By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

Increasing the cost of labour in the country could make The Bahamas regionally “less competitive” , a private sector executive, stating that this nation must see its gross domestic product (GDP) at a rate of 5.5-6 per cent to affect unemployment levels and climb out of its current fiscal crisis.

Robert Myers, Bahamas Chamber of Commerce & Employers Confederation (BCCEC) chairman noted that this nation’s US $4 per hour minimum wage was already higher than regional counterparts. This he said was backed by a July International Labour Organisation (ILO) report. The report titled ‘Minimum Wage Practices – Lessons to be Learned’ by

Anne Knowles, ILO senior specialist for employers’ activities highlighted many of the Chamber’s concerns regarding an increase in the minimum wage and the economic background against which a minimum wage increase would occur. The report noted that if minimum wage is too high it can, hinder employment of least experienced, skilled and qualified; have disproportionate negative impact on young workers; push up other wages; ignore productivity and ability to pay arguments; price unskilled workers out of the market; cause employers to cut back on discretionary spending such as training and fringe benefits and also increase the number of people on welfare.

The report also noted that if the minimum wage is to low it could if minimum wage is too low, it becomes meaningless: can mean better off not working and receive social security benefits; enables exploitation of vulnerable – especially youth and least skilled.

“It’s dangerous to talk about increases in minimum wage without looking at all the other empirical data and without understanding how we rank competitively on a regional basis with our peers in the Caribbean. Minimum wage will have an impact on wage growth, competitiveness, GDP and unemployment. I would think that 90 per cent of business in The Bahamas are paying well above the minimum wage but one has to realise that at the end of the day if the Bahamas does not increase GDP at a rate of 5.5 -6 per cent we would not affect the unemployment levels nor do we climb ourselves out of the current fiscal crisis. Every time that we increase a cost of labour or a cost labour burden you make the country regionally less competitive and therefore you are risking your GDP growth. GDP growth is the only way we are going to get ourselves out of this problem. It is the only way to get unemployment down, get ourselves out of debt, along with fiscal reform and cut back expenditure,” said Mr Myers. The report noted that minimum wage alone will not create a better employment environment. “As a social instrument it needs to be paired with effective social security measures,” the report stated, adding that is important that social security benefits are not higher than minimum wage.

Mr Myers said:“Our primary focus needs to be to grow our GDP and increase productivity. We are already losing market share to our regional competitors. We are not anti-wage growth or social benefit but if you do these in a vacuum and you are not cognizant of the bigger picture the country will fail anyway. That report and our discussion about cost burdens is based around that philosophy that you cannot tax your way out of debt. Wages is one thing but there is another 18-20 per cent cost burden that comes from things like holiday pay, vacation pay, sick pay insurances and NIB. All of that is before VAT and National Health Insurance.”