The national minimum wage

Apr 29, 2021 Features / Columnists, Peeping Tom

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Kaieteur News – The Minister of Labour says that in making a decision to gazette an Order raising the minimum wage to G$60,000 per month, he has to consider the position of both the unions and the private sector. If the PPP/C, however, was truly a working class party, it would have already raised the minimum wage to the proposed G$60,000.
At present, the national minimum wage is said to be G$44,200 and the government minimum wage in the public service is G$70,000 per month for a 40-hour week. However, the lowest paid staff of the Guyana Sugar Corporation earn far less than the public service minimum wage. The only entity therefore that is likely to be directly affected by the increase in the minimum wage is the sugar corporation and this is only for a small number of workers.
But there will be indirect costs to the government. For example, the government would have already signed contracts with security firms to provide services to government offices. The rates for this service would have been calculated based on a national minimum wage which is less than G$60,000. It therefore means that the government will have to renegotiate those arrangements.
This should not be a problem. The government indicated that in order to procure the 200,000 doses of the Sputnik vaccine, it would need to make adjustments to the Budget. It therefore has the option to going to a supplementary Bill in order to have the necessary funds approved for any additional expenditure, which will accrue as a result of an increase in the national minimum wage.
The biggest obstacle to increasing the minimum wage is the private sector, which has friends within the government. But it is now time to set aside that friendship and for the government to do the right thing and increase the minimum wage to G$60,000.
The private sector will use the pandemic as an excuse. And given the problems which many small private sector businesses have suffered, it is not unreasonable to conclude that for some of them, increasing the minimum wage at this time will create further hardships, especially for micro enterprises and small businesses.
And other problems will emerge for low-income employees desperate for work. They will be forced to work off-the books in order to secure work. As such, they will be deprived of benefits such as NIS.
But the exploitation of workers is too palpable to ignore the pleas of the working class. Security guards are paid a pittance, some supermarket workers are paid G$1,500 per day and they have to work long hours. Domestics and labourers can hardly afford to buy a soft drink when the day comes given the low wages most of them have to accept in the private sector.
The debate over a national minimum wage has been a long one. There are obvious benefits for workers. Paying a minimum income to workers will help to reduce inequality. This is one of the strongest arguments in support of Biden’s plan to raise the minimum wage in the United States from US$7.25 to US$15.00 per hour. The other benefit is that it will help lift persons out of poverty.
The disadvantages are mostly theoretical. It is argued that raising the minimum wage will encourage more persons to work and therefore lead to greater unemployment. It is also said that increasing the minimum wage will be more severe on small businesses as compared to large businesses, which will be better able to absorb an increased wage bill.
The argument about the pandemic cannot be totally dismissed. But as we have seen the large businesses in Guyana seem to be doing very well despite the pandemic. But the smaller businesses are badly affected and may not be able to shoulder an increase in the national minimum wage.
If the Minister of Labour wants to do a balancing act, he should consider a two-tier approach. He should immediately order an increase in the national minimum wage for all businesses, which have more than 25 employees. And for those with fewer than 25 employees – that is the small businesses – he should give them a two-year grace period to recover from the pandemic. This would be a fair way to go.
The Minister of Labour no longer needs to agonise. He should do what he knows has to be done. Increase the national minimum wage with immediate effect for all non-small businesses and give small businesses a moratorium of two years to implement this measure.
And while he is doing that, he should launch a study to determine a living wage for public servants. And then, he should commit to merging the living wage with the national minimum wage within five years. Now that is what you call a working class labour policy!

(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)

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