DISAPPEARING WORKERS? PART II: Economists Urge Deeper Analysis

Dec 22, 20242 min read

Belize City, December 19, 2024 — Economist Dr. Philip Castillo has called for urgent research into Belize’s declining labour force, echoing the concerns of Statistical Institute of Belize (SIB) Director General Diana Trejo.

Dr. Castillo described the trend as a “cause for deeper analysis and concern,” highlighting key areas that warrant immediate investigation.

Dr. Castillo suggested starting the investigation with discouraged workers, the role of women in the workforce, and the impact of extending the mandatory school age from 14 to 16. He emphasized that these “low-hanging fruits” could provide critical insights into the causes behind the labour force's sharp contraction, which has declined by 13% from 191,881 in September 2021 to 166,206 in September 2024.

Last week, when speaking with The Reporter, Trejo acknowledged the need for comprehensive studies to explain this reduction, which has also seen the number of employed persons fall from a peak of 183,285 in September 2023 to 162,759 in September 2024.

While preliminary factors such as discouraged workers and demographic changes are under consideration, the data requires a more detailed analysis to pinpoint the drivers.

One potential explanation is demographic inversion, where older workers exit the workforce faster than younger individuals join it. This could lead to a demographic drag, slowing economic growth as dependency ratios increase and fewer workers support more dependents. Alternatively, the rise in the mandatory school age may have shifted a portion of the youth population out of the labour force, a theory Dr. Castillo believes deserves close examination.

Despite the labour force contraction, the unemployment rate has fallen sharply, from 4% in September 2023 to 2.1% in September 2024. However, this drop coincides with a reduction in the labour force size, raising questions about the potential of masked structural challenges.

Discouraged workers—individuals who cease job-seeking efforts due to limited opportunities—are another plausible factor in the shrinking labour force. The SIB and economists like Dr. Castillo are aligned in their call for targeted studies to explore these dynamics.