MSME Alliance says JLP plan to double minimum wage could lead to job losses

 

The Micro, Small and Medium-sized Enterprise (MSME) Alliance is warning that the Jamaica Labour Party's election promise to double the minimum wage could lead to job losses.

 

JLP leader Dr. Andrew Holness announced on Sunday night that, if re-elected, his government will gradually increase the national minimum wage from $16,000 to $32,000 for a 40-hour week. 

 

Speaking at the JLP's final mass rally in Spanish Town, St. Catherine, Dr. Holness said the first increase to $18,500 would take effect in the first budget, with further hikes rolled out in the years ahead. 

 

But MSME Alliance President Antoinette Hamilton told Radio Jamaica News on Monday morning that the proposal is unrealistic and will result in financial hardship for many small businesses.

 

"I think $32,000 - that is what $128,000 per month - that is not something that small businesses will be able to afford. Persons may lose employment because if we are forced to pay them this, we're not going to be able to use them. And so it may mean that we have to lobby with the government because I don't see this as being feasible - $32,000 is very high," she complained.

 

Ms. Hamilton said that small businesses are not growing at a fast enough pace to pay more salaries.

 

"Our business is not going by 50%. Small businesses are not growing by 50% in revenue. In any given year...some are struggling to even grow by 15%. If you just look at what is happening on the stock exchange, you can get an idea. Even larger businesses are struggling to go by 15% annually. So, I'm not sure how that figure was derived and I'm forseeing a big pushback by the MSME sector." 

 

Economist Keenan Falconer said the Jamaica Labour Party's proposal to double the minimum wage must be supported by productivity gains and measures to control cost of living if it is to have lasting benefits. 

 

Mr. Falconer noted that there is no evidence to suggest that adjustments to the minimum wage have led to higher unemployment and inflation over the period, but he cautioned that sustained increases could put pressure on other wages and prices unless carefully managed. 

 

"This latest adjustment must be coupled with improved productivity gains as well as measures to keep increases in the cost of living in check, as that may put upward pressure on all other wages and consequently prices, especially since most persons and entities who pay minimum wage are also fellow wage earners as well as small and medium-sized businesses," he suggested. 

 

Mr. Falconer argued that minimum wage laws must be more strictly enforced and it takes discussions that should now focus on creating a framework for a livable wage, one that reflects the realities of Jamaica's cost of living. 

 

"Like minimum wage, however, I think this is something that may have to be legislated or enshrined in policy or corporate responsibility frameworks for companies in order to be actualised. Over time, liveable wages have been demonstrated to be poverty reducing and so government employers and unions will now have to recommit to establishing a liveable wage standard while simultaneously now addressing structural price inefficiencies in the market which have traditionally militated against the impact of wage increases generally," reasoned the economist, who was speaking with Radio Jamaica News on Monday morning.

 

Dr. Holness has asserted that the increase in the minimum wage will bolster labour productivity as more Jamaicans will feel motivated to work. 

 

The JLP leader said this increase in productivity will generate economic growth, which should benefit the base of the society. 

 

Pointing to the Caribbean, Dr. Holness noted that Jamaica's minimum wage is lower than some of its regional counterparts including Barbados, with a minimum wage of about J$33,600, and Trinidad and Tobago at approximately J$21,000. With Jamaica's minimum wage currently at $16,000, the JLP leader admitted that the country needs to "step up". 

 

 

But the People's National Party has responded to the JLP's minimum wage increase announcement, describing it as clutching at straws and trying to salvage a dying campaign. 

 

Speaking Monday morning at its final press conference before the September 3 general election, the PNP said the minimum wage should not be politicised and suggested the plan was a last-ditch effort to win over voters since it had not previously been mentioned in any of the three political debates. 

 

"The former Minister of Information was also in that debate. She mentioned nothing. But more importantly, Andrew Holness was also at that debate and mentioned nothing about any changes to the minimum wage. As a matter of fact, he was complaining throughout the debate and very unassertive and very ambiguous on any issue of policy he tried to cover," PNP campaign spokesperson Raymond Pryce contended.