The Tribune

By AVA TURNQUEST

Tribune Chief Reporter

aturnquest@tribunmedia.net

LEADING businessman Dionisio D'Aguilar yesterday said he remained unconvinced that the government's 40 per cent minimum wage hike, while politically popular, will have much impact on the status quo of anemic economic growth and stark unemployment.

Mr D'Aguilar maintained his position that the mandatory increase for the private sector was ill-timed, but acknowledged that the current minimum wage of $150 was "unlivable".

Given the thousands out of work, and the recent implementation of Value-Added Tax (VAT), he said the business community will undoubtedly settle with the government's decision and let "the chips fall where they may".

"It would be reprehensible for me to stand up and say don't increase it [minimum wage]," he said, "but I don't think many people are making that. There are sectors of the economy which people are making about $150, but below $215 generally, and they are the people who glean the least from the public school system. They are the less educated of our people.

"My position is let the market decide, you don't need government intervention. For those people making $150, if you have no education and nothing to offer it's difficult to get yourself a decent job.

"I don't think $210 is unreasonable, I just worry there are an excessive amount of people unemployed and I don't think this is going to help that."

On Wednesday, Labour and National Insurance Minister Shane Gibson announced in the House of Assembly that government will raise the national minimum wage by 40 per cent following months of research and negotiations on the topic.

The weekly minimum wage for public servants is already $210, but the minimum wage for private sector workers is currently set at $150.

The National Tripartite Council recommended the increase to $210, taking into consideration advice from local stakeholders as well as advice from the International Labour Organisation (ILO) and International Organisation of Employers (IEO), the Inter-American Bank and CARICOM state officials.

The projected increase is less than the 100 to 133 per cent increase recommended by Obie Ferguson, president of the Trade Union Congress (TUC), and John Pinder, president of the Bahamas Public Services Union (BPSU).

Both men recommended to the government that a minimum wage increase to between $300 and $350 be made.

Mr D'Aguilar reasoned that the current unemployment level of 15.7 per cent represented some 31,000 persons. While $210 was a more livable wage, he suggested that the increase will not lead to greater output given the likely job cuts to balance the added expense.

"You've just introduced the Value-Added Tax which has already made it more expensive for the consumer," he said. "VAT will suck $300-400 million out of the economy, taken from consumers and given to the government. The education system is substandard at best. What is important to factor in is while minimum wage might be low, many may argue that so is productivity."

Mr D'Aguilar added: "Realistically it's politically popular so it's going to happen and may the chips fall where they may. I'm sure the government has assessed all the pros and cons: there are pros, $150 is unlivable so government makes these decisions. I don't think its going to change much."