Revisiting the minimum wage discussion

We reported last week that the Government’s plan to increase the minimum wage to five dollars an hour is coming on January 1. The Government argues that having a minimum wage that allows working-class families the ability to provide a decent life for their families has positive implications for Belize’s sustainable development and advances the achievement of the United Nations Sustainable Development Goals, which address poverty alleviation, decent livelihood, decent work and the reduction of inequality. We also heard from the Belize Business Bureau, who supports Government’s decision. They went further to say that the rate should be at six dollars and twenty cents. However, while the Belize Chamber of Commerce and Industry supports an increase in principle, they’ve made the case that an increase to five dollars is too sizable a jump and that increases in the minimum wage ought to be phased in. During a recent press encounter, the Chamber’s Policy Analyst, Dyon Elliott says there may be significant economic impacts the government is not considering. 

Dyon Elliot, Chief Policy Analyst, BCCI: “Using general data from SIB and again this needs to be drilled down further and again this is the data that should be coming from the Ministry of Labor, from whatever government agency that’s responsible for this but from our estimates we are seeing close to $200 million being added in payroll costs just overnight if that happens like that. That is a concern because a lot of businesses are still we talk about Belize is growing,  in economic circles we’re talking about nascent recovery, we’re talking about just coming out of a 2020 almost 14 to 16% recession we’re getting back on our feet. A lot of companies are still struggling even getting back to normal.” 

Reporter: Getting back their employees to 100%. 

Dyon Elliot, Chief Policy Analyst, BCCI: “Exactly so that is still happening and I used an analogy in a TV show the other day where I was saying this picture as if it was already raining and the ground is flooded and the ground is saturated and on top of that comes more rain you notice how the ground tends to flood. So you’re already competing with record inflation, Belize hasn’t had inflation this level for at least 13 years and we know why the international effects and all that type of stuff, fuel prices are high, food prices have been fluctuating significantly you had the backlog with shipping that had been increasing container costs all of these trickle down, fertilizer prices gone down and then in all this already struggling environment among other variables I have not mentioned you have a 52% increase from $3.30 to $5 overnight? We are saying that could lead to some adverse effects on the employees that we are trying to say you need to consider because employers – and we have talked to some of our members that said I can’t afford if this happens and I might have to send some people home I don’t want to but if that’s what’s happening we might have to consider that and I think the conversation has become murky because there’s a distinction between minimum wage and living wage. The $5 is close to a living wage and if you are saying now we are saying in the first instance we can support a 20% increase from $3.30 to about $4.” 

To help people live more productive lives, the minimum wage should not be the only thing that is addressed. Elliott argues that Government must do its part to strengthen and expand the social safety net, especially for those living on the margins. 

Dyon Elliot, Chief Policy Analyst, BCCI: “Within minimum wage is one sub part of a larger discussion about social protection programs. Under social protection you have at least four different general categories you can look to. Social assistance, social care, social insurance most religions will recognize social insurance in the form of Social Security your contributions and those types of things, and you have active labour market policies and interventions. Under labor market interventions you have active and you have passive. Under passive is where you would find minimum wage but what about the social assistance,? What level of contribution is the government making towards social assistance? For example we have conditional cash transfers like boost how is that been doing? Is that getting stronger, is that getting weaker? We have a supplementary budget going today actually before the house how much is if that is contributing towards social assistance? Social care? Labour market policy?, Social insurance? One study had shown that for you to cover the minimum social protection floor you need anywhere between 1.3 to 4.7% of GDP. If you use SIB’s most recent rebase statistics for GDP you’re somewhere between $60 million to over $200 million are we seeing that level of investment in the country? So if we’re gonna have a conversation about poverty which the minimum wage is a part alleviating poverty but there is a role here for government to also take up more of that responsibility as well. Again for avoidance of doubt the Chamber of Commerce is not saying we disagree with the increase in the minimum of wage we think it’s just fair and reasonable to increase the minimum wage as a matter of fact we believe it should be increasing every year the international average for this type of thing as we had shown is about 6.3% on average every year in many countries around the world where you’re seeing an average increase in the minimum wage, not a living wage but a minimum wage. We are saying we agree even though we know the international benchmarks is 6.3% we are saying we’re willing to accept 18% to 20% but 52% increase is an extreme jump that is almost like you’re begging for the adverse effects to be triggered.”  

As we said, the jump to five dollars is coming on January 1. The last time there was a minimum wage adjustment was in 2012.