Page 14 - Islands Business January 2021

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assistance will help alleviate the problem of limited institu- of activity during the pandemic as people lose their salaried
tional capacity, which can otherwise limit the multiplier ben- jobs, continued measures to ease doing business and support
efits. Finally, the likelihood of a drawn-out recovery means sustainability are needed.
that a multi-year approach can be used to target high quality
projects (not only those that are immediately ‘shovel ready’), Work in 2021
while still being a timely recovery stimulus.” In its December 2020 report on COVID-19’s macroeconomic
impacts and job prospects, the World Bank said that redeploy-
Other sectors ing workers from hard-hit sectors like tourism to alternative
The continued reliance on tourism in many Pacific Island occupations that draw on similar skillsets should be priori-
countries and uncertainty over the opening of borders and ap- tised, and could be supported through re-training.
petite for travel is one of key risks to economic recovery (see Globally there has been much hope placed in the digi-
page 16). talisation of work but how does this translate to the Pacific
For the region’s largest economy, Papua New Guinea, Islands? “Low numbers of ICT job vacancies indicate potential
growth will depend on a strong resources sector, including obstacles to the digitalisation of work seen in other regions.
new investments. There’s some optimism around the con- Mismatches between demand and supply of skilled labour,
struction boom being driven by additional investment into the which have been exacerbated by the impacts of COVID-19 on
resource sector and its potential to generate jobs. labour demand, point to the continued importance of invest-
“The implementation of new resource projects (Papua ment in skills development,” the World Bank states.
Liquified Natural Gas (LNG) and Wafi-Golpu) combined with “Digital literacy, coupled with soft skills such as those re-
professional, administrative, and support services needed lated to persuasion, emotional intelligence and organization,
alongside these projects, could generate formal jobs. There will be important for harnessing such opportunities. These can
are downside risks, however, such as ongoing disputes over again be supported through training and active labour market
the Porgera mine which could weaken investor confidence,” measures,” the World Bank report observes. Fiji’s Business
the World Bank has written. Processing Sector (see story on page 18) is an example of how
The longer borders remain closed, the greater the threat these skills can be harnessed with the right infrastructure and
to supply chains, including the raw materials and workers incentives, however while fiscal stimulus packages in PICs to
required for infrastructure projects so pivotal to the economic date have focused on relief from the shock, they have been
recovery plans of many Pacific Island nations. largely silent on active labour market measures.
The Pacific’s sovereign, superannuation, provident and trust Meanwhile pressure continues to restore and expand labour
funds last year played a critical role in immediate response mobility programs into Australia and New Zealand as a means
measures, and will be looking to continue that into 2021. But of creating jobs and income and filling labour gaps in those
they will also be increasingly important in financing economic countries, particularly in the agriculture sector.
recovery on a broader scale. In recent months, workers from Fiji, Tonga and Vanuatu
“Pacific funds provided crucial support during a time of have travelled to Australia to work on farms and in meat
need, helping members, employees and governments weather plants. “This window of opportunity during these challeng-
the economic crisis unleashed by the pandemic,” Pacific ing times is a blessing,” Fiji’s Employment Minister Parveen
Islands Investment Forum (PIIF) chairman and Samoa National Kumar said at the farewell for one group this month .
Provident Fund CEO, Pauli Prince Suhren says. While remittances to Fiji, Samoa and Tonga generally held
PIIF remains focused on making investments which help up in 2020 despite some volatility, risks remain if there are
bridge the region’s huge infrastructure gap. The International continued job losses amongst the Pacific diaspora, and if
Finance Corporation (IFC) estimates investment of US$45 deployment of Pacific workers to Australia and New Zealand
billion over 12 years is needed to overcome the Pacific’s infra- doesn’t gain pace. “Experience from the Global Financial
structure deficit. Crisis suggests impacts on remittances can be delayed,” the
“It’s worth noting that there are enormous investment op- World Bank has stated.
portunities in this region, including in infrastructure, and that
Pacific funds are in a good position to partner with govern- Political outlook
ment and the private sector as we look towards recovery For Marshall Islands, the Federated States of Micronesia
and building back better,” said Thomas Jacobs, IFC Country and Palau, critical negotiations over the Compacts of Free
Manager, Australia, New Zealand, Papua New Guinea and the Associations with the United States will continue this year.
Pacific Islands. Under each compact, the island nations receive development
In the domestic retail, manufacturing and service sectors, assistance and visa-free access for its citizens to the United
the survival of many businesses in the short term will depend States, and the US in return has a strategic monopoly on the
on the continuation of policy responses to help them miti- Micronesian states. The compacts also allow the US to test
gate the effects of economic downturn such as tax and duty missiles at Kwajalein atoll in Marshall Islands. Palau guaran-
relief, deferred social security contributions (such as in Fiji), tees the United States the use of certain defence sites in the
and wage subsidies. Similarly, in the micro and small and future under its compact agreement.
medium enterprise (SME) sector, which has seen a flourishing The impact of the change in administration in Washing-

14 Islands Business, January 2021