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Analysis: Submissions Must Be Realistic

Analysis: Submissions Must Be Realistic
May 24
12:24 2018

Another round of consultations to review our minimum wage rate has begun.

The first consultation was in Lautoka yesterday and more are lined up for the week.

This is the opportunity for people who are really passionate about the minimum wage rate and not just harping on about it to suit their political agenda, to come out and make their submissions.

While this has started again, it is important to remember a few facts:

  • The minimum wage rate is for unskilled workers. It is not for people who are skilled in their fields such as carpenters. In Fiji, trades people such as carpenters, brick layers etc are earning well above the minimum wage rate.
  • It was the Bainimarama Government which introduced the minimum wage rate. While SODELPA is now pushing for an unrealistic rate of $5 it is important to remember that when their leader Sitiveni Rabuka was Prime Minister, he chose not to introduce a national minimum wage rate. Now, to gain a few more votes, his side is calling for $5 an hour.
  • The Bainimarama-Government introduced the first ever national minimum wage in 2014. And since then it has been reviewed and increased twice and currently stands at $2.68 per hour

These days, a foreman in the building sector has a minimum rate of $5.22 an hour, a class 1 tradesman has a minimum rate of $4.30 an hour; an underground miner in the mining industry has a minimum rate of $4.69 an hour; a log truck driver in the sawmilling and logging industry has a minimum rate of $4.25 an hour.

There seems to be a lot of misinformation about the minimum wage and related wage regulations.  It is also an area that the Opposition has used to try and gain political mileage.

What can an unrealistic minimum wage rate do to Fiji’s economy:

We need wages to remain affordable for employers and they need to be able to pay a rate that is sustainable.

We also need to ensure that it does not have an inflationary impact on the economy.

Studies have shown that there is a direct relationship between an increase in an unrealistic minimum wage rate and unemployment.

A small shop which employs five salespersons on $3.80 an hour will certainly have difficulties in paying $5 an hour to the same number of staff.

They will either let go of their staff, making some unemployed or they will increase the prices of their goods to compensate for the increase in the wage rate.

Who will end up paying for the increase in the price of goods? Consumers.

Nannies are in high demand in Fiji right now. They earn from $100 to $150 per week while the person who employs them may be earning $6 an hour.

If by law they are required to pay their nanny $5 an hour, will they be able to sustain themselves with the remaining $1 an hour?

Or will they choose to find alternative arrangements to look after their child? So that a nanny who was earning $3.30 an hour will suddenly be without a job.

Who benefits from the increase in minimum wage rates? Not 130,000 Fijians who are self-employed- the taxi driver, the market vendor, the woman who comes around to sell cakes or roti at your office.

But they will feel the pinch in increased prices.

Without benefitting from it, these Fijians will have to pay the price.

So be realistic when you are making submissions.

Be mindful what an unrealistic increase can do to our economy.

Edited by Percy Kean



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