Social Protection in Jamaica: Strengths and Limitations of Its Redistributive Mechanisms

This paper explores how social protection in Jamaica helps reduce inequality through redistributive mechanisms, and the effects on company and worker behavior, labor market segmentation and productivity. For that purpose, it analyzes the main social protection programs, including contributory programs, the national health program and the main poverty alleviation program. The analysis finds that Jamaica has a fragmented social protection system, with some elements favoring redistribution and others hindering it. Costs associated with formality result in few direct benefits for formal workers and high cross-subsidization of informality, acting as an implicit tax on formal private-sector employment. Furthermore, Jamaica has a national insurance scheme with low coverage due to high informality and a highly regressive government pension scheme. Universal health coverage and the poverty alleviation program facilitate redistribution by focusing benefits on lower-income quintiles. Jamaica’s social protection architecture has a direct impact on social outcomes, as well as productivity and the rule of law, and a comprehensive analysis is key to its improvement.