By YOURI KEMP
Tribune Business Reporter
Petroleum retailers yesterday the minimum wage increase was something they “all have to manage” as they continue to push for a change to the industry’s fixed-margin business model.
Oswald Moore, owner/operator of Rubis East West Highway, told Tribune Business he was “always in favour” of employees having more income but the problem remains the inflexible fixed margin structure. Out of the 44 cent per gallon of gasoline margin, sector operators are having to cover ever-increasing labour, utilities (electricity), rental and other costs in the current inflationary environment.
However, Mr Moore, a former president of the Bahamas Petroleum Dealers Association (BPDA), is at odds with the assertion by its current vice-president that the 24 percent minimum wage increase to $260 per week will trigger lay-offs across the industry.
Vasco Bastian had warned before Christmas that the minimum wage increase may force the sector to lay-off employees unless margins are increased. With the industry’s gross profit margins largely fixed at a time when a wide variety of expenses are rising, he said petroleum retailers are being left with no choice but to cut costs if they are to survive.
The sector is among those that will also have to absorb the $50 per week increase in the minimum wage, given that a number of employees earn this level of take-home pay. Mr Bastian said: “We are looking to promote our self-service and trying to stay afloat without cutting staff, but it is almost a certainty we will reduce staff complements for 2023.
“Minimum wage will increase by approximately 24 percent for all employers. However, petroleum retailers are not able to react to this as they have a fixed margin per gallon.” As a result, Mr Bastian said staff reductions of up to 25 percent were being mulled to enable gas station operators to make ends meet, along with the possibility that Bahamians may have to become used to self-service at the pumps.
Petroleum dealers last year called for a 50 percent increase in their gasoline retail margin which, if granted, would have raised it by 27 cents per gallon from 54 cents to 81 cents. However, despite a series of meetings with the Prime Minister, Cabinet ministers and government officials, no change in the margins was granted with the Davis administration concerned about imposing further inflationary costs on families and businesses amid the spiralling cost of living crisis.
The talks eventually seemed to peter out after oil prices began to ease on global markets. Oil prices, as Tribune Business went to press, stood at $77.05 per barrel on the West Texas Intermediate Index and at $82.10 for Brent Crude. However, while the petroleum industry’s concerns may have abated for now, the problems driving them have not gone away and are set to be exacerbated by multiple cost increases that will hit in 2023.
But Ethan Moss, chief executive officer of JMEL Enterprises, operator of the Rubis gas station on East Street and Soldier Road and Rubis Gladstone Road, backed Mr Moore. He said: “This is something we all have to manage. It was inevitable and times are difficult for everybody. This is just something we have to manage and move forward with.”
Debra Symonette, president of Super Value, said the 13-store supermarket chain had been paying the current minimum wage to employees for some time now and there will not be a significant impact to expenses. She added: “We definitely won’t be laying off any staff. We’re very optimistic. We’re hoping that there’ll be a change in the economy soon and things will get better gradually.”
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