Barbados risks falling further behind its regional peers unless wage talks move beyond minimum rates to tackle weak productivity, data gaps and the real cost of living, the finance minister, joined with employers and an economist, has warned.
In a panel discussion following the annual general meeting of the Barbados Employers’ Confederation (BEC) at the Lloyd Erskine Sandiford Centre, Minister of Finance Ryan Straughn, Executive Director of the BEC, Sheena Mayers-Granville, and Professor of Economics and Deputy Principal at the University of the West Indies Cave Hill Campus, Winston Moore, discussed the factors affecting productivity and economic growth.
Minister Straughn stressed that for Barbados’ economy to recover, the strategy must be focused on sustainable growth.
“We have been focused on stabilisation, we’ve been delivering some growth, it’s now time for some transformation. We’ve had some challenges prior to us taking office, we have some things that we have to address that allow us to be able to ensure that we continue to have sustainable growth. As a government, we’ve been trying to prime the environment whereby businesses can move from being small to medium, medium to large, large to regional, and the like.”
Straughn noted that businesses must move beyond the local market and expand regionally and internationally if the country is to improve productivity and maintain economic stability.
“Whilst we want to have some level of manufacturing and those types of things here, use of the global supply chain is going to be critically important if Barbados is going to have a truly sustainable model. Your business must be geared toward, how can I expand your market.”
“To the extent that you are able to drive long-term growth, that is going to be centred on how much output you can generate, how much of that then is earnings for exchange to sustain what it is that Barbados has to offer,” he added.
Straughn argued that discussions of productivity cannot focus solely on the minimum wage.
“The business proposition must change and therefore that is something that the conversation about minimum wage or any of those things becomes part of your strategic objective.”
The government is supporting businesses in digital solutions and closing the data and digital skills gap, he revealed.
“If we do not focus on these strategic things, then the sustainability conversation will come up because everything is a shock and our earning potential reduces, meaning the government has to do some subsidies. It has to do all these things to help keep the economy taking over, then it means that any conversation around productivity cannot be solely focused on the minimum wage but on, how do you upskill your workers fast enough to keep pace with what is a very rapidly growing global environment.”
But the BEC’s Mayers-Granville, speaking from the employers’ perspective, highlighted the issues faced by small businesses.
“When we talk about productivity, at an individual company level there are a number of factors that go into that: skills and training, attitude, motivation, tools, technology, management quality, and whether persons are being led, directed, and supported. We also look at the work environment. All of those things impact what workers can give to you.”
She also noted productivity issues: “Businesses increasingly tell me that we have a productivity problem in Barbados. It’s not anecdotal; it is a pattern. We also have the pattern that we don’t name, lateness. We know when certain people will be absent based on what’s happening in the organisation. There is also presenteeism. The Americans call it ‘quiet quitting.’ We knew about it a long time before.”
Mayers underscored the need for a shared responsibility in improving productivity.
“Productivity is a shared responsibility. It’s not just on the workers. Government, employers, workers, training institutions, we all have a role to play.”
Data-driven decisions are crucial, she stressed. “We need data and not sentiment. When we’re looking at wage decisions, we need to anchor them in data. Data cannot be exclusively the domain of cost of living. We need to have other data in the conversation so that those decisions are defensible and anchored in strong numbers.”
Professor Moore agreed that while Caribbean productivity once stood at about 50 per cent of OECD productivity levels, it had since fallen closer to 30 per cent.
He, however, challenged the wage-versus-productivity divide focus. He proposed the “efficiency wage theory” that higher wages can increase productivity.
“The modern thinking is that you might have a situation where wages actually encourage people to be more productive. Modern thinking also says that even though workers are productive, that productivity might not lead to higher wages unless there are institutional structures in place.”
“You cannot disentangle or separate wages and productivity,” he added.
He pointed to social and structural barriers to productivity in the workplace:
“You might find that persons stay off the job because they can’t find anyone to look after their kids. You might find that persons disappear between two and three o’clock every day because they have to pick up their son or daughter. You also have large firms that may keep down wages in a particular industry.”
He continued: “You can’t say that you’re going to pay a productivity-based wage unless you are actually measuring productivity. There’s been this growing gap between wages and productivity, and the reason for that is technology.”
The economist has urged improved data collection and sector-specific productivity measurements to guide wage negotiations and policymaking.
(LG)
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