A PROSPEROUS Fijian economy could be one where remittances play a much smaller role in the economy.
Westpac Australia senior economist Justin Smirk shared this at the Fiji-Australia Business Council Forum noting that a reduction in remittances could signal that Fiji had created an economy capable of retaining more of its workforce and providing opportunities for people to earn sustainable incomes at home.
Speaking at the forum, Mr Smirk said Fiji had the foundations needed to generate growth, but needed to consider how its resilience could be transformed into long-term prosperity.
Mr Smirk highlighted Fiji’s relatively low labour force participation, saying this was important given the country’s level of debt.
“Participation determines how many people were working, earning incomes and paying taxes, which in turn supports the Government’s ability to manage its finances,” he said.
“If you want to continue to run large deficits, we have to think about ways that we can improve our participation.”
He also pointed to Fiji’s heavy reliance on remittances, saying they presented a risk because they reflected Fijians working offshore and represented a loss of talent from the domestic economy.
“I think some level of migration and brain drain is inevitable for smaller economies. You know, Fiji losing workers to Australia and New Zealand, while New Zealand also loses workers to Australia.”
He said the challenge was finding a balance that allowed Fiji to retain enough of its skilled workforce while building economic stability and prosperity domestically.
“So a degree of prosperity would come through with a low level of remittances.”
Fiji received $875.2 million in remittances in the year to June, a 26.3 per cent increase.
