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Renewed call for closer look at informal sector's role in economy
Julian Richardson
Tuesday, November 03, 2009
PROFESSOR Neville Ying, a board member of the Jamaica Productivity Centre, yesterday reiterated an age-old argument that Jamaica should take a closer look at the role the informal sector (those outside the tax net) plays in the economy.
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| Professor Neville Ying makes a point at yesterday's Observer Monday Exchange. At right is Phillip Alexander, group chief risk officer, GraceKennedy Limited. (Photo: Naphtali Junior) |
"The International Labour Organisation (ILO) has been studying this issue about the extent to which we include the informal economy in our statistics... we don't," said Ying yesterday during the Observer's weekly Monday Exchange meeting of reporters and editors.
"That's why you have this difficulty when you look at Jamaica where we say that our productivity is low, but when you look at our quality of life, it just doesn't match," Ying added. "Part of that is the extent of which we are capturing those numbers in the formal system."
A study commissioned by the Government in 2002 concluded that the equivalent of 43 per cent of Jamaica's gross domestic product (GDP) was informal, and therefore escaped the regulatory purview of the authorities.
The International Monetary Fund (IMF), in 2006, estimated the annual growth of the Jamaican economy at up to three percentage points above the Statistical Institute of Jamaica (Statin) estimate, due, the fund said, to the unmeasured activities in the informal sector. Noting at the time that the country's informal sector was growing faster than the formal sector, the IMF contended that the rapid growth in the underground economy was counter to sustainable economic development.
According to the ILO, the main employment generator in Latin American countries is the informal economy. According to the organisation's statistics, between 75 and 80 per cent of every 100 new job posts were created by the informal sector over the last decade.
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