Pacific Update 2016 Inclusive Growth for Enhanced Resilience 19 th July 2016 ICT Centre USP Suva Sunil Kumar, School of Economics, University of the South Pacific 1 Labour Market Constraints and Challenges in Fiji
Pacific Update 2016 Inclusive Growth for Enhanced Resilience
19th July 2016
ICT Centre USP
Suva
Sunil Kumar, School of Economics, University of the South Pacific
1
Labour Market Constraints and
Challenges in Fiji
Outline of Presentation
1. Introduction: Fundamental Problems of the Fiji Economy
2. Fiji’s Labour Market Overview
3. Wage Rates and Labour Laws
4. Migration and Sector Constraints
5. Some Policy Suggestions and Concluding Remarks
2
Introduction1) Growth Sectors – Low Growth Rates
2) Employment and Productivity
3) Some broad issues that need attention
3
Sectors Fiji is Likely to rely on for sustainable development:
1) Tourism Sector
2) Construction Sector
3) Financial Services
4) Manufacturing
5) Trade Services
6) Other Services (Food Services; Mechanical Services: Repairs)
7) Technology and Communication Services
8) Health services
9) Education Service
10)Business Services
There are huge stories to tell in each of these.
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013
Figure 4: GDP Growth Trend 1971-1913
Source: World Bank Database (Accessed March 2015)
Moving Average for Fiji’s Growth Rates
4
Growth Trends
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
2008 2009 2010 2011 2012 2013
Agri Manuf Cons W/R&RT Trans&S Accom&F
I&Com F&I Rest PAdmin&Def Edu
Source: Fiji Bureau of Statistics, Key Economic Statistics, March 2015.
Figure 6: Structure of the Fijian Economy (2007-2013)
Proportion of Economy (Percent)
Manuf
W/R&RT
F&I
Agri
Trans&S
Is Economic Transformation possible with this sort of
GDP growth trend
5
Structure and Transformation Pattern
6
Employment by major Industry Groups FIBOS 2015
Human Resource Development Needs Serious Attention
7
Fiji’s Labour Market Overview
1) USP – Mostly White Collar Professional
2) FNU – (Former FIT – now mostly white collar professionals)
3) University of Fiji – Mostly white Collar – Accounting/economics and
Medicine; Law
4) Sangam Nursing School
5) Private Training Schools – Mostly Computer Services
Institutions and their Output:
Huge gap exists in technical training.
Deficits Exist in the Following Areas:
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1) Mechanical Technicians – Auto Mechanics
2) Construction – Carpentry (Painters; Block layers; Plastering etc.);
3) Plumbing; Electricians; Refrigeration
4) Joinery; fitting; Machine operators
5) Mechanical Equipment Operators (grader drivers, delivery drivers, forklift
drivers, mixer operators etc.)
6) Surveyors – land and property
Technical Areas
Accountants (Office Assistants) – who are Qualified to do the FRCA; FNPF and
Labour Law requirements (Tax calculations; FNPF calculations; Wages)
These requirements place a huge demand on the Businesses,
particularly small businesses. Virtually every small business
has to employ at least one person to engage in fulfilling these
requirements. Small businesses cannot cope, only the big
ones can.
1) Lack of skills and experience;
2) Lack of skill in higher end IT, Communication Technology and
managerial skills for small and medium enterprises;
3) Labour Shortage in Rural Areas also which lads to declining
stock of farmers;
4) Aging Farmers is a serious concern.
Other Problems relating to Labour Shortage:
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Lack of Experience and Mis-match of
Labour Skill
10
Labour Shortage could be a Long-term (or
Permanent) Shock unless immediate steps are
taken to address the problems.
Labour Market constraint is the key problem in attaining
higher productivity.
Fiji is no longer a low-wage, middle-income economy that
can attract foreign investments on the grounds of low cost
production.
11
Wages are relatively high for low productivity due to
lack of skills.
12
13
Mean Wage
Rates across
Occupations
FIBOS 2015
14
Mean Salaries
across
professions
FIBOS 2015
There are two key problems to address :
1) Low net population growth (0.4%) largely due to low birth rates
and migration;
2) Lack of appropriate training (Fiji needs a TAFE Model Institutions)
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
I-Taukei Indo-Fijian
Others Total
Figure 11: Population Growth Rates
Source: FIBOS (2015) Key Economic Statistics, March 2015.
15
Population Growth
Unemployment in Fiji
1612,000 Graduates are unemployed
Source: NEC (2015) National Employment Centre, Database, Government Building, Suva
Total Registration by Qualification as at 30th June
2015
17
18
Government Statement on Labour Reforms
Thank you
19
Migration and Labour Mobility:Migration must be discouraged – Long-term
policy prescription are needed.
NZ-Australia labour mobility policies may not
auger well for Fiji. May be ok for other PICs but
not for Fiji
Policies for Reforms:Appropriate Education and Training Policies are
needed