Working Paper Series: Special Edition of 2016 to 2018 Interns

associated with increased risks of youth engagement in deviant activities particularly amongst males (Carmichael & Ward, 2001). High youth unemployment and emigration of younger members of the workforce could also undermine the sustainability of spending on social safety nets (Banerji, Lin & Saksonovs, 2015). This should be of some concern given the seemingly demographic transition that Saint Lucia is undergoing. One of the major determinants of employment identified in the Caribbean is government investment (Kandil et al., 2014). However, research argues that expansionary government spending only affects cyclical unemployment and does little to fix the joblessness that result from problems like skills mismatches. Policy interventions to address such mismatches should be “ longer-term in scope involving education and encouraging innovation ” (S, A.C, 2012). It is suggested though that while the structural transformation is yet to take place, fiscal policy should be used to bridge the gap. In terms of government investment in the labour market, the Government of Saint Lucia has engaged in a number of active labour market interventions in an attempt to ameliorate the state of unemployment. However, despite the government investing nearly 1.0 per cent of GDP into these active labour market policies (ALMP) the evaluation of these costly measures has been poor and national statistics show that unemployment has remained intractably high. Internationally, reviews of ALMPs suggest that in general programmes focused on well targeted small scale training (Lutz and Mahringer, 2007), private sector hiring subsidies (Kluve, 2010) and programs to improve the efficiency of labour market search and matching and self-employment (Martin & Grubb, 2001) tend to produce the best results. Direct employment programs produce the weakest post-program employment outcomes, especially when geared toward public sector jobs (Card, Kluve & Weber, 2010). The most dismal outcome was observed with respect to out- of-school youths: almost no training programme worked for them (Martin & Grubb, 2001). The conclusion, however, is that there is no one-size-fit-all approach and that policies should be comprehensive and country-specific and focused on reviving growth and advancing labour market reforms (Banerji, Lin & Saksonovs, 2015).

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