The Tribune

By LEANDRA ROLLE

Tribune Staff Reporter

lrolle@tribunemedia.net

THE head of the Retail Grocers Association yesterday warned that the government’s decision to expand its list of price-controlled items and increase the national minimum wage at the same time will be a “big hit” to businesses, adding: “I don’t know if they’ll be able to survive it.”

Philip Beneby, the association’s president, told The Tribune yesterday that while the government’s plans to ease the high cost of living would likely be a big help to many struggling Bahamians, it would not benefit small business owners.

He also cautioned officials to be careful not to add further economic hardship on businesses that he described as the “engine to any economy”.

Mr Beneby was contacted for comment after Prime Minister Philip “Brave” Davis announced upcoming increases in the national minimum wage and revealed that 38 new items will be subject to price controls, including chicken, eggs and bread among others.

 The minimum wage increase for private sector workers is set to take effect beginning January 2023, while it will be retroactive in the public service going back to July of this year.

 “There’s talk about an increase in the minimum wage and there’s talk of increased electricity and then there’s talk of adding more basket items to the list, some 38 new items,” Mr Beneby said.

 “So, if you’re going to decrease the profitability of a business, and increase the expenses, I don’t know how that’s gonna work because adding more price control items to the list, that would decrease the profitability.

 “But you’re adding to the operational costs and I mean, don’t get me wrong, I’m not against a salary increase. That’s not my argument but you’re hurting the business to do so because when there’s a salary increase, then that means there’s also an increase in National Insurance contributions and other effects from that.

 “So, that is something that, they would really have to take deep consideration of because you don’t want to hurt the small businesses because as they say, small businesses are the engine to any economy and if they continue to do that then eventually we won’t have the small businesses and then you would have unemployment so there has to be balance there.

“So, it’ll be a big hit to the businesses, and I don’t know if they’ll be able to survive it,” he continued.

 He noted that stores don’t really make any profit from price-controlled items and that they only carry them “out of necessity”.

 He also questioned how businesses were going to manage given the fact that they had other expenses to deal with on top of an already high cost of living.

 “We already have quite a bit of price control items and to continue to add to that, the medium to small businesses don’t have that kind of spread with their profitability,” Mr Beneby also said.

 “And then the government also expects you to pay your BPL bill, they also expect you to pay your business licence and they expect you to pay every real property tax and they expect you to pay all of the commitments from the government side and also from your operational side in terms of insurance and there’s now talk of insurance rates going up.”

He continued: “So how can you increase minimum wage and reduce the profitability at the same time and how are you going to pay those increases? I don’t know but there must be some magic formula that gives you that, but I don’t know what the magic formula is yet.”

 However, Gowon Bowe, a top financial expert, said he thinks it would be “disingenuous” or premature for businesses to outright conclude that there will be closures or even layoffs once the new policies take effect.

 He was also contacted by this newspaper for insight on the matter yesterday.

 “There are a couple of reasons why I say that and the first one is really, how many persons are on minimum wage so even when we look at the industries that typically look at minimum wage like the retail sector, food outlets... the question is were persons (receiving) $210 or were they already at $250 to $260 a week?” Mr Bowe said.

 “Secondly, businesses can look at it in two ways: so if I know that the consumer base is likely to expand because of increased money in the pockets of employees, then if I’m getting increased productivity, I can actually look at it as an investment that hopefully would have a return in a faster manner.”

 Though, he acknowledged that some businesses may be forced to make difficult decisions, especially if they are not making the profits needed to sustain operations.

 Mr Bowe also said: “Businesses are not like governments where we could run deficits and worry about it later. If we run a deficit today, we have to be able to finance it and so that means that businesses have to make very real time decisions based on sometimes, incomplete information and that’s why I said I think to provide some level of, shall we say comfort, the business community would very aggressively want to see the government has based its decision on empirical analysis and not just on sentimental expression.”