Gov’t policies strengthening Jamaicans’ spending power
KINGSTON,Jamaica – The spending power of Jamaicans at various levels of the economic spectrum has been increased by virtue of several government programmes and policies over the last three years.
The Government has increased the national minimum wage, reviewed the compensation packages of public-sector workers, increased rates for National Insurance Scheme (NIS) pensioners and introduced a new pension programme.
The latest measure is the increase in the National Insurance Scheme (NIS) pension scheme, which took effect in June.
The pension rate increases range from 23 to 76 per cent and are applicable to retirement pension benefits, invalidity benefits and widows and widowers pensions.
For Individuals in receipt of full-rate pension, theirs have been increased by 23 per cent, moving from $3,400 to $4,200 per week.
The benefit for individuals receiving three-quarter-rate pension has been increased by 37 per cent, moving from $2,500 to $3,500 per week, while pensioners receiving half-rate pension have seen a 76 per cent increase, moving from $1,700 to $3,000 per week.
On June 1, the income of minimum wage earners increased from $9,000 to $13,000 per 40-hour work week.
Prime Minister Andrew Holness, said the Government is fully committed to providing minimum wage earners with a livable wage, highlighting that the new rate represents a 44 per cent increase – the largest in 20 years.
Since 2016, the minimum wage has moved from $6,200 to $13,000, representing a 110 per cent increase over the seven-year period.
“We recognise that the contributions of minimum wage earners, such as household workers, artisans, labourers, store clerks, and security personnel, are vital to the success of our manufacturers, hotel professionals, lawyers, doctors, and teachers in meeting our national productivity and service targets,” the prime minister said.
The minimum wage of industrial security guards also increased from $10,500 to $14,000 per week and the Government has also engaged with employers in the security industry to improve their conditions by ensuring that statutory payments are made so that they will qualify for housing and NIS pension.
Some of Jamaica’s most vulnerable have been receiving financial support under the Government’s $800-million Social Pension Programme, which was launched in July 2021.
Seniors targeted are those 75 years and older, who are not currently in receipt of a pension, disability benefit or other retirement benefits, cash grants from the Programme of Advancement Through Health and Education (PATH), or Poor Relief Programme, and who do not reside in a government institutional care facility.
Between May 2022 and March 2023, a total of 64,360 payments amounting to $466.5 million were made.
The new Social Pension Programme is the largest social protection initiative to be implemented by the Government since the introduction of PATH 20 years ago.
Holness, said the non-contributory scheme is aimed at reducing income inequality and promoting a better quality of life for Jamaica’s older population, recognising that many of them have little or no community support, family, savings or investments.
Public-sector workers are seeing better pay and better pension under the public-sector compensation review, implementation of which commenced on April 1, 2022.
The exercise, being undertaken over three fiscal years, is expected to conclude in 2024/25 and will provide workers with a 20 per cent salary increase over the period.
It is intended to overhaul the structure of salaries and other emoluments in the public service to make it more equitable.
It has simplified the system, which comprised 325 salary scales and approximately 185 allowances, where allowances made up a large portion of the total compensation for some groups.
This negatively impacted the pension of workers, as most allowances are not pensionable.
The new system offers better compensation to public-sector workers, as the salary on which pension is calculated increases significantly. The greater the percentage of the salary that is pensionable, the higher the pension payment.
As such, individuals will receive better pay today and a better pension when they retire.
Because pension is taken out pre-tax, this guarantees that taxes paid are calculated on a lower base, and so persons will receive an increase in their net pay.
The restructuring exercise will cost the Government more than $100 billion over the next three years.