The Global Economy and Labour Markets in the Americas with specific reference to Trinidad and Tobago Presented by: Ms. Shanmatee Singh, Director of Research and Planning, Ministry of Labour and Small and Micro Enterprise Development Trinidad and Tobago Workshop on Labour Migration and Labour Market Information Systems Quebec City, Canada February 24, 2009

Outline of Presentation Background – TT Economy and Labour Market Background – TT Economy and Labour Market Impact of global economic decline Impact of global economic decline Measures adopted Measures adopted Role of Trade Unions and Employers Role of Trade Unions and Employers Concluding Remarks Concluding Remarks

The raging waters of the global economy

Background – Republic of Trinidad and Tobago Two most southerly isles of Caribbean archipelago Population = 1.3 million Most industrialized economy in the English-speaking Caribbean Member State of CARICOM and part of the CARICOM Single Market Trinidad – energy- based (oil and gas) Tobago – tourism- based

Background – TT’s Key Economic Indicators Indicator $ / % Notes Real Growth Rate 3.5% (est. 2008)5.5% (2007) 12.6% (2006) 5.4% (2005) Annual GNI per capita TT$96, Inflation Rate 14.45% 30.6% (food price inflation) Year-on-year end (Dec ’07 – Dec ’08) Sector contribution to GDP Petroleum (Oil $ Gas)– 42% Agriculture – 0.4% Man’fg – 8% Services – 49.6% 2007 data

Background – TT’s Key Economic Indicators Indicator%Notes Growth by Sector Petroleum - 1.7% (2007), 0.4% (est. 2008) Agri. – 2.6% (2007), 8.6% (2008) Manf’g – 14.9% (2007), 4.2 % (2008) Services – 6.6% (2007), 4.9% (2008) RevenueEnergy Sector – 58% Non-energy – 43% 2007 data ExportsTT$83m - 80% oil and gasMainly to the U.S. (56.6%) and CARICOM (17.3%) ImportsTT$48mMainly from the U.S. and Brazil FDI 6.8% of GDP Mainly in the energy sector

Background – TT’s Labour Market Indicators rd Qtr 2008 Notes Labour Force 623,700625,300622,300630,700 Male -58% Female- 42% Labour Force Part. Rate (%) Male – 75% Female -52% Unemployment Rate (%) rd quarter 2008 Male – 3.7% Female – 6.2% Youth Unemployment Rate (%) vs Adult Unemp. Rate 16.5 (Adult rate Adult rate Adult rate % Adult rate - 4.7%

Background – TT’s Labour Market

Background – TT’s Labour Market (Employment) Focus on Employment: 2007 % of labour force employed: 95% In which sectors? Services - 83% Manf’g - 9% Petroleum - 4% Agri. - 4%

Background – TT’s Labour Market (Employment cont’d) Focus on Employment: 2007 In which occupations? Mainly service-type jobs eg. elementary occupations and craft work and Technicians and Associate Professionals Status of employment? - Paid Employees – 78% (of which 67% is employed in the private sector) - Own Account Workers – 15%

Background – TT’s Labour Market (Employment cont’d) Focus on Employment Problem of labour shortage: 2008 Category Sector Sem Skilled TechnicalProfessionalTotal Shortage Construction Personal Services Distribution Agriculture Tourism and Hospitality Manufacturing Financial Services Total Percentage of Total41.85%44.9%8.35%4.9%

FACTORS CONTRIBUITING TO GLOBAL ECONOMIC DECLINE Sub-Prime Crisis (epi-centre or root cause) Excessive risk taking by the world’s largest financial institutions Over leveraging (taking risks with borrowed money) greed Disdain for prudential regulations

ASSESSING THE IMPACT OF THE GLOBAL ECONOMIC CRISIS Financial Sector Trade Tourism Remittances Foreign Direct Investment

Impact of Global Decline through Financial Channel Limited impact in the short run since: T&T banks have not invested heavily in sub- prime mortgages Credit expansion of our financial institutions is based on deposit mobilization and only marginally on foreign loans Existing high level of reserves (US$9 Billion in 2008 compared to US$1.4 Billion in 2000)

Impact of Global Decline through trade channel TT’s Economy Energy and tourism-based Closely linked to US economy especially in trade Budgetary adjustments - Cut backs - deficit financing Slowdown in economic growth Reduced confidence in the financial sector Sectoral decline

Impact of Global Decline - Labour Market Note: Lack of up-to-date quantitative data to assess current impact on the labour market (most recent data: 3 rd Quarter 2008) Assessment based largely on qualitative data and expert opinion

Impact of Global Decline – Labour Market Demand for Labour: Derived demand Expected to decline – Highly dependent on exports to foster productive employment and growth. Slow-down in US economy will impact demand for TT. High positive correlation between US and Caribbean countries growth rate

Impact of Global Decline – Labour Market Employment – sectoral changes SectorChange 3 rd Qtr rd Qtr Agriculture 7% Petroleum 11% Manufacturing 2% Services 2%

Impact of Global Decline – Labour Market Retrenchment 2008 Industrial GroupNo. Retrenched Petroleum476 (171 in Dec. ’08) Finance, Insurance, Real Estate and Business Services 297 (203 in August) Food Processors and Drink and Tobacco 118 Transport, Communication and Storage 197

Impact of Global Decline – Labour Market Lay-offs (examples due to global economic decline) ArcelorMittal (steel company) – 120 employees or 15% of its staff

Impact of Global Decline – Labour Market Supply of Labour: - - Increasing labour force - - Problem of labour shortage to continue?? - - Continued focus on training and re- training of workers through a number of Skills Development Programmes

Measures to address labour market challenges Promotion of Decent Work Social dialogue / Social partnership Training and Re-training Focus on productivity Small business development Promotion of rights at work Maintainence of social protection programmes Strengthening of the National Employment Exchanges

Role of Trade Unions and Employers Viewed as an equal partner with Government in promoting decent work to overcome the labour market challenges of the global economic crisis Demonstrate a high level of willingness and commitment to cooperate and dialogue on ways to promote decent work in crisis situation

Conclusion Guidance from the recommendations of the ILO Governing Body (November 2008) Stimulate demand through public and private expenditure and investment while promoting fiscal sustainability Protect the most vulnerable in the labour maket – social protection programmes Support productive, profitable and sustainable enterprises Promote fundamental principles and rights at work