Fr Kevin Barr on the Wage Councils

ADDRESS of CHAIRMAN OF THE WAGES COUNCILS

Fr Kevin Barr

JJs on the Park 16^th September 2010

1. Introduction to the Wages Councils

The Employment Relations Promulgation (2007) tells us that the Wages Councils have been established as a mechanism to set effective remuneration for workers of the different industries {ERP no. 50 (1)]. They are “to consider any matter affecting the general conditions of employment of workers” [ERP no 53 (2)]. Thus the Wages Councils have been set up to protect the interests of the workers of the country while being fair to the employers. It is a balancing act and we have to consider both sides and make decisions that are fair and just to all concerned. The ERP states that workers and employers should work together and dialogue in good faith, with a sense of honesty, fairness and justice. The Wages Councils are one area for this to happen.

As you know there are ten Wages Councils :

• Printing,
• Wholesale and Retail,
• Sawmilling.
• Mining and Quarrying,
• Garments,
• Security,
• Building and Civil and Electrical,
• Manufacturing,
• Hotel and Catering,
• Road Transport.

[Three others are in the pipeline – Media, Seafarers, and Miscellaneous.]

The Wages Councils cover 60% of those in full-time employment. Only 30% are unionised and the other 10% falls through the cracks.

In each Wages Council there are:

• Two Employer’s Representatives
• Two Worker’s Representatives,
• Two Independent Representatives.
• I am the Chair for all Wages Councils. (And, of course, we also have a Secretary)

2. Criteria (established according to ILO guidelines)

There are a number of important criteria we keep in mind in establishing Wage Regulation Orders (WROs):

• The Basic Needs Poverty Line (BNPL) as the basis for establishing a National Minimum Wage;
• How long since a wage has been adjusted;
• The rate of inflation over that period;
• The qualifications and experience of a worker in a particular category of work;
• The level of danger involved in the work e.g. height, underground, exposure to chemicals etc;
• The ability of a business to pay the wage adjustment.

3. Wages and Poverty

Some employers get upset when the issue of poverty is raised in connection with wages. They say that wages have nothing to do with poverty. However, as we shall see, wages have everything to do with poverty.

Although there are other factors which contribute to poverty, wages are recognised as a key factor in the alleviation of poverty. The Fiji Poverty Report (1997:112) also 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.

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) and services (such as education, and health care) which are the material components of our quality of life. In addition wages provide workers with the means care for their extended families, contribute to the vanua and the church, find rest and recreation for themselves and save for the future.

It is no wonder that wages are such a key issue for the quality of life of a nation. Currently at least 35% - 40% of our population in Fiji live below the poverty line. They can’t afford to send their children to school, they can’t afford decent housing, they can’t afford proper health care and good nutritious food. And why? Because, although they are in fulltime employment, at least 55% - 60% of workers are earning wages below the poverty line.

While we need investors to stimulate more employment we must also demand that our workers must 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.

4. The Issue of Wages and the Wages Councils

Dr Wadan Narsey’s wrote his report Just Wages for Fiji – Lifting Workers out of Poverty in 2006. His detailed analysis of the working of the Wages Councils over 30 years is clear and is supported by a wealth of statistics. His painstaking research has presented clear evidence linking declining wages with the growth in poverty over the years. It is a powerful and compelling study with serious implications for workers in Fiji.

Over the years, “stolen” wages (as he termed the refusal to pay an adequate, just wage) have benefited employers but seriously disadvantaged thousands of workers whose quality of life has deteriorated. Narsey’s research showed that during the 30+ years since Fiji’s independence, over one billion Fiji dollars (F$1bn) has been transferred from worker’s wages to employer’s profits mainly because the business lobby had been exceedingly influential within the Wages Councils. They regularly pleaded “inability to pay”, “this is not the time for a wage increase” or they used tactics to keep delaying the increase.

Because of the failure of the Wages Councils over 35 years to ensure that workers wages kept pace with the cost of living, there is now a lot of “catching up” to be done by the current Wages Councils. It is not just a matter of making adjustments for inflation of the past year but of remembering that injustice has been done to workers over many years and that must be remedied bit by bit.

5. Exploitation

Dr Narsey’s study showed that workers under the current system in Fiji are often subject to exploitation. Low wages are usually justified on the ground that wages must be “competitive” in order to attract overseas investors. However, it is not only in the area of wages that workers in Fiji are exploited. There are other areas of concern as well.

Areas of Exploitation:

• The Wage Regulation Orders (WROs) set by the ten Wages Councils are often not paid by some employers;
• Workers in some companies are made to sign for wages they do not receive so that Labour Inspectors will be satisfied when they inspect the books;
• In some companies workers have part of their wage deferred on the grounds that, if they are more productive, they will receive their full wage somewhere down the line e.g. they may earn $90 but are only paid $60 for months until finally they receive the accumulated amounts of $30. Some call it creative accounting but the money withheld from many workers can be used to pay off loans etc.
• Some workers are not paid FNPF or FNPF is deducted but not paid in;
• Some workers are not paid for leave or for sick leave,
• Some workers do not receive proper pay slips,
• Some workers do not receive overtime pay for the extra hours of work they do;
• Some workers are not given a meal allowance;
• Working conditions for some workers are atrocious.

6. The People’s Charter

Pillar 8 of the People’s Charter links wages to the goal of “reducing poverty to a negligible level by 2015”. In order for this to happen, the Charter lists a number of key measures and actions which must be taken with due priority and urgency. One of them is the introduction of a national minimum wage.

The Wages Councils have been given the task of introducing this national minimum wage. Now a National Minimum Wage is always calculated against the current poverty line for the country. If we take the current poverty line for Fiji as being $175, then those who work 45 hours a week should be earning about $3,88 an hour and those who work 48 hours a week should be earning about $3,62.

We have made it clear that we do not envisage a huge jump from the present WRO to the ideal WRO required by the Minimum Wage. This would be too much for employers to bear. Rather we have declared that we will make gradual increases year by year until we reach the National Minimum Wage envisaged by the People’s Charter. But the expectation is that each year there will be a gradual increase in wages for those covered by the Wages Councils. We have a big backlog to catch up on.

7. Productivity

We often hear that wages must be linked to productivity and that when productivity improves then wage increases can be given.

Apart from the fact that there are many variables (apart from wages) which make for productivity, there is another way of linking wages and productivity. If workers are paid such a low wage, how can you expect greater productivity. They are not eating nutritious food, they are not properly housed, they can’t afford proper medical care and can’t send their children to school. Only when workers progressively get a better wage can we expect productivity to improve

8. The recent Visit from the IMF Team

The team were appalled and shocked to hear that 60% of our workers in full-time employment received wages below the poverty line. They asked if this were really true. Then they shook their heads in angry disbelief.

9. The Issue of Compliance and Enforcement

All representative in the Wages Councils have constantly stressed the need for regular inspections and enforcement of the WROs. It is one thing to set new WROs but another thing to make sure that companies comply. If everyone is made to comply then there is an equal playing field. This means that the inspections unit of the Ministry of Labour must be given more people and their inspections must be more thorough.

The Employment Relations Promulgation of 2007 does set some penalties for those employers who disregard the Wage Regulation Orders. An employer is required to display a written notice in the workplace to inform the workers of any Wage Regulation Order which affects them. If this is not done the employer commits an offence and is subject to a fine of $100. If this penalty is not paid an individual employer faces a fine not exceeding $10,000 or a term of imprisonment not exceeding 2 years or both. If this penalty is not paid by a company or corporation then that company or corporation faces a fine not exceeding $50,000.

10. Responsibilities of Members of the Wages Councils

We ask that all members come prepared for meetings. This means that they have done some research into the industry they cover and acquaint themselves with the situation and the problems of that industry. When new WROs are to be established then employers and workers should come with realistic proposals supported by sound evidence. When important decisions have been made it is expected that these decisions are conveyed back to the relevant employers or workers organisations.

While employers will represent the viewpoint of employers and workers sill represent the opinions of workers, the Independent representatives will try to look at both sides and come up with a balanced opinion. All representatives should recognise that the Wages Councils are there to protect the interests of the un-unionised workers of the country and both employers representatives and workers representatives need to work together in good faith with honesty and fairness and a sense of social justice.

Some Employers are always claiming that the Wages Councils are not independent, that I am not an independent chairman and that the two independent representatives on each Wage Council are not independent. This is very unfair. It seems that we can only be independent if we side with the employer’s opinions.

Also my credentials for the job of Chairman are sometimes questioned. I accepted the job very reluctantly. I was appointed not because I was a catholic priest or a social worker but because I have a First Class honors degree in sociology (as well as other degrees in education and theology). Also because I have studied development economics and economic theories and have done extensive research on poverty in Fiji and on the issue of wages.

Conclusion:

We respect good employers and good business men and women for their contribution to the economy. Business is said to be the engine of economic growth. BUT workers are the pillars of economic development in any nation for, without labour, capital is of little use. The workers must be duely rewarded for their contribution and not exploited as too many of them are in Fiji today. It is our job to see that they are not. So let us work together – employers, workers and independent representatives – in good faith for the better development of our nation.

Decent wages are ultimately good for the economy because most workers put most of their money back into purchasing goods and services. Hence they help to stimulate production. Moreover decent wages also have a stabilising effect on families and on the country as a whole.

We know that these may be difficult economic times but they affect not only employers but also employees. We want to be fair to employers but also just to the workers.

Ed. Note: Readers who wish to better understand the background to the wages and poverty issue, and the extent of economic inequalities in Fiji,  may care to also read this  earlier paper by Fr Barr.