Who is benefiting from our economic growth?

BARBADOS IS OFTEN held up as a Caribbean success story, with its high Human Development Index (HDI) reflecting strong scores in life expectancy, education, and income.

But behind the glossy numbers lies a troubling truth that economic inequality is quietly eroding the nation’s progress and most of the benefits of economic growth are captured by a privileged few.

According to the 2025 Human Development Report, published by the United Nations Development Programme, Barbados’ Inequality-adjusted HDI (IHDI) is 0.620, that is 23.6 per cent lower than its headline HDI of 0.811. That is not just a statistical footnote; it is a flashing red light for the economy. Even more alarming is the revelation that income inequality alone accounts for a 49 per cent loss in potential human development.

What does this mean in plain English? Nearly half of what Barbados could achieve in terms of prosperity, opportunity, and well-being is wiped out by the way income is distributed. Imagine building a house with high-quality materials, only to find that half of it crumbles due to poor foundations.

That is what inequality does. It undermines the very structure of national progress. The average Barbadian is not reaping the full rewards of economic growth. Instead, the benefits are concentrated among a small elite, leaving the majority behind.

This gap between potential and reality is not just unfair, it is also economically inefficient. It drags down consumer spending, stifles innovation, limits social mobility and increases the risk of social unrest.

The HDI data highlights the sobering truth – that the gains of growth are not sufficiently filtering down. The richest one per cent of Barbadians alone hold a jaw-dropping 21.2 per cent of the country’s income.

This level of concentration is more typical of highly unequal societies and is a red flag for social cohesion, economic mobility, and long-term growth. When so much of the nation’s wealth is locked up at the top, it is not just a moral issue but an economic drag that holds the entire country back. When the benefits of development are captured by a small group, the economy as a whole suffers.

The latest economic review shows that Barbados’ economy grew by 2.5 per cent in the first half of 2025, with tourism and construction leading the charge. Unemployment dropped to a record low of 6.3 per cent.

Not filtering down

On the surface, things look promising. But dig deeper, and the cracks appear. The growth is not filtering down to the average citizen. Many are stuck in low-wage, entry-level jobs, particularly in tourism and its support services, which remain the backbone of the economy. Despite strong visitor numbers and rising hotel revenues, the quality of jobs has not kept pace with the country’s investment in education.

More than 11 per cent of Government’s current expenditure is spent on education, equipping citizens with skills and knowledge. Yet, too many graduates find themselves in roles that do not match their qualifications. The economy needs to pivot from quantity to quality, especially in tourism.

Instead of focusing on capture-all tourism, more investment is needed in high-value segments like luxury, experiential, heritage, medical, and MICE tourism (meetings, incentives, conferences and exhibitions). These areas should offer better pay, more meaningful work and greater economic returns.

With public debt hovering around 102 per cent of Gross Domestic Product, Barbados cannot afford to waste our human capital. To secure a prosperous future, our country must ensure that economic growth is inclusive and sustainable. That means creating high-quality jobs, reducing income inequality, and making sure that every Barbadian has a fair shot at success.

Barbados’ impressive HDI ranking masks a deeper problem. Inequality is not just a social issue; it also manifests as an economic one. If nearly a quarter of our development potential is lost to inequality, then we are not just failing our people, we are failing our economy.

– ADRIAN CARTER, economic analyst

DAILY