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GAO report: Ratio of US to foreign workers in NMI improves, but economy struggling

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THE ratio of U.S. to foreign workers in the CNMI has improved over the last 18 years, even as the Commonwealth economy, which grew in 2016 and 2017, declined in 2018, the Government Accountability Office stated in its report issued on Feb. 13, 2020.

(https://www.gao.gov/products/gao-20-305?utm_source=onepager&utm_medium=email&utm_campaign=email_iat)

Known as the “congressional watchdog,” the GAO provides fact-based, nonpartisan information to the U.S. Congress.

Its latest report about the CNMI economy and workforce is required by the Northern Mariana Islands U.S. Workforce Act of 2018.

The report noted that U.S. workers represented 30 percent of the workforce in 2001 and 49 percent in 2018.

In 2001, it added, only 15,534 of the 51,783 workers in the CNMI were U.S. workers. The rest were foreign workers. In 2018, there were 13,701 U.S. workers compared to 14,095 foreign workers.

The increase in the CNMI’s inflation-adjusted gross domestic product of about 28 percent in 2016 and 26 percent in 2017 coincided with the opening of the casino on Saipan, exclusively operated by Imperial Pacific International, the GAO report stated.

However, the U.S. Department of Commerce-Bureau of Economic Analysis estimated that GDP in the CNMI fell by 20 percent in 2018, “with a sharp drop in tourist spending and casino gambling revenues following the severe damage of Super Typhoon Yutu, which made landfall in October 2018.”

According to the BEA, revenue from casino gambling dropped by over 50 percent in 2018.

“In August 2019, the parent company of the casino in the CNMI warned shareholders and potential investors that it expected to record a loss for the first 6 months of 2019 as compared with a profit for the same period in 2018,” the GAO stated. “The company’s independent auditor also concluded that the financial information for the first 6 months of 2019 might cast significant doubt on the ability of the company to continue as a going concern.”

It added that the “size of the workforce grew each year from 2014 through 2017, before contracting by almost 2,000 workers in 2018. For 2018, the Department of Homeland Security approved about 9,000 CW-1 foreign worker permits, and approved more than 11,000 permits for 2019.”

Economy, our priority

In an interview on Saturday, Gov. Ralph DLG Torres said his administration’s priority is to improve the CNMI economy.

“We’re still going through some rough times here, but we are also looking for ways to reduce the cost of government while keeping our current investors and getting more to come in,” he said.

For his part, Lt. Gov. Arnold I. Palacios said, “Despite all the challenges, there is still hope.”

As for the Saipan casino investor, IPI, he said: “We want them to succeed, but they also have to comply with the law and applicable rules.”

For its part, IPI stated on Sunday: “As an investor, IPI has undertaken unprecedented endeavors and has made tremendous contributions to the CNMI given the repeated adversities it has faced. IPI will continue the hard work and fulfill its commitments.”

Too early to tell

U.S. Congressman Gregorio Kilili Camacho Sablan, in his e-newsletter said:

“The ratio of foreign workers to U.S. workers in 2018 was 51 percent to 49 percent, according to a Government Accountability Office report…. This is the same as in 2015, but an improvement from the 2017 ratio. None of the numbers reflect the impact of the U.S. Workforce Act, which was enacted in July 2018 and is still not fully implemented. The Act requires GAO to report to Congress on the make-up of the Marianas labor force every two years.”

He added: “The Act is intended to increase the number of U.S. workers in the Marianas economy relative to the number of foreign workers over the 10-year period from 2019 through 2029. The biannual GAO report to Congress is a way to monitor whether the law is working. But it is too soon to draw conclusions, because data for 2019 is not yet available.”

November 2020 pssnewsletter

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