Opinion

#Vote2018 – Analysis: Minimum Wage Rate: Who Will Pay The Price?

Minimum wage rate is a hot topic right now and everyone from trade unionists to politicians and those who have a leg in both camps are working hard to milk
28 Mar 2018 10:00
#Vote2018 – Analysis: Minimum Wage  Rate: Who Will  Pay The Price?
An increase in the minimum wage rate will not benefit people like market vendors. Instead they will be disadvantaged by an increase in the prices of goods and services.

Minimum wage rate is a hot topic right now and everyone from trade unionists to politicians and those who have a leg in both camps are working hard to milk this issue.

The National Federation Party (NFP) is campaigning for $5 minimum wage rate. SODELPA is advocating for $4.

Fiji Trades Union Congress (FTUC) general secretary Felix Anthony, who was the leader of the People’s Democratic Party (PDP), is also charging ahead with $4 an hour as the minimum wage rate.

Mr Anthony’s former PDP colleague, Lynda Tabuya is now flying  the SODELPA flag.

What should be a feasible minimum wage rate? When did we start having one?

What is the history of Fiji having a minimum wage rate?

To begin with, it is rather hypocritical that SODELPA is advocating for $4 an hour.

Its leader Sitiveni Rabuka, who was a former Prime Minister of Fiji, in the 12 years of his leadership, did not implement any minimum wage rate at all. It was the Bainimarama Government, which following consultations implemented a minimum wage rate for unskilled workers. The FijiFirst government set $2.32 an hour in 2014, and revised it to $2.68 in the 2017/2018 Budget.

If Mr Rabuka had the political will to implement a minimum wage rate in the 1990s when he was the Prime Minister, no doubt we would have had a higher minimum wage rate now.  But, he did not.

To come out of the blue and demand for changes in something he did not see fit to implement can only be seen as joining the fashion. It is important to note that this rate is only for unskilled workers and those who are not part of the 10 sectoral-based wage categories.

Those workers that fall under the 10 sectoral based categories of course have their own minimum rate or wages which is higher than $2.68.  Of course many people who discuss this topic don’t tell others about this or fail to understand it themselves.

Who is earning what?

i. A foreman in the building sector has a minimum rate of $5.22 an hour,

ii. A class 1 tradesman has a minimum rate of $4.30 an hour;

iii. An underground miner in the mining industry has a minimum rate of $4.69 an hour;

iv. A log truck driver in the sawmilling and logging industry has a minimum rate of $4.25 an hour;

Those under the 10 wage sectors, which include the printing trade, wholesale & retail trade, hotel & catering trade, garment industry, sawmilling & logging industry, road transport, building & civil & electrical engineering trade, manufacturing industry, mining & quarrying industry and security services have a minimum rate of more than $2.68 an hour.  Any employer that does not comply with this regulation should be reported and actions will be taken against them.

There seems to be a lot of misinformation about the minimum wage and related wage regulations and it is also an area that the Opposition have used to try and gain political mileage. It has no doubt become an issue as we get closer to the general elections.

We need wages to remain affordable for employers and, employers need to be able pay a rate that is sustainable. We also need to ensure that it does not have an inflationary impact on the economy. We need to ensure that where 10 people are employed in a retail store, with the minimum wage rate set at $4-$5, five out of those ten people are not let go.

The Opposition had stated that they would work to subsidise smaller businesses. Who qualifies for this subsidy?

A person can hire his relatives and use them to get the subsidy. Who does this help? Not the people Opposition parties are professing to want to help.

Raising the minimum wage rate to the level suggested by the Opposition will actually cause job losses. On the other hand, the cost of living will rise along with the price of everything else, including butter and lamb chops. Why?

Because when an unskilled worker receives $5 an hour, skilled workers will demand more.

Attorney-General Aiyaz Sayed-Khaiyum had pointed out founder of the Hot Bread Kitchen and SODELPA MP Mere Samisoni may need to pass on the increase in pay to her staff to consumers who buy bread from her shops. And, no amount of including more items in what you call basic food items and VAT exemptions will salvage the situation.

Fiji has 130,000 people who will not benefit from the increase in the minimum wage rate but they will be on the receiving end of the increased cost in goods and services. Companies want to make profit to be able to operate no doubt.

Who will suffer? The 130,000 Fijians who will bear the cost of that increase.

It will become a costly affair and we need to know more about what Opposition parties are preaching.

Edited by George Kulamaiwasa

Feedback:  jyotip@fijisun.com.fj

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