Barbados Country Assessment of Living Conditions 2010

105 Pages·2012·1.1 MB·English

Barbados Country Assessment of
Living Conditions 2010:
Overview Report

Submitted to the Government of Barbados, National
Assessment Team (NAT) and the Caribbean Development
Bank (CDB) on behalf of the Team of Consultants (TOC)

DRAFT- For Discussion

Sir Arthur Lewis Institute of Social and Economic Studies
(SALISES)
University of the West Indies
Cave Hill Campus, Barbados
August 2011
TABLE OF CONTENTS
1. INTRODUCTION .............................................................................................................................. 2
2. MACRO SOCIAL AND ECONOMIC ASSESSMENT ............................................................................... 3
2.1. DEVELOPMENT STRATEGIES AND POLICIES ............................................................................................. 3
2.2. GROWTH AND STRUCTURAL CHANGE ................................................................................................... 5
2.3. MACROECONOMIC ENVIRONMENT ...................................................................................................... 6
2.4. LABOUR MARKET DYNAMICS .............................................................................................................. 7
2.5. SOCIAL SECTOR DEVELOPMENTS ........................................................................................................ 10
2.6. CRIME AND VIOLENCE ..................................................................................................................... 13
2.7. GOVERNANCE ................................................................................................................................ 14
2.8. HABITAT PATTERNS AND THE ENVIRONMENT ....................................................................................... 14
2.9. SUMMARY .................................................................................................................................... 15
3. SURVEY OF LIVING CONDITIONS (SLC) .......................................................................................... 17
3.1. OVERVIEW OF RESEARCH METHODOLOGY ........................................................................................... 18
3.2. RESPONSE RATES AND GEOGRAPHICAL COVERAGE ................................................................................ 21
3.3. POVERTY INDICATORS AND ESTIMATES ............................................................................................... 21
3.4. RESEARCH RESULTS ......................................................................................................................... 24
3.5. RESEARCH SUMMARY ...................................................................................................................... 44
4. PARTICIPATORY POVERTY ASSESSMENT (PPA) ............................................................................. 48
4.1. VULNERABLE HOUSEHOLDS AND COMMUNITIES: FINDINGS .................................................................... 48
4.2. RECOMMENDATIONS ...................................................................................................................... 55
4.3. VULNERABLE GROUPS ..................................................................................................................... 56
4.4. FINDINGS ...................................................................................................................................... 58
4.5. EFFECTS OF POVERTY AND SOCIAL/FAMILIAL EXCLUSION ........................................................................ 69
4.6. RESPONSES ................................................................................................................................... 71
4.7. SOLUTIONS AND RECOMMENDATIONS ................................................................................................ 73
5. INSTITUTIONAL ANALYSIS ............................................................................................................. 75
5.1. RESEARCH OBJECTIVES .................................................................................................................... 75
5.2. RESEARCH METHODOLOGY .............................................................................................................. 75
5.3. INSTITUTIONAL PROFILES ................................................................................................................. 76
5.4. SYNTHESIS ..................................................................................................................................... 96
6. CONCLUSION .............................................................................................................................. 100

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1. Introduction
The Barbados Country Assessment of Living Conditions (CALC) represents a
comprehensive study of the state of living conditions in 2010 and the factors affecting
this state. The study goes beyond the mere study of poverty, by examining the several
dimensions of living in Barbados - education, health, housing, labour market status, crime
and violence, environment, governance, economy and other socio-economic features.
The study uses sample survey data, qualitative focus groups, information, administrative
records and secondary data to provide a picture of living conditions in Barbados over the
1995-2010 period.
This overview outlines the salient features of the study. The four main reports provide
greater details on the different dimensions of the living conditions in Barbados. The
overview begins by reviewing the macro social and economic environment in Barbados
over the period 1995 to 2010. It then provides information on poverty and general living
conditions using data from a Survey of Living Conditions (SLC) and a Household Budget
Survey (HBS). This information gives some idea of how the degree of poverty and
general living conditions have changed since the study undertaken by the IADB (1997)
on Poverty and Income Distribution in Barbados. A Participatory Poverty Assessment of
households, communities and vulnerable groups provides a rich narrative on living
conditions in Barbados through the voices of selected groups and persons. An analysis of
institutions providing assistance with the living conditions of Barbados is also
undertaken.
The overview concludes with a summary of the main features of the living conditions of
Barbados over the last decade and suggests some policy measures which can enhance the
living conditions of Barbados over the last decade and suggests some policy measures
which can enhance the living conditions of the population.

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2. Macro Social and Economic Assessment
The main objectives of the macro social and economic assessment of living conditions
over the past decade are to:
1. identify and analyze the central social and economic changes which affected
living conditions in Barbados over the 1995-2010 period;
2. develop a Plan of Action for enhancing the social and economic development of
the country;
2.1. Development Strategies and Policies
Over the period 1995 to 2010, the strategic direction and vision for the development of
the country was provided by the Development Plan 1993-2000, the National Strategic
Plan 2006-2025 and the Medium-term Development Strategy 2010-2014. Barbados has
adopted a largely indicative approach to planning, with the private sector propelling
economic growth through the key sectors of agriculture, manufacturing and services
(especially tourism and international business). The Government has facilitated the
development process by creating an „enabling environment‟ through a series of
incentives, infrastructural development and rules and regulations. The Government,
through its planning process, has focused on improving productivity and promoting
export of goods and services via several trading agreements. A deliberate effort has been
made to reposition and diversify the economy, namely, from an agricultural to a services
orientation. Over the years, the Government has been able to build its human and social
capital and introduce several measures to reduce the incidence of poverty in the country.
The vision in the National Strategic Plan 2006 to 2025 is to be fully developed and
people-centred by the end of the planning period.
By international standards, Barbados has been able to achieve a „very high human
development‟ status according to the UNDP‟s human development index which
combines indicators of health and education status and livelihood. By 2007, the country
had made good progress with the achievement of four of the eight Millennium
Development Goals (MDGs) and is expected to achieve the other unmet goals by 2015.

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While there was a decline in the contribution of the agricultural sector to overall
domestic production from 7.4 percent in 1990 to 4.4 percent in 2010, the services sector
increased from 72.1 percent in 1990 to 80.5 percent in 2010 (that is, distribution, tourism,
transportation, business, general and government services) [see Table 1].
Table 1: Sectoral Distribution of Real GDP
1995-2010 (1974 - base year)
(%)
p
Sector 1995 2000 2005 2010
Agriculture: Sugar 1.9 2.6 1.5 1.0
: Non-sugar 4.6 3.7 3.3 3.4
Mining and Quarrying 0.7 1.1 1.0 0.5
Manufacturing 9.6 6.9 5.9 4.7
Electricity, Gas and Water 3.5 3.5 3.7 4.1
Construction 5.6 7.5 9.3 6.0
Wholesale and Retail Trade 19.1 19.5 20.3 21.8
Tourism 15.4 16.2 15.2 14.8
Transport, Storage and Communication 8.2 8.1 8.6 9.4
Business and General Services 17.7 17.1 17.3 19.0
Government Services 13.7 13.8 13.9 15.5
Total (%) 100.0 100.0 100.0 100.0
Total (Bds $m) 844.2 973.4 1063.2 1089.4
Source: Barbados Economic and Social Report, various issues
Economic policy measures have supported the development strategies adopted by the
Government. Monetary policies have sought to anchor the fixed exchange parity
between the Barbadian dollar and the USA dollar, to maintain balance of payments
(BOP) equilibrium and to build up the financial sector especially support for the small
and medium-sized enterprises (SMEs). Fiscal policies have been employed to support
growth and development through the provision of subsidies and incentives and „crowding
in‟ via infrastructural expenditure, to support social welfare programmes and to engage in
countercyclical activity. Barbados is a member of the World Trade Organisation (WTO),
hence its trade policies have been supportive of gradual trade liberalization via the use of
tariffication and the general reduction of tariffs.
Social policy measures have involved a range of institutional and programme initiatives:
the Rural and Urban Development Commissions, the Social Investment Fund, the poverty
alleviation programme, the Youth Entrepreneurial Skills (YES) programme, general
skills training (technical and vocational education and training), health services and
housing. Through a Social Partnership among the Government, employers‟
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representatives and workers‟ representatives, a series of Protocols have been developed to
guide wage/salary increases and other related conditions of work. During the period
since 1995, five Protocols amongst the three parties have been enforced. There is no
national minimum wage policy, but shop assistants are subject to minimum wage
guidelines established through a tripartite arrangement.
In the area of the environmental policy, the Government has been promoting the need for
sustainable development in a small, vulnerable developing economy. In recent times
there has been a push to achieve a „green economy‟ which would see an integration of
environmental and economic policy measures.
2.2. Growth and Structural Change
Over the period 1995 to 2010, Barbados experienced two periods of recession which
were largely externally induced: the 2001 recession associated with the events of
September 11, 2001 in the USA and again in 2008-9 with the worldwide recession which
had its origins in the USA. Prior to 2001, the average annual economic growth rate was
2.75 percent, while the post-2001, but pre-2008 period recorded an average annual
growth rate of 3.2 percent. These were relatively low growth rates by world and
historical standards. The „Great Recession‟ resulted in a decline of real domestic output
by 0.2 percent in 2008 and 4.8 percent in 2009 with a very modest recovery of 0.2
percent in 2010.
The per capita real gross domestic product (GDP) rose from Bds $3193 in 1995 to Bds
$4161 in 2007, which suggests an improvement in the average living standards of the
population. The 2008-9 recession however resulted in some reversal of the gains as real
per capita GDP dropped to Bds $3940 in 2009. The fortunes of the Barbadian economy
are closely linked to the more developed countries of the USA, Canada and Europe.
External shocks associated with increases in oil prices and a fall in external incomes
adversely affected the economy during the period. There was a general declining trend in
the average annual growth rate in agriculture and manufacturing over the period. The
main growth areas were in the non-tradeable sectors, namely construction, distribution
and transportation.
As noted earlier, there has been a steady decline in the contribution of the agricultural and
manufacturing sectors to GDP over the years. While the share of the agricultural sector
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declined from 7.4 percent in 1990 to 4.4 percent in 2010, the share for the manufacturing
sector fell from 10.0 percent in 1990 to 4.7 percent in 2010. The Government‟s share in
GDP was relatively constant over the period at approximately 14 percent. There was a
rise in the Government‟s share during the current recession as part of its counter-cyclical
policy action in light of the decline in private sector output.
There have been changes in the international market for sugar and other agricultural
products with the push to dismantle a preferential system as part of the trade
liberalization process. There has also been a fall-off in the regional and extra-regional
markets for manufacturing products. While the tourism sector is a major contributor to
GDP and foreign exchange earnings, there is still a high level of market concentration in
the sector with the USA, UK, Canada and selected CARICOM countries being the main
sources of tourist arrivals. As part of the diversification effort, the Government has
actively promoted the international business and financial sector. However, the sector
has been subject to threats from international organisations such as the OECD with
regards to the tax concessions provided by the Government. The domestic financial
services sector, especially, credit union sub-sector, has grown significantly over the
years. Credit unions have become a major source of funds for personal loans for their
members. In recent years, there has been a discussion on promoting the cultural sector as
part of the productive diversification process.
2.3. Macroeconomic Environment
The main focus areas of macroeconomy policy management over the period were
maintaining balance on the Balance of Payments (BOP) and containing the deficit in the
fiscal accounts - the so-called „twin deficits‟. Barbados has generally experienced a
chronic balance of visible trade deficit over the years as the exports of goods have usually
been less than the import of goods. Services exports, namely tourism, have allowed the
current account of the BOP to realize a surplus in some years. Net capital inflows have
resulted in achieving a balance (surplus) in BOP. Over the period 1995 to 2010, the
overall balance was in deficit in 1998, 2004-5 and 2008 as net international reserves
declined in these years [see Table 2]. There has also been a fall in net capital inflows as
foreign direct investment steadily declined in recent years.
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Table 2: Fiscal Balance and Balance of Payments
1995 - 2010
(%)
Fiscal Balance Balance of Payment s

Overall Current Overall
Year
Account )a
($m) % of GDP ($m
($m)
1995 -29.1 1.9 85.8 73.8
1996 -127.6 2.4 142.4 226.4
1997 -45.7 0.1 -98.6 75.2
1998 -27.4 0.6 -124.9 -74.5
1999 -68.8 2.2 -294.9 111.0
2000 -99.2 1.2 -290.0 401.6
2001 -205.1 3.3 -221.1 452.9
2002 -279.5 6.0 -354.5 177.5
2003 -126.0 2.5 -335.2 375.9
2004 -144.3 2.1 -532.8 -340.6
2005 -180.3 3.5 -733.5 -138.3
2006 -233.5 1.6 -498.5 82.8
2007 -291.6 1.6 -356.4 558.4
2008 -447.9 5.1 -876.0 -497.8
2009 -733.3 9.4 -488.5 78.8
2010 -643.7 8.1 -729.1 86.1
Notes: a (+) represents an increase in reserves and a ( -) indicates a decline in reserves
on a Central Bank basis
Source: Central Bank of Barbados
The overall fiscal deficit varied between 0.1 percent of GDP (1997) and 9.4 percent of
GDP (2009). Spikes in the fiscal deficit to GDP ratio were occasioned by external shocks
as the government employed countercyclical fiscal policy measures: 2002 (due to the
September 11, 2001 crisis in the USA) and 2009 (due to the Great International
Recession). The public debt grew from 79 percent of GDP in 1995 to over 100 percent in
2010.
In terms of international competitiveness, Barbados has performed well in terms of the
st
Global Competitiveness Index ranking 41 out of 121 countries in 2006/7 and 443 out of
139 countries in 2010/11. It has made the transition from the innovation stage of
development, but still has to overcome problems associated with productivity and red
tape.
2.4. Labour Market Dynamics
Barbados has experienced a slight growth in the labour force over the 1995 to 2010
period, with males slightly outnumbering females. The labour force increased from
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136,800 in 1995 to 142,300 in 2010. There has been a weak upward trend in labour force
participation, with the female rate increasing faster than the male rate.
There has been some degree of ageing of the population, especially those over 65 years of
age. In 1990, the percentage of the population 65 years and over was 11 percent, while in
2010, it was estimated at 13.8 percent.
Employment trends reflect production trends, with a decline in employment in the
agricultural and manufacturing sectors and a steady rise in employment in the services
sector. There has also been an improvement in the educational attainment of the labour
force with a decline in the number of adults with no certification from 60 percent in 1990
to 57 percent in 2000 and an estimated 54 percent in 2009. While Barbados has had
universal secondary level education from the 1960s and a school leaving age of 17 years,
several persons leave the school system with no certification than can signal their skills
and competencies in the labour market.
The labour force data indicate that the bulk of the employed labour force is employed in
relatively low skill jobs (service/shop, craft, service, elementary occupations). In 2009,
61 percent of the employed were classified in these occupations.
Employment growth over the 1995 to 2010 period was 2.1 percent per annum, compared
with output growth of 2.6 percent per annum. This yields an employment-output
elasticity of 0.8, which means that for every 1 percent rise in GDP, employment increases
by 0.8 percent. Female employment growth has been higher than male employment
growth, with females overtaking males in the professional categories in the late 1990s.
There has also been a growth in the number of persons reporting as self-employed.
There was a general decline in the unemployment rate over the period except those
periods when there were shocks to the economy (2002/3 and 2008/10). The
unemployment rate fell from 19.7 percent in 1995 to 7.4 percent in 2007, but rose to 10.8
percent in 2010 [see Table 3] The unemployment rate among females was generally
higher than that for males except over the 2009-10 period when it was lower. The
unemployment rate among females was generally higher than that for males except over
the 2009-10 period when it was lower. Youth unemployment still remains a pressing
problem with the youth rate generally twice the overall rate.
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Table3: Employment and Unemployment
1995-2010

No of Persons Employed Unemployment Rate
(000)
Year Growth (%)
Male Female Total (%) Male Female Total
1995 57.7 52.1 109.9 4.17 16.5 22.9 19.7
1996 62.2 53.6 115.8 5.37 11.4 18.0 14.6
1997 62.8 54.9 117.7 1.64 11.5 17.8 14.6
1998 65.7 56.0 121.7 3.39 8.3 16.3 12.2
1999 67.2 58.0 125.2 2.87 7.7 13.2 10.3
2000 68.0 61.0 129.0 3.03 7.5 11.4 11.0
2001 68.9 61.9 130.9 1.47 8.0 11.9 9.4
2002 67.7 60.9 128.6 -1.75 8.7 12.1 10.3
2003 67.4 62.0 129.5 0.69 9.6 12.6 11.0
2004 68.3 63.8 132.0 1.93 9.0 10.1 9.8
2005 69.0 63.6 132.6 0.45 8.0 11.4 9.7
2006 67.8 63.2 131.0 -1.21 7.7 9.8 8.7
2007 69.7 63.4 133.1 1.60 6.4 8.5 7.4
2008 68.7 63.4 132.1 -0.76 6.9 9.5 8.1
2009 65.2 63.0 128.5 -2.72 10.1 9.8 10.0
2010 64.6 62.4 127.0 -1.17 10.8 10.6 10.7
Source: Barbados Economic and Social Report
The rise in unemployment insurance claims over the period suggests that several workers
especially „low skill‟ service and clerical workers experience short term unemployment
spells, especially during declines in the economy.
Generally, there has been modest nominal wage increases in the public and private
sectors, with these increases more in line with inflation than productivity. Spikes in
public sector wages were recorded in 1997 (with the introduction of the VAT) and in
2006 and 2008 (with increases in oil prices) [see Table 4]. There has been a general
upward trend in real wages over the period, indicating an improvement in the average
welfare of the working population.
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