Monday, January 13, 2020
By NEIL HARTNELL
Tribune Business Editor
Private sector executives are hoping the National Tripartite Council “never goes near” the trade unions’ desired 67 percent minimum wage increase when it examines the issue in early February.
Bernard Evans, pictured, the National Congress of Trade Unions (NCTU) president, yesterday told Tribune Business it was “high time” that The Bahamas’ lowest-paid workers in both the public and private sectors saw their take home pay jump from $210 to “at least” $300-$350 per week.
Speaking after it was confirmed that the council, the body created to resolve all labour-related matters in The Bahamas, will discuss the minimum wage at its next meeting in the first week of February, Mr Evans said widening income inequality was “a recipe for complete and utter disaster” for this nation.
However, Peter Goudie, the Council’s vice-chair and one of its private sector representatives, told this newspaper he “can’t imagine us ever going near” the increase sought by the trade unions - suggesting that, at most, the minimum wage would only be adjusted for the inflationary impacts seen since it was last increased in 2015.
And, with energy prices and taxes placing most Bahamian businesses under sustained cost and competitiveness pressures, Mr Goudie said the private sector’s reaction to the prospect of a minimum wage hike was likely to be: “Are you kidding me?”
He disclosed: “As far as the minimum wage, it’s going to be discussed at the next monthly meeting, and I’m not sure where it’s going to go. Especially in this political climate, with VAT and everything else, to start putting up more costs would be suicidal.
“The matter was brought up at the Tripartite Council on Thursday, and it will be discussed next month. I would think the private sector’s position right now would be: Are you kidding me? We’re screaming about power costs, screaming about VAT, people are upset, and someone is trying to increases costs further. Right now, it’s a no brainer to me.
“Everyone is complaining right now that they’re hardly able to do business, and we’re trying to get Grand Bahama and Abaco’s recovery on track. The last thing we need is extra costs. More people than ever before are going to be hired than ever before to rebuild.”
Both Mr Evans and his Trades Union Congress (TUC) counterpart, Obie Ferguson, have repeatedly called for the minimum wage to be raised to $300-$350 per week on the basis that the present $210 is simply insufficient to provide a decent standard of living - especially for workers who have a family.
However, Mr Goudie argued that adjusting the minimum wage to account for inflation since the last rise in 2015 was the most that workers ought to expect. He reiterated that the Council, which features representatives from the private sector, labour and government, obtained significant data showing that the $210 rate was above the poverty level when it was implemented in the wake of VAT’s arrival.
“I can’t imagine us ever going near that,” he told Tribune Business of the unions’ target, “because we would only adjust for inflation. We know that the minimum wage is above the poverty level... I don’t buy this stuff from all these guys speaking with no facts. We had all the facts when we increased the minimum wage.”
Responding to critics who argue that a minimum wage increase helps businesses by boosting consumer spending, in addition to protecting the lowest-paid workers and affording them a decent standard of living, Mr Goudie argued that it “cuts both ways”.
“It also takes away from businesses that can’t afford it,” he added. “It’s nice to increase spending, but also changes what businesses have to pay. It works both ways.”
Talk of a minimum wage increase was sparked pre-Christmas by the Prime Minister, who suggested such a rise was coming from the public sector on the sidelines of The Bahamas Hotel and Tourism Association’s (BHTA) annual dinner.
This was followed by John Pinder, the director of labour, and also a former trade union leader, saying he was in favour of an increase to between $300 to $350 per week - the same level as Messrs Evans and Ferguson. Dion Foulkes, minister of labour, also suggested a public sector minimum wage increase would soon be forthcoming.
However, government policy on the issue seemed confused when K Peter Turnquest, deputy prime minister and minister of finance, subsequently said no money had been allocated in the 2019-2020 Budget for such an increase and that the matter was still being discussed at Cabinet level.
Mr Evans, meanwhile, yesterday urged the Government to take “a more strategic approach” to determining the appropriate minimum wage level in The Bahamas through the use of empirical data and analysis - the same methods that Mr Goudie says the Council has already been employing.
Describing a minimum wage increase as “absolutely terribly important” to those it will impact, Mr Evans said: “We thought it would have been on the agenda [of the Council] in December last year. Unfortunately it never got on the agenda, but it’s never too late.
“It’s high time. We cannot bury our heads in the sand. We have to say we can afford this, and that $210 is not enough for people to live on in this country. It is welcome news, and I’m hoping something will be done and that it is not just talk.
“Really and truly, no one should make less than $350; at least $300 to $350 a week. No one should make less than that. We know even that is not sufficient, but $100 a week more is a big difference for a lot of people in the lower spectrum. It’s a hell of a difference.”
Acknowledging that small businesses would be most affected by any minimum wage hike, Mr Evans urged the Government to “ease the burden” by providing relief from Business Licence fees and other taxes.
“This is what we’re fighting for,” he told Tribune Business. “We’re fighting for those at the bottom, and we will never excel as a nation until we do. The income gap is widening, and all the policies we have in place are continuing to grow it as opposed to closing it.
“We have this widening gap between the have’s and have not’s, and that is a recipe for complete and utter disaster going forward. You may not see it for four to five years but, if it’s not addressed in 10 years, we will have a total collapse.”
The first, and last, increase in the minimum wage occurred in mid-2015 in a bid to cushion the impact of VAT’s introduction - and associated cost of living increases - on low income earners.
The 40 percent rise from $150 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.