Yaneek Page | Escaping the low-wage economy trap

Jamaica’s sun-kissed beaches and vibrant culture might appear to be paradise from the outside looking in, but for many who have made this country our place to live, work and do business it’s a daily struggle to survive.

That uphill battle to make ends meet has taken centrestage in the past few weeks with striking hotel workers protesting low wages on the cusp of the peak tourist season, and a recent survey reported in this newspaper that we have the lowest salaries in the region.

Recent events have amplified valid concerns about the country’s chronic low-wage economy. This dilemma is especially pressing for small businesses that struggle to create business models and accrue the financial resources to pay their workers the salaries and benefits they deserve.

Let me share a reality that outsiders to the country and local industry landscape might not know: there are many entrepreneurs in Jamaica that find themselves trapped in a painful contradiction; they are architects and leaders of their businesses, driven by passion and a desire to create profitable opportunities, yet they also grapple with the harsh reality that their business often cannot provide a decent livelihood and critical benefits for themselves or their workers.

It’s a conversation that requires serious engagement, solutions and action if we are to break this vicious low-wage cycle.

Now, it will be easy for onlookers, and analysts with little skin in the unforgiving business bootstrapping game, to oversimplify our issues by challenges the ingenuity, vision, ambition and effort of business operators. However, many entrepreneurs might posit that it is the structural limitations of a low-income economy, marked by high imports, low productivity, an untrained low-skill workforce, high electricity costs, poor infrastructure, and limited purchasing power that make it nearly impossible to create and sustain fair wages for most.

For scores of business owners, the embarrassment is personal, because they carry the weight of responsibility for their teams while knowing they cannot offer the stability and dignity that every worker deserves. Our cultural pastime of shaming failure results in this struggle being private and silent, which make it even more challenging to solve.

Breaking free from this cycle is extremely challenging. I don’t claim to have all the answers. However, here are some potential actionable strategies, drawing inspiration from successful global examples:

Leverage technology to reduce costs and expand market reach

We must examine and assess how we can exploit advances in artificial intelligence (AI) and digital tools to help small businesses improve operations, improve efficiency, and reach new markets:

• AI for efficiency: Small businesses need to utilise affordable AI tools to automate repetitive tasks like inventory management, customer support, and marketing. This can reduce operational costs. An example of this is using AI-powered chatbots that can provide 24/7 customer service.

• Digital platforms: E-commerce platforms must be the gateway to accessing global markets, thereby and decreasing the reliance on a local market with limited purchasing power.

• Remote work models: this would reduce the need for physical space, cut overhead costs like rent for office space. The use of hybrid and remote work options is likely to attract skilled talent from a broader pool.

We must draw inspiration from Estonia’s digital-first approach, and find adaptable models for integrating technology to streamline processes, enhance productivity and reduce costs.

Build resilient supply chains

Global trade issues, raw material shortages, and rising shipping costs have disproportionately affected small businesses, making it crucial to develop resilient supply chains:

• Local sourcing: Small businesses can engage and work with local suppliers to reduce reliance on imported goods, and this has the added benefit of supporting the domestic economy.

• Regional collaboration: more emphasis should be placed on working with suppliers across the Caribbean as this would foster mutually beneficial trade relationships and minimizing dependency on global supply chains.

• Raw material innovation: Businesses can explore sustainable alternatives to costly imported materials, such as recycled or upcycled inputs, to manage costs and align with the growing demand for eco-friendly products. This is where a focus on technology and new approaches to manufacturing will play key roles in achieving this.

Rwanda’s focus on local supply chains and its investment in agricultural innovation may provide a useful blueprint for addressing supply chain vulnerabilities.

Shift toward sustainable and high-value niches

The climate crisis and rising consumer demand for sustainable products present an opportunity for small businesses to carve out high-value niches:

• Sustainable tourism: Businesses can focus on medical, eco and cultural tourism, which attract higher-value customers willing to pay a premium for medical, cosmetic care, and authentic, sustainable experiences. We must diversify away from the lower value all-inclusive tourism product that is generally offered across the Caribbean.

• Green products: Investing in eco-friendly products, that emphasizes reusable packaging or locally sourced goods, can tap into global markets prioritising sustainability.

• Exporting expertise: Services like digital marketing, creative industries, and software development allow small businesses to offer intangible products that bypass supply chain constraints while earning foreign exchange.

The Dominican Republic’s rise to becoming a global leader in medical tourism, and Costa Rica’s eco-tourism model are recent examples of how small countries can attract high-spending visitors while creating opportunities for local businesses to thrive.

Engage in workforce development

• Upskilling programmes: We must offer training to improve workers’ skill sets, making them more efficient and capable of handling diversified roles that require the use of more technology.

• Profit-sharing: Allow workers to share in the business success by implementing performance-based bonuses or profit-sharing arrangements. This is a proven method to increase the productivity of workers.

• Improving transportation, access to or subsidised childcare and health insurance can alleviate worker frustrations and boost morale.

Singapore’s SkillsFuture programme is a compelling example of how targeted training initiatives can create a more skilled and productive workforce, benefiting both businesses and employees

One love!

Yaneek Page is the programme lead for Market Entry USA, and a certified trainer in entrepreneurship.yaneek.page@gmail.com