Labour market trends and implications of regional integration

Labour markets represent the backbone of economic functioning, providing the means of survival to populations, with labour income ensuring the livelihood of workers and families alike. Labour is also an essential input into production - in many cases it is the main input, especially in service sectors which are dominant sectors in the Caribbean. As such, labour markets define economic well-being: in competitive economies labour is paid its marginal product. This implies that only productive labour prospers as higher productivity implies higher earnings, which in turn allows for higher consumption and a higher standard of living. The vitality and health of labour markets, therefore, play a crucial role in attaining and maintaining economic prosperity. Labour markets not only need an adequate match of supply and demand of labour - in terms of quantity as well as quality, but also in terms of being based on an institutional framework conducive to its smooth functioning. This requires inter alia a setting that regulates contractual agreements and protects the rights of workers, whilst not distorting hiring and firing decisions of firms.