Bunting flags Jamaica’s productivity crisis

Jamaica's economic growth remains sluggish, ranking among the weakest in the developing world, according to Peter Bunting, the Opposition Spokesman on Productivity, Efficiency, and Competitiveness. Bunting stated that real GDP growth has averaged only about one percent annually for decades, signaling a deep-seated productivity crisis.

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Labour productivity has declined. Foreign direct investment inflows have fallen sharply from their previous highs. Gross fixed capital formation has weakened. Real wages remain under pressure.

Speaking in the House of Representatives, Bunting detailed the economic challenges, noting a decline in labor productivity, a sharp drop in foreign direct investment from previous highs, weakened gross fixed capital formation, and persistent pressure on real wages. He lamented that "far too many of our brightest and best continue to leave in search of opportunities elsewhere," concluding that Jamaica has "stabilised the economy without transforming it."

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In short, we have stabilised the economy without transforming it.

Bunting referenced reports from the International Monetary Fund, World Bank, and Organisation for Economic Co-operation and Development, which he said broadly agree on the drivers of sustained economic growth. He emphasized that prosperous nations continuously improve productivity, strengthen institutions, invest in human capital, foster innovation, and create competitive business environments. Conversely, countries that fail to enhance productivity eventually hit a growth ceiling, leading to stagnant wages and diminished economic opportunities, a situation he believes Jamaica is currently facing.

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Countries that prosper over long periods do so because they continuously improve productivity, strengthen institutions, invest in human capital, encourage innovation and create an environment in which businesses can compete and grow.

While acknowledging welcome developments like increased online transactions and digital government services cited by the Minister of Efficiency, Innovation, and Digital Transformation, Bunting cautioned against confusing activity with productivity. He pointed out that many Jamaican businesses still grapple with duplicated reporting requirements, fragmented government systems, and lengthy approval processes. Furthermore, he noted that over 70 percent of transactions remain cash-based, with negligible adoption of the JAM-DEX digital currency despite significant efforts by the Bank of Jamaica. Bunting concluded that technology is an enabler, not a substitute for reform, and that true efficiency gains arise from fundamentally redesigning processes, not merely digitizing them.

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While these developments are welcome, activity should not be confused with productivity.