Dennis Chung, Contributor
JAMAICA'S biggest problem today is the debt. However, when we have managed to resolve our debt crisis what are the predictable obstacles we face in our move on to much anticipated economic success? As I see it, the next critical issue to be addressed is our human resources/people.
Probably the most valuable asset a company or country has is its labour capital. Any successful venture starts and is sustained by ideas, which comes from people. Hard work without the proper idea is fruitless, as if the path is wrong the extent of the effort will not matter in arriving at the destination. It is for this reason that successful companies seek out and hold on to the best talent.
One day accountants may begin to account for human capital as they do various assets, as some persons may be quantified to be more valuable than others, giving the companies that they work for a competitive advantage. Until then this assessment is highly subjective and we have to find ways of measuring people's potential value. This reward system is key in successful organisations.
JAMAICAN TRENDS
Jamaica is no different and needs to carefully assess our future in light of our human resource potential. Recently, the education system has been placed under the microscope, and this is important as herein lies our future potential. The fact is, if we do not produce human resources capable of competing with other countries, then we will remain poorer than they are. We only have to look at the compensation of labour within companies, where generally the more intellectually competent persons receive the greater rewards. Applying this at an international level we can see where human capital is critical. After all, it is always said that it was the people who built the mighty United States (U.S.) and it was the foresight of their forefathers that ushered in their much-heralded constitution. Without these persons what would the U.S. be today?
The table highlights some of the relevant Jamaican statistics between 1997 and 2002. The following points are to be carefully noted:
The labour force as a percentage of the population has declined over the years;
Total employment as a percentage of the population has been reduced;
Income per capita at constant prices remained flat although at current prices the numbers indicate growth;
GDP at constant prices has seen negligible growth, implying no real growth in output; and
The difference between persons enrolling in primary, secondary and tertiary institutions shows significant fallout between the institutional levels. On average, the period shows that 97,000 less enrolled in secondary than did in primary, and 215,000 less in tertiary when compared to secondary. Therefore, while on average over the period, we have had 12.46 per cent of the population enrolling in primary schools only 0.42 per cent enrolled at the tertiary levels.
These points have various implications of which the following are important to note:
On average, each person must produce more to support a growing number of dependents, whether directly or indirectly. It is also evident from the total employment percentages. Countries have long realised the implications of a shrinking labour force and have planned for it, such as in the case of the U.S. where for decades they discussed the effect of when the baby boomers got to retirement age;
No growth in constant per capita income inherently implies that our labour force has not achieved any greater skills relative to the rest of the world as the value of labour output remains the same;
Real GDP remaining flat implies growth driven by inflation and not by increased output. This suggests that we have not seen any labour (human resource) efficiencies that have added value to our output levels; and
The attrition in enrolment at the various educational levels also supports the thought that significant numbers of our persons remain in the low-skilled levels. There has not been any growth, as a percentage of population, of persons enrolling in secondary and tertiary institutions. Added to this the recent reports of worsening CXC results indicate a growing untrained labour force.
LOW SKILLED LABOUR
It is for these reasons why we seek to employ persons en masse in low-skilled industries, which include sugar, garment and data processing. Is it any wonder that the majority of our work force remains at low compensation levels? Low-skilled labour produces low value output, which in turn means a poorer country. If we are serious about competing against developed countries and copying countries such as Ireland, India and Singapore, then we must properly train our people. We have to set educational targets and work towards them, understanding that there is a direct link between quality education and output. Proper training is necessary to improve our offering of the products and services that we hold a competitive advantage in. Education is not the final result but provides a major stepping stone to achieving the desired effect.
All the talk about uses of technology, within companies and the country, is useless unless we develop a labour force that can properly leverage its utility. Technology should not be applied just for the sake of having it but because it improves labour efficiency and output. With our present labour situation, it is difficult to attract high value output investments as we do not readily have labour to staff those ventures. We would therefore have to import labour, via returning Jamaicans or foreigners.
The reality, however, is that this is not a short term plan as it takes years to educate a person. Therefore, when we educate people and export them we are not only losing the cost of that education but the greater opportunity cost of a better future. We cannot afford to lose our trained population to other countries. It is not enough to receive the remittances that they send when they are away, as this represents only a fraction of their potential output. A key ingredient of a developed country is a highly educated population, which will eventually drive economic prosperity.
