Minimum wage increase on the horizon

Hourly-paid workers, particularly those in the field of agriculture, are due to see a notable increase in the minimum wage, following a Cabinet decision three weeks ago to accept recommendations made by The Minimum Wage Task Force Report in April to have an across-the-board minimum wage implemented this year of $3.10 an hour.

The increase for agricultural workers works out to $60 a week for a normal 45-hour work-week, but a mere $5 an hour for other workers, except for students. This represents a 24% increase in the minimum wage for agricultural workers but only a 3% increase for shop assistants and domestic workers, who have not seen minimum wage adjustments in more than three years, since 2007.

Agricultural workers were promised an increase to $2.75 in 2008, but did not get it. The adjustment for agricultural workers was approved since January 2007 – more than three years ago, when they were promised a further increase in the minimum wage to $3.00 in 2010.

Labor Commissioner Ivan Williams tells Amandala that the Attorney General’s Ministry is in the process of drafting the statutory instrument, which would soon be signed by Labor Minister Gabriel Martinez. As soon as Task Force recommendations become law and the new rates take effect, said Williams, the public will be informed.

Inflation has been taken into account, Williams told us. He explained that the export-oriented businesses had expressed concerns that a further increase in the minimum wage would – on top of high production costs – make it harder for them to compete with other companies from countries in the Central America region. A perusal of the International Labor Organization’s minimum wage database by our newspaper reveals a stark contrast between minimum wages here and in some neighboring countries. The figures that appear in the ILO database are equivalent to BZ$4.54 a day in Salvador, BZ$10.89 a day in Guatemala, and BZ$5.65 a day in Honduras.

The current minimum wage in Belize, according to Williams, does not provide for a decent standard of living. He cited minimum earnings of $135 a week for domestic workers, shop attendants and manual workers assuming they work a 45-hour week. We note, though, that with the increase, these workers will only get $4.50 more a week if paid at that rock-bottom rate.

While the increase would be enough to put an additional tube of toothpaste to the weekend shopping list, Williams noted that the rate represented a compromise among the parties – government, the union and the private sector.

The rates have been fixed at those levels because the economy is just recovering from the effects of a global recession, he told us: “We are not saying that it should not be higher.”

Vice president of the National Trade Union Congress of Belize, Paul Perriott, indicated that the unions are not quarreling with the rate, because any improvement is good for workers. However, he noted, the rates will continue to be under review. Although they would have wanted to see a higher rate, said Perriott, the proposition faced a lot of opposition, as usual, from private sector and employers.

Israel Marin, the Belize Chamber of Commerce rep on the task force, told Amandala that there are really two schools of thought: one being that the increase in minimum wage would hurt businesses who cannot afford it – the other being that it will help, because it would increase the purchasing power of workers and put more dollars into the economy. “This is a very complicated issue,” Marin explained.

Empathizing with the challenges many workers are facing amid the current economic climate, Marin noted that even those making $5 and $7 an hour – which he said is the prevalent rate for most businesses – are still finding it hard to make ends meet.

With the increase in the minimum wage, said Marin, some workers may ask for a higher salary as well.

Government has also approved a gradual increase in the minimum wage that would be calculated in the future based on a cost of living index. However, rates of $3.10 and $3.30 have already been approved for this year, 2010, and next year, 2011, respectively. The next recalculation is due for 2012. The proposal for that year, we are informed, is for $3.50 an hour to be fixed as the minimum wage.

Williams acknowledged that this is not the true value to reflect the rising cost of living; however, they had to strike a balance amid concerns from employers, who are uneasy over the increased costs of doing business. The figures were also based on the recently concluded Poverty Assessment Report, he said.

We have also been informed that the Statistical Institute of Belize (SIB) will provide a formula for a Living Wage Index, which would be used in the future to calculate the minimum wage.

A union official told us that some cost of living adjustment calculations have put the figure between $6 and $9 an hour for a family of five to maintain an acceptable standard of living. In Trinidad and Tobago, the new government is being taken to task over plans to increase the minimum wage to TT$20 (equivalent to about BZ$6.35. Likewise, Barbados labor advocates are clamoring for a minimum wage increase there, as only shop assistants are affixed a minimum wage of BDS$5.00 (US$2.50, BZ$5.00) per hour.

According to Marin, Belize’s labor force is very small and it had been customary for companies to make up by hiring migrant workers; however, with wages improving in the region, less are coming to Belize in search of jobs. When the new minimum wage takes effect, he opines, the merchandising businesses that would be most affected are those owned by the Indian community – not the Chinese, who control the distribution sector but who don’t generally hire locals.

While the Government is moving ahead with reforms in the rate and calculation method for the minimum wage, we note that one recommendation it did not accept was to adopt the ILO Convention 131: the minimum wage fixing convention of 1970, which would bind government to proceed with the living standards-based approach in determining the minimum wage, using a sort of Living Wage Index.

The government, however, accepted the task force’s recommendation that the National Poverty Assessment Project be used to calculate the wage. Commissioner Williams said that the idea is to have the index updated every six months to a year.

Perriott said it is good that Government is working with the plan, though no timeline was given to the union when the new rate would kick in.
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