Delay, reduce pay floor, says Clarke as business ‘not ready’

The business community’s leading spokesman Friday pleaded with the Mia Mottley administration to delay the hike in the national minimum wage due to take effect in six days, saying that $8.50 an hour could lead to a possible collapse of some firms, increases in consumer prices and job losses.

Chairman of the Barbados Private Sector Association (BPSA) Ed Clarke said the private sector is recommending that the minimum wage be pushed back to January 2022 and should be $8 instead of the proposed $8.50.

Acknowledging that the BPSA fully agreed there was a need for a national minimum wage, Clarke declared many companies already pay workers above what is being proposed but there were hundreds of micro and small businesses that currently could not afford to do so, and the move could spell disaster.

Government has proposed a national minimum wage of $8.50 and a minimum wage for security guards of $9.25 to take effect next Thursday.

The current minimum wage in place,$6.25, only applies to shop assistants under a provision in the Shops Act.

During an online media conference on Friday, Clarke told journalists that based on the start to 2021 many more businesses “will likely fall by the wayside”.

He declared: “In 2021, we see no revenue coming in from the tourism sector, we see a very stagnant business sector, but now we are being asked to increase our minimum wage by April 1 this year. The private sector is of the opinion that the timing is way off. We do agree there is a need for a national minimum wage increase, we support it and understand the needs of our employees, but we do believe it should not be at the expense of the whole business sector and wider economy.

“We certainly are asking Government once again, and for the public to understand the reasons we are asking for the deferral until January 2022. We believe it will give businesses, certainly those in the tourism and hotel sector, small businesses that are still struggling and the larger businesses that have laid off people, time to build back up their strength and get the economy going again in order to allow us to meet the demand of this wage increases in 2022,” he explained.

The BPSA was not in a position to say how many businesses have closed over the past year due to the COVID-19 pandemic or what percentage of the private sector labour force was being paid below the proposed $8.50.

But private-sector officials have said the micro and small businesses would be the most affected, while Clarke pointed out that based on an initial survey, one in three businesses would be negatively affected.

The BPSA chairman said:” About 35 per cent of respondents are those who are going to be impacted by this change. Some people have more people at the lower end of the scale.

“So those are the ones you will see having more impact. Will they be able to charge an increase in their prices to customers? Will they be able to cut other costs to continue operation if they can’t get increases in their prices? Market forces might then force them out of business, so those are the things you have to be aware of.”

But Prime Minister Mia Mottley has already indicated Government’s intention to go ahead with the April 1 implementation date for the minimum wage.

Several Government ministers and senators have also thrown their full support behind the proposed wage level and the start date.

Clarke and other private sector members, however, have warned that should the change take effect in the next six days as intended, there will be ripple effects, including layoffs, changes in contracts and consumer price rises.

He told journalists: “There must be a way that they stay in business if they want to stay in business and if they can stay in business. If they cannot gain that additional revenue by increasing prices or gain new revenue from volume, which at this time in Barbados is a rarity, they have to find ways of reducing their other costs or labour costs. Those are the two factors that will impact them most or increase the prices to the current customer base they have.”

Private sector leaders have explained that in addition to increased costs by service providers as a result of the minimum wage, other pay scales that were at the level of the proposed minimum wage but higher than another pay grade would have to be adjusted.

The Barbados Employers’ Confederation (BEC) has also raised several concerns with Government, indicating that while it supports a minimum wage, it was concerned about its timing.

BEC President Yvonne Hall cautioned Government to take several things into account including the need for a clear definition for minimum wage and the knock-on effect on commissions, allowances, incentives and new working arrangements.

“So our concerns would be more in relation to the mechanics supporting the new legislation,” said Hall.

The notice of intention to make a national Minimum Wage Order was made public on February 4, and individuals and organisations were given until March 17 to indicate any objections in writing to the Ministry of Labour and Social Partnership Relations.

The BPSA had met with the blue-ribbon Advisory Committee in January and then within the “short’ timeframe, surveyed members and was able to make its submissions by the March 17 deadline.

“We expressed our concerns with the very short timeframe given to us as a major player in this sector to respond to the request,” said Clarke.

He said the BPSA only received acknowledgement of the submission from Government on Thursday, noting its input had been taken into account during the “design” of the Order.

The business community spokesman appeared miffed by the Mottley administration’s bypassing talks with the Social Partnership before deciding to implement the minimum wage in the next six days.

He suggested the process was rushed and needed some more time to be discussed by representatives of labour, Government and business.

Clarke said: “We had limited time to do [our] research as you can understand. This thing has been rushed through pretty quickly. So based on our research we were able to say $8 is an acceptable amount, but timing is a big problem. This year is not the time for it.”

Trade unionists, too, have reportedly questioned why enough meetings had not been taking place at the level of the Social Partnership on certain key issues including the proposed minimum wage.

Responding to questions during an online media conference, Clarke said a Social Partnership meeting that was scheduled for January did not take place owing to the lockdown linked to the spike in COVID-19 cases then.

He told reporters: “One would have expected major decisions would be taken to the Social Partnership for discussion prior to a decision being made such as the national minimum wage. ( marlonmadden@barbadostoday.bb)

“We have not had an opportunity to discuss this at the Social Partnership. We were to have a prices and incomes protocol discussion in January but with the further onslaught of COVID we have not had any Social Partnership meetings.”

The business leader said officials were hoping for one to be held this month, but the 2021-2022 Estimates of Revenue and Expenditure debate has taken centre stage, and they were now “looking forward to one in the very near future”.

He said: “I think things of national importance like this, certainly a national minimum wage, should be brought to the Social Partnership for discussion before it is finalized, and that has been the policy of Government certainly in the past, and I think that there is nothing for that to change at this time.

“We should be doing that as a matter of protocol and we would hope in the future these things will continue to come to the Social Partnership for discussion prior to being made law or into an order.”
(marlonmadden@barbadostoday.bb)