Opinion: Tourism in Jamaica: an industry based on misinformation and exploitation
The recent industrial action at various hotels in Jamaica is indicative that Jamaica’s tourism-dependent economy is a failure. But if definitive economic proof is needed, look no further than the gross domestic product (GDP) per capita, wages and tax contributions because they are the primary indicators of the strength of an economy, and our numbers show a country in dire straits.
GDP and Wages
The GDP of a country - the measurement of economic output - is directly linked to its industries. For instance, in 2022 the South Korean tech giant Samsung alone contributed a whopping 22.4% (US$340 billion) to the country's impressive US$1.67 trillion GDP. The GDP per capita is the economic output of a nation per person (GDP ÷ population), and it is used to measure national prosperity. So, the higher the GDP per capita, the more prosperous a country is, and prosperous countries tend to manufacture. The GDP per capita of South Korea was US$32,400 in 2022.
In Jamaica, tourism contributed 33.6% of GDP in 2023 (US$5.7 billion). It is fair to assume that the GDP per capita should exceed a living wage otherwise a country would be just surviving. The income tax threshold - the amount earned that is exempt from taxation - is a good yardstick to gauge a living wage, and it is almost US$11,000 in Jamaica. So one would expect our GDP per capita to exceed US$11,000, but it doesn’t.
Tourism helped to deliver a GDP per capita of just under US$6,900 in 2023. It is roughly US$22,700 for our smaller neighbour, Barbados, which also boasts a tourism product. The US$6,900 equates to a measly US$130 per week, and to put that in context, the weekly cost to provide lunch for a high school student is around US$25, and a 2-pound loaf of bread is approximately US$5.
GDP per capita is theoretical and can be disputed, but wages are indisputable and Tourism Minister Edmund Bartlett revealed about a year ago that lower-end workers make up between 70-80% of employment in the industry. While we don’t know specifically what lower-end workers make, during recent protests at Bahia Principe in Runaway Bay, housekeeping staff reportedly said they received a basic salary of $37,000 (US$237) fortnightly, which would equate to $18,500 weekly (under US$120) or about US$6,000 a year. The $18,500 is just above the minimum wage in Jamaica of $15,000 (under US$100) per week. There are a lot of single mothers working in housekeeping.
It appears that tourism is actually perpetuating poverty, and expansion cannot improve the plight of workers. When questioned about low wages in 2022, this is what Robin Russell, the president of the Jamaica Hotel and Tourism Association had to say:- "Wages are the largest single expense of any hotel and if we raise those wages indiscriminately, without a raise in income, they run the risk of bankrupting not just their individual businesses, but the entire industry."
In light of the resolution at the Royalton Negril and elsewhere, this statement appears false. This is an industry built on a model of exploitation. And for those who still maintain the economic importance of tourism, look at the contributions to the treasury.
Taxes
Taxes run countries and major industries should contribute proportionately to the treasury. During the April 2024 Sectoral Debate, whilst celebrating record earnings, Minister Bartlett boasted, "The country also earned US$103.5 million or $16 billion in departure tax; $4.6 billion in airport improvement fees; airline passenger levy, $9.2 billion; passenger fees and charges, $11 billion; and room tax, $3.6 billion, for a total direct revenue flows into the consolidated fund of US$345.8 million or $53.6 billion.
However, this was nothing to celebrate. Tourism contributed an alleged 34% to GDP, but $53.6 billion was under 5% of the $1.1 trillion 2023-24 budget. It is also worth noting that Minister Bartlett did NOT mention a corporate tax contribution from the hoteliers. This is unsurprising because many operate under an incredibly favourable tax regime, with 10-year relief on corporation and consumption tax, as well as import duties.
The primary reason for these incentives is because hotels create thousands of jobs, and tourism has helped deliver an alleged low 4.2% unemployment rate. However, personal income tax should be a critical contributor to the treasury, but very few of the 367,000 workers earn near enough to pay it. There is obviously a problem when the biggest industry contributes under 5% direct tax and very little income tax to annual budgets.
The embarrassing GDP per capita, and moreso the pathetic wages and pitiful tax contribution, are clear indications that the importance of tourism is fabricated and the claim by the government that tourism is our lifeblood is a fallacy.
The recent scathing comments by the Antigua and Barbuda Prime Minister Gaston Browne regarding the actions of the Jamaica-based Sandals Resorts International highlight that the goings on of hotels in Jamaica are not accepted elsewhere. Browne wants the hotelier to consider leaving the islands because it had adopted a policy of not wanting to pay taxes. He went on to say that their model was reminiscent of the colonial period and slavery, and the industry could not attract workers because of the low wages.
In Jamaica, the expansion of all-inclusives continues, and add insult to injury, it is being aided by the use of the people's money to construct airports. Without conducting a cost-benefit analysis, multimillions of USD were spent to expand the Ian Fleming International Airport to accommodate one airline company. And to double down on government support, the prime minister recently announced that plans are underway for the construction of another airport in Negril.
In a statement, the opposition People's National Party "fully acknowledges the value of expanding Jamaica's tourism infrastructure" but urged a rethink.
More than a "rethink" is needed. This gross mismanagement is possible because of the widely-touted but unsubstantiated benefits of tourism.
Diversity needed
I am not anti-tourism, but this version of tourism that has been created under the Jamaica Labour Party and the People's National Party is not working. One solution is the walkout of all the staff nationwide, but that is not going to happen. Therefore, the creation of better-paying industries and a skilled workforce are needed. The Covid debacle illustrated the fragility of tourism, but due to mismanagement and lack of leadership, the economy is not diversifying. Manufacturing is essential, but Jamaica has always had extremely high electricity rates and this has prevented investment in food processing, proper solid waste management and numerous other energy dependent industries.
Our supermarket shelves are full of snacks from Trinidad. Why? Because Trinidad has cheap electricity. However, a solar investment pays for itself within a few years so the generation of incredibly cheap electricity is possible. Jamaica could have a vibrant economy if free solar and wind energy were exploited with the same enthusiasm as the people and land. And when the inevitable hurricane strikes Jamaica, what will recover quicker, tourism or solar powered manufacturing?
The prime minister recently spoke about tourism benefiting all Jamaicans, but the strikes and protests at various hotels tell a different story. To be honest, I’m shocked that there aren’t more. We must demand an immediate review of the industry.
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Dr. J. Lennon is an advocate for real change in Jamaica. His website is: LetsBuildaBetterJamaica.com. The views expressed are his own and not necessarily those of 18º North. Send feedback to LetsBuildaBetterJamaica@gmail.com.
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