Earl M. Bartley, Contributor
IN 2002, remittances to Jamaica were US$1.2 billion, the single largest source of foreign exchange inflow.
These were roughly equal to the combined residual foreign exchange earnings from tourism, approximately US$800 million, and mining about US$380 million.
Mindful of these figures, and probably simply acknowledging that Jamaican nurses and teachers were migrating by the hundreds to the United States and the United Kingdom, Prime Minister P.J. Patterson recently proposed that Jamaica enter into formal arrangements with these two countries for the training and export of these professionals.
The proposal was heartily supported by the Jamaican Teachers Association and the Jamaica Nurses Association and certain sections of the media.
It is not hard to see why the JNA and the JTA might be enamoured with such a proposal, considering that their members stand to benefit from first world salaries and living standards.
But the issue is far more complex than either the remittance volumes or the JTA's elation suggests, and the costs and benefits to the society as a whole need to be systematically analysed.
COSTS
The relevant socio-economic costs are those involved in providing health, security, and especially education, for the would-be migrant, from birth through the various levels of schooling to the point of migration. These costs are shown in table provided (see table) for the 22 years on average that it takes to nurture and train a child to adulthood.
Thus the direct costs of nurturing and training a child from infancy to a professionally qualified young adult is approximately J$950,000.00.
In addition to these direct costs, we also need to look at the opportunity costs of training these persons for export.
Opportunity costs arise from the reality that resources are limited and have alternative uses.
In economics, the opportunity cost of any good and service is the value of all the other goods or services that must be given up in order to produce it.
Thus, the $950,000 that was spent in training the migrant teachers or nurses could have been allocated to farmers and manufacturers to produce crops or other items. Having been used for training, however, these sums become unavailable for these other purposes.
Labour is the most important of all resources in any economy because it can produce nearly everything else, except naturally occurring resources.
Moreover, given the prolonged period of investment in training and the innumerable opportunities foregone, an estimate of the opportunity cost for training and nurturing the would-be migrant for 22 years would be a multiple of three or four times the direct costs or approximately $3.0 million.
BENEFITS
The main benefits expected from the export of young professionals are a stream of remittances in the years ahead.
Assuming that there are two million Jamaicans living overseas, the US$1.2 billion remitted last year averages out at US$500 or J$30,000 per immigrant per year.
We are going to assume, however, that being young professionals, the newer Jamaican immigrants will be more generous. The average salary for nurses and teachers in the U.S. is about US$35,000.
After paying taxes to Uncle Sam and meeting their living expenses in their new environment, we are going to further assume that they remit US$200 per month or US$2,400 per year, which is approximately J$144,000.
This level of remittances is comparable to that sent home by immigrant Colombians (US$2,396); Guatemalans (US$2,289); and immigrants from the Dominican Republic (US$2,500).
Further assuming that the immigrant lives the rest of his professional life in his new country about 35 years and continues to send home US$200 per month, then the total amount remitted over the period would be US$84,000 or J$5.04 million.
Considering that Jamaica spent J$3 million 35 years ago to train the migrant, then it is manifest that we have not made much from the deal.
The real dimension of our loss, however, is revealed when we consider the "present value" of these future remittances.
"Present value" is an analytical tool in business economics that enables us to calculate what a series of future payments are worth now.
Assuming an inflation rate of seven per cent per year, the present value of the J$5.04 million remitted over 35 years would be J$171,500. This amount is well below the direct costs ($950,000) of training each nurse or teacher, not to mention the total economic cost of J$3 million.
Even if the U.S. were to pitch in as the Patterson administration is proposing and subsidise the tertiary training of teachers and nurses, Jamaica's costs of training these young people up to age eighteen would still be more than double the future value of the remittances here assumed.
MIGRANTS OR IMMIGRANTS?
At remittance levels of about US$600 per month, and assuming the US picks up the cost of tertiary training, we break even on our investment in training these young people after 10 years.
But it is hard to imagine nurses and teachers taking home US$2,400 per month and living in high cost places like New York, being able to send US$600 to Jamaica monthly.
Furthermore, as Dr. Louis Sipio of the University of Illinois observed, "Immigrants with the skills to take advantage of opportunities in the U.S. were less likely to remit." That they tend to become "acculturated" more readily, and that "women tend to remit less than men."
These considerations point to the possibility that our mostly young and female nurses and teachers are likely to become comfortably settled in their new environment and remit far less than what it cost to train them.
Some persons have argued that in addition to remitting money, migrants expand the overseas markets for Jamaican products, especially food and drink.
Chances are, though, the migrants would have consumed more yam and breadfruit at home than in the more diverse and well-supplied overseas food market. There is, however, a hard currency benefit to overseas sales of Jamaican products.
Still, though it is well recognised that we cannot stop people from pursuing better prospects, in those areas where we are short of essential workers, the Government should impose a three-year bond at the end of training to recoup some of society's investment.
Fortunately for us the foreign recruiters are going for recruits with work experience which serves the same purpose. It is also worth our while for some effort to be made to convince the recruiting countries to share the cost of tertiary training.
But the idea that seems to be gaining ground that we should train and encourage labour export as development policy is a bad idea that should be discouraged.
The benefits rarely catch up with the costs. Better for us to clean up our politics and environment and train our people, and try to attract some of the 3.5 million high value service jobs expected to migrate from the developed countries over the next twelve years.
LURCHING FROM PILLAR TO POST
That we should be thinking seriously of labour export as development policy is illustrative of the fact that, after 40 years, Jamaica is still not settled on a development path. We are still lurching from pillar to post.
In the 1960s, we pursued import-substitution policies which, it was obvious, were always going to be choked of foreign exchange if they were not export promoting.
By the mid-1970s, the import substitution policies did in fact start to choke.
During that decade (1970s), we shifted to more rational policies based on developing and processing indigenous resources in our many communities islandwide. That strategy was choked off by ideological posturing on many sides.
In the 1980s, we tried to get in as late entrants into export platform production of high volume, low skill commodities. But, with our lack of Confucian diligence and subservience and the several problems of high cost that beset that effort, most of the factories began exporting their operations by mid-1990.
Since then we have literally been foundering. Economic policy has been more preoccupied with balancing the books and every few months the "lead-off sectors" change from light manufacturing to information technology, to agriculture, and lately to tourism and sugar.
BETTER FOUNDATION
It is manifest to me that an improved bottom-up community- based strategy as tried in the 1970s is the better foundation to build on, and that Jamaica has little future as a producer of high volume world market commodities, whether it is sugar or T-shirts.
Rather, the areas in which we have had the most sustained success is in producing unique high quality items from our natural resources such as Tia Maria, Pickapeppa, patties, coffee or reggae. But sometimes it seems, that even when we are capable of planning when it comes to systematic, rational, implementation we invariably lapse into muddle.
As frustrations and tensions build up while we muddle along, I do not know which is going to come first. "Jamaican boat people" or a reprise of the Morant Bay Rebellion islandwide. I hope it is the last. It is more dignified.
Earl M. Bartley is an economist and businessman. You can send your comments to adapapa@cwjamaica.com
