The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Grand Bahama Chamber of Commerce’s president says the private sector is not opposed to the concept of a minimum wage increase but, rather, the timing.

Greg Laroda told Tribune Business that a further increase in labour costs for already “struggling” small and medium-sized businesses could make the difference between them maintaining current operations or downsizing and even closing their doors.

The Davis administration, which committed to raising the minimum wage by 19 percent pre-election, from $210 to $250 per week, has now asked the National Tripartite Council, the body responsible for all labour-related matters in The Bahamas, to study the issue and provide recommendations to the Government.

However, Mr Laroda said that besides these concerns, many companies are in a dilemma as to what they will do when the COVID ‘furlough’ period expires in March and they have to either recall those staff or pay them full severance packages.

“We also have to look at what happens with the furlough coming to an end in March,” the GB Chamber chief warned, “and what some companies are going to do. Some companies are wondering if they have to let people go, and wondering where this money is going to come from.

“There’s also this issue with a lot of trade unions pushing for an increase in the minimum wage. Again, when it comes to that, from the business standpoint we understand the side the unions are coming from where they feel an increase in the minimum wage is possibly overdue, and the current rate or number is out of line and needs to be raised.

“We’re not in disagreement with that,” Mr Laroda added. “It’s the timing. A lot of the companies that are going to be affected are the small and medium-sized businesses, which are the ones that are struggling now.

“When you put them in a position of having to increase salaries, they have to do more with less people and keep their costs down. While they may pay an increased minimum wage, they may pay it to less people. There are some companies operating with minimal people to carry out their operational functions.

“Those companies that cannot reduce any further may be forced to see if the economy improves and they can carry this burden for a few months, or if it’s too much and they have to close their doors. All these things the Government will have to consider when looking at increasing the minimum wage at this point in time.”

The National Tripartite Council will “definitely be looking” at a potential minimum wage increase, its vice-chair said earlier this month, after the Government requested that it study the matter.

Peter Goudie, who represents employer interests on the body charged with addressing all labour-related matters in The Bahamas, told Tribune Business that the Council will likely form a committee to research the minimum wage issue.

The Progressive Liberal Party (PLP), in its election campaign manifesto, pledged to raise the private sector minimum wage by 19 percent - increasing it from $210 to $250 per week. “He’s asked us to take a look at it,” Mr Goudie said of the Prime Minister, “and we will take a look at it.

“We haven’t formed a committee yet. That will happen when we have a National Tripartite Council meeting to set the agenda for the next three years. We’ll definitely be looking at the minimum wage. That’s what they want. We will form a committee and do the research on it.

“We’ll decide our priorities and go from there. We have to look at what we’re going to do tomorrow, what we’re going to do a year from now, that kind of stuff. We’re moving.”

The 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 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.