The latest survey of private businesses in Fiji reveals that skill shortages could become an entrenched feature of the Fijian economy limiting the speed at which the economy can grow.
Sharing the results of their ANZ Research, senior economists Dr Kishti Sen and Tom Kenny said the survey involved about 350 ANZ customers across a range of industry sectors who provided opinions on the current business conditions (demand, profitability and employment), expectations of future trading conditions, capex investment intentions, new hires and key constraints faced by the private sector.
The quarterly survey results highlighted the issue of skilled labour shortage and retention of skilled labour in a tight market across all sectors was the greatest challenge with offshore employment opportunities the major contributor to labour shortages in the country.
The authors of the report also shared that it was really important to improve supply of labour through incentives and scholarships, adding that if the supply of labour was not strong enough to keep up with demand, wage pressure would develop and could persist.
“This, in turn, will lead to higher rates of inflation as higher wage costs are passed onto consumers in the form of higher prices. Hence, skill shortages could lead to higher interest rates, on average, over the course of the business cycle.
“Thus, the mismatch between demand and supply requires some urgent solutions so Fiji can continue to grow sustainably and broaden the base of its economic drivers,” the authors said.
According to the authors while the survey began in quarter four of 2019, COVID-19 has adversely impacted the number of responses in recent surveys, reflecting its impact on Fiji’s hospitality-based economy.
“So, care needs to be taken when interpreting the survey results when the sample size is small (less than 30). Fiji’s economy relies on free movement of people as international tourism accounts for 40 per cent of GDP.”
Meanwhile, the cost of fuel and higher shipping costs were also highlighted as headwinds by Fiji’s business community.
The survey also highlighted businesses reporting improved trading conditions through the first half of the year with expectations of future sales, revenue and profitability looking positive.
