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Council: Review Minimum Wage Every Two Years

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The National Tripartite Council will in future review the minimum wage every one to two years to determine if increases are warranted, as one member yesterday denied that an impending rise would harm the economy or employment levels.

Peter Goudie, one of the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) three members on the Council, told Tribune Business that few businesses would be impacted by the first proposed rise in the minimum wage since it was implemented in 2001.

While declining to reveal how much of an increase the Council has proposed, Mr Goudie said extensive research had gone into the recommendations that now have to be approved by the Christie administration’s Cabinet.

The human resources specialist said Bahamian businesses had raised little objections to the proposed minimum wage increase, given that their lowest wage was already above the likely new threshold.

With most companies paying above the ‘new’ minimum wage, Mr Goudie forecast that there would be little fall-out for jobs and employment levels.

The main concern, he explained, was that a minimum wage rise would create pressure for salary rises at a higher level, exciting the “expectations” of better-paid Bahamians who have gone without an increase for many years.

For that reason, Mr Goudie said the Council would review the minimum wage on a frequent basis to determine whether it was adequate - both to avoid wage pressures throughout the economy (cost push inflation) and prevent any ‘shocks’ for businesses that did pay the minimum salaries.

Explaining the research that went into the Council’s recommendations, Mr Goudie told Tribune Business: “We went to the Department of Statistics, and we asked them what $150, with inflation and the cost of living, what it would be equivalent to today.

“Then, with that kind of number, we went out to a lot of businesses through the Chamber and asked them what they could live with. They came back and told us what they could take. The

“Most of them said the amount we’re paying is above that [proposed minimum wage], or the amount we’re paying below that is nominal. We really have information that can stand up, and that we can make reasonable recommendations on.”

Mr Goudie also revealed that the Council obtained advice from the International Labour Organisation (ILO) and International Organisation of Employers (IOE) before submitting its recommendations to the Government.

The annual minimum wage for Bahamian public servants is $11,500 or $210 per week. However, the minimum wage for the private sector is $150 per week or $4 per hour – $7,800 annually.

Trade union leaders, such as Obie Ferguson, the Trades Union Congress (TUC) president, and John Pinder, the Bahamas Public Services Union (BPSU) president, have called for the minimum wage to be increased to between $300 to $350 per week - which would represent between a 100-133 per cent increase on current levels.

Both union leaders have argued that it is impossible for Bahamians to enjoy a reasonable living standard on $150 per week. And they have enjoyed some backing from the private sector, though not to the extent of $300-$350 per week.

Rupert Roberts, Super Value’s president, previously told Tribune Business he had no objection to an increase in the private sector minimum wage to at least $200 per week - a 33 per cent increase.

Support in the private sector for a minimum wage increase has increased, and Mr Goudie said the Council’s proposal would not negatively impact the economy or job levels.

“I would bet that the only companies who aren’t paying above the minimum wage are those that have totally unskilled labour,” he told Tribune Business. “There are not going to be that many of them. We did our research.”

For this reason, Mr Goudie said the proposed minimum wage increase’s impact on the overall Bahamian economy will be “minimal, very minimal”.

As to fears that an increase in labour costs will prompt some employers to downsize their workforce, Mr Goudie replied: “I don’t think that’s going to happen.

“The only concern I have here is that when you don’t change the minimum wage for such a long period, as we have, you’re going to get other employees saying: ‘You’ve got a minimum wage rise; we should have one, too’. You don’t want to put expectations out there.”

For that reason, Mr Goudie said the Council would now assess the minimum wage’s adequacy every one to two years - rather than waiting 14 years as this nation has done.

“The only issue one business in Freeport had was: ‘You’ve waited for 14 years, and are hiking it to that amount?,” he recalled. You get people used to it, leave it for years, and then increase it by $60, $70 per week. That’s a lot.”

Mr Goudie said he had warned the Council’s union members that the minimum wage increase could create pressures for salary rises among better paid Bahamian workers, given that many had not seen an improvement for years due to the recession and subsequent slow recovery.

He added that this was a message the unions did not like.

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