Call for financial safety net for vulnerable workersMonday, May 25, 2020
BY ALICIA DUNKLEY-WILLIS
WITH thousands left reeling from sudden layoffs and redundancies in Jamaica and across the Caribbean as businesses try to weather the economic fallout from the COVID-19 pandemic, a call is being made for an unemployment insurance scheme, a living wage policy and legislation to protect contract labourers in the region.
In fact, Lauren Marsh, a research fellow at Hugh Shearer Labour Studies Institute at The University of the West Indies, Mona, thinks regional governments should implement a combination of the three measures to protect vulnerable groups such as service workers, sales workers, clerks, and individuals involved in domestic occupations.
“The fact is COVID-19 has led to the layoff of thousands of Caribbean workers in the [occupational categories identified by the International Labour Organization], and these are minimum wage earners, they are chief breadwinners and single parents, and in some cases, youth workers,” he said on Friday.
Marsh was speaking during a webinar on the implications for labour markets post-COVID-19, hosted by the Hugh Shearer Labour Studies Institute.
“These persons are extremely vulnerable — there is sometimes little or no job security. I know of cases where persons in these categories have contracts for three to six months, they are poorly compensated — often below the minimum wage — and there are sparse benefits, oftentimes no vacation benefit, no pension, no sick leave, and so on. The fact is, the occupations mentioned earlier are extremely vulnerable to external shocks,” Marsh pointed out. “We are seeing this mainly in the tourism industry for Jamaica and some Caribbean territories because of the disruption in the supply chain — where there are no visitors to the countries then there is no revenue.”
Noting that many of these individuals are left without any kind of supplementary income amid the already burdened welfare system in the Caribbean region, Marsh said they have to “resort to informal means of earning”.
“We need to move forward by utilising unemployment insurance to provide some amount of wage replacement for these vulnerable persons,” he stated.
Unemployment insurance is temporary wage replacement for eligible workers who may become unemployed because of circumstances beyond their control, for example layoffs, natural disasters and other crises and labour market issues. Developed countries such as the United States, United Kingdom and Canada have unemployment programmes in place, some of which are from the early 90s.
Caribbean countries, Marsh said, do not have unemployment insurance facilities, except for The Bahamas.
Pointing out that the main issue with implementation of unemployment insurance in the Caribbean is its associated cost, Marsh said there are ways around this.
“For Jamaica, the Planning Institute of Jamaica estimates that it would cost between $22 to $41 billion to implement the system. There are also issues with monitoring. There is a view that we don't have the platform or the framework to facilitate this kind of programme — that will take us some time for implementation and, possibly, revolutionise how we go about collecting data on individuals.
“So without that kind of system in place there is a view that it may lead to moral hazards where persons may defraud the system — mainly they would access the benefits under false pretence because we are unable to provide proper regulation,” he explained.
According to the research fellow, Jamaica would be “somewhat misguided” if it were to look to more developed countries for a template.
“I believe if we intend to implement an unemployment insurance policy for the Caribbean or Jamaica, we need to look at hybrid models...there are several hybrid models evident in our neighbours in South America. For Jamaica, I have a very profound recommendation from a colleague which says that if we don't have the financial base for the unemployment insurance, it could piggyback on the National Insurance Scheme,” Marsh told the forum.
The proposal, he said, is to increase NIS contributions by five per cent, with 2.5 per cent being contributed by employers and 2.5 per cent by the Government.
“It may be a bit costly, but we can probe it more. The fact is, we know that workers in Jamaica and the Caribbean need some form of temporary support if they are experiencing difficulties, such as temporary job loss, which they are now doing in COVID-19,” he argued.
In the meantime, Marsh said a 2018 unpublished study on unemployment insurance for Jamaica could provide a point of reference for Jamaica and other Caribbean counterparts.
“We need special legislation for contract labourers — for example hotel workers, restaurant workers, security guards, BPO [business process outsourcing] workers, and so on,” Marsh said, noting that the issue with contract labour is that many of the individuals are extremely vulnerable, are usually poorly compensated, have little or no job security, are not usually unionised, and are basically not protected under law.
“They are denied maternity and vacation leave, et cetera, and they are denied social protection with usually no health nor pension benefits, based on the nature of their contract. Ironically, despite the concerns with contract labour in the Caribbean, there are no legislations to protect our people from this kind of exploitation. I believe that Caricom [Caribbean Community] itself needs to develop model legislation for contract labour to kind of steer or provide a blueprint, and countries can develop their own legislation to protect their workers,” he said.
Noting that there is, however, little research or data on contract labour in the Caribbean to guide the legislation, Marsh said there was useful information provided by the International Labour Organization Bureau for Workers' Activities.
Additionally, the research fellow is also batting for a graduation from the current minimum wage scheme.
“It is full time we move from utilising a minimum wage to implementing a living wage. In the Caricom region, many countries do not have a specific formula to calculate the minimum wage, it is simply by negotiation, and in some cases, there is no empirical data guiding the negotiation process. So, in some instances it does not reflect the economic reality of minimum wage earners.
“We did a piece of work three years ago, using 2012 data [during which] we saw that the minimum wage in about 2015-16 should have been about $12,000, and in Jamaica the minimum wage is now $7,000 — so it shows that we need some formula to calculate [it],” Marsh said.
“It is feasible to calculate a living wage for Jamaica — we can use data from the [ Jamaica] Survey of Living Conditions. There is a view that the living wage drives up unemployment, and I would say I am yet to see any empirical data to support this,” he added.
On Friday, Gillian Corrodus, chief director for industrial relations at the Ministry of Labour, on the question of job cuts being used as a first resort by employers, said this was not entirely the case.
“What we have recognised is that there have been job cuts, but primarily temporary job cuts through layoffs, not permanent job cuts through redundancies or dismissals. And it, therefore, means persons are still technically employed though not at work,” she said.
According to Corrodus, “Those persons who are experiencing either the temporary job cuts or permanent job cuts will definitely have to re-examine what the labour market is requiring of them as workers, and ensure that their talent is what the labour market requires.
She said, similarly, each organisation will have to look at what is the talent or human capital required to move forward in the direction of sustainable growth, and how to attract this talent or create it.
She, in the meantime, challenged Marsh on his stance regarding contract workers.
“In terms of contract work, we would want to recognise that in Jamaica every single Jamaican worker — whether they are on a fixed-term contract or permanent contract – are really covered under the minimum standards provided by the labour laws in relation to holidays with pay and all the minimum wage payment. So, therefore, any Jamaican worker who is not receiving this decent work standard is required to seek redress through the Ministry of Labour,” she stated.
According to Corrodus, where the problems are being experienced is not so much with “the contract itself, but the nature of the contract, the content of the contract, and where the contract seeks to stipulate that the person is not a worker”.
“That's where we have the problem, because if it classifies them as an independent contractor then they are not technically covered by the labour law, but all other persons under contracts, once they can establish an employee-employer relationship by way of supervision, the way they are paid, they are technically workers and are covered by these minimum standards,” she said.
Marsh, in noting that the points raised by Corrodus were valid, however, maintained that “the main issue I have observed with these contracts is mainly the time frame or lifespan — some of these contracts are three to six months. If you have a contact for three to six months, what are you entitled to under law? Basically, nothing. These persons are denied vacation, sick leave and other major benefits, which are given to other workers who have a longer contract,” he said.
Jamaica's Tourism Ministry in early March, in referring to the job cuts in the tourism industry, said the sector was on a hiatus, adding that of the 160,000 employed in the industry at that time, 120,000 had been laid off and 40,000 were still working.
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