Are Jamaicans getting lazier? Unemployment is at a record low, but the island’s labour productivity has gone down. What’s going on? 

According to the Planning Institute of Jamaica’s 2022 Economic and Social Survey, Jamaica’s labour productivity decreased at an average rate of 0.8%, annually, from 2018 to 2022.

Labour productivity is defined as the quantity of goods and services produced by each working person. 

Now, some of you might be confused about why productivity declined when one of Jamaica’s biggest accomplishments in recent years is coming out of COVID with a record-low unemployment rate of 4.5%.

Low unemployment means more people are working, so productivity should be up, right?

Well, according to the report, the decline was mainly due to the employed labour force growing at a higher rate annually than real GDP.

GDP is the total value of goods and services produced by a country in a year. So, essentially, while more people were working, they weren’t producing as much.

But why? To understand this, you have to keep in mind that this PIOJ report took an average of productivity levels from 2018 to 2020. And what was happening right in the middle of that timeframe? Exactly, the pandemic.

According to the report, during the five-year period, the employed labour force grew at an average rate of 2% while GDP grew at a rate of 0.5%. So while more people started working, the value of what they produced barely increased.

Labour productivity the most in 2020 the peak of COVID.  It dropped by 5%. 

Remember COVID shut down whole industries and hundreds of people lost their jobs, plus the lockdowns and other restrictions would have severely impacted economic growth. 

And let’s not forget inflation peaked at almost 12% in 2022, so that would have impacted the value of goods and services- GDP. All of that combined is what led to the dip in productivity.

But it’s not all doom and gloom.  Some things are already starting to turn around. 

According to the report, in 2022, the economy grew by 5.2% while the employed labour force grew by 4.8%; which translates to increased productivity.

The PIOJ noted that the reopening of the economy, lifting of restrictions etc will continue to boost productivity. 

The unemployment rate is still low, and we’ve talked about the boom in multiple industries, which means more jobs. Inflation is also finally falling, which is good news for GDP. 

And that’s the bottom line.