Working Paper Series: Special Edition of 2016 to 2018 Interns

2011 and 2015. Overall, economic growth has stagnated and prospects for growth have been weak and uncertain. Given the high and persistent levels of unemployment, it is fitting to critically examine the labour market, from a demand and supply standpoint, with a view to understanding the idiosyncrasies inhibiting the economy’s ability to adjust on its own and the ability of the labour market to revert to its natural rate. Literature on the topic identifies information asymmetries, accessibility to and affordability of skills training that match the labour market’s demand, barriers to entry and exit of firms and distortions brought about by excessive labour legislation as some of the possible contributory factors to this rigidity. Other possible explanations for the high rates of unemployment include structural factors such as the nature of the educational system and its interaction with the needs of the labour market (i.e., the mismatch problem). Additionally, technical change and the use of new capital-intensive techniques of production, permanent shifts in the demand for goods and services especially in export markets, the skill mix of the labour force and available job opportunities and, to a lesser extent, cyclical factors such as the insufficiency of aggregate local and foreign demand for goods and services. Institutional factors such as the activities of labour unions and labour market regulations have also been raised as possible contributing factors to high levels of unemployment. There has also been an increase in the number of ‘ discouraged workers’ who are not employed and are not actively looking for work, even though they would like to work. Such high rates of ‘open’ and ‘disguised’ unemployment represent a serious waste of the human resources and constitute a high cost (social cost) to society. A vibrant labour market is indispensable to sustainable economic development. As a result, tackling issues of the labour market and its adjustment has to be paramount in national development strategy. It is clear that job creation cannot be led solely by central government. This paper aims to provide a descriptive analysis of the labour market in Saint Lucia with a view to propose areas for growth and employment creation. The remainder of the paper is organized as follows: section 2 will survey some of the literature bon the labour market; in section 3 the methodology is presented; sections 4 and 5 cover the stylized facts about the situation in the labour

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