The Good News and the Bad News about the 10% Wage Order

Fr Kevin Barr sent  these comments to the Fiji Times in response to their request for his reactions, as chairman of the Wages Council,  to the 10% Wage Order.  He has kindly allowed me to publish his reply. The official press release is published at the end of  Fr Barr's comments
There was good news and bad news about the 10% wage increase.
The good news was that finally - almost two years after the previous increase - most of the workers belonging to the 10 industries covered by the Wages Council will get a 10% increase backdated to the 1st May (Those in the transport industry will get only 7%).

The bad news is:
  • It should have been 15% for many of them;
  • It should have come into effect on 1st July last year;
  • For some industries (e.g. Security) the different classifications of workers and the differing wage structure affecting them has been omitted  thus affecting justice for those workers;
  • All workers covered by the Wages councils (60-65% of those in full-time employment) will still receive wages below the poverty line which is now $185 a week for a family of Mum, Dad and 2-3 children (or as Professor Narsey expresses it "for four adult equivalents).  Of course, most poor families have more members and the national average per household is 5.7.  Some, of course may have more than one wage earner but many very poor families have only one.
  • The Garment industry and Security still pay the lowest wages in the country.
Of course, the cost of living has increased dramatically since the 20% devaluation of the Fiji dollar, the increase in VAT to 15% and the rising cost of fuel, water, electricity and especially food (not only in the supermarkets but also in the everyday vegetable markets).  Almost every week we hear of increases in one area or another so people are being hit left, right and centre with increases in the cost of living while their pay packet doesn't increase, or now increases only slightly.  Remember that 10% of $1,000 is $100 but 10% of $2.00 is only 20 cents.  Ten percent might sound a lot but because the base wage is so small, it is a relatively small increase. (Those in the garment industry screamed and yelled in 2009 when the wage for beginners was increased from $1.25 to $1.50.  They said this is a 20% increase and unsustainable.  Yet it was only 25 cents.)
Wages have always been spoken of as the key issue for poverty alleviation.  The long delays in implementing the wage increases and the consistent objections by a small group of greedy but influential employers is most disappointing.
Better wages will:
  • put more money into the economy as we know that poor people have to spend just about all they get;
  • encourage and increase productivity (as workers are not enthusiastic to just sweat it out for a very low wage)
  • help to decrease poverty and put less stress on government resources in terms of poverty alleviation.
I hope this goes some of the way in addressing the questions you raised.   Kevin Barr

The Minister for Labour, Industrial Relations and Employment, Mr. Filipe Bole confirmed that all industrial sectors covered under the ten (10) Wages Regulation Orders will be paid a 10% increase in minimum wages with effect from 1st May 2011, with the exception of operators of Buses and Taxis who will get a 7% increase as endorsed by the Road Transport Wages Council.  After receiving submissions from the respective Wages Councils and responses from industries, he said that the employers have improved their ‘ability to pay’ position at the back of a generally positive economic recovery, resulting in the revision upward of their position to 10%, as mediated by the Ministry.  After considering all relevant economic and social factors, Mr. Bole said, Government agreed to peg the official increase at 10%, which is gazetted this week.
Mr. Bole revealed that Government delayed the implementation of any wage increase by six (6) months since 1st November 2010 due to subdued national economic conditions.  Now, Government has honoured its promise by proposing a double digit increase in minimum wages for all workers covered under the ten Wages Regulation Orders with the exception of operators of Buses and Taxis under the Transport Industry who will have a 7% increase in minimum wages .  This progressive increase in wage rates to be paid to marginalized workers as a mediated solution between industries and the Wages Councils is an indication of the positive recovery or our economy and also reflects the proper due diligence undertaken by the Ministry in its engaging dialogue with employers, workers and the Chairperson of the Wages Councils in the ‘spirit of good faith’.  This positive increase also reflects our national corporate social responsibility to both the workers and the nation as a whole towards our collective efforts to alleviate poverty, as committed under the Peoples Charter for Change, Peace and Progress
Whilst Government will continue to provide an enabling policy environment and incentives to boost investment, productivity and profitability of companies, it also has the social responsibility to alleviate poverty amongst the marginalized sectors of our society.  In this regard, the Minister appeals to all employers to be fair and just in distributing their profits and productivity gains not only to their shareholders, but especially to the workers, who are the most important assets in their organizations.  Mr. Bole encourages employers to continue to shift their business culture from one of ‘cheap labour’ dependency towards incentivizing the development and participation of their workers to enhance their creativity and innovation to add more value to their goods and services with greater productivity and product differentiation.__________
Taito R Waqa
For Minister for Labour, Industrial Relations & Employment


Anonymous said…
Wealth must be first created before it is distributed. We still fail to "get it"? Inflation must be low but not quite absent and a climate of entrepreneurial Liberty of Thought must prevail: prerequisites to economic growth at microlevel.

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