Photi: JIS. Jamaica Chamber of Commerce head Lloyd Distant warned that workers in Jamaica's huge informal economy have suffered most in the age of the Covid-19 pandemic.

KINGSTON, Jamaica — Jamaica Chamber of Commerce (JCC) President Lloyd Distant Jr says the impact of the coronavirus (COVID-19) pandemic has highlighted the need for more businesses to be brought into the formal economy.

He said that government could help these informal operators make the transition by implementing targeted policy measures.

Speaking during the Rotary Club of Kingston’s digital meeting yesterday, Distant said anecdotal evidence suggests that approximately 60 per cent of Jamaica’s economic activity is informal.

He pointed out that these enterprises often employ fewer than 10 staffers who are undeclared, mostly low-skilled employees without social protection, health or safety benefits.

He pointed out, however, that given the fact that workers are mostly undeclared, “it makes it virtually impossible for the Government to identify and cover all of these entities and individuals”.

“In these instances, we find that these employees have very low productivity, low rates of savings and investments, and negligible capital accumulation,” he pointed out, noting that this makes them particularly vulnerable to economic shocks such as COVID-19.

He said that their informal status precludes them from benefiting from crisis-related short-term financial assistance interventions, such as the Government’s COVID-19 Allocation of Resources for Employees (CARE) Programme.

Government provided financial grants to operators in the informal sector to cushion the impact of COVID-19. These included bar operators, hairdressers, taxi operators, barbers, and craft and market vendors.

Mr. Distant lauded the intervention but noted that greater support is required given the size and scale of the informal economy.

Noting that COVID-19 has “brought out the vulnerabilities of the hundreds of thousands of Jamaicans workers who earn a livelihood in an informal way,” Mr. Distant said that the situation serves as a reminder of the crucial need to make the transition from an informal to a formal economy “a priority area for our national policies”.

“Coming out of the COVID-19 crisis, there needs to be a very determined move in that direction,” he stressed.

What is an informal economy?

An informal economy (informal sector or grey economy) is the part of any economy that is neither taxed nor monitored by any form of government.

Although the informal sector does make up a significant portion of the economies in developing countries, it is sometimes stigmatized as troublesome and unmanageable.

However, the informal sector provides critical economic opportunities for the poor and has been expanding rapidly since the 1960s. Integrating the informal economy into the formal sector is an important policy challenge for countries wishing to bring employment protections and benefits to all workers, and of course, to raise tax revenues.