Thousands of Barbadians are attending universities and other tertiary institutions in droves and leaving them fully certified, but their inadequate skill on the job is hurting small and large firms in Barbados.
In a Barbados Enterprise Survey Country Bulletin released by Compete Caribbean, a regional private sector development programme, local businesses questioned singled out the island’s “inadequately educated workforce”, access to finance, and electricity challenges as their biggest headaches.
While small firms surveyed said their biggest concern of the three was electricity, and their medium sized counterparts said access to finance “takes precedence”, the larger firms with the bigger work forces complained that “the skills gap is the biggest concern”.
On the subject of the “inadequately educated workforce”, the bulletin said: “Barbados boasts of a tertiary school enrollment of over 60 per cent of gross enrollment, almost double the non-OECD average (2011), and an adult literacy rate of 91.2 per cent (2010). Despite this, the firms interviewed in Barbados identified an inadequately educated workforce as one of their leading constraints.”
“Note that in this instance the term inadequately educated workforce pertains to the identification of the labour skill level as a major constraint and not the number of educational degrees or the quality of education provided.
“On average, 33.1 per cent of the firms interviewed in Barbados identified the skills gap as one of their major developmental constraints. In particular, 46 per cent of large firms stated that this constraint was major. Of these firms, 17.7 per cent believe that the skills gap is the most major constraint to their growth,” it added.
Sourcing funding for their business was another main issue of concern for local businesses. In fact, across the board it was the top constraint mentioned, with more than a quarter of those surveyed saying that “generally, access to finance is the top hindrance to firm development in the country”.
“Barbadian firms indicated that, on average, 51 per cent of all loans require collateral. However, medium-sized and large firms report that 92 per cent of their loans must be collateralised. Small firms only report that 32 per cent of their loans must be collateralised, but this may be due to the observation that approximately 74 per cent of small firms indicated that they did not need a loan in the last fiscal year,” the report stated.
“Firms that have access to credit from commercial banks are faced with collateral requirements of approximately 138.1 per cent, compared with 197.3 per cent in Latin America and the Caribbean. Collateral requirements in Barbados increase with firm size (small 127.6 per cent, medium-sized 144 per cent and large 160.8 per cent), while manufacturing firms must hold 21.4 per cent more collateral than services firms (manufacturing 157.1 per cent, services 135.7 per cent).
“However, overall, Barbados has the lowest average level of collateral requirements in Latin America and the Caribbean, second only to Brazil (71 per cent).”
Compete Caribbean’s survey, which was conducted for the first time between April and August 2011, said the cost of electricity in Barbados also seemed to be hindering firm development.
“Within Barbados, domestic customers are charged the highest per unit rates for electricity even after adjustments are made to account for a 10 per cent discount on the basic rate due to early payment by residential clients and the exclusion of value added tax for commercial and industrial clients (given that it may be reclaimed by these subgroups). As a result, unlike the case in Dominica, the cost of electricity declines with usage,” the document noted.
“The supply of electricity however, seems to be quite reliable. There is an average of one electrical outage per month which typically lasts about 108 minutes and costs firms 0.1 per cent of annual sales in losses overall. Notably, firms also shore up their electrical supply by using generators. An average of 16.9 per cent of firms in Barbados indicated that they owned or shared a generator that generated about 47.5 per cent of their overall electrical needs.”
Compete Caribbean is funded by the Inter American Development Bank, the United Kingdom Department of International Development and the Canadian International Development Agency. With $80 million in financial resources, it supports projects in 15 Caribbean countries including Barbados. (SC)