The chokehold of income inequality in Jamaica
Tackling income inequality between the wealthy and ordinary people is one of the most significant challenges we now face globally.

Between 2019 to 2021, during the height of the novel coronavirus pandemic, the world’s 10 richest men more than doubled their money from US$700 billion to US$1.5 trillion, making US$15,000 per second or US$1.3 billion daily. At the same time, over 160 million more people were forced into poverty.

The top three men on the list were Elon Musk (Tesla), Jeff Bezos (Amazon), and French fashion tycoon Bernard Arnault (Louis Vuitton, Moët, Hennessy, LVMH). LVMH, which owns Fendi, Christian Dior, and Givenchy, recorded revenue of US$17 billion for the first quarter of 2021 alone, moving Arnault’s net worth to US$186.3 billion (Forbes 2021).

Oxfam International’s Executive Director Gabriela Bucher says, “If these 10 men were to lose 99.999 per cent of their wealth tomorrow, they would still be richer than 99 per cent of all the people on this planet [with] six times more wealth than the poorest 3.1 billion people.”

Tackling this extreme income inequality between the wealthy and ordinary people is one of the most significant challenges we now face globally. How do we give people the ability to afford a decent quality of life?

Over 21,000 people die daily because of pervasive hunger and starvation, the lack of access to health care, and the effects of violence and climate breakdown.

The war in Ukraine now takes centre stage, and the world has mobilised billions in aid, but this problem predates it, and more people are dying from it.

How did we get here?

The world was led to believe that unrestrained free markets would be a great social leveller, leading to more people achieving personal wealth and higher standards of living for everybody. Taking care of the top would trickle down to benefit the bottom was the philosophy behind the neoliberal reforms of the 1980s, followed by the globalisation of the 1990s. However, instead of the promised prosperity, there was “de-industrialisation, polarisation, and a shrinking middle class. The richest 0.1 per cent of American households now own as much wealth as the bottom 90 per cent — a trend that has accelerated rapidly since the 1980s” (Professor Robert Reich ).

In the US, average life expectancy is declining after rising for a century. And, for those in the bottom 90 per cent of the income distribution, real (inflation-adjusted) wages have stagnated. The income of a typical worker today is nearly where it was 60 years ago (Professor Joseph Stiglitz, 2020).

While capitalism has proven to be the system that creates more wealth (there are more individual billionaires now in communist China than anywhere else), we should find a better way to distribute this wealth more equitably.

Thomas Piketty argues that the current system of unchecked capitalism is fundamentally flawed because its rewards and inevitably flows disproportionately to those who own capital, rather than those who contribute only with their labour. Consequently, inequality is not the result of economics or technological change. Still, it is rooted in ideology and political practices that create inequitable structures and institutions within a society’s legal, educational, and fiscal systems that sustain high levels of disparity.

These entrenched systems, in my view, are undoubtedly stifling for the average Jamaican with little hope or expectations for their life. Most are trapped in a chokehold of institutionalised inequity, a broken system designed to keep them invisible and powerless to get ahead. As a result, their daily lives are a constant hustle without enough to fill a prescription, access a mortgage for homeownership, go to school, stay safe, and feed themselves. For the thousands of children growing up poor in Jamaica it’s hard to argue that they will ever have the means to beat the odds on their own.

Last year Finance Minister Dr Nigel Clarke announced that Jamaica’s poverty rate went down to 11 per cent, or that 330,000 Jamaicans are poor. On a per-capita basis, Jamaica ranked 146 in the world, so poverty is relative, and we should expect more from a country with bountiful natural assets and brand appeal. The poverty rate is the ratio of the number of people (in a given age group) whose income falls below the poverty line, taken as half the median household income of the total population (www.oecd.org).

Income inequality is measured primarily by the Gini coefficient and how equally income is distributed across a population, among other indicators.

Let’s take one industry as an example to focus on the levels of inequality in our society. Our tourism sector earned US$3.64 million in 2019. More than 160,000 Jamaicans worked in tourism in 2019. This sector accounts for almost 31.5 per cent of our gross domestic product (GDP), yet many workers at some of our island’s most prominent resorts live in substandard homes on captured lands within deep rural communities. Furthermore, most are employed on low-wage contracts without the assurances of permanence, statutory benefits, or a retirement pension. Taxi drivers in New York and London speak of enjoying a Jamaican vacation, but the equivalent taxi driver in Jamaica has very little hope of experiencing the same luxury at a Jamaican hotel or anywhere else.

In an industry in which the average room rate is internationally competitive at US$300 or $45,000 per night, labour as a percentage of the operating cost may be less than 5 per cent. Furthermore, many large hotels operating in Jamaica are offered tax incentives by the Government; however, their profits may be repatriated offshore through management fees and sales commissions for tax purposes. So, essentially, after the initial capital investment, their long-term contribution tax-wise may only be paying wages for labour.

Don’t get me wrong, investment in our tourism product is welcomed, but our objective in the best interest of national development is for our workers to share in the prosperity and growth of the industry in a more equitable way. After all, ordinary workers’ tax dollars fund the Ministry of Tourism to promote business for these hotels.

How can we fix it?

The policy we need to pursue is a tax system in which all pay their fair share. For example, France ensures large transnational businesses pay what is due. Recently, McDonald’s France and its related companies agreed to pay over US$1.2 billion to French authorities to settle a case in which the fast-food giant was accused of years of tax evasion. Additionally, Apple settled with France to pay US$571 million for back-dated tax.

Our collective willpower must encourage competition in our marketplace to avoid the creation of monopolies, establish a liveable minimum wage with a graduating scale, give improved access to loan capital at affordable rates for young entrepreneurs, and implement universal equal access to a quality education for all.

While there is no magic wand, the truth is there can be a practical rebalancing of power, human creativity, and cooperation between Government, owners of capital, and civil society, that can move Jamaica toward a fairer and efficient system to significantly narrow the gap between the rich and poor over time. Let’s start now!

Lisa Hanna is Member of Parliament for St Ann South Eastern, People’s National Party spokesperson on foreign affairs and foreign trade, and a former Cabinet member

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