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News » Business leader critiques Jamaica’s redundancy payout laws

Business leader critiques Jamaica’s redundancy payout laws

Jamaica redundancy payout laws
Photo from Jamaica Observer

MONTEGO BAY, JAMAICA — Business leader Mark Kerr-Jarrett voiced concerns over the financial burden of redundancy payouts in Jamaica, calling current regulations a “disincentive” for companies to increase efficiency.

Kerr-Jarrett, Managing Director of real estate developer Barnett Limited, made the remarks while addressing Prime Minister Andrew Holness at the opening of the company’s new business center in Montego Bay last week.

“The redundancy payments are also a disincentive to looking for new employment and major burden to the businesses in increasing efficiency, productivity through retooling and upskilling,” he stated.

Under Jamaica’s Employment Act, laid-off staff are entitled to up to three weeks’ pay for each year served, depending on tenure. Kerr-Jarrett contends such payouts can jeopardize a company’s plans, using a past example at his firm.

In 1996, when Barnett Limited wanted to transition from manual to mechanical sugar cane harvesting, the redundancy payouts would have exceeded the $550,000 cost of new machinery.

The businessman added that quality human resources are Jamaica’s “greatest challenge” to private sector growth. He suggests reforming the education system long-term and, more immediately, “public sector reform” to free up skilled workers for the private sector.

With Jamaica’s outsourcing sector expanding, freeing up skilled labor could help fill shortages in qualified personnel and boost competitiveness in higher-value outsourcing, according to experts. 

Moreover, reduced redundancy costs could allow companies to retool and train workers to move up the value chain.

While describing his proposals as “scary,” Kerr-Jarrett believes they would spur economic growth by making businesses’ fiscal space and human capital available.

In his reply, Prime Minister Holness acknowledged the development would increase labor demands and pressure, stating reform was a “delicate subject” requiring careful attention.

The exchange comes amid a debate over labor shortages and the need for foreign workers. Kerr-Jarrett calls for decisive action to restructure the labor market and reduce redundancy costs he sees as inefficient.

Read more here.

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