Published On: Thu, Sep 1st, 2016

VBC: Job growth not parallel with economic growth

WILLEMSTAD - Developments in the economic area in terms of real economic growth and the labor market in terms of employment growth in the past decade were not parallel to each other.

This period was characterized by marginal economic growth (an average of 0.5 percent annually) and by a sharp deterioration in labor productivity (cumulative over 25 percent).

This is according to the Curaçao Business Association (VBC) in its latest newsletter. However, the number of jobs increased in this period by 20.4 percent (10,480), or an average annual growth of 2.3 percent (1164 jobs). “A seemingly paradoxical development that is difficult to explain. Arguments as reducing the number of well-paid jobs and an increase in jobs where wages are lower, are not unequivocally supported by figures, said the VBC.

The figures from the Central Bureau of Statistics (CBS), International Monetary Fund (IMF) and the Central Bank do point in the direction of a fall in wealth and real wages. There is a process of impoverishment and falling prosperity. Thus, in the period 2005-2015 there was a reduction of 9.7 percent in real Gross Domestic Product per capita, while in the period from 2005 to 2011 real wages registered a decline of 12 percent.

It looks, according to the VBC, that job growth has been the result of growth in a large number of temporary posts and increase in the number of small businesses. “This growth, however, has not led to an increase in overall wealth and prosperity. At most, it has helped to mitigate the deterioration process. The question is how long this process can be sustained and whether there is a socio-economically desirable situation. Indeed, global experience shows that declining labor productivity, reduction of wealth and lack of innovation is often a recipe for impoverishment.”

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