Knight

While successive governments bemoan the billions of tax dollars they have failed to collect from unregistered companies and entrepreneurs, national statistics show that the sector has been instrumental in reducing unemployment and poverty.

The informal sector was highlighted in the country's national report on the Millennium Development Goals (MDG) for its role in reducing unemployment and poverty levels.

The contents of the country's national report, which will be presented at the annual ministerial review of the United Nations Economic and Social Council, were revealed Thursday afternoon at the Planning Institute of Jamaica's (PIOJ) New Kingston offices.

The report said unemployment declined from 15 per cent in 1990 to 10.6 per cent in 2008.

"This decrease is partly due to the growth of the informal sector from an estimated 28 per cent of GDP (Gross Domestic Product) in 1989 to an estimated 43 per cent in 2001, probably one of several contributors to a significant reduction in poverty levels," read a section of the document.

Dr Pauline Knight, director of social policy, planning and research at the PIOJ, said it was hard to ascertain the fullness of the informal sector's contribution. "It is the sector that is not being recorded," Dr Knight said.

She continued: "They are not being counted in our GDP very well. The statistical institute has to use ad hoc means of trying to count the sector to include them in the GDP measure because they are not automatically included because they are hidden so it is the underground economic operations."

The significance of the sector's contribution to GDP and poverty reduction might be due to its change of face over the years.

"Surprisingly, it is not only your low-skilled but some of your professionals who are a part of the informal sector."

"It used to be that your informal sector was your low-skilled or unskilled but since about the mid-1990s it has been transformed to include a lot of professionals," she said.

Dr Knight said the informal sector's estimated contribution to GDP is "quite significant", "but they are robbing in other areas". "They are making a contribution but not as much as they could make because everybody has to pay their taxes."

She added: "They are using the roadways and all the services of the Government but they are not contributing and this is a part of the problem of the low revenue intake of the Government".

tyrone.reid@gleanerjm.com