The Government of Jamaica (GoJ) COVID-19 pandemic stimulus response: an opportunity to regulate and formalize?

Abstract

PurposeThe purpose of the paper is to determine whether the Government of Jamaica's COVID-19 Allocation of Resources for Employees (CARE) Stimulus Response program provides a sufficient opportunity for formalization of the informal economy.Design/methodology/approachA careful examination of the program has been conducted, specifically through reading the CARE brochure, reading the budget presentation by the Minister of Finance in which the program was introduced and details highlighted, following program updates at COVID-19 Press briefings and the Minister's Twitter account, and following related articles and programs via original and social media.FindingsThis paper suggests that any capitalizing on the opportunity to promote formalization is insufficient. Early data show increased applications for licenses and registration by informal operators, but the CARE program is only short-term, and the benefits of formalization will have to surpass those of informality to be sufficiently attractive. Other attractors must necessarily involve simplifying the process of contributing to the National Insurance Scheme; and offering unemployment insurance; along with access to finance, education and training and policymaking opportunities. COVID-19 provides the possibility of a “new deal” for the informal economy that could yield productivity gains and more inclusive development.Originality/valueThis is one of the earliest examinations of how the short-term financial support schemes implemented by the GoJ as its COVID-19 Stimulus Response has been used as an incentive to formalize the large informal economy.