The Global Financial Crisis: Critical Social Issues For Jamaica - - PowerPoint PPT Presentation

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The Global Financial Crisis: Critical Social Issues For Jamaica

Presented by Pauline Knight & Christopher Smith Planning Institute of Jamaica April 02, 2009

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Outline of Presentation

Jamaica and its position in the global economy Select macro economic and social indicators Social Issues as a result of the global financial crisis Jamaica’s response Policy recommendations Conclusion

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Jamaica

Classified as a medium income country GDP per capita estimated at US$ 5 075.6 in 2008 up from US$ 4 811.0 in 2007 Population as at October 2008 was 2.69 million

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Jamaica Cont’d

Jamaica is highly integrated in the global economy This is evident in its high degree of

• penness – 99 and 98 per cent 2006

and 2007 respectively Any major shift in the global economy will have an impact on Jamaica

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Select Indicators

0.0 500.0 1000.0 1500.0 2000.0 2500.0 2003 2004 2005 2006 2007 2008 Years US$M Bauxite Tourism Remittances

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What is the Impact on Jamaica?

Depreciation of the Jamaican currency Inflation Contraction in industries (lay-offs, closures & salary cuts) Contraction in GDP Reduction in Government revenue – budgetary constraints Reduction in remittances

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Emerging Social Issues

Contraction in GDP Smaller national ‘pie’ to share Currency Depreciation/Inflation Higher prices Reduction in purchasing power for all HH Increase in HH unable to meet basic needs i.e. more poverty

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Emerging Social Issues

• Contraction/Salary Cuts in Industries

Higher unemployment Less income for affected HH Increase in HH unable to meet basic needs i.e. more poverty Communities in bauxite areas devastated

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Emerging Social Issues

More Children At risk More Female Unemployment Higher Crime More youth unemployment Contraction In Industries

Higher unemployment

Less HH Income Poorer nutrition Poorer School attendance Less health care

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Emerging Social Issues

Reduced Revenue/Budgetary Constraints Delay/cancellation of programmes/projects Social well-being negatively affected Decline in real wages in public sector Less income for affected HH

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Emerging Social Issues

Reduction in Remittances Less income (cash/kind) for approx. 42%

• f HH

Reduction in HH expenditure on day-to- day needs (90% of remittances) Increase in HH unable to meet basic needs i.e. more poverty

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Summary of Social Effects

Reduction in purchasing power for all HH Less income & day-to-day expenditure for some HH Higher unemployment Increase in poverty Poorer nutrition Poorer health Higher crime Lower school attendance More youth and children at risk More economic dependency for females Less social/community well-being

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Government’s Response

Government’s response is two-fold

• 1. Stimulus package
• 2. Social protection measures

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Stimulus Package

10% margin of preference to Jamaican

• wned companies in GOJ procurement

policy. 15% of procurement reserved for SMEs J$650M allocated for on-lending to SMEs by financial institutions & Jamaica Business Development Centre

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Stimulus Package Cont’d

Tax on dividends paid by non-listed companies abolished January 01, 2009 Transfer tax reduced from 6.5% to 5% Job placement services for laid off workers arranged with Heart Trust/NTA NHT can make arrangements to either temporarily suspend mortgage payments, extend the loan period and reduce interest rates for persons suffering from loss of income

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Stimulus Package Cont’d

Government will adjust regulation for classification of non-performing loans from 90 to 180 days. US$300M loan from IDB to be accessed through the EXIM Bank J$2.5 billion additional expenditure on local infrastructure (roads, drains, gullies etc) authorized

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Ongoing Social Protection Initiatives

Increase (+40%) in beneficiaries of cash transfers i.e. PATH Increase in the size of the PATH benefit Nutrition programme in basic schools in one parish i.e.

• St. Mary (lack of funds prevented all island

implementation) Earmarked budgetary provisions for free lunches for PATH primary and secondary students Waiver of fees for health care and tuition in secondary schools Economic Empowerment Grants for PWD

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Recommended Policies/Strategies for Positive Social Outcomes

Household Income/Poverty Reduce and contain inflation as its impact is most devastating on the poor and vulnerable

Encourage mortgage companies & other financial institutions to reduce financial burden on persons with loss of income e.g. suspend mortgages etc.

Stimulate growth in agriculture for local food production and also rural development Raise income tax threshold

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Recommended Policies/Strategies for Positive Social Outcomes

Unemployment Have pro-poor arrangements to encourage viable livelihoods e.g. MSE loan pool Stimulate businesses through tax cuts etc. Establish a registry of persons laid off to obtain household information and identify needs and appropriate provisions e.g. Training & job placement services Promote community based responses:

• Communal enterprises (agri and non-agri)
• System to promote volunteerism & engage

volunteers

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Recommended Policies/Strategies for Positive Social Outcomes

Unemployment (cont’d)

Introduce unemployment insurance for the future as a partial alternative to redundancy payments and link to training for re-tooling

Youth/Children/Women At Risk Expand youth development programmes to absorb unattached youth and provide linkages to job market Expand progs. like PATH & raise benefits

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Recommended Policies/Strategies for Positive Social Outcomes

Communities At Risk Use geographic targetting tools (i.e. indicator mapping) to guide community interventions Promote community based responses Health Removal of User Fees esp for the poor

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Recommended Policies/Strategies for Positive Social Outcomes

Nutrition

• Public education
• School feeding esp. basic & primary schools

Other

• Special funding arrangements for temporary

social assistance programmes for specific population groups e.g.

a) Benefits for elderly, b) Economic Empowerment Grants for disabled

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END OF PRESENTATION