Determining a national minimum wage can be a complex matter.
It’s not as simple as what some politicians make it out.
The clamour for $4 an hour (SODELPA) and $5 an hour (National Federation Party) may sound good but in reality only some employers may be able to afford them.
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Many may have to lay off workers because they cannot afford them especially if it is implemented across the board sectorally. Small businesses may be the hardest hit.
Attorney-General and Minister for Economy Aiyaz Sayed-Khaiyum has made it clear that the existing national wage rate of $2.68 an hour applies to unskilled workers only.
It means that employers still determine the salaries of most other employees based on merit – qualification, skills and years of experience.
Some employers are already paying $4 and $5 an hour and others higher.
This is already happening in the civil service as part of the reforms. It is also happening to a large extent in the private sector.
If wage rates are going to be raised to $4 or $5 an hour, the employers will pass on the extra cost for the bigger overhead to the consumers.
Logically, it will increase the cost of living.
In some countries, there are several minimum wages for different sectors.
Research has shown that minimum wage systems are diverse and many approaches are possible, depending on the needs and choices of individual countries.
Some countries have only one minimum wage applied to all employees in the country; others have multiple minimum wage rates by sector of activity, occupation, or geographical region.
In New Zealand, the adult minimum wage applies to all employees aged 16 years and over who are:
ν not starting-out workers or trainees, or
ν involved in supervising or training other workers. What this means will depend on each individual situation. For example, it would usually include an employee overseeing the performance of another employee, or instructing another employee in the performance of their job; the employee doesn’t have to have direct line management responsibility for other employees. The supervising or training needs to be a part of that person’s job, not just a one-off event.
There is also a starting-out minimum wage. It applies to workers who are:
ν 16 and 17-year-old employees who haven’t done six months of continuous employment service with their current employer. After six months with one employer they are not starting-out workers and must be paid the adult minimum wage
ν 18 and 19-year-old employees who have been paid one or more social security benefits for six months or more, and who haven’t completed six months’ continuous employment with an employer since they started being paid a Social Welfare benefit.
ν 16 to 19-year-old employees whose employment agreement states they have to undertake industry training for at least 40 credits a year in order to become qualified in the area they are working in.
If an employee is supervising or training other workers, then the starting-out minimum wage doesn’t apply and they must be paid at least the adult minimum wage.
The training minimum wage covers another group -employees aged 20 years or over whose employment agreement states that they have to do at least 60 credits a year of an industry training programme to become qualified in the area they are working in.
Many of these employees will be apprentices. An apprentice has the same minimum rights and protections under employment law as any other employee but may be paid the training wage.
It doesn’t apply to employees who are being trained at work, for example, by their employer at the start of their employment; it only applies to employees doing an approved industry training programme.
It also doesn’t apply to an employee who is supervising or training other workers. These employees must be paid at least the adult minimum wage.
The current minimum wage rates (before tax) are as at 1 April 2018 and apply to employees aged 16 years or over: ν Adult $16.50 ν Starting-out $13.20 ν Training $13.20 There is no minimum wage for employees under 16 but all the other minimum standards and employment rights and obligations apply. When an employee turns 16, they must be paid the relevant minimum wage (even if they were paid less than the minimum wage when they were 15).
Fiji might not adopt the same system but it will have to come up with something that works best for us. Studies have shown that simple systems are easier to operate.
Feedback: nemani.delaibatiki@fijisun.com.fj
