Kristen Gyles | Bureaucracy and the low productivity problem

One quiet drag on national output that isn’t being talked about enough is inefficient bureaucracy. What if, after writing this article, it had to be reviewed by an editing assistant, then by two editors, then by the editor-in-chief, then assessed by a communication consultant and then voted on for publication by the Gleaner’s board of directors?

Then, whatever is left of it might be just in time to make the Christmas edition of the newspaper. Whatever value lies herein would have benefited absolutely no one for the several months it would have spent climbing its way up the bureaucratic chain.

Low productivity in Jamaica is typically blamed on crime, energy costs, an undiversified economy or on the general limitations of being a small island state. Those factors matter. But why not pick the lowest hanging fruit before climbing to the top of the tree for the much harder-to-reach ones?

Bureaucracy itself is not the enemy. Especially across the public service, systems must exist to ensure that decision-making is not only consistent and predictable, but rational and free from personal biases and prejudices. So, high-impact decisions ought not to be left up to the whims of one or two persons. The problem arises, however, when decision processes become slow, opaque, duplicative, or unpredictable. At that point, this inefficient bureaucracy disguised as due diligence, only enables foolishness and causes problems.

Productivity, at its core, is output per worker. Anything that delays the use of labour or capital therefore lowers productivity. So, the longer the delays in decision-making, approval processes and information dissemination, the bigger the drain on productivity.

To use a simplistic example to make the point, think about construction and development approvals. Someone wanting to set up a small housing development could face lengthy processes involving multiple agencies, environmental clearances, planning permissions, and utility coordination. When approvals drag on for months or years, capital sits idle. Workers who could have been hired remain unemployed or underemployed. Output that could have been generated simply never materialises. Multiply these ‘could have’, ‘would have’, ‘should have’ losses across dozens or hundreds of projects, and the macroeconomic cost becomes significant.

The clearances and permits might all be very important, but why should securing them take several months? Why should securing them take years?

DETER INVESTMENT

The all-too-common administrative delays and regulatory uncertainties deter both local and foreign investment. Investors contemplating different jurisdictions will consider not only labour costs and tax incentives, but also how quickly permits are granted, how predictable industry regulators are, and how efficiently disputes are resolved. If the administrative process is unpredictable, capital will flow elsewhere.

Judicial delays are perhaps the most underestimated bureaucratic drag. When contract enforcement takes years to resolve, businesses become especially cautious. Companies become reluctant to enter into complex agreements or partnerships because the risk of unresolved disputes is too high. A sluggish court system raises the cost of doing business.

Inefficient bureaucracy might not be the only or the largest contributor to Jamaica’s low productivity problem, but it exacerbates the bigger contributors – like low industrial diversification. Currently, tourism is the lifeline of the Jamaican economy. However, the tourism sector is an unpredictable one because it is highly susceptible to external shocks. The COVID-19 pandemic which was declared ended almost three years ago should have taught us this, but from that time until now we are just as dependent on tourism revenue.

For years we have been talking about diversifying our economy away from a reliance on low-value sectors and towards new high-skill areas that can increase overall productivity, but will it take two or three more decades before the legislative and operational framework is built out for the establishment of these emerging sectors and services? It is all well and good to surmise that a shift towards greater use of digital services and artificial intelligence will help our economy but if the legislative framework and regulatory systems that ought to be in place to facilitate the shift aren’t in place we’re only setting ourselves up for disappointment.

WAITING TIME

Something else that deserves serious attention, which is naively just assumed to be nothing more than a matter of personal inconvenience, is the amount of time that people waste waiting on government services.

I went to get my driver’s licence renewed mid-December of last year, after paying the renewal fee online. After waiting in the tax office for perhaps about an hour, thinking I was about to collect my new driver’s licence card, the online payment receipt I came in with was handed back to me with the date ‘February 3, 2026’ scribbled on it. It was at that point that I got the joyful news that I could return any time after that date to collect my new card. I believe the second visit took longer than the first.

So, a process that I started online still needed to be completed in person, not only in one visit to the physical tax office building, but in two visits over two months.

When people are forced to take hours from work to attend to simple things like driver’s licence renewals, their individual productivity suffers. In Jamaica’s case, making the machinery of government more efficient might be one of the most powerful tools available to unlock higher growth.

Reforming bureaucracy is not glamorous, but it may be one of the most cost-effective productivity strategies available. Imposing statutory time limits on approvals should yield some gains without massive public spending. We also need to find ways to compress the timelines for drafting, reviewing and passing legislation. Faster processes mean faster capital deployment, and faster capital deployment means higher output per worker.

Kristen Gyles is a free-thinking public affairs opinionator. Send feedback to kristengyles@gmail.com and columns@gleanerjm.com