Minimum wage needs work

| 20/08/2014

(CNS): The president of the Chamber of Commerce has said that while the organization backs the concept, it won’t back the implementation of a national minimum wage until government forms a workable policy based on credible research and reasoning. Urging government to release a white paper clearly outlining the proposals and objectives, Johann Moxam said there are many issues that will need to be addressed, from enforcement to how helpers will be treated under the law before the government is in a position to introduce and set the level for a minimum wage that can work.

Although Moxam has said the Chamber membership supports the principle of a minimum wage, its recently published position paper on the issue seems to take a very reluctant position and Moxam himself was less than enthusiastic about the government’s ability to get the policy right when he spoke to CNS.

“The Chamber understands that the political mandate of this government is to implement minimum wage legislation. However, before such a decision is made or finalized we encourage the government to look at the issue holistically, proceed cautiously and ask itself several questions outlined in our position paper,” he said.

Although the PPM government campaigned for a minimum wage during the run up to the 2013 general election and marked it as an early priority in the party’s manifesto, Tara River, the current employment minister who ran on the Coalition for Cayman ticket, did not campaign for its introduction and was understood to oppose the principle. During a debate in the Legislative Assembly in February on a private members motion to introduce a basic rate of $5 and get the legislation on the statute books and then gradually increase it, Rivers rejected the paper brought by Ezzard Miller.

She said the ministry was establishing a committee and researching the issue and needed data on which to base the policy.

According to sources close to the committee, despite having been mandated to work on this issue for more than seven months, the government still does not have comprehensive data on the issue, including how many local workers would be impacted or how it would be enforced.

The Chamber boss also said that the organisation has not seen any statistical information about the issue and queried where was the relevant data from all sectors of the work force, especially tourism and hospitality, construction, retail, the service industry, security companies, labour intensive industries, domestic workers and other jobs that will be impacted to inform the policy.

Moxam told CNS that he had concerns about the enforcement because if government cannot police the policy the problem of importing cheap labour will persist.

“One of the biggest issues will be enforcement and who will do the enforcing once a minimum wage is implemented. Will that be a separate agency or will it fall to the NWDA or Immigration? “ Moxam asked. “Both those agencies are already stretched and arguably underperforming when it comes to their current remits so government really needs to think about this and many other issues before it goes ahead and implements the basic wage. We are a long way from the place we want to be are there not enough answers. At the moment we don’t know what we want to do or how we are going to achieve it.”

The president said the Chamber’s position paper has listed the issues that the organisation’s members, many of whom will be impacted by the introduction, feel have to be addressed before the law is passed. He also warned government that it is an economic policy issue that should not be politicised.

“This matter is too important to politicize. The Ministry of Labour and government have to guard against playing politics with this issue. Is this being contemplated to appease one's conscience or truly help Caymanians?” Moxam asked as he called on government to spell out how the policy will help local people.

Although Moxam may believe that a minimum wage should not be political, it is a political issue as its introduction around the world in democracies is motivated by a desire to prevent exploitation of low wage earners by employers. It has never been warmly welcomed by business or right of centre politicians who support the power of the market place.

In Cayman supporters say the introduction of a minimum wage will help local people as it should reduce the amount of cheap labour being imported. With security guards, janitors, gardeners and other low wage earners known in some cases being paid well under $5 on hour, if employers are forced to pay those workers a liveable wage, local people could take on those jobs and stop what many say is the importation of poverty.

Nevertheless, the Chamber says government must examine the other issues surrounding the introduction and the overall size of the problem they are seeking to remedy before passing the law.

“It is important that government understands the tipping point for businesses and all households with the introduction of a national minimum wage,” he said. “This entire discussion is too important for the country, economy and people to get wrong so let's remove the emotional and political rhetoric from the discussion and ensure this decision is grounded in facts and we are clear with the objectives behind it."

In the end it is the rate at which the wageis set that will determine how much support the policy will get from the business community or workers. Too low and it will fail to address the problem of cheap labour but too high and business will not support it and will seek ways to either avoid complying or pass on the costs to the consumer in an inflated economy where the ordinary man in the street already carries a significant financial burden for propping up government as well as the business community.

See the Chamber's full position paper on the minimum wage below.

Related video on CNS Business: Dialogue before minimum wage, Moxam urges

Category: Local News

Comments (16)

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  1. Anon says:

    Labour unions are born because of unfair treatment of labourers. When the demands of that union becomes unreasonable it destroys commerce. Remember Eastern Airlines?  Through their  union, the cleaners of the aircraft were paid $16-18 per hour, and that was probably over twenty years ago. Just give it  little time – we will see a workers union here before long because of unfair treatment of employees. 

    I really don't know how anyone can employ a person for $5/hour and sleep at night. There are work permit holders who are being paid even less – like US$5/hr. 

  2. Anonymous says:

    I'm trying to figure out your labour price compared to your selling prices of coffee and sandwiches and pastries. You sound like you have three coffee shops with three workers in each plus a manager ?  What it appears to me is that , if you get rid of 1 worker in each cafe instead of paying $15 per hour the 2 workers getting $8 per hour will increase your cost by $1 per hour per cafe? true? 

    If you kept the 3 workers paying them $8 per hour ,your cost would increase by $9 per hour or $72 per day . $1728 per month . 

    So 3 more coffees or 2 more sandwiches or 3 more pastries per hour ? true? 

    So the question that comes to my mind is , how much profit are YOU making? Not enough ? right? 

    Then you need to close your shops and sell them to someone who knows how to make business without stealing from your workers. Then you get a job of your choice and you try and live on $10 per hour. 

    Paying your workers a decent pay will allow you to profit more then you can dream about. Read Henry Ford

  3. Anonymous says:

    All a minimum wage does. Is increase the cost of living. It benefits no one.

    If only benefits the minimum wage earner temporarily. Until the cost of living catches up to that wage. Then they are right back where they started. And you must raise the minimum wage again. Increasing the cost of living. Its' a very bad cycle.

     

    Owners of business aren't going to absorb the additional wage increases. They will pass that increase on to the consumer. That means you.

    that 3 dollar coffee, now becomes a 4 dollar coffee.

    A minimum wage also forces companies to downsize. Currrently, im paying 5 dollars an hour, for 10 workers. But now I must pay them 8 dollars an hour. Well. I will just lay off 3 workers and demand the remaining 7 to work that much harder.

    after all, they are making more money. I expect more output.

    And I will raise the cost of all my products, to pay for this wage increase.

    If anyone cannot see this. Then you do not understand basic economy principles.

    Free market. If I advertise for 5 dollars an hour, and I need 10 people. But only 7 are willing to work for that. I dont' get the work force i need. My current 7 employees will be overworked and unhappy, so they will quit often. And I will be in a constant training phase. So the quality of my business will be affected.

    But if im happy with that model. Who should tell me otherwise.

    But its' my fault if my business fails. Due to a lousy wage offered.

     

    Yet, if i want to have a better business i offer more money to my employee'si I manage to get those 10 employee's now. Due to the increase in wage, my workers are happier. But I make less money. But it's less headaches for me.

     

    But ultimately, its' my choice what business model I want to run.

    free market. It's the only way to go.

     

    • Dreadlock Holmes says:

      Where to start in reply to your post. First off, I understand your position as an employer and at the same time, I'm glad I don't work for you. The creation of a minimum wage means that you will hire fewer people and make them work harder??? I don't understand that. How do you propose to do it  a whip?  The five dollars you are now paying you must admit even to yourself is not a living wage. Just because people are willing to work for that does not make it so to whit: when was the very last time that you lived on five dollars an hour. Not recently I imagine.The common chant among many employers is that the implementation of a minimum wage will directly cause a complimentary increase in the price of goods and services. That is quite an enlightening admission in itself for what it says is that they are quite prepared to pass along every single increase to customers. Rather than say absorb some of it themselves. IE in slightly lower profit margins. This of course sets the labor force up as the "bad guys". And the business owners as the hapless victims. Forgetting of course that many of their customers, with increased buying power, are the aforementioned bad guys. But let's cut to the Chase when there is no minimum wage unscrupulous employers will pay whatever they deem to be necessary. And in many cases this would be nothing, if they could get away with it. Whilst hiding behind Free Enterprise, or the Market Economy. It's all rubbish. The reality is, five dollars an hour (sometimes less believe it or not) is NOT a living wage in a modern and supposedly sophisticated market I don't care how you choose to defend or justify it.

      Just thank your lucky stars there aren't any labor unions on the island. That's another question for discussion. Why not?

  4. Anonymous says:

    If the minimum wage is at anything other than the lowest levels then I hope everyone is ready for the steep cost of living increases and inflation that it will bring.

  5. Anonymous says:

    " Henry Ford began paying his workers a minimum of $15 an hour! (It was $5 for an eight hour day – which would be worth $116.48 now.) That's right – in a much poorer America, one without TV, radio, phones or House of Cards on demand, Ford could afford it. In fact, Ford later said, he couldn't afford not to: "The owner, the employees, and the buying public are all one and the same, and unless an industry can so manage itself as to keep wages high and prices low it destroys itself, for otherwise it limits the number of its customers. One’s own employees ought to be one’s own best customers."

    Tell THAT to anyone who says we can't afford a minimum wage of $15 here in 2014 – 100 years later, in a country about eight times as rich per person. The CEOs will scream and weep now just like they did then, and just like then they'll be wrong. Not only would it not destroy American businesses, it might be the only thing that can save them."

    The trickle down economics would be a win-win for everyone in Cayman. We would drop burglaries by 90% and people would have hope. We could stop the bleeding of capital flight in this country also. There are so many benefits to name. Lets try to do the right thing for everyone.

  6. Anonymous says:

    9:44

    Agreed. I havenot had a successful experience with this department in over 4 years. There was once upon a time, for a short time, one young educated Caymanian woman there who was professional and astute. Probably got the boot as the culture there does not embrace professionalism.

  7. Anonymous says:

    When the Chamber states that the issue could become politicised, presumably what they mean is that the rate could in practice be set according to the whims of populist pandering politicians rather than by technocrats interested in a stable and growing economy.  

    $50 minimum wage anyone?

  8. Anonymous says:

    Don't have the data?  There is any number of sources for payroll data including the annual ESO labour force survey, the National Assessment of Living Conditions, the immigration database (which contains the data on every expat's salary) and the NWDA (which presumably has salary data for registered Caymanians).

  9. I. M. Wright says:

    Enacting a minimum wage law is an invitation to inflation.  In fact, it IS inflation.  When wages are raised at the lowest level, in time they will be raised for most all levels.  How high can it go?  In the game of life there will always be a lot of people who won't take those low-paying jobs, and there will be untrained workers that need work and appreciate the fact that they can find work.  We don't want to make wages so high that businesses are forced to close their doors.

  10. Anonyanmous says:

    Mr. Moxam is right we must address the problem of minimum wage and the only way to do this is to have all the Chamber members and all employers of this country participate in a test whereby for one week they are paid the lowest paid wage that an employee on island is being paid and try to live off that for a week.  I guarantee that study will be sufficient to determine if a minimum wage is necessary or not and what it should be.

  11. Whodatis says:

    The Cayman Islands has been, for some years now, in dire need of a minimum wage.

    However, for it to succeed, it must be done subsequent to or in tandem with a radical overhaul of our energy status quo.

    *Hint: SOLAR POWER

    We have to snip off a bit at both ends for the country to see and feel any noticeable benefits from the implementation of a minimum wage.

    **Also, the minimum wage should be one that eradicates much of the understandable avoidance of certain jobs by Caymanians.

    Yes, all of the above may and should result in a decrease in our dependency on imported cheap labour aka imported poverty. For example, we do not need a repeat of this ridiculous story from a few weeks back.

  12. Anonymous says:

    The labour dept is ruled by political interference and who knows who etc. giving them another law to enforce to benefit employees is a waste of time because a lot of the big money companies  especially Caymanian companies are above the law.

  13. Anonymous says:

    Bringing in more laws and no government yet has been able to fund the Labour Department to properly enforce the existing law.  Now you want to have a minimum wage for them to enforce. That department is a joke. You call and no one answers the phone, you leave a message and no one returns your call, you get an officer and nine times out of ten they don't get back to you and when they do it is usually to tell you they can't help you it's civil. They ask employees to provide proof of overtime when it's the employers responsibility to keep and provide this documentation.  They fail to enforce labour and pension benefits tHey are just plain useless. I am all for,the minimum wage but not sure if it makes sense with department that will have to enforce it.

  14. Anonymous says:

    Politicians and the chamber represent business in general, so the more they can stall the introduction of a minumum wage the better.

    If a gardener is paid 4$ an hour, why do I have to pay 30$ an hour to the landscaping company ?

    Same goes for cleaning services. I remember an office being cleaned by 5 ladies in 2 hours. The bill was 1000$.

    These examples show the BS the politicians are throwing at us.

    Look at the business owners, they have big houses and expensive cars.