Boosting productivity for decent work and inclusive growth in the Caribbean

Since the 1980s, the Caribbean has experienced a steady decline in economic growth, declining from around 4 - 5 per cent annually in 1980, to about 2 per cent in recent years. Two key factors precipitated this slowdown: persistently low productivity and insufficient investment in productive capacities. This trend has constrained progress towards improving living standards, reducing poverty, and nurturing sustainable enterprise development.

The labour productivity growth in the Caribbean has also remained subdued over the past two decades. Between 2005 and 2023, the region recorded an annual average productivity growth rate of just 0.6 per cent, well below the global average of 1.5 per cent and significantly lower than other regional blocks such as ASAEN (2.8 per cent) and BRICS (5.4 per cent). When Haiti is included in the calculation, the Caribbean’s labour productivity growth turns negative, meaning output per hour worked has declined.

There are several structural factors that underpin the persistently low levels of labour productivity in the region. Limited economic diversification, high informality, and weak innovation systems constrain productive capacity. Employment remains concentrated in low-productivity sectors, while high-productivity sectors face shortage of skilled labour. The ongoing digital and green transitions demand new skills and investments, yet progress in these areas has been slow. Furthermore, weak labour market institutions such as inadequate social dialogue and limited collective bargaining, reduce the extent to which productivity gains translate into decent work outcomes.

Despite these challenges, Caribbean countries have increased their efforts to promote productivity by establishing national productivity councils that champion a culture of efficiency and innovation, provide hands-on support to enterprises, strengthen public-sector performance, and facilitate dialogue among government, employers, and workers. These councils are often mandated to develop productivity data and research, drive national improvement programmes, and increasingly support digital and green transformations- ensuring that productivity growth contributes to better jobs, stronger businesses, and more resilient economies.

The evidence shows that advancing productivity requires an integrated and coordinated approach across macroeconomic, sectoral and enterprise levels- what the ILO refers to as the Productivity Ecosystem for Decent Work. At the macro-level, comprehensive employment and productivity strategies, promotion of skills development and inclusive social dialogue are essential to creating an enabling environment for sustained productivity improvements.

At the sectoral level, targeting high-potential sectors for productivity upgrading and job creation is necessary, with a focus on strengthening the right value chains and promoting resource efficiency. Industry-specific training and accelerated technology adoption are equally critical to support this transformation. At the enterprise level, formalization of businesses provides access to services and protection that enable productivity gains, complimented by digitalization and targeted skills development.

These interventions will only deliver impact if they are grounded in robust evidence informing their design, implementation, and monitoring. Reliable productivity data is therefore essential to inform policy decisions and guide strategies for sustainable improvements.

For Caribbean policymakers and social partners, productivity is the foundation of long-term prosperity. And prioritising coordinated action to raise productivity through skills development, investment in productive sectors, and stronger social dialogue is a must, not an option. Without improved productivity, achieving decent work and inclusive growth will remain out of reach.