Prime Minister, the Most Hon. Portia Simpson Miller, says a collaborative approach must be taken to design and shape a framework for Unemployment Insurance that is best suited to Jamaican conditions.
Mrs. Simpson Miller was addressing the opening session of a two-day Labour Market Forum on: ‘Reforming Jamaica’s Labour Market: Social Protection through Unemployment Insurance’, at the Jamaica Conference Centre, on December 6.
Unemployment Insurance is defined as a mandatory, contributory scheme that is financed primarily through contributions by employers and employees. It would provide income support to recently laid-off workers as they try to find new employment and is implemented in many countries around the world.
Mrs. Simpson Miller noted that the State, employers, trade unions and workers, as well as external partners, must work collaboratively to design and shape the framework for such a policy.
However, she said that such a policy must address assistance for the self employed and encourage a culture of entrepreneurship and small business development.
"Overall, we must seek to build an Unemployment Insurance system that is equitable, in that the burden of financing is shared fairly among groups, generations and populations; that is fiscally, financially and economically efficient; a model that is well-managed and avoids waste and corruption; one which charts a path to the better use of Jamaica’s human resources, and is better able to cope with unemployment and contingent risks; and one that ultimately helps Jamaica to achieve economic growth and the possibility of full employment,” she outlined.
In the meantime, Director General of the Planning Institute of Jamaica (PIOJ), Dr. Gladstone Hutchinson, said there is a current recognition for additional Labour Market Reform in light of the impact of the global economic crisis. He noted that Jamaica has been impacted to the extent that its employed labour force has, over the past five years, experienced a decline of 6.8 per cent or nearly 80,000 persons, as domestic economic activity contracted.
Dr. Hutchinson added that it is crucial to start engaging various stakeholders as it relates to reducing the impact of excessively high redundancy costs, which appear to be the main area where Jamaica falls down in comparison to relevant comparator countries.
“Redundancy cost reduces labour market flexibility, by making a financial demand on businesses at a time when they can probably least afford it. As a result, onerous redundancy payments reduce productivity and competitiveness as firms may choose not to ‘right size’ because they don’t have the financial capability to pay severance. Redundancy cost may also serve as a disincentive for new companies to enter the market,” he said.
Dr. Hutchinson noted that the Government’s focus on reform is well placed as the growth strategy currently being negotiated with the International Monetary Fund (IMF) envisages an initial phase of reforms to improve the dynamic efficiency of the economy, through enhancement of the business environment.
“The promotion of labour market reform is an important element of these strategic initiatives to be undertaken over the medium term,” he pointed out.
The forum has as its primary objectives: to sensitise stakeholders on the operation of global unemployment insurance; to generate discussions with the aim of getting a consensus on the establishment of an alternative approach to the requirements by law for redundancy payments; and to offer recommendations toward the development of a model of Unemployment Insurance Scheme for Jamaica