Press release 2021-010
“TO INCREASE JOB OPPORTUNITIES”
Investing in education and labor market skills required for sustainable and inclusive economic recovery
Willemstad/Philipsburg – “The COVID-19 pandemic has taken a severe toll on the already fragile economies of Curaçao and Sint Maarten. Before the pandemic, Curaçao was in a protracted recession due mainly to the lingering spillover effects of the deep economic crisis in Venezuela. Meanwhile, Sint Maarten was starting to recover from the massive destruction caused by Hurricane Irma in 2017. According to the latest estimates, the economies of Curaçao and Sint Maarten may only reach their pre-pandemic levels by 2024”, stated Richard Doornbosch, president of the Centrale Bank van Curaçao and Sint Maarten (CBCS) in the 2020 Annual Report.
The crisis caused by the pandemic could inflict persistent damages to the economy through several channels. Among other things, private investment growth may be weaker than before the pandemic due to uncertainties about economic prospects in the short and medium term. In addition, the crisis could result in a smaller labor force because of an increase in the number of discouraged workers and labor migration to countries with better prospects. Also, the crisis may affect productivity growth as business closures and bankruptcies result in capital losses and resource misallocation.
According to Doornbosch, tourism-dependent economies such as Curaçao and Sint Maarten may experience persistent and long-lasting scarring. Pandemic-related productivity losses may be substantial as tourism businesses face additional costs to reduce the risk of contagion because of health and cleaning protocols, social distancing measures, and measures for contactless accommodation and food services.
“To increase the pace of recovery while limiting economic scarring, it is important that the governments of Curaçao and Sint Maarten take measures to stimulate private investments by reducing the cost of doing business, the lengthy administrative procedures, and red tape”, stated Doornbosch. “Furthermore, to prevent business closures, bankruptcies, and a reduction of the labor force, the governments should continue to provide financial support to the most affected sectors and workers while the crisis is ongoing”, he stated. Since April 2020, discretionary policy measures are being implemented to dampen the socioeconomic effects of the pandemic, including payroll subsidies to businesses, income support to the self-employed, and unemployment support. According to Doornbosch, these measures should be complemented by programs aimed at (re)training and skills development of the unemployed to increase their prospects in the labor market.
Doornbosch added that the focus should not only be on a sustainable economic recovery but also on a more inclusive growth path that provides opportunities to all groups in society and distributes aggregate income in a fairer manner. “To this end, structural reforms that accelerate productivity while improving social cohesion are crucial. These reforms include investing in the education system and stimulating lifelong learning, addressing rigidities in the labor market, and improving the quality of and access to digital technologies”, he stated.
Currently, tourism is the most important economic pillar of both Curaçao and Sint Maarten. For the recovery of this sector, continuous attention must be paid to health and hygiene protocols to rebuild trust and confidence among potential travelers. At the same time, new business models in the tourism industry with a higher value added than the traditional one could be considered, such as ecotourism. The COVID-19 pandemic has shown us how vulnerable the tourism sector is to external shocks and has underscored the importance of economic diversification. “Therefore, the economic policy agenda of both countries should include measures to improve the investment climate, in order to stimulate creativity and entrepreneurship,” concluded Mr. Doornbosch.
Willemstad, July 30, 2021
CENTRALE BANK VAN CURACAO EN SINT MAARTEN