Unemployment Rates Hovers around Record 30% for Caribbean Countries
In May this year, Bahamian Prime Minister Dr. Hubert Minnis, speaking in a Mother’s Day media message, indicated that based on the number of applications for unemployment benefits his country’s unemployment rate would likely “exceed an unprecedented and extraordinary 30 percent”. Two months later, in July, a United Nations Development Program (UNDP) Country Note on the Impact of COVID 19 reports that the Prime Minister’s prediction was on target. The report stated: “Current levels of unemployment can be estimated from the unemployment benefits paid to workers by the government. …With the current estimate of workers laid off, the level of unemployment rises from 9.8% to 25%, but if informal workers are considered…the potential unemployment rate could reach 28%, which is close to the 30% projection by the Prime Minister.”
More recently in early August, the Barbados Government announced that during “the period March 23, 2020 to July 31, 2020, the National Insurance … paid $70.6 million to 28,950 unemployment benefit claims.” That figure represented an unemployment rate of approximately 19% of the country’s labour force of 155,000, according to World Bank data. It is, however, noteworthy that the announcement also underscored the fact that those not benefiting from the current program include individuals “who had not worked for 52 weeks”. Considering that Barbados’ 2019 unemployment statistic indicated that roughly 16,000 persons (10.3%) were unemployed, it is not difficult to conclude—as Barbadian Prime Minister Mia Mottley had done in a May 2020 media interview—that the combined figures of the newly and previously unemployed suggests an unemployment rate closer to 29%.
Fundamentally, these cases are not unique, as the tourism-dependent Caribbean economies all share similar surges, and this includes countries like Belize. In an October 9th, 2020, press release, the Government of Belize (GOB) announced that it had approved 42,575 applications under the unemployment relief program. With Belize’s fast-growing labour force of close to 200,000, those approved represent an approximate 21% unemployment rate.
However, similar to the Barbados relief program, Belize’s current Unemployment Relief Program does not include the “long-term unemployed” who were not direct victims of the pandemic-induced recession. The 2019 statistics reported by the World Bank places Belize’s unemployment rate at about 6.4%, while the Statistical Institute of Belize (SIB)’s September 2019 data reports a rate of 10.4%. Depending on the choice of data source, Belize’s unemployment rate under the Great Lockdown Recession brought about due to the Coronavirus Disease (2019) (COVID 19) is estimated between 27% and 31%.
The sizeable jump in unemployment figures in the three economies is linked to the jurisdictions’ notable reliance on the tourism sector, arguably the hardest hit industry during the COVID-19 crisis. In terms of total contribution to Gross Domestic Product (GDP), tourism contributes a total (direct and indirect) of 48%, 41%, and 45% to the Bahamian, Barbadian and Belizean economies, respectively. The sector is also responsible for a substantially large proportion of jobs, as it directly or indirectly accounts for 56% of the jobs in The Bahamas, more than 40% in Barbados, and approximately 40% for Belize.
Other Caribbean countries are equally likely to be faced with sharp unemployment shocks due to their tourism-dependent status. These include countries such as Aruba and St. Lucia that also appear on the 2018 World Bank’s top-twenty list for countries reliant on the tourism sector.
For Latin America and the Caribbean (LAC) as a whole, the International Labour Organization (ILO) anticipates an increase in unemployment by as much as five percentage points. In July, the ILO wrote: “The Outlook highlights that the most recent World Bank forecast estimates a drop in economic growth of -7.2 per cent, which would take the unemployment rate up to 12.3 per cent, whereas if the latest International Monetary Fund (IMF) data are considered, a contraction from -9.4 per cent unemployment would reach 13 per cent”.