Increased wages could lead to layoffs in manufacturing and hotel industries
By VonDez Phipps
Reporter-SKNVibes.com
BASSETERRE, St. Kitts – The Prime Minister Hon. Dr. Denzil Douglas’ late October announcement of an increase in minimum wage to EC $320 per 40 hour week was met with elation by those workers affected, however economists are forecasting negative spinoffs including mass layoffs at manufacturing companies.
Reports reaching SKNVibes hinted that some of the manufacturing companies across St. Kitts are considering laying off up to 20% of their workers due to the increase to their wage payouts not being offset by any increase in production or earnings. There has also been ‘talk’ that some hotels may be forced to reduce staff in order to meet the new minimum wage requirement.
SKNVibes has it on firm standing that about half of the organizations involved in the consultations with the National Advisory Committee on Minimum Wage recommended that the new minimum wage be greater than EC$300 per 40-hour week, with about 37 percent proposing it to be equal or less than EC$300 per 40-hour week and the remaining 13 percent not giving a specific amount.
According to Section 4.1of the Draft Report of the 2008 Minimum Wage Review proposed by the Advisory Committee, “There was strong support for a minimum wage of EC$300 per 40-hour week at the rate of EC$7.50 per hour with said minimum wage being national in scope so as to embrace all employed workers throughout the labour force regardless of industry or occupation.
“The union however recorded that ideally they wish to see a minimum wage of EC$350 per 40-hour week at the rate of EC$8.75 per hour and if this was not possible, then no lower a minimum floor of EC$320 per 40-hour week at the rate of EC$8.00 per hour.”
Reportedly, the St. Kitts-Nevis Hotel and Tourism Association expressed that “too high a minimum wage could serve to fuel inflation, overprice St. Kitts-Nevis in the Regional Competition for business, imperil local and offshore manufacturing entities and impede the development of the small/micro business sector”.
The representative from the Manufacturer’s Division of the Chamber of Industry and Commerce, who advocates for one of the major groups of workers earning the minimum wage, noted that many of the factories are facing a number of challenges spawned by the economic conditions in the international market place.~~Adz:Right~~
He also stated that some of the factories were planning to expand their services and intimated that “any minimum wage over EC$7.50 per hour [EC$300 per 40-hour week] could engender possible layoffs, curtailment of [possible] expansion plans and flight of business to cheaper wage destinations”.
Some of the manufacturers are rumoured to be re-evaluating with a view to reduce or eliminate additional incentives that were offered to workers including full travel expenses, Christmas and other bonuses, insurance, medical and dental benefits, cooperative schemes and other social and economic benefits fully borne by the employing entity.
SKNVibes spoke with Labour Commissioner Spencer Amory, who acknowledged that problems may arise from of the change which may lend to a multiplying effect. He made it clear though that he did not envisage any problems leading to unemployment and underscored that the employers should honour the new stipulation.
“I don’t have any information that there would be layoffs and I do not envision factories laying off people. The minimum wage has been increased over a number of years. So we are hoping that the employers would adhere to the new stipulations in the minimum wage.
The law is the law. It is something that happens all over the world and it has never stopped the world before. The important thing is that the government gets a commensurate level of productivity now having a higher amount of money,” Amory commented.
“There is no measure to protect workers from losing their jobs due to the increase. If the dance can’t pay for the lights, it is just something that may happen.”
