High unemployment and rising inflation could trigger spike in misery index

A university professor of management studies and economics is warning of a possible resurgence in the island’s “misery index” this year.

Pro-Vice-Chancellor for Undergraduate Studies at the University of the West Indies (UWI) Cave Hill Campus Professor Justin Robinson fears that unless unemployment continues to fall this year, the misery index may spike again to 2020 levels of 20.8 per cent or worse.

He explained that the misery index, which was popularised in the 1970s with the advent of the simultaneous combination of high inflation and high unemployment, is supposed to capture the degree of economic distress felt by the average person due to the risk of these two factors.

In a scholarly work entitled The Misery Index in Barbados: A Brief Historical Overview and made available to Barbados TODAY, the Pro Vice-Chancellor noted that the index is calculated by adding the inflation rate to the unemployment rate with a higher value indicating greater economic misery.

“At the end of 2021, the misery index had fallen below 15.6 per cent, slightly below the historical average, largely due to falling unemployment,” Professor Robinson pointed out. “However, unless unemployment continues to fall in 2022, with inflation rising and possibly rising to more than 6.0 per cent, the misery index may rise back to 2020 levels, or higher in 2022,” he cautioned.

The UWI educator contended that while the ‘economic misery’ from unemployment might be greater than the misery from a higher cost of living, the misery from joblessness tends to be contained to the unemployed and their personal circles, while the impact from an inflationary surge is far more widespread.

“Therefore, given that any surge in the misery index in 2022 will likely come from inflation, one can expect the collective howl from economic misery to be louder than usual even though the overall misery index may not be significantly higher than the historical average,” according to the Robinson.
emmanueljoseph@barbadostoday.bb