Wed | Aug 4, 2021

Household incomes still in recovery - New Statin study finds less than half of impacted earnings returning to pre-COVID levels

Published:Friday | January 22, 2021 | 12:17 AMKarena Bennett - Business Reporter
Carol Coy, Director General of Statin.
Carol Coy, Director General of Statin.

A survey by the Statistical Institute of Jamaica, Statin, around COVID-19’s impact on households, conducted during the month of October, has found that 45.8 per cent of Jamaicans have had their incomes reinstated to levels before the coronavirus entered Jamaica.

A previous survey by Statin in July had found that nearly half of Jamaican households, 47.5 per cent, had experienced a reduction in their income because of COVID-19 related disruptions to business and trade.

In an overview of the October 2020 findings, which is expected to be published by the statistical agency next week, Statin noted that some two per cent of the participants interviewed were currently earning more than their pre-COVID incomes.

Another 528,800 persons or 45.8 per cent of participants reported that during the month of October, they were still suffering from a partial loss of income, while 16,200 persons or 1.6 per cent had no income, largely based on the impact of COVID-19 on the economy since the virus made its debut in Jamaica in March, leading to a lockdown of the economy to fight its spread.

The number of participants that reported complete loss of income in October was less than half of the number recorded for July 2020, Statin data showed.

Slowly changing

The shift in income levels comes amid big job losses, but even the jobs picture appears to be changing. While the October 2020 labour force survey recorded a 3.5 percentage point rise in the unemployment rate, or UER, to 10.7 per cent in a year-on-year comparison, it was still a 2.7-point improvement on the July 2020 survey. Then, the UER was estimated at 12.9 per cent, at a time when Jamaica’s top employer, the tourist sector, had been in full lockdown and was just starting to air out hotel rooms again, to re-enter the market.

Similarly, other businesses, some of which had downsized, began ramping up operations again in early June and beyond, with the phased reopening of the economy.

Data reflecting a weaker year-over-year performance, but stronger quarter-over-quarter performance, also held for the Jamaican economy for the third quarter ending September 2020.

The economy contracted by 10.7 per cent during the third quarter relative to the corresponding quarter of 2019, but, when compared to June 2020, it grew by 8.3 per cent, indicating a slow rebound of the economy from the fallout of COVID-19. The April-June quarter had been particularly bad, having experienced a historic 18 per cent contraction.

“The relaxation of some of the measures, implemented in the second quarter of 2020 to limit the spread of COVID-19, contributed to this performance,” said Statin’s Director General Carol Coy during the agency’s quarterly briefing on the economic data it compiles.

The shrinkage in GDP for the September quarter resulted from declines in both the goods-producing and services industries, at 3.5 per cent and 13.1 per cent, respectively. The drag on the goods sector was mainly attributed to lower output in the mining and quarrying sector, which dipped 20.7 per cent from falloffs in the production of alumina, and reduced demand for crude bauxite, particularly from China.

Activities in the services industries, particularly tourism and travel, transportation, commerce, and recreation and culture, remain constrained by measures implemented to contain the COVID-19 pandemic.

Statin has not yet published data on which areas across Jamaica have seen a reinstatement of monthly wages. According to the study it conducted in July, the decline in income was most prevalent in ‘other urban centres’ – inclusive of areas generally populated by tourists – where 63.3 per cent of households indicated that they had a reduction in income, followed by rural communities which experienced a 60 per cent decline.

The Greater Kingston Metropolitan Area was the least affected by income losses.

For the September 2020 quarter, stopover visitor arrivals declined by 81.8 per cent; while the hotels and restaurants industry declined by 65.2 per cent, representing a further fallout of 1.4 percentage points from the hotel industry’s performance relative to July 2020.

The performance of hotels and other short-stay accommodation was impacted by the 83.5 per cent reduction in foreign national arrivals. The ‘restaurants, bars and canteens’ grouping continues to be negatively impacted by measures implemented to reduce the spread of COVID-19, with closure orders and curfews resulting in reduced opening hours for some establishments.

Expectations are that more restrictions will be lifted once Jamaica begins vaccinating the population against the coronavirus. That is expected to begin in April, starting with frontline workers and politicians. Around 16 per cent of the population is expected to be vaccinated by the end of the year.