OIA report on NMI unemployment rate disproved

The widespread use by apparel and tourism industries of nonresident workers from Asia has nothing to do with the alarming unemployment rate in the CNMI as claimed by the U.S. Department of the Interior, according to the accounting arm of the U.S. Congress.

The General Accounting Office disputes claims by the interior department that the high rate of unemployment among U.S. citizens is caused by the garment and tourism industries or the foreign workers they employ.

“We found no data that support the claim that unemployment in the CNMI is caused by the garment and tourist industries or by their use of foreign labor,” the GAO February 2000 report said.

The US interior department’s Office of Insular Affairs has said CNMI’s unemployment rate is three times higher than many American labor markets which have a measly average of 4.2 percent among native-born US citizens.

Of the 10,438 US citizens in the local labor force, 9,039 or 86.6 percent are employed while 1,399 or 13.4 percent are without jobs.

The OIA has expressed alarm on the skyrocketing unemployment rate in the CNMI despite the overflowing job opportunities in the private sector, which is primarily manned by nonresident workers.

The OIA has said the highest unemployment rates in the US mainland stayed within the single-digit level and have been reported in the District of Columbia (7.6%) and New Mexico (6.4%).

Gov. Pedro P. Tenorio said like CNMI, Guam has about 13 percent unemployment, attributing the Commonwealth’s high jobless rate to the decline in tourism spawned by the Asian economic upheavals.

An economic study funded by the Office of Insular Affairs disclosed that the garment industry has an employment multiplier of about 1.5, meaning that each job in the apparel manufacturing sector generates one-half job in the rest of the economy.

According to the GAO report, the Saipan economy added about 2,100 jobs for local residents, including 1,650 jobs for U.S. citizens and 45o jobs for workers born in Micronesia. During the same period, the economy added about 10,000 new jobs for foreign workers.

“In other words, the economy added almost two jobs for local residents for every 10 jobs it added for foreign workers, about twice what the Department [of the Interior] claims,” GAO said.

It noted that growth in employment for U.S. citizens from 1995 to 1999 occurred even though the economy suffered a 30-percent decline from 1997 levels during the last two years.

GAO also dismissed OIA claims that private sector employment for local workers has grown little since 1995 despite the presence of too many job opportunities in the business community which are mostly held by nonresidents due to the unavailability of skilled local labor.

The CNMI Department of Commerce noted that private sector employment of U.S. citizens increased by about 24 percent between 1995 and 1999 on Saipan, while total employment of U.S. citizens, including employment in government sector, rose by about 22 percent.

Although employment of non-U.S. citizens increase by 43 percent over the same period, this figure is already inclusive of the 27 percent increase in employment of people born in the Freely Associated States, who are not considered either U.S. citizens or foreign workers.

The Accounting Office also revealed that employment on Saipan improved faster by 183 percent than the island’s population growth rate which increased by 169 percent between 1980 and 1999.

The GAO findings contradicts a report previously released by the U.S. Department of the Interior’s Office of Insular Affairs that the island’s unemployment rate has skyrocketed due to the influx of foreign workers in the Northern Marianas.

GAO said labor participation among U.S. citizens on Saipan increased from about 58 percent in 1980 to 68 percent last year. Also, the number of U.S. citizens in the island who were self-employed rose from 2.5 percent to 5.0 percent of those employed over the same period.