The strangulation of income inequality in Jamaica

Addressing income inequality between rich and ordinary people is one of the most significant challenges we currently face globally.

Between 2019 to 2021, dAt the height of the novel coronavirus pandemic, the world’s 10 richest men more than doubled their money from $700 billion to $1.5 trillion, or $15,000 per second or $1.3 billion dollars per day. At the same time, more than 160 million additional people have been forced into poverty.

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

Gabriela Bucher, Executive Director of Oxfam International, says: “If these 10 men were to lose 99.999% of their wealth tomorrow, they would be even richer than 99% of everyone on this planet. [with] six times more wealth than the poorest 3.1 billion people.

Tackling this extreme income inequality between rich and ordinary people is one of the most significant challenges we currently face globally. How do we give people the opportunity to have a decent quality of life?

More than 21,000 people die every day from widespread hunger and starvation, lack of access to health care, and the effects of violence and climate degradation.

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

How did we come here?

The world was led to believe that unrestricted free markets would be a great social leveler, leading to more people achieving personal wealth and a higher standard of living for everyone. Caring for the top would trickle down to benefit the bottom was the philosophy behind the neoliberal reforms of the 1980s, followed by the globalization of the 1990s. However, instead of the promised prosperity, there was “deindustrialization, polarization and a declining middle class. The richest 0.1% of US households now own as much wealth as the bottom 90% – a trend that has accelerated rapidly since the 1980s” (Professor Robert Reich).

In the United States, average life expectancy is falling after rising for a century. And, for those in the bottom 90% of the income distribution, real wages (adjusted for inflation) have stagnated. The income of a typical worker today is almost that of 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 that wealth more fairly.

Thomas Piketty argues that the current system of runaway capitalism is fundamentally flawed because its rewards and inevitably accrue disproportionately to those who own the capital, rather than those who only contribute with their labor. Therefore, inequality is not the result of economic or technological changes. Yet it is rooted in political ideology and 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 suffocating for the average Jamaican with little hope or expectation for their life. Most are trapped in a chokehold of institutionalized inequity, a broken system designed to keep them invisible and powerless to move forward. As a result, their daily life is a constant bustle without enough to fill a prescription, access a mortgage to own, go to school, stay safe and feed themselves. For the thousands of children growing up in poverty in Jamaica, it is hard to say that they will ever have the means to overcome the obstacles on their own.

Last year, Finance Minister Dr. Nigel Clarke announced that Jamaica’s poverty rate had fallen to 11%, or 330,000 Jamaicans are poor. Per capita, Jamaica ranks 146th in the world, so poverty is relative, and we should expect more from a country with abundant 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 (

Income inequality is measured primarily by the Gini coefficient and the equal distribution of income within a population, among other indicators.

Let’s take an industry as an example to focus on the levels of inequality in our society. Our tourism sector brought in US$3.64 million in 2019. Over 160,000 Jamaicans worked in tourism in 2019. This sector accounts for almost 31.5% of our gross domestic product (GDP), but many workers of some of our island’s most prominent resorts live in substandard homes on captured land within deep rural communities. In addition, most are employed on low-wage contracts with no tenure, benefits or pension insurance. Taxi drivers in New York and London talk about having a Jamaican vacation, but the equivalent taxi driver in Jamaica has very little hope of experiencing the same luxury in a Jamaican hotel or anywhere else.

In an industry where the average room rate is internationally competitive at US$300 or US$45,000 per night, labor as a percentage of operating costs may be less than 5%. Additionally, many large hotels operating in Jamaica receive tax incentives from the government; however, their profits may be repatriated overseas through management fees and sales commissions for tax purposes. So, essentially, after the initial capital investment, their long-term tax contribution can only be used to pay labor wages.

Don’t get me wrong, investment in our tourism product is welcome, but our goal, in the interest of national development, is for our workers to share in the prosperity and growth of the industry more equitably. After all, ordinary taxpayers’ money funds the Ministry of Tourism to promote the business of these hotels.

How can we fix it?

The policy we must pursue is a tax system in which everyone pays their fair share. For example, France ensures that large transnational companies pay what is due. Recently, McDonald’s France and its related companies agreed to pay more than $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 agreed with France to pay US$571 million for a backdated tax.

Our collective will must encourage competition in our market to avoid the creation of monopolies, establish a sustainable minimum wage with a sliding scale, provide greater access to loan capital at affordable rates for young entrepreneurs and implement the equal universal access to quality education for all. .

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

Lisa Hanna is MP for St Ann South Eastern, People’s National Party Spokesperson for Foreign Affairs and Trade, and former Cabinet Member