Last update: 11-Dec-2013 6:16 am
Wednesday, December 11, 2013
Trinidad & Tobago Guardian Online
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IMF focuses on T&T’s high underemployment
The International Monetary Fund (IMF) says there is evidence of significant underemployment in T&T and the “degree of slack in the labour market” may be underestimated in official data because of the delinking of the reported unemployment rate with GDP growth.
In its latest country report on T&T the IMF said: “The official unemployment rate peaked at 20 per cent in 1990, declining continuously afterwards until it stabilized at around five per cent over the last five years. At the same time, real GDP growth was buoyant in the earlier period, averaging 6.2 per cent, while average real GDP growth econometric analysis gives an estimated elasticity of contracted to 0.7 per cent during 2008 to 2012. A simple employment to GDP of around 0.3.”
The global agency said temporary government employment programmes—the Community Environment Protection and Enhancement Program (Cepep) and the Unemployment Relief Programme (URP)—have buffered T&T’s unemployment rate from the economic volatility of recent years. In addition, the government has introduced various employment support and training programmes under the Social Sector Investment Programme (SSIP) to reduce high unemployment.
The IMF pointed out that the “beneficiaries of these two programmes alone exceeded the average number of unemployed between 2008 and 2012.”
“Trends in sectoral employment and output suggest the temporary programmes reduce measured unemployment, but contribute little value added. Participants in employment programmes are classified as employed under ILO standards, and are counted as part of the community, social, and personal services sector. The share of this sector in total employment increased from 31 per cent to 34 per cent from 1995 to 2012, at the same time as its share in total GDP declined from 18 per cent to 9 per cent.
“In addition, there is direct evidence of significant underemployment in this sector. During 2009 and 2011, it accounted for 45 per cent of those employees who worked for below 33 hours/week for the specific reason of having ‘no more work to do’,” the report said.
The IMF said reducing high dependence on government support is key to reviving T&T’s labour market and enhancing labour competitiveness. It noted that employees under Cepep and URP mainly provide low-skilled labour but their hourly wages are higher than minimum wage earners who do comparable work. “As a result, private sector employers reportedly have difficulty competing with the government in hiring unskilled labour.”
According to the report, T&T ranked 110th out of 144 countries in labour market efficiency in the the Global Competitiveness Index in 2011–2012. “In particular, a poor work ethic is cited as one of the most problematic factors in the efficiency of the national labour force, suggesting that temporary government employment programmes may be providing significant disincentives to work,” the IMF said.
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