Salary Pressure ‘Risk’ Via Minimum Wage Increase


Tribune Business Editor


Higher-paid Bahamian workers were yesterday warned not to expect, or push for, an automatic pay increase now that the minimum wage is being raised by 40 per cent to $210 per week.

Gowon Bowe, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chairman, said salary increases for better-paid Bahamians would come from improved performance and productivity, not the “raising of the bottom of the ladder”.

Mr Bowe conceded there was “a risk” that the proposed minimum wage increase, unveiled by Shane Gibson, minister of labour, in the House of Assembly yesterday, might spark wage pressures (and cost push inflation) throughout the economy.

He argued, though, that the expectations of higher salaried Bahamians were better addressed via “pay for performance”.

“Persons should not be expecting a rise because the bottom of the ladder has been raised,” Mr Bowe told Tribune Business.

“That is to keep pace with the cost of living..... Your argument should not be centred around keeping the differential between the minimum wage and your wage. Your argument should be to demonstrate that you are generating greater value, and should therefore be paid more.”

Peter Goudie, who represents the Chamber and private sector on the National Tripartite Council that recommended the $60 per week minimum wage increase, told Tribune Business last week that the rise might generate inflationary wage expectations elsewhere in the workforce.

“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,” Mr Goudie said.

Mr Bowe, meanwhile, said research conducted by the Chamber, which incorporated the effects of inflation between 2002 to the present day, resulted in its recommendation for a $204 weekly minimum wage.

While its representatives had to negotiate with counter-offers, “particularly from the Government”, which was looking to match the private sector’s minimum wage with the $210 per week paid in the public sector, Mr Bowe said the $210 was “a middle ground all parties can live with”.

“Most of our members said they were paying in excess of $204 per week in any event, and $210 was going to be an affordable level,” the BCCEC chairman told Tribune Business.

“We did not object to it being $210 a week. While the amount was slightly higher than what we arrived at, it was not exorbitant. There wasn’t immediate resistance to that.”

With most Bahamian companies paying salaries above the minimum wage, the 40 per cent increase proposal - which is likely to be ratified by the Government and Parliament - will not negatively impact the economy or labour market-at-large.

Mr Gibson yesterday confirmed that the $210 figure was a “compromise” worked out between the Government, private sector and trade unions.

For his part, Mr Bowe said the $204 figure offered by the private sector was “not going to be a ridiculous differential” from the final $210.

“This is not a monumental difference, and no employer wants to be unfair to their employees,” he added. “Most employers were saying they are well above $150, and above $204. It was always an element of being equitable to the employees, and not being detrimental to key stakeholders.”

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

It is unclear how happy trade union leaders will be with the increase to $210 per week. Obie Ferguson, the Trades Union Congress (TUC) president, and John Pinder, the Bahamas Public Services Union (BPSU) president, had both 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. Yet the rise to $210 does not amount to half of what they were seeking.

Mr Gibson admitted in the House of Assembly that the Government “may not totally be satisfied with the figure that is being recommended” but had accepted it given the Bahamian economy’s current condition.

He added: “There are many in the private sector, in the trade union movement, who would like more. [But] everybody recognises that we are now just coming out of a recession.

“We are now turning the corner, as the Prime Minister has said. It was important for us to reach a compromise and this is fully supported by the Chamber of Commerce. What we have to do moving forward is to put ourselves in a position where we could constantly monitor and review the minimum wage where we won’t allow another 14, 12, 13 years to pass before we have another increase in the minimum wage.”

Mr Goudie told Tribune Business last week that the Council had recommended to the Government that it review the minimum wage every one to two years to determine if increases are warranted.

Mr Bowe, meanwhile,,said the agreement reached via the Tripartite Council “bodes well” for what the Government, private sector and the trade unions can achieve by working together.


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