Report: Jamaica wage rise tops region
Jamaica made more progress on wages than any of the twenty countries sampled in the region, when factoring for inflation, a new UN report says.
It follows the big pay raise the Jamaican government granted to itself.
The report from the Economic Commission for Latin America and the Caribbean, or ECLAC, a regional UN agency, said wages rose for 12 of the 20 economies for which information was available.
The increases were more than 10 per cent over the levels of the first half of 2022 in Jamaica and Mexico; and more than 4.0 per cent in Chile, Costa Rica and Paraguay, stated the report titled Preliminary Overview of Economies of Latin America and the Caribbean 2023.
In the first half of 2023, the average real wage in the economies of the region for which information was available increased by 0.4 per cent. At the bottom end, El Salvador, Haiti and Trinidad & Tobago witnessed declines in real wages.
In Jamaica, the government granted pay hikes for politicians and civil servants totalling $1.7 billion, such that the salary of the prime minister would move from $9.1 million to $28.6 million by April 2024, according to information from the Ministry of Finance. That equated to a 215 per cent pay raise, which sparked a national outcry. In response, Prime Minister Andrew Holness indicated plans to forgo his increase, and announced he would also not receive retroactive payments.
Prior to the public pay raise, the national minimum wage was also increased from $9,000 to $13,000 per week last June, a jump of 45 per cent.
The ECLAC report noted that the rise in public-sector salaries resulted in Jamaica having the second-highest rise in primary expenditure among countries where data was available. Guyana led the bunch with spending on its pensioners, but also capital projects such as hospitals and schools.
“In Jamaica, payroll expenses increased following the implementation of a new compensation system for public employees. In Guyana, there were significant increases in the monthly instalments of the old-age pension, starting in January, and in the cash transfer of the ‘Because We Care’ programme, targeted at school-age children,” ECLAC noted.
Guyana, a new oil economy, more than doubled its capital expenditure on the public investment programmes, last year, “driven by the construction of hospitals, schools, housing, roads and agricultural infrastructure”. Excluding Guyana, the rest of the region largely kept capital expenditures stable year-on-year, the report said.
Locally, inflation hit a post-pandemic peak of 11.8 per cent in April 2022, but was hovering at 6.9 per cent in December 2023.
The inflation rate, while subdued, still tracks above the 5.3 per cent Latin American average and 4.5 per cent Caribbean average.
Interest rate hikes by the Bank of Jamaica helped to cool down prices, but the prevailing inflation rate is still outside the target band of 4 to 6 per cent.
Among a group of 11 nations in the region with inflation targets, Mexico, Colombia, Guatemala and Jamaica were the only nations that kept the policy interest rate elevated, with the others reducing rates.
The countries that cut interest rates included Costa Rica, which was the first to start the cycle in March 2023, the report stated. It was followed by Uruguay, the Dominican Republic, Chile, Brazil, Paraguay and Peru.
The report also noted that Jamaica’s labour force participation rate was the second highest in the region at 104.6 per cent, bettered only by Bolivia at 106 per cent.
Although near to full employment, ECLAC says the Jamaican economy will still deliver growth of 1.9 per cent, according to 2024 projections. That level of growth will trail the Caribbean’s projected average of 8.3 per cent, or 2.6 per cent once Guyana is including. Flush with oil, Guyana is set to grow 29 per cent in 2024, among the fastest in the world.