One in every five workers in Barbados could be jobless soon, says a university professor, as the COVID-19 pandemic continues to rock the local economy.
Assessing current data of best and worst case scenarios, Dr Justin Robinson, Professor of Finance at the University of the West Indies, Cave Hill Campus said unemployment could jump to in excess of 20 per cent, spawned by the number of people who depend, directly and indirectly, on the now decimated tourism sector.
Professor Robinson a former director of the Central Bank of Barbados and a former chairman of the National Insurance Scheme (NIS), expressed particular concern for the self-employed, small and micro business owners, who are likely to face great hardship if the situation is prolonged.
The self-employed, he stressed, may not have access to unemployment benefits provided by the NIS, thus worsening their situations.
As the local tourism sector, which has virtually collapsed, with international travel halted, Professor Robinson said if the impact of COVID-19 lasts until the end of June, about 25 per cent of tourist arrivals could be lost. However, if the blow to the leisure travel business continues until the end of the year, the result could be a staggering 75 per cent reduction in arrivals.
In the United States, more than 10 million workers have applied for unemployment assistance in just two weeks, immediately pushing the once record-low unemployment level there to ten per cent.
The university academic told Barbados TODAY: “The United States’ jobs report and travel restrictions on the United Kingdom, Canada, Europe and Trinidad and Tobago, make it likely that the tourism impact may well last at least up to June. We seem likely to lose at least 75 per cent of arrivals . . . therefore we can expect to lose at least 6.4 per cent of GDP. GDP losses of this scale can translate into significant unemployment in Barbados likely in excess of 20 per cent.”
More than 40,000 Barbadians are employed directly and indirectly in the tourism sector and following the outbreak of the global pandemic, most of Barbados’ hotels and independent restaurants have closed their doors indefinitely, as operators monitor the spread of the highly infectious respiratory disease.
With the main foreign exchange earner in distress, Professor Robinson noted: “The pandemic will impact negatively on the Government’s ability to meet the targets in the International Monetary Fund (IMF) BERT (Barbados Economic Recovery & Transformation) programme as designed.
“The slowdown in the economy is going to sharply reduce Government’s revenues, and expenditures may have to increase in certain areas. The government has already been forced to engage in additional borrowing.”
However, the management specialist said, the unique nature of the pandemic “makes it likely” that the Government can re-negotiate terms with the IMF. “The inability of the Government to meet [any] targets is not due to lack of commitment or incompetence, the inability arises from a unique external shock.”
Professor Robinson, who is also Dean of the Faculty of Social Sciences and Executive Director of the Cave Hill School of Business, expressed worry for the island’s small business sector.
“Small businesses and self-employed persons are especially vulnerable to these types of shocks. Firstly, they may not have the cash reserves or a larger parent company to help sustain them during a sustained period of low to no revenues and self-employed persons may not be able to access unemployment benefits,” he pointed out.
He said Government will have to be “creative” in finding ways to provide assistance to these groups or many will “go under”.
Professor Robinson said in the US, self-employed persons are being allowed to file for unemployment benefits while the British government is paying around 75 per cent of employees’ salaries.