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:

8

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:

9

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