While Barbadians were focused on the finals of the ICC Men’s T20 World Cup, it was reported in the media that a tranche of BDS$56million was approved by the International Monetary Fund to be drawn down by the Government. This latest disbursement equates to BDS$374million accessed to date from the Extended Fund Facility and Resilience & Sustainability Facility of the IMF.
What was noticeable from this report was the stellar performance of the local economy as proffered in the Fund’s recent review. This performance is supported by several local economists and institutions, who opine that the economy has sustained consistent growth during the post COVID-19 period. Noteworthy was the realisation that the primary surplus for the prior year was achieved and a target of 4% is projected for fiscal year 2024/25.
Understandably, the question on the lips of many is, where is this growth being experienced? Already, micro, and small firms are indicating unprecedented challenges in growing their markets and earning revenue since consumers have not returned to pre-pandemic levels of spending.
Of particular concern to Business Basics is the social development trajectory and the indications for business and the wider economy.
Unbeknownst to most, Barbados has descended in its Human Development Index (HDI) ranking, recorded by the United Nations. Ten to 15 years ago the country boasted of being number one on the HDI. That is not the case today, and as expected there is little fanfare about the slide in the ranking. In 2021, Barbados ranked below countries like the Bahamas, Trinidad and Tobago, and Grenada in the Caribbean Community.
What many do not want to discuss is the level of property in Barbados, and its lived reality for many. While policymakers will reference the lack of credible research to produce the numbers, the glaring reality of this in everyday experience cannot be refuted.
Poverty in Barbados has been experiencing a rise since 1996. According to the Borgen Project, household poverty rates increased from 8.7 percent to 15 percent, and individual poverty rates increased from 13.9 percent to 19.3 percent between 1996 and 2016.
A UNICEF report highlights that poverty rates increased for all age groups between 2010 and 2016. The report indicated that in 2016, 32% of young people in Barbados were living in poverty, which is higher than the poverty rate for adults aged 25+ years (21%). The ILO Social Protection Platform notes that poverty levels have been on the rise since 2010, with one in four persons living in poverty.
All these reports agree on one thing – poverty has been worsening in Barbados for some time with significant increases in poverty among young people and other vulnerable groups. The most recent data available is from 2012, which showed that 2.5% of the population, or approximately 7,000 people, lived in multidimensional poverty. The intensity of deprivations in Barbados was 34.2%, indicating a significant lack in several areas such as health, education, and standard of living.
Understandably, current data is needed to quantify and qualify the situation to inform the policy and programmatic solutions needed to reverse this decline.
In 2018, the Barbados Economic Recovery and Transformation (BERT) Plan aimed to address the issue. There is therefore some contradiction if we are experiencing a worsening of social conditions yet a burgeoning economy. One former prime minister was noted to have said “it’s not just an economy, it’s a society”.
Some argue that the decline in Barbados' social development index ranking is also linked to the socio-economic dislocation caused by the COVID-19 pandemic, which exacerbated existing challenges such as poverty and homelessness. The government's efforts to address these issues, include initiatives like the One Family Programme, aimed to alleviate the difficulties faced by many Barbadian families.
Due to the symbiotic relationship between society and the economy, negative implications are there for business activity and real economic growth. If not adequately addressed, this social development slide threatens the gains achieved such as an educated workforce, political stability, and quality of life. Businesses are already challenged with a labour market that is not productive, with poor cognitive skills and a decline due to a brain drain. An increase in crime threatens the lives and livelihoods of all and can erode the quality standard of living known to Barbadians.
A recent speech by George Reid titled "A Practical Approach to Social and Economic Transformation in Barbados," opined some salient points worthy of analysis.
A critique of the development model suggests:
- Focus on GDP growth doesn't translate to shared prosperity: Barbados' economic growth over the past 40 years has not benefited all Barbadians. Inequality remains high, with the working class and middle class struggling.
- An over-reliance on tourism and offshore finance: The economy's dependence on tourism and offshore financial services makes it vulnerable to external shocks.
- Insufficient investment in social programmes: The social safety net is not strong enough to address poverty, especially for vulnerable groups like the elderly and single mothers.
An alternative development approach includes:
- Focus on human capital development: Investment in education and training to create a skilled workforce and boost productivity.
- Support for domestic industries: Government should help domestic industries, like manufacturing and agriculture, become more competitive.
- Social inclusion: Strategies to reduce poverty and inequality should involve targeted social programmes, fairer distribution of income, and ensuring everyone has access to opportunities.
- Sustainable development: Integrate environmental protection into development plans to ensure long-term benefits.
