Change in fiscal policy required to improve Jamaica's productivity - Chung

By Kimone Witter    

 

Financial analyst Dennis Chung says improvements in Jamaica's productivity will require changes in the government's fiscal policy.

 

Fiscal policy is a collective term for the taxing and spending actions of governments.

 

Recently, Bank of Jamaica Governor Richard Byles again flagged low productivity as a major conflict in the fight against inflation.

 

Speaking Tuesday on The Morning Agenda, on Power 106, Mr. Chung said there is too much inefficiency in the services provided by the government.

 

He highlighted traffic congestion and conducting business among the areas in need of urgent attention.

 

Mr. Chung said, without transformation, a shift to higher productivity will not happen soon. 

 

"I estimated a few years ago, when I did a rough computation, we waste over $200 billion a year in productive hours on the road. We have not been able to fix that. We've been talking about it for a long, long time. In 2013, the IMF agreement said that the major thing that we can do to move productivity in this country is labour market reform. We still have not been able to do that. So I don't think it's going to happen soon, because our fiscal policy is definitely not aligned."

 

He argued that although Jamaica may be making small improvements, other countries are making larger strides, which means they will be more competitive. 

 

Mr. Chung said there is need for more digitisation of services and integrated use of artifical intelligence. 

 

"We had a discussion the other day in this country about AI, and artificial intelligence is going to take over the world. It's happening in other countries already, and our conversation in this country is, oh, we don't have to fear too much, because it's not going to take over all the jobs. No, we are not going to allow it to do it, but what is going to happen is that we're going to see the difference in our exchange rate and our inflation rate, because we're going to be not as competitive as other countries who choose to do these things, who chose to put laws in place that make it easier for businesses to deal with labour, that make it easier for businesses to move their goods around," he asserted. 

 

Sydney Thwaites, President of the Jamaica Manufacturers and Exporters Association (JMEA), believes creating an efficient society is not an impossible task, but it will take time to achieve.

 

Mr. Thwaites said there are local examples of manufacturers moving in the right direction, leading to increased output. 

 

"As a manufacturer and as our members, we make strikes to that every day. So I don't look at it as an impossible task. I just think we have to make sure that all the sectors keep the pace with that and allow that change to happen. The government is making strides on digitising our society and doing a bunch of things, so we're hopeful that these things will catch on, but we're not waiting," said the JMEA president, who was also a guest on The Morning Agenda.

 

He said an ease in interest rate policies would have a positive effect on productivity by allowing companies access to capital investments and growth.