The Tribune

• TUC chief predicts Gov't to approve 24% rise

• Says ‘reasonable’ although unions eyed $300

• Call for 'short spurt' future rises, inflation-tied

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A trade union leader last night forecast the Government will likely approve a 24 percent hike in the private sector minimum wage to $260 per week after a presentation was made to the Davis Cabinet on the issue yesterday.

Obie Ferguson, the Trades Union Congress (TUC) president, told Tribune Business that such an increase - amounting to $50 per week or roughly $200 per month - was something the organised labour movement can live with given the economy’s continuing struggles to fully recover from COVID-19 even though it falls short of their $300 target.

While the outcome of yesterday’s Cabinet meeting was unknown, and it is unclear if any final decision has been reached, Mr Ferguson said: “What I do know is they’ve had discussions along the range of $260; roughly about $260 per week, which is a compromise with what we were looking at.

“We were looking at $300 per week, and had a progressive formula for reaching a living wage. I think it’s going to be $260 and there should be a gradual formula to work towards a living wage. I think that’s probably where it is going to be. We are suggesting that there be a progressive, gradual formula to get to a living wage.”

Raising incomes for the lowest-paid workers in Bahamian society has assumed increasing importance due to soaring inflation that has sparked a cost of living crisis for many both locally and worldwide. Any rise in take home pay will help these persons and their families to at least offset some of the price hikes witnessed across multiple essentials and consumer goods since the COVID-19 pandemic.

Although a $260 minimum wage would be 13.3 percent, or $40, short of the unions’ ideal, Mr Ferguson said the union movement regarded such an increase as “reasonable” given that many employers are still trying to rebound from the pandemic.

“Having regard to the state of the economy at this point, it is not unreasonable,” he told this newspaper. “We would obviously prefer it to be better. We recognise the state of the economy, and we are prepared to consider that as reasonable in this set of circumstances.

“I think $260 will be reasonable. The private sector was somewhere in the range of $230 per week, which would not be reasonable in this set of circumstances with inflation and all of that. It has a serious impact, but they seem to be willing to do it at $260.”

Tribune Business sources, speaking on condition of anonymity because they were not authorised to talk publicly, confirmed that the Davis administration was considering three separate proposed minimum wage increases along the lines suggested by Mr Ferguson.

These included a recommendation of around $230 per week from the private sector; $300 per week from the trade unions and organised labour; and the likely $260 per week which was described as the Government’s “compromise” solution. The latter $260 would be some $10 per week higher than the $250 minimum wage that the Progressive Liberal Party (PLP) committed to in its election manifesto, potentially allowing it to claim a victory over the increase.

Peter Goudie, head of the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) labour division, and a private sector representative on the National Tripartite Council, declined yesterday to comment on the various figures and proposals before the Government.

However, he confirmed that other members of the National Tripartite Council, the joint private sector, union and government body responsible for dealing with all labour-related matters in The Bahamas, had made a presentation to the Davis administration’s Cabinet yesterday on the various minimum wage recommendations and proposals.

And Mr Goudie agreed that future minimum wage increases should be implemented “in short spurts”, with the matter reviewed every two years and rises linked to inflation, rather than the two significant one-off increases that have occurred in the two decades since the then-Ingraham government introduced it at $150 per week in 2001.

The only prior increase was the 40 percent, or $60 per week, increase implemented in 2015 to offset the impact of VAT’s introduction. Mr Goudie said smaller, more frequent increases linked to inflation via the consumer price index or some other measure would be easier for impacted employers to absorb.

“I totally agree that, yes, that’s what we should do,” he told Tribune Business. “We had originally planned on increasing it every two years, but when Hurricane Dorian came and then the pandemic set in, we couldn’t justify recommending anything. I agree that we should do it in short spurts every two years because then it’s not such a big impact at one time. I totally agree.

“I heard that same feedback in 2015 when the minimum wage was increased from $150 to $210 per week. Everybody said: ‘Why didn’t you do something sooner?’ but we were newly formed and not responsible for making the recommendation. I heard the feedback then, and we agreed at the National Tripartite Council level we should look at it every two years, but how could you justify that when the country is going through a cataclysmic experience with Dorian and COVID?

“I totally agree that in the future we should look at it every two years so it’s not such a large impact on businesses and everybody else as long as we know what inflation is, but we have a statistical institute that can give us that information.”

Confirming that he himself was awaiting news of any Cabinet decision on the minimum wage increase, Mr Goudie said: “I can tell you there was a presentation to Cabinet, but I don’t know of any decision. It was to be discussed, but how far they got in their discussion and what decision they made, I haven’t got a clue.”

He added that the presentation was given by three members of the National Tripartite Council, who “went through all the research and how they arrived at their recommendations”. The Davis administration was already in receipt of papers on the issue, and Mr Goudie said: “Everybody has been waiting a long time for this [increase]. I just want to see it done. Whatever’s going to be done, let’s get it done.”

Robert Farquharson, the director of labour, previously estimated to Tribune Business that around 25 percent of the Bahamian workforce - some 60,000 workers - will benefit from a minimum wage increase. “There are approximately 235,000 in the workforce, and based on information from the Department of Statistics we estimate 25 percent to be on minimum wage or will be impacted by a rise in the minimum wage,” he said.

Mr Farquharson did not break down the 25 percent, or near-60,000, who would benefit from a minimum wage hike although it is possible that figure includes a significant number of persons who make the majority of their income in commissions or tips. Such workers are often paid a low basic salary, and those numbers will also include the likes of food store and gas station workers.

While a minimum wage increase will raise labour costs for employers, and could provide a disincentive to hiring for some, it will also boost living standards for impacted workers and potentially boost the economy by raising consumer spending.