Avoid snail's pace on unemployment insurance, JEF urges lawmakers - Jamaica Observer

Source: Jamaica Observer

JAMAICA Employers' Federation (JEF) says it is fully on board with the Government and trade unions to make the country's first unemployment insurance scheme a reality. However, it is hoping that lawmakers will not make the legislative process lag.

According to JEF President Wayne Chen, while the federation has always been in support of unemployment insurance it is not necessarily optimistic about the timeline set by the Government for implementation but will expend all efforts to ensure that the necessary legwork is done to bring it to fruition.

"Based on my own experience in the private sector, in terms of implementing a new insurance model, these can take a while because you have to have your actuaries go to work, hence it requires some legislative amendments or provisions -- which can be painfully slow in Jamaica. We don't have a history of crafting legislation very quickly; that said, we will work earnestly to see that it is done in an efficient way," Chen told the

Jamaica Observer.

"It always comes down to the details... it should be noted that I have been part of the Dr Marshall Hall-led Labour Market Reform Commission; we haven't seen much implementation of the recommendations of the commission," he added.

Labour and Social Security Minister Pearnel Charles Jr, making his contribution to the 2024/25 Sectoral Debate in the House of Representatives last Wednesday, said Jamaica is moving ahead with the establishment of the country's first unemployment insurance scheme, with details of the proposed model, governance, management, and investment strategy to be submitted to Cabinet for approval in the current financial year. He said the need for such a scheme was brought into sharp focus by the COVID-19 pandemic.

The benefit, he explained, will be introduced through the Social Protection for Increased Resilience and Opportunity (SPIRO) Project.

On Friday, Chen said he was encouraged by the announcement when it was first made in Parliament by Finance Minister Dr Nigel Clarke.

"He cited the historic low rate of unemployment and the... fiscal support which would actually give the Government sufficient funds to put the seed capital into an unemployment insurance scheme. We have the technical support of our multilateral partners and the Bank of Jamaica, we are told, so I think there is certainly the opportunity for us to work with the leaders of the labour unions and with the Ministry of Labour and the wider Government to ensure it happens," Chen stated.

"But to answer your question, when do we see it happening? That is all up to the legislative process, but I think we can negotiate and come to a workable solution very quickly, and after that it is up to the legislators to get it through Parliament," he said.

Chen argued that unemployment insurance "is a critical part of strengthening the social safety net" as it will lift the general standard of living in the country.

That said, Chen shared that JEF is of the view that "it must be paid for in a very equitable way".

"In the past we have seen that the social safety net, from time to time, has fallen on employers in the formal sector, bearing in mind that around 40 per cent of Jamaica's economic activity takes place in the informal sector," he pointed out.

He suggested that Jamaica should look to best practices elsewhere to help decide on its own model.

"We note that it was implemented in Barbados over 40 years ago, and in The Bahamas over 30 years ago. We can look at these models to see how we move forward in Jamaica but we believe that it must be done in a way, as promised by the minister of finance, which will not result in an overall increase in payroll taxes. We believe that we can discuss in a tripartite way with our colleagues in the labour movement and our colleagues in Government," Chen said.

Government senator and trade unionist Kavan Gayle, weighing in on the discussion, said the measure could not come too soon.

"I anticipate that, going forward, whatever that framework will be, in pursuance of such objective, [it] will be exposed to consultations at the Labour Advisory Committee (LAC) which the minister chairs -- and the LAC has representatives from both the trade unions and the employers' federation," he told the

Sunday Observer.

"The pandemic that had extensive layoff of employees would have triggered a need for any such arrangement but this is a protective mechanism that has been provided for workers in the event they are out of office because of varying reasons of separation, and so the details are very, very important," Gayle said.

In pointing out that support under any such scheme is always for a defined period, to lend support in the event of separation, Gayle said the measure "provides not only protection but adds value to the market and spending power to employees at a time of need".

"So it is something that is active to ensure that the labour market is protected but also that an employee who is a consumer is protected, because those are the times (when they face unemployment issues) that they require the level of social support. Unemployment insurance will never fully meet the needs of restoring a worker's purchasing power. It is really a support," he stated.

Gayle, in the meantime, said productivity rates in the country need to be elevated.

"Jamaica has reduced the unemployment rate to four per cent, jobs are being created and you have more people being employed -- which is a good thing -- but what we have to do as a country is that in order to sustain this level of job creation and investment that is taking place, we have to be more productive. When you compare our productivity levels to [other] Caricom [countries], we are not at that place. The fact that we are attracting investments, in order to sustain that level of investment and the employment rate we have to pursue a level of productivity to allow it to be sustainable," Gayle argued.

Unemployment insurance protects employed individuals against the risk of job loss, and provides access to partial income during periods of unemployment. The benefit would complete Jamaica's social protection floor, given that it is the only missing element as articulated in the Jamaica Social Protection Strategy of 2014.

It can serve as a macroeconomic stabilisation tool during periods of economic downturn by strengthening the country's ability to respond to economic shocks while reducing the risk of poverty among workers and their families in periods of crisis.