Contributing writer Dickson Igwe
Part one of a story looking at the Virgin Islands labor market in light of recent assertions by political leaders and the realities of the world economy
In Caribbean news, an online story of May 5, 2013, in the Virgin Islands, described the assertions of a local politician and cabinet minister who lamented at the many career challenges faced by Virgin Islanders who have qualified abroad and returned home.
The politician described how Virgin Islanders are facing challenges finding the right jobs when returning to their homeland. These challenges were further exacerbated by the difficulty in finding a decent living wage in the country, especially a wage comparable with that found in the USA or UK for the same type of work. This was a very interesting story that had this Observer thinking.
On the other hand, a leading Virgin Islands opposition figure, and former cabinet minister, just before the minister made these remarks, expressed concern that expatriates were leaving the country owing to a slow economy: that this had implications on various parts of the economy. That politician highlighted the slow property rental market as a feature of expatriates returning to their various homelands.
Now, expatriates’ leaving the Virgin Islands for lack of work, if that is so, alludes to the present state of the job market, just as with the Virgin Islander who returns home and finds it difficult to find a job. And both leaders were actually further alluding to two sides of the same economic coin.
In any event, the two politicians were inadvertently theorizing about the local job market. They were describing various aspects of the demand and supply of labor in the Virgin Islands. This is a critical component of the Virgin Islands economy.
What both men were further acknowledging, probably unknowingly, was the fact that it is very seldom in the power of governments to control the national labor dynamic: not unless a government has unlimited cash, as is the case with some Middle Eastern States, or a China that has trillions of dollars in reserve.
The Virgin Islands does not have unlimited cash. And a new negative focus by certain big powers on the offshore financial services offered by certain smaller jurisdictions is not helping economic matters in the country.
Countries with huge cash reserves, those that can create money out of thin air, owing to their economic and geopolitical clout, or states with massive borrowing capability, can reduce unemployment by public spending on colossal projects such as new cities, hydro electric dams, bullet train networks, massive airports and seaports, thousands of miles of highway, and so on; and China is doing just that.
In the USA, post the 2007 Recession, nearly a trillion dollars was spent on economic stimulus to get the economy out of the financial abyss. Today, Quantitative easing by the Federal Reserve is creating liquidity, and promoting lending, by increasing the amount of cash in circulation.
This is being done to generate demand and consumer confidence, during an otherwise anemic economic recovery. In essence these countries throw cash into the economy, and that helps employ hundreds of thousands of their own people, directly or indirectly, even changing the national economic trajectory.
But for fiscally challenged countries, government control and direction of the national labor market is a very difficult affair indeed: it is hugely limited by extrinsic factors. This is made even more difficult by the fact that in the 21st Century, the labor market is clearly global.
Hopeful graduates in a depressed global economy. Photo courtesy www.voice-online.co.uk
The swift movement of assets across borders is not just in cash, machinery, and technology. Today, increasingly, human capital also moves across borders, going to where demand for its services exists, or where there are better job conditions, a better quality of life, and higher living standards.
In the Virgin Islands that may mean more migration into the country by poorer neighbors. On the other hand, it could also mean Virgin Islanders either moving out and into the USA for work, or staying in North America after qualifying or graduating.
And if wages and conditions are better in the USA than at home, then nothing can stop locals and natives from staying in the US after graduation. International labor market dictates, and global economic trends, are more powerful than a single government’s desire to calibrate the internal labor market for political and social purposes. This is even more so for small and vulnerable countries.
For these Lesser Antilles, a new legal framework may have to be drawn up, making it compulsory that those on scholarship return for a certain length of time, to give national service. That will not be very popular.
In financial services, as is the case with tourism, the job market is decided not by Virgin Islands politicians and bureaucrats, but by the state of the world economy, global markets, international investors, and faceless executives in many a foreign capital. Add local financial services managers who look to global markets for direction.
Ultimately, the job of the political establishment is creating the right type of physical and social infrastructure, and an economic model that will allow for a thriving labor market.
To be continued
Dickson Igwe is an education official in the Virgin Islands. He is also a national sea safety instructor. He writes a national column across media and has authored a story book on the Caribbean: 'The Adventures of a West Indian Villager'. Dickson is focused on economics articles, and he believes economics holds the answer to the full economic and social development of the Caribbean. He is of both West African and Caribbean heritage. Dickson is married with one son.
