Wages in Fiji Today

By Fr Kevin Barr

There is an urgent need for the Wages Councils to meet to propose wage increases for the various industries to come into effect on May 1^st 2012.

The Wages Regulation Orders which finally came into effect on the 1^st May 2011 were calculated early in 2010 to come into effect on 1^st July 2010. Hence they were about one year overdue. Moreover the proposed Wage Regulation Orders were reduced (without any consultation) by at least 5%. So not only were the WROs delayed by one year but they were also reduced by 5%.

All this needs to be seen against the background of the devaluation of the Fiji dollar by 20% in April 2009 and the increase in VAT by 2.5% in January 2011.

The devaluation of the Fiji dollar by 20% meant that the purchasing power of the Fiji dollar declined considerably. The Bureau of Statistics calculated that the Consumer Price Index (CPI) for food increased by 38% and the CPI for building materials by 29%. This had serious repercussions for the 60% of those in full-time employment whose wages were already below the poverty line.

Certainly devaluation had very serious repercussions for low income earners and the poor generally. The proposed increase in wages by 15% (for most but not all industries) was meant to offer some small alleviation to those seriously affected by the devaluation. BUT the proposed wage increases were delayed for almost a year and many families found it very hard to cope.

On top of all this suffering not only were wages increases delayed and reduced but VAT was increased by 2.5% in January 2011. This added to the burden of low income earners and the poor because (as every economist knows) VAT is a regressive tax.

Consequently by 1^st May when the WROs finally came into effect after almost a year’s delay, not only they were totally inadequate to address the serious decline in the purchasing power of their existing wage caused by devaluation of the Fiji dollar but:

• The proposed WROs were cut by 5%
• VAT was increased by 2.5%.
• Food prices, water costs, electricity costs and fuel prices continued to increase (despite some adjustments by the Commerce Commission)

Thus the situation of the workers of the country and their families seriously deteriorated and their quality of life declined considerably.

In brief, because of policies introduced on advice from the International Financial Institutions, prices have increased – food by 38% + VAT, electricity by 30%, water by a considerable percentage and fuel (by erratic jumps). Yet wages for over 60% of the workforce have been kept at an atrociously low level.

One visiting IMF team in 2010 judged the wages of those covered by the Wages Councils to be outrageously low yet another IMF team advised an increase in VAT by 2.5%. And while the tax net was widened to cover everyone (even the poor and low income earners), corporate taxes were reduced and 13 year tax holidays were offered to attract investors.

Programmes like food stamps to assist those on social welfare assistance reach only the destitute (or about 3% of the population) and not the other 32% of the population who live below the poverty line. Free bus fares for school children whose parent’s combined income is below $15,000 are certainly welcome as is the promise of gradually providing some school text books free of charge and free meals for some rural schools. But these programs do not offset the heavy burden placed on the shoulders of the poor and low income earners by the policies mentioned above..

The Wages Councils must be allowed to meet and recommend a decent wage increase in wages to come into effect in May 2012.

Any current impasse on wage issues caused by some individuals in the Labour Ministry must be dealt with speedily and decisively.

We cannot expect real harmony in the country and productivity in the labour force until workers are treated with dignity and social justice.