Private sector bodies raise concern on national minimum wage ‘promises’
26 October, 2018, 8:00 am
TWO leading private sector organisations have raised concerns on the lack of consultation regarding promises of increasing national minimum wage made by political parties.
In a joint statement, the Fiji Commerce & Employers Federation (FCEF) and Fiji Hotels & Tourism Association (FHTA) stated that the proposed minimum wage increases from $4, $5 and $10 an hour were “very misguided concepts” and “misleading”.
The organisations stated that the lack of consultation with the private sector and industry leaders had led to misreading the potential repercussions of these proposals and the effects this will have on our economy and workforce.
“An increase to $4 and $5 an hour is essentially an increase of 49 per cent and 87 per cent respectively to the proposed wage rate,” the statement read.
“A significant proportion of this increase will be passed onto the consumers, which will also have a spiraling effect and an increase in inflation.
“When the minimum wage rate is increased the flow on effect will be that those on current rates will also want their wages increased, thus creating more adverse impact on our economy.”
The statement further added that the wage increase would have more drastic impacts on SME’s, the corner shops in the informal sector rather than the medium and larger business in the formal sector.
It added that the proposed increase in national minimum wage would also have an adverse effect on labour employed in the informal sector such as housemaids, gardeners, baby sitters, etc.
“Many of these will either be laid off or end up working reduced hours so that families that employ them can still run their homes within their budgets,” the organisations stated.
“Given that Fiji’s economy is largely supported by SME’s we must consider the impacts of how this will affect Fiji’s economy in the long term.
“Indiscriminate increases will push the cost of doing business up from an already high cost and raise service costs which will in turn affect all industries.
“Businesses will be then forced to address increased costs that can lead to job losses as more investment gets directed towards mechanization and automation for improved sustainability and productivity.”
The two organisations have also recommended to take into account the social wage, such as free bus fare, subsidies on electricity and water bills for families earning below the threshold amount.
“The study done by the consultant earlier this year mentioned that the social wage amounts to around $1.30 an hour and this added to the minimum wage rate of $2.68 an hour would equate to around $3.98 at present in real terms, which is about what some political parties are already proposing,” the statement said.
The FCEF and FHTA however said they were not against the increase of the national minimum wages, but raised concerned about the lack of consultation with the private sector and industry leaders.
“Any increase to minimum wages has to be on a progressive basis and in phases that consider the status quo and current economic situation of the country,” the organisations stated.
“We want to reiterate that the current minimum wage issue being discussed here refers only to unskilled labour and that most wage councils already pay over and above the current minimum wage rate.”