Reflections on wages Fr Barr


REFLECTIONS ON THE ISSUE OF WAGES
Kevin J. Barr

The justice of a socio-economic system deserves in the final analysis to be evaluated by the way in
which a person’s work is properly remunerated in the system.

As Fiji moves more and more from a subsistence to a cash economy wages have become an increasingly important issue. Wages are the means whereby workers can support themselves and their families and improve their quality of life. Wages provide:
  • access to goods (such as nutritious food, clothing, decent housing)
  • access to services (such as education, and health care). These are the material components of our quality of life.
  • provide workers with the means care for their extended families, contribute to the vanua, the church or religious organisation, school;
find rest and recreation for themselves,
  • save for the future.
Thus it is important that wages are properly determined so that they meet the current needs of workers in accordance with the current cost of living as indicated by the Basic Needs Poverty Line (BNPL). In Fiji this is determined every six years by using data from the Housing, Income and Expenditure Survey carried out by the Fiji Bureau of Statistics (and adjusted each year according to the recognised rates of inflation for the past year).

Wages are recognised as a key factor in the alleviation of poverty. The Fiji Poverty Report (1997:112) stressed that overcoming poverty was not just a matter of providing more employment, it was a matter of making sure that all those in fulltime employment received wages above the poverty line. The Report stated:
The challenge is not just to create jobs but to provide remuneration
enough to enable the workers to live decent lives. This stems from the
observation that, though people have jobs, their incomes are insufficient
to meet their basic needs.”

So many people in Fiji today are being forced to accept low wages because it is either that or nothing. But a fair wage is not whatever wage the worker is persuaded to accept. A just living wage means that a worker (male or female), if employed full-time, should be able to earn a wage that will enable him/her to support the family in their basic requirements of food, clothing, housing, education and health care. It should also provide some security for the future.


The ten Wages Councils have the task of protecting the interests of the workers in Fiji who are not covered by Trade Unions. While striving to be fair to employers but just to workers, they sit four times a year and set Wage Regulation Orders (WROs) for those workers in the country who are in full-time employment in the ten industries covered by the Wages Councils. But, unfortunately, we have high levels of poverty in Fiji (35%+) because at least 60% of workers in full-time employment are earning wages below the poverty line. The reasons for this are discussed below.

While we need investors to stimulate economic growth and create more employment we must also demand that our workers be paid a just living wage. The call for a just living wage is not an appeal for charity or good-will. It is a call for justice.


Excuses Commonly Given by Employers for Unjust Wages

In his detailed research report Just Wages in Fiji – Keeping Workers Out of Poverty (2006) Prof. Wadan Narsey looked back over 30 years of the operations of the Wages Councils and showed how employers had consistently managed to get their own way:
It was clear that most employer’s representatives resisted all proposals
for wage increases, and they were quite successful in their attempts. The
long term outcome was the severe deterioration in real wage rates and
consequently a growth in poverty in the nation” (p. 77). Employers
would cite “the usual litany of industrial woes, warn of redundancies and
unemployment that high wage adjustments would cause and give a lower
counter-proposal” (p.76). They would plead “inability to pay” or “this is
not the right time”.

In his research Prof Wadan Narsey says that, over the years “stolen wages” (as he terms the refusal to pay an adequate, just wage) have seriously benefited employers but seriously disadvantaged thousands of workers whose quality of life has deteriorated. Narsey claims that in the 30 years since Independence more than one billion Fijian dollars has been transferred from worker’s wages to employer’s profits mainly because the business lobby was exceedingly influential in the Wages Councils.


Some of the excuses commonly offered have been:

1. Inability to pay: This has been a common and regular excuse of employers for over 36 years in Fiji. IT may sometimes be true but often is an excuse for which no evidence is produced. The 2007 Employment Relations Promulgation allows any employer who honestly cannot afford to pay the Wage Regulation Order to present his/her case to the Minister who will have his/her books examined by three accountants (a chartered accountant, a forensic accountant, and a tax accountant) and if “inability to pay” is verified, then an exception will be granted. However not one employer has yet availed himself/herself of this possibility so it is presumed that they can pay.

2. This is not the time for an increase. This regularly excuse is used in good times and in bad and it appears that, for employers, no time is ever the right time for wage increases even when they are demanded by inflation and increases in the cost of living. It seems that it is never the right time because better wages will interfere with company profits.

3. Threat of Redundancies: Often employers threaten that if wages increase they will have to put off workers and so cause greater unemployment. Research in other countries shows that this rarely happens. Sometime there is an immediate angry reaction leading to workers being put off but it is usually temporary and, after a while, employers realise that they need to take their workers back. Also where redundancies do occur the real reason is not wage increases but other factors. The wage increases are used an axcuse for what was going to happen anyway.

4. Productivity: Workers are not productive It has been easy for some employers to suggest that “productivity” must be the main criteria for any wages increase because the Ministry of Labour has been pushing for greater productivity. We all want to see greater productivity but productivity cannot be limited only to labour productivity. There are a lot of elements which make a company or business productive – management style, up-to-date technology, capital for investment, better training of the work-force, properly targeted markets etc Moreover for workers to be more productive they need to be paid a decent wage which enables them to meet their basic needs and family properly fed, educated and provided with decent health care. We cannot expect harmony in the country and productivity in the labour force until workers are treated with dignity and social justice.


5. Being internationally “competitive”: Again we hear the excuse that employers in Fiji have to compete with lower costs (including wages) in countries such as South East Asia. Why should the burden of being “internationally competitive” be placed on the shoulders of workers whose wages are well below the Basic Needs Poverty Line. Wages are relative to the cost of living a specific country and the Basic Needs Poverty Line in that country should be considered to be the guideline for wages in that country. If employers want to pay Bangladeshi or Chinese wages they should set up their businesses in Bangladesh or China. If they want to stay in Fiji then they should be bound by the standards and requirements of Fiji.

Moreover employers often try to make their own personal interests appear to be in the national interest and so persuade governments to give in to their requirements. They threaten loss of international competitiveness or redundancies if wages are increased. They do not consider their worker’s basic needs to be in the interest of the nation. This is scandalous behaviour and is unacceptable.

Wages are part of the cost of doing business in a particular country - not a handout to workers from what is left over after desired profits have been made. Business may be the engine of growth but it is the workers who keep the engine moving and workers need to be able to meet their basic needs.

6. Longer Hours: Some industries (e.g. Security) suggest that if workers are to receive wages above the poverty line they should be able to work longer shifts. The Employment relations promulgation allows only two shifts – 45 hours over 5 days and 48 hours over six days. They suggest (5 or even 6) shifts of 12 hours which would make for work hours of 60 or 72 hours. Thus better wages can be achieved by multiplying low rates by longer hours. This is no justification for unjust wages. Workers should not have to work much long shifts in order to make a decent living (even if workers are persuaded by their companies to ask for this).

The Issue of Low Wages - some important observations
  • Low wages (as long as they are just and fair) may give some employers an incentive to provide more employment to workers.
  • BUT low wages (below the Basic Needs Poverty Line) simply create more poverty and instability in a country.
  • Low wages rarely provide an incentive for greater productivity whereas decent living wages provide workers with the possibility of being more productive (because they and their children are better fed, better housed and better educated and hence more satisfied and less prone to criminal activity).
  • Widespread poverty does not encourage economic growth in a nation. It is a breeding ground for lower educational standards, poor health, squatter housing and greater instability in a country. It is also a breeding ground for crime and hence more costly to government in terms of police, courts and prisons.
  • Low wages often lead to better qualified workers going overseas to seek employment and so causing a “brain drain” for the home country.
  • A better distribution of wealth through just living wages and progressive taxation lessens poverty and inequality and makes for a better, more stable, safe and prosperous nation for all – including the better off.

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