More jobs, smaller savings sap entrepreneurial energy
The newly released Global Entrepreneurship Monitor, GEM, report on Jamaica has found that improving job prospects and falling savings have both served to limit total early-stage entrepreneurial activity, referred to as TEA, across age groups.
TEA measures the percentage of the working age population - 18 to 64 year-olds that are in the process of starting or have just started a business. In Jamaica's case, a third of the TEA group fell into the 35-44 age category.
The Monitor says that most households now fall into the low-income bracket where it is difficult to accumulate savings to start a business.
The majority of households 96.8 per cent earn less than $3.03 million annually. This represents a monthly combined household income of $252,378.83, "which is within the low-income bracket and can impact consumer purchasing power and ability to amass funds to start businesses," the report said, while noting that households predominantly comprise three members.
GEM also reports a decline in total TEA to 9.9 per cent, compared to 22.7 per cent in 2008 and 15.6 in 2009.
The researchers said rising unemployment after the recession of 2008 should have been a fodder for entrepreneurship, but the TEA rates have not recovered for Jamaica.
In 2010, the TEA rate declined dramatically to 10.5 per cent as the economy improved, then rose and stabilised at 13.7 per cent, and 13.8 per cent, respectively, for 2011 and 2013.
However, the researchers noted that the years 2013 to 2016 saw "a remarkable period of economic stability with a new IMF agreement and successive years of passing the economic tests related to the agreement. The resulting draw down of funds for public-sector investments, improvements in agriculture and tourism, all militated against individual pursuits in entrepreneurship. It was, therefore, not surprising to see a 9.9 per cent TEA rate in 2016."
The report also found that more than half of the TEA group, 59.2 per cent, were localised in the retail trade, hotels and restaurant category.
Meanwhile, GEM said that the rate at which Jamaicans discontinue business after investing is in line with other countries.
The business discontinuation rate measures the proportion of the working-age population that ceased business operations over the past 12 months by selling the business, shutting down operations or otherwise severing an owner/management entrepreneurship relationship with the business.
GEM cited Jamaica's discontinuation rate at nine per cent, comparing it favourably not only with the rest of Latin America and the Caribbean at 9.6 per cent, but also with North America at 12 per cent. The only region that Jamaica underperformed was Europe, the report noted.