A major shortcoming of policy making in Barbados, and across the Caribbean for that matter, is a tendency by Government bureaucrats and the political directorate to overlook the critical factor of human behaviour.
Indeed every government pursues a policy agenda. However, success in terms of achieving strategic objectives hinges largely on securing specific types of responses from the general populace. A critical question, therefore, which should be foremost on the minds of policymakers, is: “What must we do to achieve the desired response?”
In our case, the issue of higher productivity readily comes to mind. We have been told time and time again in recent years by various Government spokespersons that higher productivity is critical to the future, especially in relation to boosting the global competitiveness of our economy and achieving sustainable growth.
In support of the aforementioned objective, 2017 has been officially designated by the National Productivity Council as the Year of Productivity with the aim of sensitizing Barbadians on the need to be more productive.
To give the issue high visibility, Prime Minister Freundel Stuart was asked to serve in the role of national productivity champion.
Ironically, news came last week that Government’s efforts to boost productivity were being undermined by Government itself through pursuit of a policy of high taxation.
This was a major finding of a study commissioned by the National Productivity Council itself and conducted between April and July of last year.
The survey, conducted by Dwayne Devonish, senior lecturer of management science at the University of the West Indies, Cave Hill, involved 150 local private sector organizations, drawn from seven sectors: accommodation and restaurants; construction; manufacturing; wholesale and retail; transportation; financial services and other services.
“Private sector managers admitted that the general business environment within the country is still not conducive to the promotion of productivity at a national level due [to] high levels of taxation,” the study found.
“Low investor and corporate confidence, inefficiencies in certain Government services and perceived lack of support from Government in the forms of incentives and other forms of technical support” were identified as other factors.
Following last month’s presentation of the 2017 Financial Statement and Budgetary Proposals which imposed an even higher level of taxation, we can very well imagine what the response would be if the survey were conducted today.
In the circumstances, it is debatable if the yearlong public sensitization effort aimed at boosting productivity will make a significant difference. Clearly, Government needs to do more.
Human nature is such that the actions of persons are generally motivated and driven by the pursuit of self-interest. The all-important “what’s in it for me?” question arises.
Indeed, the free market model of the capitalist economy which Barbados has adopted to some extent is premised on the pursuit of self-interest with an understanding that such benefits the common good.
In an environment of high taxation, workers, for example, would be naturally inclined to be less productive because they do not see any real benefits at the personal level for going beyond what duty requires.
There is also the sentiment among many Barbadians that they are working more for Government than themselves, because of how much they have to pay in both direct and indirect taxes.
Which probably explains why many Barbadians reportedly avoid working overtime while others currently work only for a specific period in a year to avoid going into a high tax bracket. It is interesting that in the survey, when respondents were asked to make suggestions on how best Government could assist the private sector in improving workplace productivity, respondents expected it “to play the role of chief enabler or facilitator”.
In his 1994 bestseller The Age of Diminished Expectations, Paul Krugman, the Nobel Prize-winning American economist, underscored the importance of productivity.
“Productivity isn’t everything but in the long run, it is almost everything,” he argued.
“A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.”
From all indications, Barbados has not achieved the kind of productivity gains that we would have liked, based on current efforts. And it is clear that success on this issue will require much more than just appealing to the private sector and workers. The critical factor of “self interest” must be taken into consideration. Government decision-makers, therefore, ought to reflect on the findings of the productivity survey. It clearly suggests a case exists for revisiting the current approach.