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News Report: PLP's Minimum Wage Hike 'Economic Suicide'

By NEIL HARTNELL - Tribune Business Editor, Tuesday, March 9, 2021

The Progressive Liberal Party's (PLP) plan to increase the minimum wage by $40 per week was yesterday branded "economic suicide" by the private sector's top labour specialist.

Peter Goudie, the Bahamas Chamber of Commerce and Employers Confederation's (BCCEC) labour division head, told Tribune Business that the Opposition's proposal would deter hiring by businesses "who are barely holding on" and may even result in fresh terminations due to the associated increase in labour costs.

Arguing against the imposition of a fresh private sector burden when companies "are shutting down almost every day" due to COVID-19's economic devastation, Mr Goudie described the PLP pledge of a $250 private sector minimum wage as "a political manoevere by the Opposition party that's desperate to try and win seats" in the upcoming general election.

Chester Cooper, the Opposition's deputy leader, justified the party's proposed 19 percent minimum wage increase on the basis that Bahamian workers require a "livable wage" given the ever-increasing cost of living so that they can "live with dignity".

“We looked at what happened when the previous PLP administration increased the minimum wage by 40 percent,” he said. “We are comfortable that what will happen as a result is small businesses will have more money, the economy will grow, there is more money in circulation, the Government will in fact receive some taxes back as a result of more money in circulation, (and there will be) more money in spending by the persons with $250."

This stance, though, was comprehensively rejected by Mr Goudie, who told this newspaper: "They said that the last time we increased the minimum wage there didn't appear to be any economic shock waves, but that increase was not done in the middle of a pandemic or aftermath of a Category Five hurricane.

"I just think increasing the minimum wage right now would be economic suicide. We have got businesses shutting down almost every day and they want to increase the minimum wage. Chester [Cooper] is supposed to be a very smart businessman, but sometimes you have got to wonder......."

Mr Cooper, who prior to his election as Exuma's MP in 2017 was the principal of BAF Financial, the insurance and financial services provider, is also a past president of the Bahamas Chamber of Commerce.

"I just think it would be economic suicide," Mr Goudie reiterated of a minimum wage increase now. "This country is in big trouble. If you are going to increase my costs of doing business, and I'm struggling as is, I'm just going to cut more. We all have to survive somehow....

"We know people want the minimum wage looked at, but it's not economically feasible right now. I just get upset. If you increase it to $250 it's a 19 percent increase. You've got people in the private sector who are barely hanging on to to their businesses right now, and you want to put a 19 percent increase on the minimum wage?"

Mr Goudie, who is one of the key private sector representatives on the National Tripartite Council, the body that deals with all labour-related matters in The Bahamas, said the US Congress last week set a precedent by shutting down the bid by Senator Bernie Sanders and other left-leaning Democrats to increase the federal minimum wage to $15 per hour.

"Think about that one. The largest economy in the world shut down a minimum wage increase," he added, while questioning what the impact on the Bahamian government's payroll would be if the PLP sought to increase the public sector minimum wage of $220 per hour.

"You want to put more money in the Government's coffers, but how are you going to do that when you increase the minimum wage?" Mr Goudie asked "It's a political manoevere. It's a political manoevere by the Opposition party that's desperate to try and win seats."

The minimum wage has only seen one increase since it was first introduced in The Bahamas in 2002. That occurred under the last Christie administration in the aftermath of VAT's 2015 introduction, and was designed to help offset the rise in living costs produced by the then-new tax.