The substantial increase in public sector salaries last year has forced businesses island-wide to hike their salaries to retain talent, according to President of the Jamaica Employers’ Federation (JEF) Wayne Chen.
At the same time, Chen has suggested that educational institutions are not producing the number and type of workers needed for the local market amid the labour shortage.
Chen stated that in the fiscal year 2023/24, more than $100 billion was paid out compared to the previous year, with over 1,000 public sector workers receiving pay increases averaging $1 million each, impacting the decision-making of businesses throughout the country.
He made his comments during the Jamaica Chamber of Commerce (JCC) fourth Quarter Business & Consumer Confidence Indices Webinar, titled “Bears versus Bulls: Preparing for What’s Ahead,” on January 16,
“We in the private sector saw the push it (the public sector salary increases) had on the private sector to retain talent, especially in an environment of record unemployment of 4.5 per cent, the lowest ever, and with the highest number of Jamaicans employed in the formal sector ever”, Chen said.
“Recognising that there’s an upward push for wages, the retention of talented and experienced skilled workers means that you have to pay more”, he added.
“The massive increase in public sector wages has made every business leader go back to the drawing board and ask what technology can be invested and what training can be invested,” Chen noted.
While expressing concern about the output of skilled workers by the country’s educational institutions, Chen conveyed dissatisfaction about the percentage of workers without formal skills, contributing to the country’s low levels of productivity.
“The fact is there is a mismatch between the skills that the market needs now and the skills that are coming out of our institutions of formal education”, the JEF president said. “The other factor is that the Jamaican workforce has a 60 per cent component with no certifiable skill. Jamaica has chronically suffered from low productivity, one of the lowest in the hemisphere”.
Chen noted that while the debate about the need to import skilled labour continues, it would not be easy to import workers.
“Nobody wants to import skills if those skills are available locally”, Chen said. “But the fact that the cry has increased for the opening up for the invitation of skilled workers, bearing in mind that without any change in legislation, we can bring in workers from the rest of the CSME (CARICOM Single Market and Economy) speaks to one of the impediments to growth”.
Meanwhile, Don Anderson, Managing Director of Market Research Services Limited, which conducts the quarterly surveys, said the most recent survey indicated that businesses would be investing more in human resources because they recognise that that is one of the shortcomings to growth.
Anderson said the issue could be examined in further detail in future surveys.