The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

MERCHANTS yesterday said that, while a minimum wage increase is necessary to help ease the cost of living crisis, the increase in payroll expense may force some companies operating on tight margins to lay-off staff.

Andrew Higgs, WHIM Automotive's general manager, told Tribune Business the new minimum wage is “better than it was before at $210 per week". He added: "Everything is going up so people did need an increase in the minimum wage. It wouldn't affect us here, because everyone gets paid more than that.

"But I think a lot of people need to realise that a minimum wage job is an entry level job, and it's not something that you work your career at that level.” And he warned that some firms may see already “razor-thin margins” cut even more as a result of the 34 percent minimum wage increase that will take effect from January 2023.

The Prime Minister, in Tuesday night's national address, said the near three-month delay in the minimum wage increase's implementation is designed to enable impacted businesses to adjust their cost structures.

“The last time the minimum wage was raised in our country was 2015,” the Prime Minister told Bahamians. “A new increase has long been overdue. Tonight, I’m announcing that the country’s new minimum wage will be $260 a week.

“For minimum wage earners in the public service, the change will be retroactive going back to July of this year. For minimum wage earners in the private sector, the increase will begin in a little less than three months in January of the coming year, allowing employers time to prepare for the increased expense.

“The higher minimum wage will benefit tens of thousands of Bahamians. Will the increase help? Yes, it will. It was long awaited, long overdue, and the extra money every week will make a difference.” The $50 per week rise translates into a $200 increase in take home pay for a minimum wage worker every four weeks.

Mr Higgs, though, said yesterday: “Government doesn't look out for anybody except themselves and how they can get more income. But if a business is working on those really small margins, and now you tell them their salary expense is going to go up by 25 percent to 30 percent, they may have to start letting some people go.

'Because what they take in and what they put out, they're left with a such a small margin and now you're telling them they have to increase salaries. That may put them in the red, and why should they operate to make a loss?

“So, for those businesses who operate under very tight profit margins, this probably will affect them and they'll have to decide if they want to stay in business or do they want to either let some people go or maybe put some people on part time? Fortunately we wouldn't have that issue, but there are businesses that will have to make decisions."

Leonard Sands, the Bahamian Contractors Association (BCA) president, said the construction industry will see little impact from the minimum wage increase as none make less than $250 per week now - not even entry-level site cleaners. “Right now, people at the lowest end on the site start at $250 minimum, and minimum wage is $210, so it never really mattered to them because they were already getting more than that," he added.

Peter Bridgewater, Open Systems Technologies' president, said the minimum wage rise is a “great opportunity” for people entering the job market - and those currently at this level - to invest in more education and save more money.