Will There Be A Shortage Of Construction Skills?
INTRODUCTION: AN ECONOMY ON THE REBOUND
Good Morning, St. Lucia,
Here is a question for you to think about. With all the existing and planned
construction in St. Lucia in the next eighteen months, will we experience a
shortage of labour – particularly skilled labour?
Already, some persons are talking about the possibility that the local economy
may overheat. What they mean is that the economy may, in the short term, grow
too rapidly, causing inflation and other problems. For example, if – and I say a
big IF – there is a shortage of labour, then the price of labour may increase,
thus contributing to an overall increase in construction costs.
There can be little doubt that the St. Lucian economy is showing solid signs of
recovery. The latest assessments carried out by regional and international
financial agencies have confirmed that St. Lucia’s economy is on the rebound.
In my Budget Address in April 2005, I indicated that our economy had experienced
an improved growth rate of 3.6% for 2004. The International Monetary Fund (IMF)
reported a few weeks ago that “real GDP growth” in St. Lucia for 2004 actually
rose to 4% -- that is, 4% more than I had announced (?).
As the Eastern Caribbean Central Bank (ECCB) reported last month, the positive
growth rate in St. Lucia – and indeed in the rest of the OECS – has been driven
largely by construction and expansion in the tourism industry. The Central Bank
has also predicted that, barring unforeseen or uncontrolled events like natural
or man-made disasters, the growth rate in St. Lucia and the rest of the OECS
will continue to be driven and fuelled by further growth in tourism and
construction. Much of the growth in construction is explained by the
construction of infrastructure for the hosting of the Cricket World Cup in 2007.
Indeed, the Central Bank estimates that the region’s economies, including St.
Lucia, will collectively grow by 5.6% this year. An even higher growth rate of
7% is forecast for next year, 2006. If that happens, then this will be the
highest growth rate achieved by the OECS in over a decade.
A CONSTRUCTION BOOM
There is solid evidence that tourism-related construction activity industry is
driving economic growth in St. Lucia. Several local hotels, companies and
individuals have made good use of the incentives being offered by the Government
of St. Lucia to provide accommodation for the visitors expected for the Cricket
World Cup.
New hotels are going up and some existing hotels are expanding; new small and
medium properties are also taking off at a rapid rate as the World Cup
approaches.
Our workers can be seen at work in the north, where several of these new
investments are changing the shape of the landscape. The Plantation at Cotton
Bay – a brand new hotel – is nearing completion. The former Wyndham Hotel,
Windjammer Landings and Tropical Homes at Cap Estate are all undergoing
renovations and expansion. Bay Gardens Hotel is also due for expansion. And,
lest we forget, there is construction activity at Discovery at Marigot Bay,
which is nearing completion.
Then, there are those other construction sites where workers are also employed.
A number of new buildings are being constructed in and around the City of
Castries and the Rodney Bay/Gros Islet belt -- and indeed, in other parts of the
island – by local entrepreneurs.
But if you think that is all, just imagine what’s on the horizon. Major new
hotels and resorts are to be constructed in the coming months. These include the
Landings at Rodney Bay (which is being undertaken by local investors), the Cap
Estate Villas and Town Houses Project, the Cap Maison (at Cap Estate), the
Harbour at Rodney Bay, Chateau Village at Beausejour, Stephen’s Apartments and
Bel View Resorts.
In the South, there is expected to be even more expansion at the Coconut Bay
Hotel, the former Club Med. That hotel is likely to expand by two hundred rooms.
Anse Chastanet is nearing completion of its expansion programme. Hundreds of
jobs are expected to be provided when construction begins on Le Paradis at
Praslin Bay and Sapphire Cove between Laborie and Choiseul.
But it is not only in the tourism sector that the construction sector is
buzzing. Just take a walk and look around Castries – or between Castries and
Gros Islet – and you will see the number of business places that are either
expanding, renovating, relocating, or building anew. Here again, some of these
companies are taking advantage of incentives being offered by the Government to
business places that wish to modernise, refurbish or relocate their premises.
Truly, a construction boom is under way in St. Lucia.
PUBLIC SECTOR CONSTRUCTION
The construction boom in the private sector will be matched by major expansion
in construction activity in the Public Sector. Consider for a moment the
following. Drainage projects are under way in Dennery, Castries and Anse La
Raye. Health centres are undergoing major repairs. A school repair and expansion
programme is under way. Construction of two new secondary schools will commence
before the end of the year. Construction of the new psychiatric hospital is due
to start later this year. Construction of the new national hospital will
hopefully start in May or June 2006. Rehabilitation of the East Coast Highway
has commenced. Rehabilitation and expansion of the Castries to Gros Islet
Highway should start early next year. There is the major water improvement
project to improve the supply of water to the north. Then too, there is the
expansion and related ancillary work at the Beausejour Cricket Ground. Amidst
all of this will be the projects managed by the Poverty Reduction Fund and the
Basic Needs Trust Fund.
SHORTAGE OF SKILLS?
With the construction industry taking off as it is, there are concerns. Some ask
whether there would be enough building materials, especially after the
hurricanes which affected New Orleans and Florida. In fact, for quite some time
now, we have been experiencing shortages of cement – even though the price has
gone up.
But of late, a more interesting question is being asked. Will there be enough
skilled persons in the construction industry to facilitate the rate and pace of
the construction boom?
Already, contractors have noted a shortage of highly skilled workers, such as
carpenters and masons, electricians, tilers and other so-called “finishers”. One
explanation for this is the departure of some of these persons to Grenada to
help in the reconstruction of that island after Hurricane Ivan. But even before
Ivan, St. Lucian workers had gone abroad in search of opportunities. Following
the contraction or the economic downturn in 2001, several St. Lucian workers
headed to the Turks and Caicos Islands, Anguilla and the British Virgin Islands.
Their departure has reduced the pool of skilled workers.
WILL WE HAVE TO IMPORT LABOUR?
If, for argument sake, we might experience a shortage of skilled labour, will we
have to import labour in the near or distant future?
It’s a relevant question, but the answer is an emphatic “no” – not for the time
being, at least. There continues to be a serious surplus of unemployed labour.
If employment works according to the basic principle of supply and demand, then
as the supply of jobs increases in the months ahead, so will the demand be
reduced. We cannot begin to think about importing labour from neighbouring
countries, until our pool of surplus labour is reduced.
With local contractors crying out for skilled labourers, it is becoming
necessary for us to begin to think in terms of establishing skills banks and
increasing skills training. I am told that the need right now is for plumbers
and “finishers” – those who specialise in putting the final touches – roofs,
windows, doors, tiles, pipes, etc. It is to be hoped that those without skills
will take steps to learn new skills to increase and improve their chances of
employment in the construction boom that is under way. We may have to turn to
Sir Arthur Lewis Community College to design new programmes to train skilled
workers.
THE SPECTRE OF INFLATION
But there are other concerns. If the demand for labour rises and shortages are
experienced, then the competition for scarce skills may well lead to increases
in the price of labour. To use more technical language, increases in labour
rates could feed inflation. This could have several unwanted consequences. For
example, the overall price of construction will increase. Contractors may push
the Government to intervene to legislate rates. Some may even wish to work for
cheaper labour elsewhere in the region. All of this means that the Government
will have to monitor the emerging situation very closely.
BUILDING NEW ECONOMIC PILLARS
But there are other benefits to this burst in construction activity. By
revitalising the construction sector, the Government is also building new
economic pillars.
However, we must not lose our focus on the other sectors. While we continue to
do all we can to encourage the diversification of our agricultural base, the
expansion of our tourism sector and the continued viability of our manufacturing
sector, we must also continue to build and strengthen the Services and
Information Technology sectors of our economy. There is untapped potential in
this sector, once we get the right formula.
CONCLUSION
In effect, exciting times lie ahead. I have not even bothered to speak about
those who will be employed when the new hotels are completed.
You see, I have reason to be excited and confident about the futre. It has been
a long journey, but I believe we are on our way. The next few years will present
great opportunities and confirm our economy as a tourism and services-driven
economy. But we cannot behave like the proverbial ostrich and bury our heads in
the sand. We will not enjoy the benefits unless we solve the problem before our
eyes, for example crime., But that’s another topic for another time.
Until next week, do have a very pleasant and productive day, and God Bless!
