Jordan justifies minimum wage increase as concerns mount

With just over two weeks before a national minimum wage increase comes into effect, Minister of Labour Colin Jordan is defending the move as fair, measured and necessary—despite employers and economists warning of potential job cuts and economic strain

Effective June 1, the general minimum wage will move from $8.50 to $10.50 per hour. The new sectoral rate for security guards is $11.43 per hour. 

The proposed change, announced on May 1, has triggered unease among employers who say the financial impact is too steep and caution that the short notice could force some businesses to cut staff or hours. 

However, Jordan insists the increase was grounded in international best practice and shaped through the proper process.

“We want the business to be sustainable. Workers have to be able to eat, to support themselves and their dependents…. We have to find a place where both can exist,” he told Barbados TODAY on the sidelines of a roundtable talk hosted by the business community. 

“This is not easy. We do it through a tripartite mechanism called the Minimum Wage Board. It is the international best practice. It is the solution that is used or the construct that is used by the International Labour Organisation.”

Jordan said the Board, comprising representatives of government, employers and workers, produced a comprehensive analysis before submitting its recommendation.

“Our Minimum Wage Board sat, did a very detailed paper, statistics, all the information,” he said, adding that the Board produced a proposal “that I could support” and which was approved by Cabinet. 

“I was satisfied that the work done represented a rigorous analysis of the situation,” the labour minister added.

Professor Dwayne Devonish. (SM)

Pressed on whether he was comfortable that the proposal was viable, the minister acknowledged: “It will never be viable for all businesses or all workers.

“We’ve heard objections on both sides. There are people who feel that it is too small an increase, and there are people who feel it is too large an increase. It may not be possible ever to meet in some place where everybody is satisfied. But we had to do something that we believe is the best thing to do at this point in time. And that’s what we’ve done.”

Public objections to the proposed wage order may be submitted until May 27, after which the Minimum Wage Board is expected to review the feedback before finalising the increase.

Addressing the controversial wage hike during the Barbados Employers Confederation’s roundtable talk on Wednesday, Professor of Management and Organisational Behaviour Dwayne Devonish urged policymakers not to overlook the strain that the new wage levels may place on smaller firms. He also warned of the risk of unintended consequences if they are left to absorb the cost alone.

“I commend the move towards a minimum wage hike,” he said. “But I was always cautious as an academic and a researcher…. The minister was on [Down to] Brass Tacks with me just the other day, and the notion was that there are a lot of small businesses that are not ready to absorb the costs that naturally are caged by a minimum wage hike.”

He recommended that wage increases be rolled out alongside broader policy adjustments to shield vulnerable businesses and to curb the temptation to cut corners.

“When I talk about packages like a minimum wage hike, it has to be complemented with other policy modifications to offset — and not just to offset, in a sense, the costs for small businesses, but to kind of prevent them from engaging in what I would call unscrupulous practices,” Devonish said, “because there will always be that business that would take a shortcut to find a way to get around the law.”

“I always say that if we could create a situation where they don’t have to do that — let’s support them, let’s put our hands out there to help them along,” he added. 

Devonish also warned that without decent pay and working conditions, Barbados risks an exodus of skilled workers.

“Make the wages and the working conditions [better], otherwise they’re going to leave this country,” he cautioned.

shannamoore@barbadostoday.bb