Written by: Neil Hartnell, Tribune Business News, February 16th, 2022
Increase said to be almost inevitable
But uncertain if it will be PM’s $250
And livable wage ‘way down the road’
Recommendations on a minimum wage increase could be submitted to government “within a month”, Tribune Business was told yesterday, although a liveable version is “way down the road”.
Peter Goudie, who heads the Bahamas Chamber of Commerce and Employers Confederation’s labour division, and is its representative on the National Tripartite Council, said it was impossible to determine whether an increase to $250 per week - as pledged by the government during the general election campaign - will be the outcome until all research is completed.
While indicating that some increase for the lowest-paid private sector workers is almost assured, Mr Goudie said it will not necessary be a cure by itself for the inflationary surge in everyday prices that is starting to eat away at Bahamians’ living standards and disposable income.
Disclosing that the Council, which was created to address all labour-related matters in The Bahamas, has formed a committee to research whether a minimum wage rise is justified and to what extent, he added that moving to a so-called “livable wage” - a promise contained in the Davis administration’s Speech from the Throne - is an aspiration that is much further away.
“We’re looking at a minimum wage increase right now,” Mr Goudie confirmed. “We’re doing all the research, but the livable wage, that’s down the road. That’s way down the road. There’s a lot of research and discussion that has to be had about that.
“Like Bernard Evans (now the Government’s chief industrial negotiator said), it may be introduced incrementally, but I don’t think we’re going to get up anywhere the University of The Bahamas came up with. We’re going to have to ask them to come up with their research so we can have a look at it ourselves.
“You cannot expect that everybody in a household of four to five persons is going to have this livable wage wherever it comes from. Suddenly you’re going to have everybody making $600 a week?”
University of The Bahamas (UoB) researchers, in a study produced earlier this year, pegged Nassau’s monthly living wage at $2,625 while the equivalent for Grand Bahama was $3,550 per month.
The authors, Lesvie Archer, Olivia Saunders, Bridget Hogg, Vijaya Permual and Brittney Johnson, wrote: “Our gross living wage estimate for New Providence is 26 percent lower than the Grand Bahama living wage estimate, nearly 200 percent higher than the national minimum wage, 127 percent higher than 2013 poverty line and nearly 75 percent higher than the minimum wage hike proposed by a local union.
“Our living wage estimate for Grand Bahama is nearly 300 percent higher than the living wage, 200 percent higher than the 2013 poverty line and 140 percent higher than the minimum wage hike proposed by a local union.” The Bahamas’ private sector minimum wage, last increased following VAT’s introduction in 2015, is currently $210 a week.”
The minimum wage, though, is defined differently from the “livable wage” measure employed by the UoB study. It based its work on a model employed by Richard Anker, the International Labour Organisation’s (ILO) living wage specialist, who defined a livable wage as one that can sustain a person’s “physical, emotional, social and cultural needs and that of their family beyond mere subsistence”.
Food and housing costs, based on a “nutritious diet” and “decent housing”, were factored into the calculations together with other daily living costs, while the research also drew on data from sources such as the 2019 Labour Market Information Newsletter; 2017 Labour Force Report; and 2016 Government of the Bahamas salary book.
The Davis administration picked up on this in its Speech from the Throne, which typically only gives the barest outlines of the Government’s policy and legislative direction. It stated that the Government will introduce more consumer protection legislation and “increase the minimum wage and phase in a liveable wage”. No timelines, figures or other details were provided.’
Mr Goudie, meanwhile, told Tribune Business that recommendations on a minimum wage increase were “imminent”. However, it is presently uncertain whether the data will support the 19 percent increase - from $210 per week to $250 per week - that was previously promised by Prime Minister Philip Davis QC.
“It’s going to come,” the Chamber’s labour chief told Tribune Business. “I know that the Prime Minister talked about $250, but until we see the research we don’t know what it’s going to be. That’s what they said, but they didn’t have any research to back it up. That’s what we’re doing. There’s a committee, and I’m getting some information from them.
“We’re also getting information from the former Department of Statistics. That’s what we need to start out, and then we’ll go from there. That’s going to be done fairly soon... I would say we’d have a recommendation within a month by the time we’ve put everything together, and put the recommendation to the minister of labour.”
Keith Bell, minister of labour and Immigration, will then have to take the Council’s recommendation to Cabinet to obtain formal approval from his ministerial colleagues before any minimum wage increase can become law and brought into effect.
The private sector minimum wage was last increased by 40 percent in 2015 by the former Christie administration, which took it from $150 per week to $210 per week in the wake of Value-Added Tax’s (VAT) introduction.
While another increase would raise incomes for the lowest wage earners in Bahamian society, and thus help to somewhat offset the impact of rising inflation on the most vulnerable individuals and families, a minimum wage hike can come with unintended consequences.
For it increases employers’ marginal employment costs and, if raised too high, could disincentivise companies from hiring young, low-skilled labour at a time when the economy needs every job it can get in trying to recover from COVID-19. However, many observers view the increased social protections offered by a minimum wage as outweighing any unintended negative consequences.
Mr Goudie, meanwhile, said that while a minimum wage increase may help to ease the impact of widespread price hikes for the economy’s lowest paid workers it will not completely eliminate the pain for these persons and their families.
“It’s not going to stop these price increases,” he warned. “They’re being caused by COVID-19 and backlogs in the supply chain. You look at some of these car dealerships and they don’t have any cars. They cannot get them. If you want to talk about supply chain break down, there you go.”