One of the big chal­lenges that the work­ing peo­ple of this coun­try face is the ris­ing cost of liv­ing at a time when T&T's eco­nom­ic cir­cum­stances–as a re­sult of prices of petro­chem­i­cal ex­ports that are

volatile and low­er in to­tal than two years ago–re­quire that em­ploy­ers main­tain some con­trol over their labour costs.

The ris­ing cost of liv­ing comes at a time when in­comes are be­ing com­pressed. This equals a de­cline in the stan­dard of liv­ing of

thou­sands of peo­ple in this coun­try be­cause the fact is that the high­er in­fla­tion rate comes at a time when the un­em­ploy­ment rate in T&T in­creased from 5.1 per cent in the fourth quar­ter of 2009 to 6.7 per cent in the first quar­ter of 2010–main­ly as a re­sult

of the slow­down in con­struc­tion.

At the end of last month, the Cen­tral Bank re­port­ed that the cost of liv­ing in­creased by 16.2 per cent in the 12 months to Au­gust

from 14.1 per cent in Ju­ly. A sig­nif­i­cant con­trib­u­to­ry fac­tor to an in­fla­tion rate that is trend­ing up­ward, at what the Cen­tral Bank

says is the fastest rate since No­vem­ber 1983, al­most 27 years ago, is the fact that food prices in­creased by 39.1 per cent in Au­gust

on a year-on-year ba­sis.

It is the na­ture of in­fla­tion dri­ven by high­er food prices that it af­fects work­ers at the low­er end of the in­come spec­trum much more than those at the up­per end of the in­come spec­trum. This is be­cause those at the low­er end a high­er per­cent­age of their in­comes on food than those at the up­per end.

The pic­ture, there­fore, is that a large num­ber of low­er-in­come work­ers are fac­ing rapid­ly ris­ing food prices at a time when

there are few­er job avail­able. One of the mea­sures that the Gov­ern­ment has put in place to ad­dress the pain felt by

low­er-in­come cit­i­zens is the pro­pos­al, out­lined by Min­is­ter of Labour Er­rol Mc Leod in his con­tri­bu­tion to the 2011 bud­get, that

the min­i­mum wage be in­creased from $9 to $12.50 an hour. This will af­fect rel­a­tive­ly few work­ers as, ac­cord­ing to Mr Mc Leod, most work­ers in this coun­try al­ready earn more than $9 an hour. But in­creas­ing the min­i­mum wage may al­so put up­ward pres­sure

on wages at the low­er lev­el which may bring some re­lief to those who have been rav­aged by spi­ralling food prices.

While in­creas­ing the min­i­mum wage rep­re­sents some re­lief, the Gov­ern­ment needs to do more to im­pact food prices so that if in

the fu­ture we ex­pe­ri­ence a year in which there is both a with­er­ing drought and a dev­as­tat­ing flood, the coun­try is not im­pact­ed by food price in­creas­es of near­ly 40 per cent. This is go­ing to be a dif­fi­cult task and one that will not be achieved overnight.

One of the mea­sures that gov­ern­ments in a sit­u­a­tion like this could take is to low­er tar­iffs on im­port­ed food. But such tar­iffs have al­ready been sig­nif­i­cant­ly elim­i­nate in this coun­try and many food items have al­so been ex­empt­ed from the Val­ue Added Tax. The one main area that the Gov­ern­ment can fo­cus on is in­creas­ing lo­cal food pro­duc­tion by in­creas­ing the en­tire gamut of as­sis­tance to the agri­cul­tur­al sec­tor. In­creas­ing agri­cul­tur­al in­comes is one

sure way that the Gov­ern­ment can en­cour­age an in­crease in agri­cul­tur­al pro­duc­tion which is like­ly to cause low­er food prices

over the medi­um term.

While the 2011 bud­get does not of­fer the agri­cul­tur­al sec­tor much in the way of in­creased as­sis­tance, giv­en the in­fla­tion sta­tis­tics out­lined by the Cen­tral Bank, it is ex­pect­ed that the Gov­ern­ment will ramp up con­tri­bu­tions to an agri­cul­tur­al rev­o­lu­tion in T&T in the years to come.