Govt’s promised minimum wage increase would have little impact

A minimum wage increase announced by Prime Minister Dr. Hubert Minnis would not have a “tremendous budgetary impact” as most public sector workers are likely already above that level and would not see any difference in their salaries, former Minister of State for Finance James Smith told The Nassau Guardian yesterday.

“Minimum wage increases do not always result in any major expenditure for the simple reason, many people in the public service are beyond the minimum already,” Smith said.

“It’s usually only entry-levels or very small percentages that may be below whatever that would be, the minimum wage, at this time.”

As a result, he said, “I don’t see it having any tremendous budgetary impact. They never do.”

Smith’s comments come on the heels of the prime minister’s announcement on Friday that the government intends to increase minimum wage for government employees.

Currently, the minimum wage is $220 per week, or $5.25 per hour. It was last increased in 2015—the same year that value-added tax (VAT) came into effect. In July 2018, the VAT rate increased from 7.5 percent to 12 percent.

On Friday, Minnis said the private sector minimum wage cannot be increased without more consideration, but he also told reporters the government is focused on protecting “the poor and marginalized”.

“There are automatic increments in the service, so after you’re in the service for one year you’re probably above the minimum,” explained Smith, who is also a former governor of The Central Bank of The Bahamas.

“The great majority of them (public sector workers) would not really see a difference in their salary.”

He added, “But it kind of was said in a kind of signal to the private sector, if anybody out there’s paying below the minimum, and private sector tends to pay more than the public service.

“So in terms of its impact on the budget, I don’t see it being a drastic move.”

Smith also noted the timing of the announcement in consideration of the recent passing of the government’s Electricity Rate Reduction Bond Bill, 2019 which Minister of Public Works Desmond Bannister said would result in a monthly increase of an average of a $20 to $30 to household bills and which has led to outrage in some sectors.

“The timing of it is, I guess for most people—give it in one hand and take it back in the other,” Smith said as he highlighted that “BPL will go beyond the public service” and impact even those who may not be experiencing any increase in their salary.

There have been conflicting reports surrounding Minnis’ announcement, as Bahamas Public Services Union President Kimsley Ferguson said that minimum wage negotiations which have been ongoing since their industrial agreement expired in 2018 have not yet been confirmed.

The union negotiates on behalf of the general public service, including workers such as clerical staff and the treasury; however, it does not include customs or immigration officers, teachers or doctors.

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