FCEF: Minimum Wage Rate Reality

The Fiji Commerce and Employers Federation responds to comments from both the FLP and NFP. The  Fiji Commerce and Employers Federation (FCEF) had called for caution and restraint when dealing
24 Jun 2017 10:00
FCEF: Minimum Wage Rate Reality
Ambassador Nazhat Shameem Khan, FTUC national secretary Felix Anthony, acting PS for Employment Salaseini Daunabuna and CEO FCEF Nesbitt Hazelman

The Fiji Commerce and Employers Federation responds to comments from both the FLP and NFP.

The  Fiji Commerce and Employers Federation (FCEF) had called for caution and restraint when dealing with significant increases in the national minimum wage.

Federation chief executive officer Nesbitt Hazelman said FCEF is concerned that the $4 or $5 minimum wage for unskilled workers that is mooted by politicians would not only raise expectations but impact jobs and employment creation.

The impact would especially affect the SME and micro enterprises sector due to affordability issues.

“The fallouts would also be even greater in the informal sector not covered under FCEF membership.

“Our key interest is in job creation to ensure that as a nation, we allow our youth and the unskilled the pathway to get a first step into the jobs and livelihood market…once they have a job they will have the opportunity to up skill and move up the wage ladder.

“We are fortunate that the current Government has for the first time put in place a minimum wage policy for Fiji but we need to allow it to work for the benefit of the nation in a sustainable manner,” said Mr Hazelman.

FCEF had met with its tripartite members and debated the viewpoints through ERAB consultations despite the differing views and various positions.

The Federation’s position on the matter is that an excessive minimum wage hike has the real potential to reduce employment, said Mr Hazelman.

“It would particularly affect the youths who are first time job seekers and those operating small micro and SME businesses- and not in a position to pay or sustain major wage increases.

“It would also stifle job growth; against a backdrop of significant increases in the costs of doing business- coupled with costs pressures through international competition for those in export industries,” Mr Hazelman added.

FCEF continues to advocate that as a developing nation and a middle-income economy, Fiji will remain highly competitive.

This will be done through the Federation’s role in ensuring that the policies including the national minimum wage compliments this goal as this would.

“This would also attract international investors that ideally provide more decent jobs.

“Any significant increases in minimum wages, we believe, will have an upward push factor to those industries in the formal sector covered under the various orders and union collective wage agreements.

“This would raise sustainability issues cause distortions leading to inflation,” Mr Hazelman said.

The Federation believes that job creation and up skilling are alternatives to enable those in the informal sector to move into the formal sector with better paid jobs and labour rights.

Improved productivity and standardized measurement would also off set wage increases thus increasing output and GDP growth.

However, the Federation felt there were shortcomings in the report but was satisfied that the report took into account key measures such as inflation tares, productivity measures and social wage through Government’s social policies.


Professor Pratha’s research states:

The minimum weekly income per household based on current BNPL should be approximately $203.00 a week per household for unskilled workers in informal sector.

His survey also revealed that a household would generally have more than two wage earners.

Government currently has a social wage through its social policies that allow household incomes and total sum benefit to be above the minimum wage requirement.


Informal wage category sector:

Demand drives the pay rates whereby the skilled work force are been paid around $5-$10 per hour or above.

The market forces dictate the rates and industries pay accordingly.

Some industries require special attention on how the proposed rate can be applied.


FCEF suggestions:

Government to include tax breaks or reinstating the 100 per cent tax rebate on employer FNPF contribution to ensure there is no job losses in the garment and security industries.

A long term plan for the minimum wage rate increase. Government may consider looking at progressive increase to the minimum wage every 2 years taking into account Fiji’s economic growth, inflation rates and productivity growth.

Food and utility prices to be checked as these bills consumes most of the wages earned by lower income earners impacting purchasing ability of other key services like health and education.



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