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The Possible Impact of Minimum Wage Increase in Barbados

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Faith Chukwuka

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The Ministry of Labour and Social Partnership Relations has stated that the Government of Barbados has proposed a Minimum Wage (National and Sectoral Minimum Wage) Order, 2021. This is now open for public debate and feedback; Barbadians have until March 17th to let their views be known.

The current minimum wage in Barbados is $6.25 and governs only shop assistants under the Shops Act 2015. While it was only intended for shop assistants many other businesses adopted the policy and have been using it as a guide for their pay rate.

The Minimum Wage Order proposes a wage increase to $8.50 per hour while security guards would see a sectoral minimum wage of $9.25 per hour. This would mean weekly earnings of $340 for a 40-hour workweek, and $68 per day for an 8-hour workday.

Within the Order is a minimum overtime rate for ordinary workdays of $12.75 per hour or part thereof, and $17 per hour or part thereof as the minimum overtime rate of wages for Barbadian public holidays.

Security guards would also receive a new minimum overtime rate of $13.88 per hour or part thereof for “ordinary working days”, and $18.50 per hour or part thereof in overtime wages for public holidays. Should it be approved it will take effect within two months.

Is the timing right?

Back in 2012 when the minimum wage was raised, the business sector agreed that $6.25 per hour was less than ideal. They supported the introduced rate and agreed that it would be followed by incremental increases annually. This was due to the poor economic landscape at that time. One of the concerns noted then was that some businesses would be pushed to cut their workforce to maintain operations.

More than eight years have passed since the last wage increase for shop assistants. Multiple factors changed that proved the current minimum wage is insufficient to allow workers to meet basic living standards.  There have been changes to the socio-economic climate, recessions, increase in bus fare and taxation and unemployment to name a few. However, the climate has also changed for businesses since the advent of Covid-19 and all of the financial considerations companies have had to make; both with regards to loss in revenue as well as increases in expenditure.

In congruence with this, Brittany Brathwaite, President of the Human Resources Association of Barbados (HRMAB) in Madden, 2021 noted,

“There are two sides to this coin, there is, of course, the current economic climate and all that is happening, and I am sure business associations will say it is not the right climate for it…there could be an argument made that there was enough advanced notice for many years for persons to act the very least in line with the Shops Act minimum wage.”

Weighing in on the issue, local Economist Jeremy Stephens communicated that he does not think many companies will be able to comply immediately. His suggestions are that: 

  • Employers be given until September, 2021 to become fully compliant.
  • Government may give tax breaks for persons who do early implementation of adhering to the national minimum wage.

What about us the employers?

It is obvious that employers will have concerns especially in this Covid-19 climate where the bottom line of several businesses have been hard hit even now, during our period of National Pause.

The concerns might then be due to the foreseen negative effects of the:

  • Inability to cover overhead costs
  • Probable need to cut staff hours
  • Need to cut the budget for staff training and development and the implications of such.
  • Possibility of having to pass on the increased labour costs to the customers through products and services; will they still do business with us?

The above validating your concerns as an employer key questions you might need answered by the Government are:

  • Will there be financial assistance available to me as these changes come into play?
  • Would it create a problem should I have to decrease employee hours?

Not dismissing these facts, a position can be made for a silver lining. While you as an employer may question the timing. Having staff who are well paid can be a benefit to a business, these include:

  • Staff are more motivated and committed
  • Staff provide better customer service
  • Lower turnover & reduced costs of hiring and training
  • Lessens absenteeism

A curse in disguise?

On the other hand, while we see the initial benefit to the workers some ramifications can be foreseen regarding the new implementation. It has been known for years that many workers in Barbados have been under-earning and the minimum wage which was last increased in 2012 needed to be raised.

As an employee the wage increase will benefit you in:

  • The ability to cover your cost of living and keep up with price inflation
  • Being more motivated to work and attend work frequently

However, the possibility is that you could face:

  • Unemployment
  • Reduced working hours
  • Increased workload

First Vice President of the Democratic Labour Party, Ryan Walters, has too predicted job loss. “While we agree with a wage increase we would hate to see more hard-working, tax-paying citizens lose their jobs in this harsh economic environment.”

Resultantly, employees will have their share of questions regarding the proposed Minimum Wage increase:

  • Will the cost of living be raised should unemployment drop to recapture revenue for the country?
  • Should I be laid off or made redundant due to the increased wage, will I be “absolutely” entitled to unemployment benefits through the National Insurance Department irrespective of my previous length of employment? 

These are just some of the few challenges and yet benefits that we anticipate will arise as a result of a wage increase in this current climate. But we want to hear from you; How do you foresee this will affect your business? Are you as an employee afraid that this move could affect your employment?

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