Tag Archives: National Minimum Wage

Increase in National Minimum Wage, after 9 Years

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Submitted as a comment by Disgusting Lies & Propaganda TV on the Minimum Wage (Yes) Timing (No?) blog

The findings of the Minimum Wage Board should really put the specific amount of 8.50/hr min wage in its true perspective. The fact that it is even below their 10/hr recommendation and even below the 12/hr (inflation adjusted) “living wage” just convinces me more that the $8.50 should be implemented sooner rather than later. I may be a little sensitive to timing (in that i would have considered an additional 3-6 months after April 1st) but I don’t support it delayed until Jan 2022 (as Edward Clarke was suggesting). THAT would be taking a joke too far.

My reasoning supporting the specific increase is as follows:-

  1. Govt is looking for ways to stimulate the economy post lockdowns, post COVID-19 pandemic. To put it simply, businesses can only survive if there is spending in the economy. The consumer plays just as important a role in the economy as the supplier. Min wage workers constitutes a small part of consumers. In a sense govt is trying to increase their participation in the economy by increasing their ability to spend.
  2. Inflation raises OTHER COSTS of doing business, wages can be lumped into those costs. It is a cyclic effect. Businesses usually respond to inflation by raising their prices, labour responds by requesting wage increases to deal with increased prices, wages subsequently increase. For most economies once wage rates closely matches inflation rates there is no adverse effect to the economy or to individual businesses as profit margins are maintained. Only those businesses that have employees working below 8.50/hr would be directly affected in the short term. The private sector is giving the perception that it would be a large shock to the “cost of doing business”. The point here is that we are dealing with NARROW BAND of the minimum wage and not all wages. The 8.50\ hr rate is below the inflation adjusted amount, it still suits businesses more than the worker, but is probably considered due to the economic effects of COVID-19.
  3. The 75% ($1.50) increase in bus fare in 2019 was REASON ENOUGH to raise the minimum wage. It is a cost that those earning minimum wage mostly pays and CANNOT reasonably avoid paying with a cheaper alternative. Pre 2019, bus fare for the purpose of GETTING TO & FROM WORK ONLY was $2 x 2 x 5 = $20 (2 bus daily for 5 days work week) or $40 (4 buses daily). Post 2019 it is 3.5 x 2 x 5 = $35 (2 buses) or $70 (4 buses). That is a max $30 increase in bus fare out of a min wage of $6.50 x 40 hrs = $260 that hasn’t changed since 2012. The point here is that the increase in min. wage is 2 years OVERDUE.
  4. It has been 9 years since the last increase in minimum wage. The party in power addressed the minimum wage as a “manifesto promise” in 2018. This govt announced as recently as Dec 2020 that the minimum wage would be “addressed” by April 1, 2021. The point here is that this should constitute reasonable notice and reasonable expectation that a min wage raise was coming in the near term. The private sector probably dismissed it as “politicking”.
  5. Businesses would have benefited from the reduction in corporate tax rates in 2019/2020. This would have given them more “financial space” to handle increased costs and “erosion” in profits. The point here is that this financial space wasn’t even needed if the normal inflation- price- profit relationship was maintained.

Minimum Wage (Yes) Timing (No?)

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Whether studying the issue in the classroom or conversing in a rum shop the amount and timing of the implementation of a national minimum wage generates robust discussion in any country. Pros and cons are easy to find on both sides of the contentious issue.

The Barbados government some suggest are moving like the proverbial bull in a china shop to implement a minimum wage of $8.50, up from $6.25 with security guards to get $9.25 to take effect on All Fools Day 2021. The trade unions are saying it is too low and it should be implemented without delay. Some in the private sector suggest it is too high and the date of introduction is too aggressive.

This government’s decision to increase the minimum wage is commendable and long overdue. The evidence support in the last 5 years there has been significant upward movement in the rate of inflation and the Retail Price Index supports Barbados being an expensive place to live.

The concern by parties of the dispassionate kind entering the debate is not the amount of the minimum wage being introduced but its timing. Moving from $6.25 to $8.50 is significant. Its introduction must be weighed against how the market is likely to respond. Unfortunately this is an unknown. After more than 10 years of a struggling economy many businesses are operating with depleted cashflows. Bear in mind COVID 19 would have exacerbated stress to the profit and loss of many businesses. It is easy for some to sit in the armchair and make the uninformed assumption that all businesses make money. Many operate at the margins.

On the biscuit and cheese side of the discussion, the data supports those earning at a subsistence level must be experiencing an enormous challenge. The obvious position is that a caring society must find ways to support the most vulnerable. The blogmaster will not join the politically motivated and uninformed crews by shouting the minimum wage should be hiked to $10.00 and to hell with considering the consequences. Many debating the issue are unaware this is a debate raging in many countries including the most developed.

It may be useful for the calculus used by the technicians to be made public. The majority of Barbadians will not understand it but it make help to deflate the emotional arguments that a national minimum wage amount is not determined by pulling from a hat.

It seems the majority of opinion from the private sector is that the timing is bad given the vagaries of market of the last 13 years and the consequential negative impact. From the view of trade unions and under-represented workers, now is the best time because of the current state of things.

In is against this background the government has had to make a tough decision.

The blogmaster is always amused when decisions – as in this case moving forward with the implementation of a minimum wage is made – several interest groups will make themselves heard post facto. What is the purpose of the tripartite arrangement (Social Partnership) we beat our chest again? The discord the many dissenting views must cause the public does not help to inflate confidence into the Barbados space. In a situation like this why the social partnership could not have agreed to a communique registering the different concerns after discussing government’s decision to move ahead? It seems all issues in the country have to be resolved after a predictable adversarial process. Historically this has not been the Barbados way.

Whether the government folds to the request of private sector to suspend the hike in minimum wage or not, there is a problem to solve.

How do we (society) protect the vulnerable and marginalized worker in the society at a difficult time.

How does government implement a minimum wage policy to equatable redistribute income in the society.

So far the statement on the matter from Andrew Bynoe of A1 supermarkets is one of the more sensible ones registering with the blogmaster.

I would even advocate moving to $10 an hour to somebody who works for 40 hours, so they would have a gross take-home pay of $400. However, having said that, the cost of living has to be addressed, because for businesses to be able to support the minimum wage up to $10, we have to look at the other areas of costs that affect the running of businesses…Employees would have to honour efficiency and higher productivity within the workplace…

Andrew Bynoe

Another Heather Cole Column – Social Justice for the Working Class

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A reckoning for social justice is unfolding in Barbados. Unlike the USA earlier this year where it was prompted by police brutality and death, in Barbados the reckoning has been prompted by labour unrest.

Working Class Inclusion in the Social Partnership

In an address on World Day of Social Justice on February 20th 2020, the Minister of Labour Colin Jordan spoke on the topic “Closing the Inequalities Gap to Achieve Social Justice”. In that address he stated, “social justice connotes an environment where there is equity and fairness, no one is marginalized, exploited or discriminated against, there is no poverty, there are equal gender opportunities, and there is no infringement of human rights” and “social justice will be achieved through a variety of means including education, awareness-building and legislation.” Sad to say, the minimum wage was overlooked and not included. A few months later, in June 2020 the Minister brought legislation to discriminate against the already exploited working class of Barbados.

On December 14, 2020 after months of social unrest, the Minister stated that the Government will revisit the changes made to the Severance Pay Act which reduced the length of time persons can apply for severance and revisit employers’ refusal to pay severance. However, also at the heart of this serious matter is the fact that the government and a ‘social’ partnership made a bad decision against one class in society which could have plunged the island into its worst labour relations crisis since the 1930’s Riots. Until it is changed, the BEST Program is an epic failure which will affect the entire labour force not only Tourism workers. The idea that such a decision was accepted by government and the social partnership is a matter of grave concern. It is a clear indication that the social partnership is a limited interest group serving its own interest and that it has the propensity to make its self-interest government policy.

In order for there to be meaningful change in terms of labour legislation going forward, the social partnership must be a broad based interest group which includes representation from the working class. Co-operatives and NGO’s must also be represented.

Historical Origins of the Minimum Wage

To have any discussion on wages in Barbados, one must start with three things which are the distribution of land and capital and the labour force that supplies labour. All three have been determined historically during slavery when the white upper class owned the land and the capital and the black working class were the source of labour. The black working class went from no wages to extremely low wages as the planters had an abundance of labour to choose from. The disparities between the profits of the planter class and wages of the labourers came to a head in 1937 and riots erupted. A low wage of about 30 cents a day was being paid.

Today ownership of the means of production (land and capital) has basically remained unchanged in Barbados. Even with the advent of credit unions little has changed for the working class. Constrained by the lack of Capital and land, the working class has been unable to impact the wages that they earn even with the support of the labour unions.

The minimum wage is a wage at the subsistence level. At present, the minimum wage is $6.25 per hour in Barbados. It is the demarcation of poverty line when compared to the high cost of living. In essence, the minimum wage has kept the working class in poverty.

The Living Wage

A living wage is a wage that is high enough to maintain a normal standard of living. It takes into consideration the cost of food, transportation, rents, mortgages, utilities, clothing, self- maintenance, healthcare, education and the payment of taxes.

According to Oxfam the introduction of living wage is beneficial to a society when:

1. Increases in wages are long overdue.

2. It is used to address long standing issues in class/race inequalities.

3. It is used to reduce poverty.

4. It is used to fuel economic growth.

Government maintains a basket of goods that are under price controls. For decades that basket has remained unchanged even though taste has changed in the population due to a large consumption of imported goods. Control of what the working class eats has shifted from the planters to government if it determines what your wages can buy.

Government New Minimum Wage by Sector

Government has stated that it will introduce a new minimum wage structure by sector as opposed to an across the board minimum wage. For this to make an impact on the livelihoods of the working class, the following must occur:

1. There must be a best practice used to determine the valuable of types of labour. This may also negatively impact labour relations.

2. Government must invest in agriculture to increase locally grown crops to substitute for imports.

3. Government must provide subsidies to agriculture.

4. There must be an across the board price freeze to combat inflation.

5. Rents for the working class must be fixed or subsidized.

6. Food for the working class must be subsidized i.e. there must be 2 different price structures in the supermarket, one for the working class and another for everyone else.

7. There is a special interest rate for the working class.

8. Access to capital for the working class.

9. Subsidized transportation for the working class.

10. Land purchase and building materials are subsidized for the working class.

Conclusion

Getting back to the Minister’s address on February 20th, 2020, he failed to include the minimum wage of $6.25 an hour as part of the social justice environment that he described. Perhaps it was an oversight on the Minister’s part but that minimum wage has been responsible for the exploitation and discrimination of the working class of Barbados.

The government of Barbados has a choice, either subsidize the working class or provide a living wage. The question that government needs to determine is if it really wants to positively impact the lives of the working class in Barbados by taking the measures outlined above when it introduces the new minimum rate structure or if it will not be easier to provide the working class with a living wage which reduces government’s effort and cost. The new minimum rates structures on their own will not work unless they equate to a living wage.

Going forward it is hoped that the government comes to terms with the fact that representation from the working class is included in the social partnership and that there is acknowledgement that a minimum wage has failed largest class of the population and that a living wage must be legislated as it is in the best interest of all Barbadians.

Grenville Phillips Speaks : Difficult Conversations – Barbados’ Minimum Wage

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G4S has agreed to pay a minimum wage of $8.79 per hour, with a minimum of 40 hours per week. As part of the agreement, it seems that the Government must force their competitors to adopt a similar standard. It is important when setting government policies, that all perspectives be examined.

It is normal for large businesses to want to maintain their dominant market position. This is done in two ways; namely, offer better service, or damage competitors.

Those who choose the method of offering a better service, tend to view obstacles to their growth as challenges to overcome. They tend not to concern themselves with their competition. Instead, they focus on continually improving their quality of their service, by improving the management of: competent staff, quality input materials, and quality and low-maintenance equipment.

ARTIFICIAL STANDARDS.

One common method that dominant players use to harm their competitors, is to adopt an artificial standard, that has little to do with the quality of the service. Then they influence the government to make that standard mandatory for their competitors.

A minimum wage is an artificial standard. It has nothing to do with the quality of service. Paying someone a higher salary does not magically improve that person’s competence or productivity.

Established companies who compete on quality, normally reward their productive employees with higher salaries. Therefore, a minimum wage is not an issue for them. A minimum wage is an important issue for many newer companies, who have to compete on cost.

A dominant company can harm newer companies, if they can entice them to match the salaries of the dominant company. But new companies are not normally that stupid. They would never agree to such madness that would immediately make their companies uncompetitive.

Uncompetitive businesses normally accumulate high debts. This then leads to the closure of the business, and the dismissal of all employees – who then earn no wages whatsoever.

When the government meddles unnecessarily in the commercial market, the results are normally disastrous for everyone – employees, employers and the Government. A high minimum wage is a win for the dominant business, and the unions who represent entry level employees. It can be political abuse for everyone else.

POLITICAL ABUSE.

Entry level positions are not designed to be permanent for an employee. They are designed to give all employees an opportunity to demonstrate their competence and productivity, so that they can earn a higher salary.

Employees who have qualified for a higher salary, but are underpaid, are being robbed by bad employers. Unlike our physically enslaved fore-parents, we have options. Good employees can leave bad employers and offer their services to a competitor, or they can start a rival business.

Employees demonstrate their mental enslavement, when they stop trying to be better. In my opinion, one of the most tragic sights, is to see a person comfortable in an entry-level position for their entire careers – and being lauded as a loyal employee.

High minimum wages allow bad employers, to keep employees in entry level positions for longer periods. It can also make employees comfortably mentally enslaved. So what is the solution?

THE SOLUTION.

Government may mandate a minimum wage with the following attributes:

a) it it high enough to prevent mentally enslaved workers from being exploited;

b) it is low enough to allow new businesses to be competitive;

c) it is low enough to give entry level workers an incentive to qualify for higher-paying positions.

Grenville Phillips II is a Chartered Structural Engineer. He can be reached at NextParty246@gmail.com