Multitrack strategy needed to address the informal sector — JCC president


Multitrack strategy needed to address the informal sector — JCC president

Business reporter

Wednesday, October 14, 2020

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President of the Jamaica Chamber of Commerce (JCC) Lloyd Distant Jr says responses to the fallout from the COVID-19 pandemic for those operating in the informal economy cannot separate the health and economic impact and to this end must include a multi-track strategy that combines a couple lines of action.

Distant indicated that the risks associated with COVID-19 exacerbated the main vulnerabilities of poor workers in the informal economy.

“The last decade has been marked by a growing recognition that the large size of the informal economy is a major obstacle to poverty reduction. We have to bear in mind the reality of the situation, informal enterprises are not registered and so it makes it difficult for the authorities to identify and reach disadvantaged groups,” he said during the Rotary Club of Kingston's digital meeting held recently.

According to him, it is essential to reduce the risk of the contagion for workers and their family and to ensure their access to health care.

“We need to continue to invest in strengthening our health systems and in making that investment ensuring access and protection for all. We got to determine how best to build universal social protection, something that will support the recovery of productive economic units which will boost their productivity and at the same time facilitate the transition from informal to formality so we can ensure that more formal job opportunities are available to the Jamaican market,” he continued.

Distant further indicated that the crisis has had an uneven impact in different sectors and that in itself can trigger significant restructuring of economic activities.

“The expansion of an informal economy often follows a financial collapse. When you find permanent closure of formal micro, small and medium-sized enterprises, [this] triggers an unprecedented surge in unemployment or underemployment, and as long as this crisis continues, it has a long-lasting effect on the economy. To make up for that loss of income, we find that especially in the lower-income countries like Jamaica, where there are weak social protection systems, people end up resorting to making living as an informal micro business owner,” he stated.

While Distant commended the Government on its crisis-related short-term financial assistance interventions, he added that economic recovery, whereas necessary, will not by itself reduce informality, especially considering the size and the scale of that sector.

What is needed as well, Distant said, is the identification of the needs and priorities of the informal sector to establish sustainable and suitable public policies to enable and ensure that this takes place.

“We got to get deep in understanding what the real requirements of people are in the informal economy, and the recognition that there will not be one answer that fits all, but we need a solution that is multi-tentacled in providing for people in these situations,” Distant argued.

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