T&T’s retrenchment figures increased by 80 per cent last year, when compared to 2019, data from the Central Bank has shown.
But the reality is the situation can be much worse than that.
“Data on retrenchment notices filed at the Ministry of Labour showed that 2,744 persons were retrenched during 2020, much higher than the 1,528 persons retrenched during the previous year,” the Central Bank stated in its annual economic survey for 2020.
“In 2020, most of the retrenchments occurred in the finance, insurance, and real estate and other business services (879 persons), manufacturing (562 persons), and distribution, restaurants and hotels (527 persons) industries,” the Central Bank stated.
According to the Central Bank “retrenchment” refers to the termination of employment of a worker at the initiative of an employer for the reason of redundancy according to the Retrenchment and Severance Benefits Act (No 32 of 1985).
The Act states that, “where an employer proposes to terminate the services of five or more workers for the reason of redundancy, he shall give formal notice of termination in writing to each involved worker, to the recognised majority union and the Minister of Labour.”
If fewer than five employees are terminated, employers are not obligated to report to the ministry.
“This indicator for job separation is, therefore, limited insofar as it only includes registered retrenchment notices, and does not capture other forms of job separation, especially the non-renewal of contracts of temporary or short-term workers.
Furthermore, reports of job losses at establishments cannot be equated with an equal rise in the unemployment rate,” the Central Bank stated.
“Data on the labour market are not collected from firms and other establishments, but households via the Continuous Sample Survey of Population (CSSP). Moreover, persons who have been retrenched or who have lost their jobs otherwise (expired contract, retired, etc) and have not sought re-employment during the reference period are not classified as unemployed,” it stated.
Official unemployment statistics from the Central Statistical Office (CSO) were only available up to the second quarter of 2019, the Central Bank stated.
“Supplemental data for 2020 suggest increased joblessness and labour market slack as a result of the pandemic. Businesses adjusted to the economic fallout of the virus by employing a variety of strategies. Some managed their wage bill through temporary layoffs, reduced working hours and/or salary cuts. In other cases, headcount was decreased via retrenchments,” it stated.
The amount of “slack” in the economy is a measure of the quantity of unemployed resources. It represents the quantity of labour and capital that could be employed productively, but instead, remains idle.
Another supplemental indicator monitored by the Central Bank is the number of job advertisements published in the print media.
This indicator of labour demand), declined by 41.0 per cent during 2020,” the Central Bank stated.
“Labour market slack was also evident by fewer man-hours worked during the first three quarters of 2020. The Index of Hours Worked, inclusive of both the energy and non-energy sectors, declined by 2.5 per cent year-on-year over the period,” it stated.
The Central Bank stated that “containment measures” which were implemented to slow the spread of the virus created “unparalleled labour market disruptions across industries.”
“From the onset of the first confirmed positive case of COVID-19 on March 12, 2020, the Government quickly implemented measures to curb the spread of the virus.
“Some of these measures included the closure of the country’s borders, restrictions on travel to Tobago, time restrictions on essential business activity and the shutdown of non-essential businesses, ceased in-house dining at bars and restaurants, the closure of places of leisure (beaches, waterparks, casinos and cinemas), the closure of all institutions of learning, only essential public and private sector employees were required to be in office, and reduced public transportation capacity,” it stated.
“The energy, manufacturing, construction, transportation and other business services (hospitality, entertainment, and tourism) sectors were hardest hit by these public health restrictions,” the Central Bank stated.
The Central Bank said several support measures were implemented by the Government to assist businesses and individuals affected by the COVID-19 pandemic including the introduction of the Salary Relief Grant and the Income Support Grant.
According to the 2021 Budget Statement, 81,179 Salary Relief and Income Support Grants were paid to 33,813 individuals who had lost their jobs or had their incomes reduced due to the COVID-19 restrictions.
During 2020, labour productivity in the non-energy sector improved by 8.5 per cent, reflecting higher production levels alongside fewer man-hours worked, the Central Bank stated.
“Domestic production in the non-energy sector increased by 7.5 per cent in 2020, while the Index of Hours Worked fell by 2.3 per cent. The largest increases in domestic production occurred in the food processing (28.0 per cent) and assembly-type and related products (23.9 per cent) industries.
“These increases were tempered by lower production in the drink and tobacco (19.8 per cent), printing and publishing (11.1 per cent), and electricity generation (4.0 per cent) industries,” it stated.
“Conversely, productivity in the energy sector declined, driven mainly by a drop in domestic production in both the upstream and downstream industries,” it stated.
During 2020, the Index of Domestic Production fell by 11.1 per cent, 16.2 per cent, and 8.5 per cent in the petrochemicals, natural gas refining, and exploration and production of oil and natural gas industries, respectively.
Meanwhile, man-hours worked in the petrochemicals and exploration and production of oil and natural gas industries fell by 4.9 per cent and 4.7 per cent, respectively.
Man-hours worked remained the same, at the previous year’s level, in the natural gas refining sector.
The Central Bank stated that restrictions on business activity contributed to considerable “slack” in the domestic labour market and kept inflation subdued in 2020.
“Labour force adjustments resulted in retrenchments, temporary layoffs or reductions in working hours. Labour market slack was also reflected in fewer man-hours worked during the first three quarters of 2020. Amidst muted economic activity, the Central Statistical Office’s Index of Retail Prices shows that headline inflation slowed to an average of 0.6 per cent in 2020, down from 1.0 per cent in 2019,” the Central Bank stated.
“While core inflation slowed to average 0.1 per cent during the calendar year 2020, food inflation accelerated mainly as a result of supply challenges associated with COVID-19 situations,” it stated.