AT his media briefing last Monday, the new Director General of the Planning Institute of Jamaica (PIOJ), Dr Gladstone Hutchinson, announced the welcome news that compared to April 2010, the total employed labour force had increased by 21,300 persons in the May to September quarter just ended.

He noted that this was almost entirely driven by increased employment in the wholesale and retail industry (up by 12,900 persons) and transport, storage and communication (up by 8,200 persons).

The context to this encouraging news, however, is that the PIOJ is still estimating a decline in real GDP of 0.5 per cent for the third quarter, relative to the same period in 2009, driven by a 1.4 per cent decline in services which outweighed a two per cent recovery in the much smaller goods producing sector. The decline was due to the lagged effect of the global recession and lower employment levels on aggregate demand, and the impact of Tropical Storm Nicole during the last week of September, the latter’s rains being estimated to have destroyed 12 per cent of crop output.

The slower rate of decline (GDP fell 1.5 per cent in the first half of the year) largely reflected the impact of the reopening of the Windalco Ewarton Alumina plant (alumina production was up 32.3 per cent) and increased bauxite production by Noranda Bauxite company (bauxite production was up 38.1 per cent).

Hutchinson noted that over the past decade, the Jamaican economy had grown by a meagre one per cent per annum. He argued that studies have shown that Jamaica’s main constraints to growth are primarily on the supply side and include the debt burden (especially its impact on the cost of capital and on government’s ability to produce its core functions and services), our high crime rate, high energy costs, low labour quality and productivity, and the poor quality of economic and social infrastructure.

Perhaps most significantly, he cited “a burdensome, inequitable and anti-business taxation structure” and a “bureaucratic and uncertain business environment” as amongst the key impediments that have combined to help create an environment “that frustrates dynamic and robust entrepreneurship and business modernisation that could lead to broad-based and sustained economic growth and well-being development.”

Hutchinson stressed that throughout the period of the recent downturn in the global economy, Jamaica’s agriculture and tourism sectors performed credibly. “Enterprises in these sectors have been engaged in retooling and generally adapting productivity enhancement measures. The result of which was that even during the worst recession in over four decades, these sectors expanded and remained competitive globally.”

Perhaps most significantly from the perspective of a growth strategy, Hutchinson revealed that the Planning Institute had commissioned the services of Professor Donald Harris of Stanford University, a Jamaican economist who is highly regarded internationally in the area of economic growth. Professor Harris is to work with an in-house team led by Hutchinson to develop “growth inducement strategies” for the economy based on the removal of “binding constraints”, and the creation of an “enabling environment” that supports emerging business clusters producing globally competitive outputs. Hutchinson expects the recommendations to inform a national discussion of policies and priorities as early as in the upcoming budget cycle, and has started a series of nationwide consultations with the stakeholders in the private, public and civil society sectors.

In addition, Hutchinson advised the Planning Institute will be signing in early December a Technical Cooperation Agreement on economic growth and social well-being with Brazil’s planning institute, the Institute of Applied Economic Research (IPEA). This was a concrete outcome of the meeting of Prime Minister Bruce Golding and former Brazilian President Lula da Silva at the First Brazil – CARICOM Summit on April 26, 2010 in Brasilia.

Hutchinson advised that a team from Jamaica’s PIOJ will then visit the Planning Institute to Brazil to study how they dealt with their very similar challenges of public debt, macro-instability and urban crime so as to inform a drive for sustainable, broad-based, poverty-reducing and humane growth and development in Jamaica. Early next year, a team of specialists from Brazil will spend a month with the Planning Institute providing technical and strategic assistance on these economic growth and development issues.

One of Hutchinson’s key points was that Jamaica’s negative business environment has “frustrated collaboration and partnerships between labour, entrepreneurs, governments, industries and sectors, and civil society that would promote synergies and complementarities in economic life and build and sharpen the global competitive advantages of our economy.”

Such an approach, based on consultation and collaboration, is at the core of the recently restarted partnership for transformation. It is, therefore, disappointing that despite collaboration being recommended as the correct approach by the government, private sector and unions (and being required by multilateral agreement), no official discussion and more importantly explanation of the new waiver system has occurred since the Ministry of Finance issued a press release on November 15. It cannot make sense to suspend the ability of the Minister of Finance to address taxation inequities whilst leaving the same “burdensome, inequitable and anti-business taxation structure” in place.

All this is likely to do is make the situation business faces more “bureaucratic” and “uncertain” than it already is. Ironically, the areas responsible for the increase in jobs in the third quarter — wholesale/retail industry and transport — are amongst those likely to be most badly affected over the course of the Christmas and tourism winter season, which cannot be what our policymakers want.