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An Approach to Formalization of the Informal in Jamaica

Formalization Meeting on Experiences in and the Caribbean under the FORLAC Programme 20-21 April, 2015, Lima, Peru

Presented by Kelvin Sergeant, Specialist, Sustainable Enterprise and Job Creation Specialist Why was Jamaica Chosen?

The Jamaican economy is characterised by persistent stagnation with an annual growth rate of 0.53% over the period 1999-2014 The Economic crisis of 2008 affected sectors such as bauxite, ; it caused declines in remittances and affected the sector as well during that period. While tourism has rebounded in terms of arrivals and revenue, the other sectors have not done well is now approximately 14.2%. is over 35% ( see chart) Large fiscal deficit and debt ( over 100% of GDP) continue to affect the government The informal sector has fluctuated between 45% - 54% for decades. of Major Industrialised

Source: Global Economy Economic Growth: Real GDP Change

Source: The Global Economy Jamaica Unemployment Rate Jamaica Youth Unemployment

Source: STATIN Youth Unemployment

Source: STATIN Informal Sector in Relation to GDP between 1966-2000

Source: IADB Why Jamaica (con’t)

The Honourable Minister of labour and Social in his address to the 103rd Session of the ILC in Geneva in June 2014 indicated:

“ We are also working to regularize and formalize our significant estimated to be approximately 45 per cent of GDP. Tax reform and enhanced measures are an important part of this initiative.”

The Minister also indicated that the GOJ was taking practical steps to achieve dynamic efficiency in the economy by improving access to , facilitating ease of establishing business, pursuing labour reform, developing venture capital framework, promoting and reducing bureaucracy. Parallel Studies on FORLAC

The ILO had also convened a number of studies on Forlac in 2013, these were:

Policies and Schemes to promote the formalization of SMEs – Trinidad and Tobago Good practices in reducing informal in LAC – The case of St Lucia Forlac- Survey of employers in the formal sector and other stakeholders in Suriname St Lucia’s Informal economy Informal Employment in Jamaica The Jamaica RBSA

• The ILO in July 2014 allocated US$325,000 from its RBSA to Jamaica under the of the ACI’s on formalization of the informal economy • The implementation deadline for this RBSA allocation is 30 September 2015. The RBSA is designed to support capacity of local to foster employability and better jobs. The programme is linked to national policy as well as local policies • Under the ILO- CPO, Jam 104-Constituents have taken initiatives in policy areas that facilitate the transition from informality to formality The Jamaica RBSA

• The Project is designed whereby two communities have been selected – one urban (Granville) and one rural Horseguards/Garlands). • It is a pilot project • It will enable programmes to be tailored to address the actual situation at the local level

It involves inter-alia: • research • practical measures for skills development and financial support • practical measures to support entrepreneurship and SMEs • capacity development of tripartite institutions to foster employability and deliver more and better jobs (hence social dialogue) • studies on social protection and capacity building Activities Conducted under FORLAC in Jamaica since 2014

Between September 30 – October 3, 2014, the ILO led a high level Mission to Jamaica . The Mission also met with a number of Institutions and high level persons, including the Minister of Labour. The objectives of the mission were to: • Obtain buy-in on the part of a broader group of national stakeholders to ensure their involvement and commitment • Identify a focal-point designated by MLSS (who is expected to co- ordinate project implementation), as well as identify members of a Stakeholder Oversight Committee • Ensure that the linkages with existing and planned ILO interventions in Jamaica were maintained and corresponded to national needs • Identify two communities for project implementation • Identify Institutions, consultants and Local Oversight Committees for each of the two communities so as to ensure that the project implementation takes into consideration the needs of the communities • Have an understanding of the diagnostic information available, in particular data on the communities Activities (con’t)

• Tripartite Steering Committee formed and the FORLAC policy initiative was adopted in October 2014 • Terms of Reference were designed for EXCOLS • Three consultants were selected:

1. Data Collection and Analysis 2. National coordinator 3. Local economic development Consultant Activities Conducted (Con’t)

First Entrepreneurship Skills Training Workshop was held for informal • Twenty-one participants SMEs of Granville on 18- 20 November 2014

• 28 persons trained (16 males; 12 females) Second • 10 farmers Entrepreneurship Skills • 7 Shopkeepers Training Workshop was • 2 Electricians held for informal SME of • 3 chef/Bakers Garlands/Horse guards • 3 dressmakers on 26-28 January 2015 • 3 hairdressers •2 welders Activities (Con’t)

The third activity was conducted in collaboration with the ACS and the OAS It involved the formation of the Regional Network of Artisans in Tourism of the Greater Caribbean in Montego Bay on March 23, 2015 Participants represented included Jamaica (20) St Lucia (1), Barbados (1), Mexico (1), Panama (1), (1), Nicaragua (1), Guatemala (1), Dominican Republic (1) Participants were also exposed to ILO’s Capacity Building tool – SIYB Participants were exposed to issues surrounding the ease of doing business Guest participants were invited to share experiences on how to be a successful entrepreneur Participants were also exposed to material on the legal aspects of business required to move from informal business to formal ones Local Economic Development Coordinator of FORLAC Project presents to informal SME Owners (Garlands) in Montego Bay in January 2015 Participants of Entrepreneurship Skills Training to informal SMEs in Garlands/ Horseguards and Environs Local Presenter on Forlac in Garlands/Horseguards Meeting of the Regional Network of Artisans in Tourism of the Greater Caribbean Presenter at Entrepreneurial Skills Training Network for Artisans in Tourism discussing use of in Formalization Discussions at the Enterprise Skills Training Session and Formalization for Artisans in Tourism Some products of Artisans in Tourism sector of Jamaica on Display Future Activities under the project in 2015

• Collection of up to date and relevant statistics in the pilot • Training of trainers in entrepreneurship • Research and awareness raising on MNE declaration for enterprises in the tourism sector and linkages with SMEs. • Strengthening of the police force to tackle child labour and informality in St James • Training on for youths in and services in Granville and Garlands • Assessment and recommendations for MOL to improve local employment services Future Activities under the project in 2015

• Enhanced capacity of employers’ and workers’ on formalization • Technical Assistance to Jamaica Apprenticeship Board members - Study tour of German Apprenticeship system – Tripartite representation • Capacity building workshop on social protection for tripartite constituents • Gender- sensitive policy initiative to facilitate formalization to be developed • Dissemination Seminar on FORLAC • Communication and publication Results achieved

Technical capacity of informal SMEs in pilot community have been enhanced

SME artisans in tourism trained in entrepreneurship skills and

Collaboration between ACS and OAS

Network formed Further Initiatives

Network of SMEs to be formed

Linkages to be formed with local SME lending company and other financial institutions

Policy initiatives from workers’ and employers’ organizations to support Formalization to be developed

Continued policy reform by MOL and other government agencies (Ministry of Trade, Heart Trust NTA) to contribute to formalization of the informal economy Any questions?