By NEIL HARTNELL
Tribune Business Editor
Trade union leaders want a minimum wage increase to between $250-$300 per week, and are pushing for the issue to be formally discussed by the National Tripartite Council.
Obie Ferguson, the Trades Union Congress (TUC) president, told Tribune Business that such a rise was justified by persistent cost of living increases that had been further exacerbated by the VAT rate hike to 12 percent.
Branding the existing $210 weekly rate as “inadequate” for the “average” Bahamian household, Mr Ferguson argued that his proposed increase of between 19 percent to 43 percent would not be too burdensome for Bahamian businesses to absorb because most were “doing well”.
He conceded, though, that a minimum wage rise ought to be accompanied by the very productivity initiatives that the National Tripartite Council is currently focused on.
Meanwhile, Mr Ferguson’s counterpart, National Congress of Trade Unions (NCTU) president, Bernard Evans, told this newspaper that the group’s representative on the National Tripartite Council has been instructed to push for a formal discussion on a minimum wage increase.
Warning of increasing income inequality and a shrinking middle class without an economic rebalancing, Mr Evans warned that Bahamian society was in danger of splitting into “two classes - the haves and the have nots”.
Still, Mr Ferguson indicated that the TUC and its affiliates were prepared to moderate their demands slightly compared to their previous calls for the minimum wage to be raised to between $300 and $350 per week.
“I think it is clear that the TUC and the affiliates are in support of an increase in what I consider a liveable wage, even though it’s referred to as a minimum wage,” he said. “Two hundred and ten dollars per week is certainly not adequate.
“At one point we had proposed increasing it to $300 to $350 a week. I think a $250 minimum to $300 would be a reasonable figure for the average household. I think that’s reasonable having regard for the cost of living, having regard for the economic situation, and it would not be too onerous on companies because most are doing well from what I’ve been led to believe.”
Mr Ferguson said he understood that while a minimum wage rise may have been discussed informally, both within the Government and at the National Tripartite Council, he was “not convinced there was a formal agenda item” as the trade union movement had not been asked to present its formal position on the matter.
“We’ve been seeking over the last couple of years for that to become an agenda issue, and look at the situation for what it was,” the TUC chief added. “The increase in VAT has really impacted that proposition and given reason for it to be supported by us with the request we’re making.
“The cost of living has gone up, rental rates have gone up, and all those things impact pay. If you look at a cost benefit analysis into all these variables, it does justify what I call a nominal increase. An $250-$300 weekly minimum wage is well within range.”
The first, and last, increase in the minimum wage occurred in mid-2015 in a bid to cushion the impact of Value-Added Tax’s (VAT) introduction - and associated cost of living increases - on low income earners.
The 40 percent rise to $210 per week was the first such occurrence since the minimum wage was introduced by law in The Bahamas in 2002. Pressure for further increases has come at regular intervals due to The Bahamas’ economic difficulties over the past decade, especially when factors such as the VAT rate rise to 12 percent reduce household purchasing power.
Many Bahamians argue that $210 per week, or $840 per month, is not a “liveable” wage and it is impossible to make ends meet with such an income - especially if the worker has a family to support - given the constant rise in the cost of living.
However, minimum wage increases come with other consequences. They inevitably increase employer costs, which can result in companies laying-off staff or becoming reluctant to take on new hires.
Given that those earning minimum wage salaries tend to be young workers, such as school leavers, just entering the workforce, any reluctance by employers to hire at an increased salary could create barriers to entering the world of work. There is also a social cost to this, as young, unskilled minimum wage earners are often those responsible for the current level of crime.
Companies could also choose to pass increased minimum wage costs on to consumers, raising the cost of living, while any increase in salary at the workforce’s lower end can result in greater expectations for a rise among higher-salaried workers - leading to cost-push inflation.
Mr Ferguson, though, was backed by his fellow trade union leader, Mr Evans, who said the NCTU had “instructed our representative to push and make a minimum wage increase an agenda item for the next meeting” of the National Tripartite Council, which is the body that deals with all workplace, industrial relations and labour matters.
The NCTU president, who last week described $450-$460 per week as a “liveable wage” in The Bahamas, said an increased minimum wage was an essential component in any strategy to fight widening income inequality in The Bahamas.
“We have to address it in a meaningful way; we can’t keep listening to Standard & Poor’s (S&P),” Mr Evans argued. “We have to present solutions to close that gap, put in place policies that expand the middle class. You can’t have policies that continually squeeze the middle class and widen the income gap.
“Whatever trajectory we’re on it’s the wrong trajectory. Your policies should be based around shoring up the middle class, and putting money in the hands of the less fortunate who have fallen below the poverty line. That’s why we keep focusing on the minimum wage, a liveable wage.
“We can’t keep doing business as usual when every study shows the poor are getting poorer and the rich are getting richer. If we don’t recognise that as a people we’re on the precipice of collapse, and will become a country of two classes: Those that have, and those that don’t.”
Mr Ferguson, meanwhile, agreed that a minimum wage increase ought to be accompanied by greater productivity, given that this was one way workers can access higher salaries and greater benefits from employers.
“We’re very supportive of productivity,” he said. “That’s been our position from the time of the late Reginald Lobosky. I worked out the first productivity agreement with Reg Lobosky. The workers do better with a productive company in terms of their wages, and it’s good for the economy as well.”