Published On: Tue, Dec 3rd, 2013

What can be done to improve the economy of Curacao immediately?

Jacob Gelt DekkerThe Central Bureau of Statistics reported unemployment of 13% in September , October, a 3,3 % rise over the previous year, and more than a 10% jump to 37.2% for youth unemployment.

The Caribbean Economic Performance Report of July, 2013 showed a shrinkage of 1.6% of the GDP of Curacao, making it the worst performing economy of 16 Caribbean nations.

The local government claims to be working day and night on the economy, but their efforts are non transparent and give no insight to the citizen. The parliament does not shed any light on a structured recovery plan either.

Dr. Emsley Tromp of the Central Bank of Curacao and St. Maarten called for increased productivity. The VBC, Curacao’s employers association, sounded her alarm many times but without rapport.

I was asked to make my contribution and offer some recommendations that could improve the Curacao economy immediately. Hopefully, many will add their suggestions to my short list.

1. Labor laws on the island, once set up to protect against exploitation and usury, are working counter-productively and cause decline of productivity, and consequently, unemployment and poverty.

- The Labor Board does not issue timely dismissal permits. Many applicants may have to wait for one year or longer, or may be denied without reason. The consequence is that employers are hesitant to hire people and prefer temporary labor agreements. Unable to adjust to economic fluctuations, labor expense becomes a disproportionate expense liability in a company and may even jeopardize the jobs of other employees. Liberate the labor market immediately!

- The minimum wage has been increased steadily by populist politicians causing the lock -out of low productivity workers from labor markets. Especially those just out of school, or school drop -outs, are unable to produce at least the cost of minimum wage, overhead and associated investment expenses. Nobody will hire unproductive workers. Introduce more flexible youth and trainee wages, or abandon minimum wage all together.

- The 80/20-law looms over the entire economy as a strong deterrent for new investments. The Curacao labor force is insufficiently educated and trained to fill business requirements. What schools produce and what employers seek shows a tremendous mismatch. Ex.: Not one school on the island offers a simple “company certificate” for instance for, Microsoft Office. The government -run school have been in a crisis for years and no effective changes are showing. Over the last three years, as many as six ministers of education tried, but all quit after a brief period. Liberate education from traditional schools and allow broad based internet education.

2. Investment climate of Curacao is very poor. The island is in the grip of monopolies and cartels, at the expense of the consumer. The added expense makes the local product non- competitive. UTS, AE, and local airlines keep new investment out of the market. Ex.: GOL- airlines of Brazil. Its hub investment on Curacao was voted down and out , year after year, apparently for protectionist reasons. End monopolies and break up cartels immediately! 3. Security on the island has deteriorates dramatically and has become a strong disincentive for business opportunities. According to Justice Minister Navarro, the island is experiencing a crime wave, caused by organized crime with the objective to destabilize the island. The rapidly growing cocaine trade from Venezuela, especially from the NE- province of La Guajira, prefer to use Curacao as an accommodating distribution harbor to Europe and North America. Curacao with very limited resources, is unable to counter the offense. Increase cooperation with the international drug task forces.

4. Investment and travel is literally halted at the border, due to obsolete visa requirements. Russians, citizens of former USSR-countries, and Colombians need to have a Schengen, USA-, plus a Curacao-visa, a lengthy expensive deterrent for visitors and investors. Former minister of Economic Affairs, Hakim, issued a ministerial decree lifting these requirements. Unfortunately, even one year later, there is little or no effect at the border. Immigration laws are equally silly and form strong barricades to new investment Lift visa requirements for Curacao.

5. The local currency is a very expensive political tool of nationalistic symbol politics. It levies a tax on local consumption for the benefit of a few banks. Extensive studies have been conducted, and dollarization appear the most effective and immediate instrument to open up markets and lower costs. Dollarize!

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