The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Chamber of Commerce’s chief executive has backed calls to review the practice of adding “automatic” 15 per cent gratuities to hospitality industry bills, amid concerns about the minimum wage increase’s impact on tipped employees.

Edison Sumner told Tribune Business that employee complaints about reduced sales commissions and gratuities, as employers seek to compensate for the minimum wage rise, provided an opportunity to review how services sector workers were compensated.

Bahamian employees working in businesses such as restaurants, hotels and luxury goods retailers have typically earned most of their income from tips, gratuities and commissions, such as the 15 per cent gratuity automatically added to diners’ bills.

Their ‘base pay’, though, has frequently been left at minimum wage levels, ensuring that their employers are the businesses most impacted by the recent 40 per cent minimum wage increase to $210.

Atlantis has indicated that the minimum wage rise is likely to increase its annual employee payroll by $2 million, one of the factors that has contributed to its ‘freeze’ on new staff hirings.

And Diamonds International, the luxury goods retailer, has reportedly moved to restructure and reduce staff sales commissions to compensate for the increased minimum wage it must now bear.

Mr Sumner told Tribune Business that employer and employee concerns over the minimum wage rise, and its fallout, were set to be addressed by the newly-formed National Tripartite Council.

That body, featuring private sector, trade union and Government representatives, was created to deal with all labour-related matters, and Mr Sumner said he was “very keen” to ensure employer concerns were dealt with.

While no companies had complained directly to the Bahamas Chamber of Commerce and Employers Confederation (BCCEC) itself, Mr Sumner said this did not mean issues surrounding the minimum wage were non-existent.

And he emphasised that had it not been for the Chamber’s involvement, the private sector could have been confronted with a minimum wage of between $300-$350 per week - the level that the trade union leadership was demanding.

Still, Mr Sumner told Tribune Business that the notion that 15 per cent hospitality industry gratuities “ought not be automatic” was one of the few areas where the Chamber and Obie Ferguson, the Trades Union Congress (TUC) president, could agree.

“My opinion, frankly, is - and we’ve had this expanded on by Obie Ferguson, one of the few areas we agree on - that gratuities ought not to be automatic,” Mr Sumner said.

“It is one of those things that the Chamber and Obie Ferguson have some agreement on; automatic gratuities being charged to certain bills at certain establishments.”

The Chamber chief executive added that “charging 15 per cent on a bill in a restaurant when the service received” was not up to standard is inappropriate

“Perhaps it’s time now for us to re-examine the way we do that, and how we determine the salaries and emoluments of persons working in this sector,” Mr Sumner said, issuing a challenge to workers and employers to begin discussions on this issue.

He added that any concerns over the minimum wage, and company reactions to it, would be received by the Department of Labour and its director, Robert Farquharson, who will then pass them on to the Tripartite Council for “further debate”.

“It is something that the Tripartite Council is having a look at,” Mr Sumner said of the minimum wage increase’s impact, and employer responses. “We were presented with these concerns after the increase.

“We have not been approached directly at the Chamber by any employer that has raised these concerns with us. But the Chamber will be very keen to ensure that concerns raised by employers affected by this are properly addressed at that level.”

Mr Sumner said the likes of gratuities and sales commissions were not governed by law, but rather individual and collective employment contracts and industrial agreements.

He suggested that employers discuss plans to restructure these forms of compensation with affected staff before implementing any changes.

The Chamber chief executive, meanwhile, defended the organisation’s involvement in discussions over the minimum wage rise, suggesting it would have otherwise been much higher.

The initial BCCEC consultation paper, circulated among members and the private sector, initially came up with a $204 per week minimum wage recommendation after accounting for inflation between now and its 2001 introduction.

While acknowledging that the agreed $210 rate was a compromise, Mr Sumner said the final figure was much nearer the private sector’s recommendation than that of the trade unions.

“We were at $210, roughly $140 less than the other guys,” he told Tribune Business. “Even though we understood the increase would cause there to be adjustments in salaries for some private sector employers, the majority said they were already paying above the new minimum wage.

“In effect, had it not been for the Chamber of Commerce’s involvement in discussions on the minimum wage, the private sector would have ended up paying significantly more than now.

“$210 is going to cause some adjustments, but we are glad the numbers are not nearly as high had the Chamber not been involved in the process.”

Both Mr Ferguson, as Trades Union Congress (TUC) president, and John Pinder, the Bahamas Public Services Union (BPSU) chief, had been seeking a private sector minimum wage around $300-$350 per week.

That would have been at least double, and possibly $200 more, than the previous $150 per week.

In hourly terms, the minimum wage has now risen from $4 to $5.25. All sides, though, agreed that given inflation and cost of living increases, $150 per week was simply not enough for Bahamians and their families to live on.