Prescription for welfare addicts ...

Marcella Scarlett, Business Reporter

Tax expert Ethlyn Norton-Coke is proposing that Jamaica do away with redundancy payments for persons whose jobs are eliminated and adopt instead a national policy of unemployment insurance.

She is also suggesting that too many persons are dependent on the welfare state and that it is time to consider limiting the size of families.

Norton-Coke, who made the insurance proposal within the context of the tax-reform debate, suggests it would bolster the social safety net while at the same time reducing dependency on government aid under the PATH programme and eliminate what companies have long complained is a barrier to closing down unprofitable businesses.

"I am a firm believer in this unemployment insurance from long time, and nobody has taken me on," Norton-Coke told Sunday Business on Thursday.

She previously raised the issue a week prior at the Kingston and St Andrew Parish Development Committee forum on taxes in Kingston. Trade unions have been making a similar proposal since 2002.

The PATH programme generally doles out to the poor and elderly benefits that are fully subsidised by Government, often through grant aid and debt.

Unemployment insurance

A system of unemployment insurance benefits those who previously had jobs and contributed to the scheme while employed. Benefits are drawn down when contributors lose their jobs.

"We need to review our redundancy payment system within the tax system. Many persons don't employ people anymore because they have redundancy payments to make. It is a deterrent to employment," said Norton-Coke.

"We need to review our systems and look at unemployment insurance and how it is that we can look to pay a little bit each month and we don't have redundancy payment. This can stimulate employment," she said.

Additionally, Norton-Coke said persons who collect redundancy payments - which tend to be lump sums calculated at two weeks' pay for every year up to a decade on the job and three weeks' pay thereafter - often spend the funds unwisely instead of investing for the future.

"Most of the people take the money and buy a taxi, which crowds our roads. Some people also waste the redundancy money and then they are out begging people, and you will see that the numbers of beggars on the streets has escalated," said the tax expert, who chairs the Institute of Chartered Accountants of Jamaica's taxation committee.

Norton-Coke was equally vocal about persons who appear to depend on welfare for survival, saying that something should be done to limit families to no more than two children.

'Cannot afford it'

"People talk about 'me get eight children, me get six children'. People must have two children and no more. They have done it in other countries successfully - China, India. We can't afford the eight and six children," she declared.

"The Government cannot afford it based on the number of persons that are in the tax system. If we have fewer children, we have less dependence on the State's resources. If you have fewer children, you are more able to look after them," she said.

Under an unemployment insurance scheme, the employee and employer would make a contribution. This amount, Norton-Coke said, would be worked out actuarially.

The contribution would go into a national pool and employees would access the fund for up to six months, she proposes, or until they find another job. The six months, she explains, is based on the model used in Canada and the United States.

"This is not a hand-me-down like PATH. I am very surprised that so many persons depend on PATH. We must earn our way. We can't depend on those who work and pay taxes to get money," she said.

"It would be like the NIS [National Insurance Scheme], but it would have to be managed better than the NIS," she said.

"NIS has not been managed efficiently," Norton-Coke told The Gleaner. "Various people, various governments, have taken money from NIS for small business, and the small businesses have not materialised to pay it back or pay the tax to enhance our fiscal position."

The tax expert says she is mainly pushing the insurance proposal as an alternative to the redundancy payments, which act as a disincentive to companies hiring persons for full-time employment.

Businesses are choosing to hire "on a contract basis, so there is no job security," said Norton-Coke.

"A lot of employers are giving people two-year contracts and then break it and renew it to get out of the redundancy payment, which does not give the employee any security. It is just a demotivating thing. How do you then try to provide housing, a mortgage, when you don't know if you are going to have a job?" she said.

marcella.scarlett@gleanerjm.com