The Impact on the St. Lucia Labor Market
From the executive summary:
This brief expands the scarce literature on the impact of the global financial crisis on labor market outcomes and welfare in the Organization of Eastern Caribbean States (OECS). The brief focuses on the economy of St. Lucia, one of the OECS member states. The statistical information assembled here should help decision makers and the public in the OECS to develop policy options that can sustain job creation and thereby enhance public welfare. It also can help gauge the effectiveness of policies over time.
The evidence presented in this brief shows how the recent financial crisis had significant and long-lasting negative impacts on the welfare of St. Lucians. The government of St. Lucia attempted to use fiscal policy to boost growth and enhance labor market opportunities in the island. Still, unemployed and underemployed St. Lucians together accounted for over 40 percent of the working-age employable population. They suffered a significant decline in welfare in the aftermath of the crisis. They lost not only their income but also the collateral benefits that are often associated with being fully employed in good quality jobs in the “formal” sector of the economy.
These findings are not surprising given the nature of the economies of St. Lucia and other OECS economies. These island states rely heavily on industries such as tourism, construction, agriculture, and financial services. Those in turn depend greatly on external demand from wealthier economies that also were damaged by the financial crisis. Travel and tourism related activities alone are estimated to account for 30 percent of gross domestic product (GDP) and employment in the OECS. Moreover, like most of the OECS economies, St. Lucia has a high level of national debt. The debt burden limits the ability of the government to invest in social programs and human capital. Debt also compromises the government’s capacity to aid the poor and vulnerable in times of crisis.