February 3, 2006
Free movement of people

Proponents of the regional integration movement must have been disappointed on Monday to hear that the member states of the Organization of East Caribbean States (OECS) had decided to postpone their entry into the Caricom Single Market (CSM) by three months until June 30 this year.

The OECS heads took this decision, they said, partly because they needed to ensure that the necessary support mechanisms, like the US $25 million Regional Development Fund, were in place. {{more}} The fund is supposed to help cushion the dislocation that will be caused to the smaller economies because of competition under the CSM.

This apparent foot dragging by the OECS is understandable. The six member states of the OECS that intend to sign on to the CSM have a total population of approximately 530,000, just about 9% of the 6 million people that live in the countries that will make up the Caricom Single Market.

Many Vincentians and citizens of the wider OECS view the free movement of people as one of the CSME’s greatest threats. It is felt that this component of the CSM will put the job security of nationals of the smaller countries like St. Vincent and the Grenadines in jeopardy. Paradoxically though, the availability of a larger, better qualified pool of workers may create an environment more conducive for job creation.

Take for example jobs in information technology and other knowledge based enterprises. The Government of St. Vincent and the Grenadines has indicated that the development of such service industries is a priority. A good idea, but our small population poses certain challenges for the success of these ventures.

Last June, Searchlight carried an interview with the American owner of this country’s largest knowledge based services firm. At that time he indicated that ideally, he would have liked to increase his staff from the 140 persons it was then, to between 500 and 1000 persons. He mentioned that his competitors in India had firms of that size and he needed to increase his local staff in order to become more competitive.

Because our population stands at only 110,000, he had come to the realization that attracting and retaining a staff of more than 300 was just not feasible. Another challenge he mentioned was the difficulty of attracting qualified university trained technical staff to tackle the higher-end work. In the last two years, despite advertising locally for graduates in information technology, and offering above average pay packages and opportunities for training, he has only been able to hire nine local IT graduates to date.

Contrast that with India, with its population of 1.1 billion people, or ten thousand times more people than St. Vincent and the Grenadines. Indian universities graduate 280,000 engineers each year. Infosys Technologies, one of the world’s leading IT services and consulting firms based in Bangalore, India, received 1.3 million applications last year for 20,000 jobs.

All is not lost, however. Even though countries like India present a huge challenge, we can take inspiration from Costa Rica. This Central American banana exporting nation, with its relatively small population of 3.5 million people, is now the third most competitive outsourcing destination in the world, after China and India. Costa Rica’s software industry accounts for 12% of that country’s GDP, overtaking coffee and bananas as the leading export.

What Costa Rica does not have in terms of population, they make up for with advantages we also have: their proximity to the United States, relatively low wages, being in the same time zone as the Eastern United States and falling trade barriers.

We in the English speaking Caribbean have other advantages. Caricom’s active members have a combined population of six million. We have stable governments and English is our first language. Perhaps, having a larger available workforce at our disposal may not be such a bad idea. Here in St. Vincent and the Grenadines we may then be able to retain the industries we do have, and attract new ones by creating the right climate for this type of investment. The movement of qualified people to our shores to take up jobs we did not previously have the capacity to fill will have a spill off effect into other aspects of our economy.

The global outsourcing market is expected to total $50 billion by 2007. Investors’ confidence in our region is growing, as demonstrated by the $68 billion in foreign direct investment Latin America and the Caribbean were able to attract in 2004. This signaled a rise of 44% over the previous year. Let us position ourselves to be able to benefit from such investments. What may seem like a set back, could very well be a golden opportunity.