resource by foreign investors. In other words, many of the jobs on-shore depend on the depletion of the petroleum asset, which is not wealth creation; indeed, it is wealth destruction! Moreso, the employment generated by the Government uses the rents from the energy sector and taxes from the on-shore, which in general does not meet the measurement metric of return on such activities.
In the short term the Government is hoping for an uptick in the activity on the oil/gas sector. However, our long term survival depends on the diversification of the economy, not simply providing jobs, however one can, but by creating a wealth-generating economy, which will provide the associated jobs/income. This will also provide the resources to sustainably generate the required goods and service and investment funds. Hence, diversification is about creating an economic system that integrates human resource development, knowledge acquisition and generation, innovation, entrepreneurship and building the international connectivity/networks in the provision of goods and services competitively. This allows the associated provision of income to the population. Indeed, this is about creating a national innovation system, using techniques which have been discussed at length in this space.
This system has to be dynamic, able to adapt to the changes in and the application of technology while maintaining a dynamic resource/capital base to provide the required goods and services. This adaptation will see jobs become obsolete as, for example, the new technologies replace humans and even existing products and services. However, these new economic systems will provide other jobs as the wealth-creating system delivers its upgraded products. Still, there is the fear that the delivery of such products will not need the employment of all in the workforce. Hence there are ideas like, for example, helicopter money that can be distributed to the public, as from the sky, not as job income, but as returns based on the intellectual property developed over years by the global population and which has led to the generation of the modern production system. This is a challenge we are yet to address.
— Mary King is an economist