Hoteliers not keen on minimum wage ‘at this time’

The cost of a Barbados vacation could rise as one effect of a proposed national minimum wage which is expected to take effect next week Thursday.

The impending increase in the base wage could mean that some tourism-related establishments are put “at a disadvantage” with regard to benefiting from the currently undersubscribed Barbados Employment and Sustainable Transformation (BEST) programme.

And, Chairman of the Barbados Hotel and Tourism Association (BHTA) Geoffrey Roach’s warning of a possible “ripple effect” that may very well lead to an even more expensive vacation for visitors relates to what he also explained as the potential knock-on effect as tourism entities struggle to maintain staff levels.

“We do have some pay scales across the tourism sector and particularly for the hotels. This minimum wage increase will not affect every single tourism enterprise in the same way, but there are tourism players where those increases at the lowest levels could potentially have a ripple effect across all the pay scales,” said Roach.

“Should that be the case, it means of course that the cost of the Barbados vacation experience is increased and this is particularly concerning because we have heard many times that Barbados tends to be a higher-priced destination. At a time when the world is coming out of a crisis trying to recover you are going to have destinations across the world competing to get tourists back to their shores.

“The timing for any increase in the cost of a Barbados vacation is not great because we are already an expensive destination and as you know those persons who are looking to take a vacation are impacted financially. So while we do support an increase in the minimum wage we too, do not believe the timing is right,” Roach explained.

Roach gave his perspective on Friday as he responded to a question from Barbados TODAY during an online media conference, called by the private sector to discuss the proposed National Minimum Wage Order.

Government has proposed an $8.50 per hour national minimum wage and a minimum wage for security guards of $9.25. Currently, the minimum wage of $6.25 only applies to shop assistants.

However, pointing out that there were different pay scales, Roach said that some industry operators currently pay a category of employees a little below what was being proposed, but they were not currently a part of the BEST programme, which provides wage support of up to 80 per cent of the ordinary salary of employees for the next two years as needed.

The BHTA chair did not provide figures, but he said those companies that were able to retain and continue to pay staff to this point without seeking the assistance, could require the assistance once the minimum wage takes effect next month.

“The BEST programme is there to lend some support, but what it does mean now is that those persons who have taken the decision to keep their staff on and pay them, particularly where they are in the bracket where they have to increase the minimum wage, will be at a disadvantage because the BEST programme has a formula that is used to determine what you will pay your staff under this programme,” he explained.

“I do not believe this minimum wage increase will apply to those persons who are in that programme. So being outside of the programme means that you are now being disadvantaged – having to shoulder a larger burden of cost for those people whose pay would have to be increased because of the minimum wage order,” he added.

Roach said he was not certain at this point whether the BHTA would be making representation to Government for further adjustments to the BEST programme to accommodate any possible changes required as a result of the proposed Minimum Wage Order.

Pending adjustments to the scheme based on concerns raised by the sector are still awaiting approval, with BHTA officials indicating earlier this month that the overall proposed changes were yet to go before Cabinet for approval.

Chief Executive Officer of the BHTA Senator Rudy Grant earlier indicated that as of March 5, there were some 54 applications to the Enterprise Growth Fund, the agency responsible for administering the BEST programme.

Those applications, he said, were valued at just over $148.16 million, and so far 43 of the applications have been approved with a total payout of just over $10.37 million.

In addition to the wage support and training component, the $300 million BEST programme makes provision for an investment component that would see tourism-related firms being able to access up to $2 million in the form of preference shares, to fund upgrade and transformation projects at their facilities.

“I do not believe that we would likely be putting forward any tweaks based on the Minimum Wage Order, but certainly we can only make that decision when we see the approval of the changes that have been recommended to the BEST programme,” said Roach.
(marlonmadden@barbadostoday.bb)