The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

The prime minister’s pledge that the unemployment rate will be slashed to a 21st-century low of six percent within 18 months was yesterday branded “highly improbable” by an ex-FNM Cabinet minister.

Zhivargo Laing, former minister of state for finance in the Hubert Ingraham administration, told Tribune Business: “I think that anything is possible, but I think it is highly improbable.

“You have to have substantial investments take place. I’m talking about substantial investments. You are creating thousands of jobs over the next 18 months, and then those jobs can’t merely be construction jobs. You can have a project take place, and a construction team in place for six months, seven months, eight months, and the job can come to an end.

“But for the next several months there might not be anything to take them up, so when they are asked ‘are you working’ or ‘are you looking for work’, they might say ‘yes’ [to the latter] and they would be regarded as unemployed even though they worked the previous months before,” Mr Laing continued.

“So you have to have a net sustainable number of permanent workers engaged at the time of an employment survey in order to calculate and register an unemployment rate of the order of what the prime minister mentioned.”

Pointing to the period between 1992 to 1997, Mr Laing said: “The unemployment rate dropped from 14.8 percent to about just under ten percent, so you are looking at a four percentage point drop in unemployment, or basically a little around a percentage point per year.

“If you look at the economy’s growth at that time, you were having growth on an average of maybe of 2.5 to three percent. This was during the period of Atlantis. In that period of time, given that enenormous robust growth taking place in the United States of America and enormous investments taking place, you were able to at that point achieve a drop in unemployment of a percentage point per year.”

Mr Laing said The Bahamas would need to double the rate of unemployment reduction achieved during 1992-1997 to achieve Dr Minnis’ target, and said: “So if you don’t have that now matching, then what is now being said would amount to......

“I think we are at around 10 percent now, and you are talking about a 4 percentage point drop. You are talking about twice the unemployment drop per year to meet that target. That’s why I said based on our historic performance that is improbable.”

He added: “Now you could have a circumstance where, for instance, in Grand Bahama and Abaco large numbers of people have been displaced by the hurricane and large numbers of them drop out of the labour pool, or are regarded as discouraged workers, and that could drop your unemployment rate.

“So let’s say the projects the Prime Minister mentioned achieve a drop in unemployment of, let’s be generous and say two percentage points, putting you at 8 percent. You could get 6 percent if a further two percentage point of people dropped out because of their discouragement.

“But I don’t know if that’s what the Prime Minister was talking about. I thought he was talking about the kind of unemployment drop as a result of job creation, not as a result of people dropping out due to discouragement.”