As we enter the peak of the traditional summer traffic of returning non-resident Jamaicans, families across the island are no doubt excited to welcome home their relatives for the Emancipation and Independence festivities. The overflow in the immigration and customs halls at both our airports, but especially at the Norman Manley International, is a visible reminder of the substantial numbers who make the trip at this time of year. Usually, about 30 per cent of the annual traffic of returning Jamaicans come home in the July-August period, putting it ahead of the 25 per cent who visit during the Christmas season.

With unemployment rising in the USA, Canada and the UK where the vast majority of our overseas relatives reside, it is not surprising that the traffic in July was running five per cent or so behind last year. The flow of remittances, another powerful indicator of the close ties between the two Jamaicas, is even more seriously affected, declining by 16.7 per cent, or US$141.5 million in the January to May period. Contrary to earlier predictions, overseas Jamaicans have not been immune from the recession, losing jobs and wealth, and thus, have had to cut back on money transfers to relatives here.

Labour market effect

A brief look at US unemployment rates for states and major metropolitan centres shows how dramatic has been the effect of the recession on the labour market, particularly in areas where Jamaicans are concentrated. Florida, for instance, which has the largest Jamaican population overseas, has seen its unemployment rate triple, moving from 3.3 per cent in July 2006, the lowest level in recent years, to 10.6 per cent in July 2009. Not only is this rate the highest point in decades, but it is above the national average of 9.5 per cent.

The tri-state area, New York, New Jersey and Connecticut, the next-largest concentration of Jamaicans while not yet as harshly affected, has been experiencing considerable job losses. As the centre of the US financial services sector, it has suffered the direct effects of the meltdown in the sector, which was the genesis of the economic recession. In all three states, the unemployment rate has more than doubled in the last 18 months, standing at 8.7 per cent, 9.2 per cent, and eight per cent, respectively.

Since the leading forecasters, including the Federal Reserve, are predicting a slow recovery, and the prospects of US unemployment rising to as high as 11 per cent next year, we should realistically not expect an early reversal of the slide in remittances. The same is true in the United Kingdom, the second-largest source of remittances, where the unemployment rate is also rising to levels not seen in the past 50 years. Canada, on the other hand, is now projecting a less severe recession and more modest numbers in job losses, hence the prospects might be better.

All told, we should expect a bumpy ride for the rest of the year, and maybe well into 2010, as far as the remittance inflows are concerned.

The rise in remittances has been dramatic over the past decade, with this source of foreign-exchange inflows outstripping all export sectors. In 2008, remittances amounted to US$2.3 billion, up from US$661 million in 1997, or nearly four times. Over the period, some US$16.5 billion came from this source, and if we go back to 1982, the figure rises to US$20.2 billion, the most remarkable statistics that I have seen. No other source has ever recorded anything close to this rate of growth, nor has generated this magnitude of inflows. It is, therefore, logical, and essential, to ask how long it will last.

Growth

This phenomenal growth has to be understood in the context of the migration of Jamaicans to the USA, the UK and Canada over the past 65 years. No fewer than 1.3 million of us went legally to settle in these countries, which explains why it is often said that as many Jamaicans live abroad as the 2.7 million who remain here. The highest migration of nearly 300,000 occurred in the 1960s, and in the '70s, '80s and '90s, the outflow continued at just over 220,000 per decade. Being aggressively upwardly mobile and of working age, the migrant Jamaicans have been able to realise the economic means that allow them to remit funds home on a regular basis.

It should be noted, however, that for various reasons, migration has slowed since the 1990s, and in this decade, so far, the figure has fallen to 180,000, the lowest rate in the past seven decades. This is an important consideration in assessing the future direction of remittance flows. The ageing of the overseas Jamaican population and the affinity for the homeland transmitted to the offspring born in the USA, Canada and the UK, will be critical. But for the immediate period, it is the depth of the recession and the speed of the recovery that will determine how soon the decline in these inflows will be reversed.

More important than questions about the sustainability of current levels of remittance inflows is the issue of how this unprecedented and massive infusion of money has been utilised. Has it gone solely to fuel consumption? In countries like India, Israel and China, this source has contributed significantly to rising rates of investment and economic growth.

Dennis E. Morrison is an economist. Feedback may be sent to columns@gleanerjm.com.