THE unabated global economic crisis, with the resultant fallout experienced in our domestic economy, has severely limited the prospects for growth of the Jamaican economy.

It is also well known that the budget deficit and the debt burden that the country is carrying are of such a magnitude that it deprives the Government of the capacity to stimulate economic activity, through state spending and to provide and/or maintain social safety nets at a level adequate to achieve tangible alleviation of poverty.

Fortunately, the Jamaican people have shown fortitude and patriotism in enduring decades of austerity, even though we are now experiencing austerity fatigue. The social and political limits of austerity are determined by two factors, the real decline in the standard of living and the willingness to endure hardships.

The decline in the standard of living is particularly harsh for lower-income groups, but fortunately in Jamaica this has not pushed people beyond survival to the point of starvation. Remittances are the social shock absorber, which increase as the need in Jamaica increases. This accounts in large measure for the fact that there has been no social upheaval, and crime has not escalated more significantly.

The other important factor has been the willingness to endure hardships which reflects a combination of a fatalism that this is just how things are in Jamaica and a sense that we as a nation are all sharing in the distress of the moment. We are concerned that this sense of community togetherness is fragile because of the pronounced income inequality in Jamaica.

The potential discord which can arise from pronounced inequality is a phenomenon not confined to Jamaica and has gained prominence because the world is becoming a more unequal place every day. The gap in per capita income which exists between the developed and developing countries has widened over time, and the income inequality within countries has also increased, even in developed countries like the United States and Great Britain.

About 42 per cent of total world income goes to the richest 10 per cent of the world’s population and only one per cent goes to the poorest 10 per cent. In the US, between 1980 and 2007, the income of the richest one per cent rose 197 per cent but 80 per cent of American families experienced income stagnation.

New empirical research has shown what we knew intuitively, ie almost all aspects of the quality of life are affected not only by the income levels of the poor but by the income gap between the rich and the poor. Income inequality promotes such ills like violence, illiteracy, poor health and reduced life expectancy, among others.

As Jamaica is a developing country, poverty and inequality of income are part of our reality and is likely to be so for many years to come. The present embryonic economic growth will not redress the problem of income inequality and the Government is too financially constrained to alleviate this problem by providing offsetting social programmes for those with the lowest incomes.

Within the limited fiscal space, the Government must make every effort to ensure that income distribution does not become more unequal. This must be part of the rationale for tax policy and fiscal expenditure.