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Plp's Minimum Wage Hike 'Economic Suicide'

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Peter Goudie

* Too many businesses 'barely holding on'

* Tripartite chief: Date will back any increase

* Union boss calls for move to livable wage

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Progressive Liberal Party's (PLP) plan to increase the minimum wage by $40 per week was yesterday branded "economic suicide" by the private sector's top labour specialist.

Peter Goudie, the Bahamas Chamber of Commerce and Employers Confederation's (BCCEC) labour division head, told Tribune Business that the Opposition's proposal would deter hiring by businesses "who are barely holding on" and may even result in fresh terminations due to the associated increase in labour costs.

Arguing against the imposition of a fresh private sector burden when companies "are shutting down almost every day" due to COVID-19's economic devastation, Mr Goudie described the PLP pledge of a $250 private sector minimum wage as "a political manoevere by the Opposition party that's desperate to try and win seats" in the upcoming general election.

Chester Cooper, the Opposition's deputy leader, justified the party's proposed 19 percent minimum wage increase on the basis that Bahamian workers require a "livable wage" given the ever-increasing cost of living so that they can "live with dignity".

“We looked at what happened when the previous PLP administration increased the minimum wage by 40 percent,” he said. “We are comfortable that what will happen as a result is small businesses will have more money, the economy will grow, there is more money in circulation, the Government will in fact receive some taxes back as a result of more money in circulation, (and there will be) more money in spending by the persons with $250."

This stance, though, was comprehensively rejected by Mr Goudie, who told this newspaper: "They said that the last time we increased the minimum wage there didn't appear to be any economic shock waves, but that increase was not done in the middle of a pandemic or aftermath of a Category Five hurricane.

"I just think increasing the minimum wage right now would be economic suicide. We have got businesses shutting down almost every day and they want to increase the minimum wage. Chester [Cooper] is supposed to be a very smart businessman, but sometimes you have got to wonder......."

Mr Cooper, who prior to his election as Exuma's MP in 2017 was the principal of BAF Financial, the insurance and financial services provider, is also a past president of the Bahamas Chamber of Commerce.

"I just think it would be economic suicide," Mr Goudie reiterated of a minimum wage increase now. "This country is in big trouble. If you are going to increase my costs of doing business, and I'm struggling as is, I'm just going to cut more. We all have to survive somehow....

"We know people want the minimum wage looked at, but it's not economically feasible right now. I just get upset. If you increase it to $250 it's a 19 percent increase. You've got people in the private sector who are barely hanging on to to their businesses right now, and you want to put a 19 percent increase on the minimum wage?"

Mr Goudie, who is one of the key private sector representatives on the National Tripartite Council, the body that deals with all labour-related matters in The Bahamas, said the US Congress last week set a precedent by shutting down the bid by Senator Bernie Sanders and other left-leaning Democrats to increase the federal minimum wage to $15 per hour.

"Think about that one. The largest economy in the world shut down a minimum wage increase," he added, while questioning what the impact on the Bahamian government's payroll would be if the PLP sought to increase the public sector minimum wage of $220 per hour.

"You want to put more money in the Government's coffers, but how are you going to do that when you increase the minimum wage?" Mr Goudie asked "It's a political manoevere. It's a political manoevere by the Opposition party that's desperate to try and win seats."

The minimum wage has only seen one increase since it was first introduced in The Bahamas in 2002. That occurred under the last Christie administration in the aftermath of VAT's 2015 introduction, and was designed to help offset the rise in living costs produced by the then-new tax.

However, the 40 percent increase from $150 per week to $210 per week is understood to have been backed by rigorous analysis undertaken by the National Tripartite Council, the body responsible for addressing all labour-related matters, and others.

"I was one of the people who did all that research and empirical analysis," Mr Goudie added. "It hadn't been done for a long time, and we know that the minimum wage we set then was above the poverty level." He said a "livable wage", as called for by the PLP, was not the same as the minimum wage, and argued that it was virtually impossible to agree on a definition of the former.

Robert Farquharson, the National Tripartite Council's chair, said a minimum wage review is already on its "agenda" currently. Declining to comment directly on the PLP proposal, or which direction the Council's assessment may take, he added that any increase must be supported by sound economic and labour market data.

"I believe any increase in the minimum wage should be preceded by investigation and recommendation from the National Tripartite Council as was done with the previous increase," Mr Farquharson said. "The National Tripartite Council does have the recommendation to review the present minimum wage on its agenda, but we haven't taken it up as yet.

"Obviously we have to do the necessary comparisons with the increase in inflation and cost of living. We'll make a recommendation to the Government based on the available data."

While any increase will doubtless be welcomed by minimum wage workers, its implementation in COVID-19's immediate aftermath represents a further burden for those many businesses struggling to survive. It would act as a marginal increase in labour costs that could disincentivise firms from hiring, a move that would especially impact younger workers, and even spark some to lay-off.

Bernard Evans, the National Congress of Trade Unions (NCTU) president, welcomed the PLP's pledge to increase the minimum wage while acknowledging that The Bahamas is in "political silly season and a lot of promises are made".

He also pointed out that the minimum wage was different from a livable wage, adding that research by the trade unions some nine years ago had shown that the latter should be pegged at $475 per week for a family with two children so that they could cover rent/mortgage and utility costs.

With that figure more than double the present minimum wage, Mr Evans agreed that the gap between the two cannot be bridged overnight but said it "can be done incrementally to get us to a place where families are not trapped and marginalised by a minimum wage that renders them handicapped when it comes to earning a living in this country".

"I don't think we should have a minimum wage; we should do away with a minimum wage and move to a livable wage," the NCTU chief told this newspaper, adding that too many Bahamians were working two to three jobs just to make ends meet.

Comments

The_Oracle 6 months, 3 weeks ago

Firstly, the minimum wage hurts those who are not deemed worth (by employers) that amount per week. they simply cannot get or hold a job.(Think D- and worse) Second, Minimum wage is suppose to be an entry level wage, not a wage for life. Thirdly, Government cannot legislate fairness or success or comfort. Lastly, The Government is usually the root of all problems, rarely the cure. We are now in full blown silly season, lies and promises should be counted like the Covid infection rate.

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GodSpeed 6 months, 2 weeks ago

Economic suicide was carried out with the lockdowns over the jokey virus. Minimum wage hike are just the death throes and bleeding out afterwards.

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KapunkleUp 6 months, 2 weeks ago

As usual Chicken Davis and his gang of merry idiots display their complete ignorance of reality. If they actually had 2 working brain cells to create a spark, they would have come up with some better election propaganda. How about a minimum wage hike but only for companies which have more than X number of employees. That's still a bad idea given current economic conditions but it sounds a lot better.

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mandela 6 months, 2 weeks ago

The minimum wage is only a threshold amount persons entering the workforce should be paid when entering. Our neighbor to the north is contemplating raising their minimum wage to a whopping $15.00 per hour, wow, but get this if the Bahamas imports 100% of its living, you think of it we import it, and then we have to pay duty on these imported goods which means we pay twice for the same goods. If in the USA they are saying that their citizens need $15.00 per hour - $600. per week to live, then a minimum wage of $6.25 per hour - $250 weekly is a joke. A person starts to work and wants to be independent and live on their own. Rent - A dump $125. - $150. per week. Groceries - Living very rough $70. per week Electricity, water, optimal - cable, vehicle, having a life. Anyone who thinks $250. per week minimum will be a disaster, should try it themselves to live on $250. per week.

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tribanon 6 months, 2 weeks ago

Wow! This guy Goudie sure has no difficulty whatsoever in making private sector employers seem cruel and evil to their employees.

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bahamianson 6 months, 2 weeks ago

if workers in the united states want the minimum wage to increase to $15 per hour, then our minimum wage should be twice or three times that. So, our minimum wage should be $30 or $45 an hour just to live. the prices in America are way less than here, electricity is way less , everything is way less, and they want the wage to be $15, imagine us.

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sheeprunner12 6 months, 2 weeks ago

Not if you are living on the East Coast or West Coast in urban areas ..... The urban cost of living in the US is much higher than in the rural setting ...... It is similar here in The Bahamas ......... many Family Islanders can survive and live well on very little cash, except they adopt a "city lifestyle"

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sheeprunner12 6 months, 2 weeks ago

The question to ask is: Why is our present cost of living so high, while our standard of living is sub-par? .............. The top 25% of the Bahamian society are really out of touch with the realities of the lower 40% (who live on the edge of poverty).

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tribanon 6 months, 2 weeks ago

It's because of that cartel of a few super wealthy Bahamian families that control the Arawak Cay port through which most of our imported goods flow. And we have the FNM to thank for the sweet heart "guaranteed profits" deal Ingraham gave the principal owners of the APD. The knock-on cost of living effect of the outrageously high importation costs (i.e. well-padded shipping, insurance, document processing costs, etc.) for just about everything brought into our country has financially crippled the vast majority of Bahamians.

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Clamshell 6 months, 2 weeks ago

Regardless of where you fall on this question, I always find it rather droll for wealthy old white men to wax on and on in the popular press about the minimum wage and the life of the working poor. I wonder how long Mr. Goudie would last if we put him on a budget of $250 a week. (My bet? Two days, max.)

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bahamianson 6 months, 2 weeks ago

Hold on a sec, do you think we have more wealthy black bahamians or nore wealthy white bahamians nowing that the ratio is 85:15? The man's race has nothing to do with it.nwhite bahamians have a voice also, and with that voice , they have a say without people like you criticizing them because of they race. Actually, you sound like a racist for making such a comment.

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Clamshell 6 months, 2 weeks ago

For the record, I’m a semi-wealthy old white guy ... 🤣😎

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KapunkleUp 6 months, 2 weeks ago

Well then pass the Grey Poupon, kind Sir.

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FrustratedBusinessman 6 months, 2 weeks ago

Welcome to 2021. Always a white man to blame somewhere for some problem lol.

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FreeUs242 6 months, 2 weeks ago

The minimum wage should have been boosted a long time ago. I know this is a BS stunt to get the Bahamians attention to vote them in power. I vote once in my entire life and will never vote again unless these two parties are gone forever. They don't car about Bahamians unless u are a wealthy one.

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John 6 months, 2 weeks ago

The GDP of most countries is down and has been declining for the past 20 years. And the short answer for the reason dor it is because productivity is down and has also been declining for the past 20 years. And so this has led to steady inflation and rapid increases in the cost of living over the year. So workers around the world, especially those who live in industrial nations, compensate or make up the difference between inflation and maintaining their standards of living by qualifying themselves for pay increases. They go to college and get degrees it take classes or attend seminars or lecture sessions and qualify themselves for pay increases. But productivity remains decreased and stagnant or declining and so inflation must rear its ugly head again and eventually it will be accompanied be unemployment and sooner or later recession. But in the lower echelons of the workforce, there are those who depend on minimum wage to keep their wages propped up. College and classes and other skills improvement mechanisms do not work for them, so they cry out (to politicians) to raise the minimum wage. And not all who are caught up in the minimum wage quagmire are entry-level workers. In fact many are seasoned workers who have been in the workforce for many years. But because the employment opportunities in this country are so limited, many find themselves moving horizontally in the workforce as there is very little upward mobility. And so the politicians and political parties also play this game, making false ir unfiltered promises. Promises they cannot keep. And some will cut off their faces to spite their noses. Joe Biden promised a $15 minimum wage and he wished his nose was bigger to hide his face as he knows it’s almost impossible to deliver a $15 minimum wage. Let not the PLP fall into the same trap.

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