FDI and Jamaican Work Permits granted to Foreigners – FDI increase when Infrastructure Project start due to Skilled Certified Labour Shortage

With the recent visit of the IMF (International Monetary Fund) head Christine LaGarde over a three (3) day period now concluded as stated in “Christine Lagarde Impressed By Awareness Of Jamaica's Need For Economic Reform” published Sunday June 29, 2014 10:48 am, The Jamaica Gleaner Jamaica is left with a lot to reflect on, particularly as it relates to our relationship with foreigners in General.

As a country we’re a Net Importer of goods, with even the very product we produce having their raw materials originate from other countries, even for Food Processing as argued in my blog article entitled “Jamaica's Basic Item Food Bill mostly from 1st World Countries - Buy Jamaican Build Jamaica made from Imported Raw Materials in containers that says Made in Jamaica”.

This article is sure to enflame the passions of many Jamaicans, particularly those out of work. So I’ll tell the story in two parts; Good News and Bad News.

Jamaica and FDI – Foreigners Love investing in Jamaica, despite the problems

Jamaica’s FDI (Foreign Direct Investment) according to the World Investment Report, published by the UNCTAD (United Nations Conference on Trade and Development) has increased by some 16% as stated in “Jamaica's FDI grows 16%” Published Wednesday June 25, 2014, The Jamaica Gleaner. In 2013 Jamaica attracted some US$567 million in FDI compared to the previous year 2012 where we attracted US$490 million, an increase of US$75 million or the 16% as touted in the UNCTAD's World Investment Report.

The report, which is focused on how SIDS (Small Island Developing States) can achieve their Sustainable Development Goals by 2015 via FDI's, Government Investments and reduction of Bureaucratic Red Tape, also point out some others who were a part of this exclusive growth club in Latin America and the Caribbean.

The Growth of the FDI's in these countries took place in 2013 and is compared to 2012 figures:

1.      117% increase for Mexico

2.      61% increase for Panama

3.      16% increase for Jamaica

4.      14% increase for Costa Rica

5.      5% increase or Nicaragua 

6.      5% increase for Guatemala

7.      37% decline for Dominican Republic

But let's focus on Jamaica a bit. Their Financial inflows from FDI over the years are as follows:

1.      US$567 million in 2013

2.      US$490 million in 2012

3.      US$218 million in 2011

4.      US$228 million in 2010

5.      US$810 million from 2005 to 2007 on average

The Group figures i.e. SIDS, Central America and the Caribbean when 2013 is compared to 2012 figures are equally interesting and show the spread of investment activity by Corporations in the general area:

1.      16% decline in FDI inflows to the SIDS, representing US$5.7 billion

2.      64% increase in FDI inflows to the Central America and the Caribbean, representing US$49 billion

Caribbean FDI Decline was mainly due to the fallout from the Economic Recession in the US of A back in 2008 whose effects still linger on as the S of A is yet to emerge from the Doldrums as stated in my blog article entitled “EU, USA and the Second Recession - Economist Dennis Chung's Andromeda and The Long Night”.

This resulted in a decline in Tourism arrivals as well as small Manufacturing Industries, albeit tourism is now on a recovery path. Farming e.g. Banana's and Sugar cane are long dead, having been blighted by WTO (World Trade Organizations) and the removal of post-Colonial Trade Agreements that gave preferential treatment to ACS (African and Caribbean States).

Most marked decline in the Caribbean region was the Dominican Republic, which received far more in terms of FDI, but saw a 37% decline. Their figures of US$1,991 million in 2013 compared to US$3,142 million in 2012 are figures Jamaica would love to have received, but flipped the other way around, of course.

As for the increase in the Central America and the Caribbean FDI figures, that's mainly due to Mexico, the biggest gainer in the group, attracting US$38,286 million in FDI in 2013 compared to US$17,628 million from 2012. This ironically, has to do with Beer, more specifically Corona Beer and the recent acquisition of Groupo Modelo by Belgium's Anheuser-Busch InBev for US$18 billion. With a 60% swathe of the Mexican market being served by this Brewery, this scored some decent pints (and points) on the FDI charts in the UNCTAD's World Investment Report.

Jamaica FDI increase – So too does Jamaica Work Permits for Foreigners

Now for the Bad News.

Ministry of Labour and Social Security tabled a report in Parliament in June 2014 that makes for some troubling reading. According to the report, that's been a 23.1% increase in Work Permits being granted to foreigners as stated in “Demand for Jamaican work permits increases”, published Wednesday June 25, 2014, The Jamaica Gleaner

These Work permits are mainly solicited by FDI on behalf of foreign worker who have skill which are apparently lacking in Jamaica. You can also figure out the country of origin of many of these FDI by looking at where the requests for Work Permits often originate:

1.      Africa

2.      Asia

3.      Caribbean

4.      Europe

5.      Latin America

6.      North America

7.      Oceania

The Number of Work Permits for Foreigners is also on a steady rise that matches the slow rise in FDI investment in Jamaica

1.      1,910 in 2012-2013

2.      2,351 in 2013-2014

This represents an increase of 441 Applications or 23.1% during the 2013-2014 Financial Year. Broken down in more detail:

1.      62.5% were new Applications

2.      22.4% increase in approvals, representing 4,138 Applications

3.      29.5% decrease in refusals, representing 43 Applications

4.      5.7% increase in work permit exemptions, representing 1,601 Applications

Note here that exempted individuals include foreigners married to naturalized Jamaican citizens for more than 30 days as explained under the Foreign Nationals and Commonwealth Citizens (Employment) Exemptions Regulations 1964. There are other types of exemptions, mainly relating to Ministers of Government granting favours to certain Category of workers if there's a perception that there's a severe shortage of non-existence of certified and skilled workers in Jamaica.

So what skilled areas do these work permits represent? The breakdown will surprise you:

1.         69.8%, representing 1,228 applications, were for the category of “professional, senior officials and technicians”

2.         35.9%, representing 1,487 applications, were for the category of “wholesale and retail trade, repair of motor vehicles, motorcycles and personal and household goods”

3.         27.7%, representing 1,228 applications, were for the category of “construction”

4.         11.3%, representing 466 applications, were for the category of “plant and machine operators, and assemblers”

5.         7.6%, representing 314 applications, were for the category of “crafts and trade-related workers”

When you break down the figures further to countries from which these Foreign Migrants seeking work permits originate, you may be tempted to shut down your computer, as it's not very pleasant:

1.         69.5% or 2875 were from Asia, representing 2,875 Applications

2.         10.9% from Europe, representing 453 Applications

FDI and Jamaican Work Permits granted to Foreigners – Set to increase when Project get underway

So the conclusions that can be drawn are obvious:

1.      16% increase in FDI based on UNCTAD World Investment Report means we’re on the cusp of a massive Investment push

2.      21% increase in Jamaican Work Permits granted to Foreigners indicates more Asians and Europeans coming to Jamaica to work

This mean in the next five years as several Infrastructure projects move forward, they’ll be less work for Jamaicans as with more FDI coming, they’ll be looking for skilled, certified labour that we in Jamaica don’t have. If you’ read my Geezam blog article entitled “Jamaica facing an acute Shortage of Qualified Technicians and Engineers for upcoming Projects”, you’d realize that many had complained that Jamaica has an acute shortage of skilled, certified Engineers.

This shortage will persist for a very long time and as such, FDI seeking to start up their businesses will have to augment this shortage by employing foreigners. Therefore, expect these numbers to increase. Jamaica will realize growth in our economy as the IMF head has said, but it will be kickstarted by foreign skilled Labour, not Jamaican, at least for the net five (5) years.