Editorial | Private sector and growth

Maybe they are addressing the question quietly in the background.

However, the Private Sector Organisation of Jamaica (PSOJ) should clearly signal its philosophical position, not only on the Government’s declared pivot to growth, but an implicit acknowledgement, if not full embrace, of the need for something resembling an old-fashioned industrial policy. Which, of course, implies a larger role for the State in the economy, as the government works with the private sector and other key partners in fashioning a national consensus of how the economy should function and the mechanics required for it to work.

Put another way, is the PSOJ, the island’s leading private sector body, as was suggested by businessman Christopher Zacca, willing, not only to be passive partner, assume, with conviction, leadership of a new growth strategy alliance, when this process may not be in favour in some global centres of power? That implies something more fundamental than an oversight group to track the government’s implementation of a suite of promised policies.

Clearly, working with multiple institutions in the national interest isn’t a heavy lift for the PSOJ. In the past, it has helped the government, across administrations, to ensure fiscal discipline and put its macroeconomic house in order.

Except that in recent times, including in the current debate on growth strategy, there has been no indication from the private sector on whether it believes that something more fundamental needs to happen, in a deeply coordinated fashion, to induce robust and sustainable growth.

This newspaper believes there is. Which, as we have made clear before, is not an advocacy for the fiscal looseness that characterised the Jamaica of the past, with its mini booms and busts and mostly long periods of stagnation.

UNASSAILABLE

While it is unassailable that macroeconomic stability is sine qua non for sustainable growth, the argument is equally unimpeachable that stability is not, of itself, a sufficient condition to achieve GDP expansion at a sufficiently high level, on a sustained basis, to transform Jamaica from a low-wage, low-technology, low value-added economy.

Indeed, critics who insist on hewing tightly to the entrenched economic orthodoxy need only consider Jamaica’s economic data of recent years and, critically, the recent observations of the island’s minister for investment, industry and commerce, Aubyn Hill.

Over the past dozen years Jamaica – having run large primary surpluses, which allowed it to accelerate the payment of debt, but limited its capacity to spend on infrastructure and social services – has significantly reduced the debt as a proportion of national output. It fell from nearly 140 per cent of GDP, to 72.2 per cent in 2023. It will reach the targeted ratio of 60 per cent in 2026/27. Additionally, last year the island recorded a positive current account balance of nearly one per cent of GDP, from a negative 13 per cent at the start of the reform efforts.

One upside in the economy is that the official unemployment rate is now at a historic low of 4.2 per cent.

Yet, the island has struggled to achieve significant economic growth, hovering at around two per cent per annum, except for the early post-COVID-19 years when it recovered the ground lost during the pandemic. Indeed, growth is projected, at best, to be flat this year, but most likely negative.

Further, labour productivity has maintained a near four-decade trend of decline of around one per cent per annum. Total factor productivity has similarly fallen.

It is against that backdrop that The Gleaner welcomed Mr Hill’s recent declaration in a Senate speech that “Jamaica must now pivot to and focus on achieving an increasingly strong and sustained economic growth performance”.

OFT-REPEATED SENTIMENT

In that he echoed an oft-repeated sentiment that this newspaper, and others, even as we have made clear that a growth strategy doesn’t, and mustn’t, imply an abandonment of prudent fiscal policies.

Minister Hill, pointing to the fact that the island hasn’t recorded a trade surplus in over six decades (imports last year of US$7.59 billion was nearly five times exports), suggested export-led growth should be a critical part of Jamaica’s new mission.

What he didn’t do, however, was offer a strategic pathway towards robust and sustainable growth, apart from highlighting some sectors that may be ripe for exploitation.

Since then Prime Minister Andrew Holness has sketched the broad outlines of a programme, which among other things, will provide incentives to the private sector and operational reforms of the government bureaucracy.

An oversight group will monitor the programme’s implementation. It is not absolutely clear what will be this group’s role in the programme’s ultimate design.

In a speech last month at his induction to the PSOJ’s Hall of Fame, Mr Zacca, CEO of the financial services conglomerate Sagicor Jamaica, called for a partnership of the government, the political opposition and civil society to fashion a consensus on the way forward. He suggested the PSOJ might assume leadership of the process.

“This coalition must have a respected and influential voice at the decision-making table, ensuring that the hard choices we need to make are implemented for the benefit of all,” Mr Zacca said.

However, whether the PSOJ, or whoever else, will have a specific role in the proposed oversight group is not known. This question and the terms of reference of the oversight group should be a matter of urgent public discussion, in which the PSOJ must be robustly engaged.

With general elections imminent, less than a year away, the PSOJ might be wary to act in this way, fearing that the matter might become victim of a partisan debate.

We disagree.

It is precisely the time to lock the political parties into a national growth strategy so that whichever one forms the next government has a clear template that isn’t the product of populist rhetoric from which to work.