Just Wages? 'Just' Flies Away

by Crosbie Walsh

Government sets up the Wages Councils, accepts its method of determining a just minimum wage based on the Poverty Line, accepts its recommendations for wage increases for some industries, announces when the increases will be paid, and then backtracks on everything because there's a global crisis, some employers say they can't afford to pay — and they need to remain competitive with Bangladesh!

Employers did not direct these concerns at the Wages Council and earlier some employers had refused to co-operate with the Council to determine what they could afford. They bypassed the Council and went directly to Government, and Government did not refer them back to the Wages Council. Instead, it heeded the employers' concerns and ignored the Wages Council.

One can sympathise with Wages Council chairman Fr Kevin Barr who told Fiji TV last Thursday that he was so frustrated that Government kept giving in to a small group of employers that he'd thought of resigning. What's the point, other than window-dressing, in having a Wages Council that employers and Government ignore?

The latest development is that Textile Clothing and Footwear president, Kalpesh Solanki, has put a proposal to the Ministry of Labour that would give garment workers a wage increase of 7%. They say they are making this offer because they are "corporate citizens [who] understand workers in their industry need an increase in their wages because of the challenges that they face [and because of] their social responsibility to our workers." He thought the 7% offer was reasonable and sustainable.

The Permanent Secretary for Labour, Taito Waqa, presumably speaking on behalf of Government, welcomed the move by the industry saying he hoped that other industries would also follow suit. He said the new rate would come in on May 1st and — wait for it — the National Minimum Wage Order, that was expected last year, should be implemented before 2015. The Wages Council would probably also accept the 7% increase as a temporary measure but I doubt they'd be prepared to delay their recommended minimum wage (see below) until 2015.

How else can one interpret this information other than as a sell out by Government? We know times are tough for employers. We know Government has to keep them on side. But the Wages Council needs to be a party to these agreements if only for the sake of due process and transparency. It would not be the first time an unscrupulous employer has slipped a backhander into a senior government employee's pocket. And if being competitive with Bangladesh is all that important, as Solanki claims, why doesn't he move his business to Bangladesh. I call his bluff. For him, his business is more profitable in Fiji.

And we can forget Solanki's sweet cooing about social responsibility. This is the industry that for many years has paid the worst urban wages in the country to the country's most vulnerable workers — desperately poor Indo-Fijian women. It is the industry that over the years has received untold government concessions to make it "competitive and sustainable." And it is also an industry owned by Indians, mainly Gujerati, who treat their workers as if they lived in Mumbai or Dhakar where appallingly low wages are more acceptable and where the cost of living is far less than Fiji. It is an industry where its owners live in opulence and its workers in poverty. Not as bad as Mumbai, perhaps, but close to the bottom in Fiji. If I am doing some garment employers a disservice by these remarks, they should publicly distance themselves from Solanki's offer, which is really about staying on side with Government by appearing to be conciliatory while offering far less than is reasonable and far less than that recommended by the Wages Council.

Employers want to use inflation as the major factor for setting wages. That's fine so far as annual adjustments are concerned but what is the baseline against which the adjustments are to be made?Existing wage levels? What employers say they can afford to pay? The Basic Needs Poverty Line (BNPL) of $176 a week for urban workers? Or some other estimate of the cost of living?

The 7% offer seem reasonable in today's economic climate if existing wages were reasonable for the people trying to live off them, but the employers' offer and the Wages Council recommendations —which have heeded employer concerns— are both well below the poverty line. The Wages Council seems prepared to accept the 7% offered as a temporary measure but with some wages not adjusted for over two years and an inflation rate of 4.8% since 2008, the 7% offer falls short of even that.

The table below shows the present average weekly wages and hourly rates for beginner and experienced garment workers compared with the Solanki offer, the Wages Council recommendations and the BNPL. The Solanki offer would give workers an extra $4.50-$5.50 a week and the Wages Council an extra $11.25-$14.40, which would still far less (about one-half) of the BNPL. The major cause of urban poverty in Fiji is not unemployment; it is employment on less than subsistence wages.

Weekly Take Home Pay (F$*)
	Present	Solanki	WagesC	BNPL**
Experienced	80.1	85.5	94.5	176
Beginners	67.5	72	78.75
Hourly Rates(F$*)
Experienced	1.78	1.9	2.1	3.91
Cent increase		12	32	2.13
Beginners	1.5	1.6	1.75
Cent increase		0.1	0.25
* F$1=A$0.55, US$0.55, NZ$0.70. ** Basic Needs Poverty Line.

Employers have also argued that it's better to keep everyone employed, even if on lower wages, than dismiss workers because they cannot afford to pay the higher wages. This "half a loaf is better than none" argument also seems reasonable if there was evidence that employers were also profiting by less than their original loaf, and if significantly more jobs were being created -- which is not the case.

Government says it is committed to the People's Charter whose vision embraced seven salient features: a just and fair society; unity and national identity; merit-based equality of opportunity for all Fiji citizens; transparent and accountable government; uplifting the disadvantaged in all communities; mainstreaming of indigenous Fijians in a modern, progressive Fiji; and sharing spiritualities and interfaith dialogue."

To achieve these ends, the Charter lists eleven pillars that will be used to rebuild Fiji. The two pillars most relevant to the question of wages are Pillar 5 concerned with economic growth and sustainability and Pillar 8 concerned with reducing poverty by 2015. 

It would now seem interpretation of these two pillars are in conflict, and that Government has been pressured, with respect to minimum wages, to lean more towards the employers and economic growth than towards workers and reducing poverty.

The PM and Cabinet would do well to heed the words of the Apostle James writing about some employers: "You have piled up riches in these last days.  You have not paid any wages to those who harvest your crops.  Listen to their complaints!  The cries of those who gather in your crops have reached the ears of God." (James 5:3-4).

FOOTNOTE: Coincidentally coinciding (a deliberate choice of words) with Kalpesh Solanki's statement on wages, he announced that the garment industry, assisted by a $300,000 grant from government, plans to make Fiji the manufacturing hub of the Pacific within the next three years, increasing exports from $90 to $150 million and employing 6,000 people. In the past three years, seven new projects have been registered representing a proposed investment of over F$5.4 million and proposed employment of over 121 locals. “This year we will continue to build on initiatives we implemented last year and we will work with the Fijian Government as partners,” he said. Fiji would be better served if he also included his workers as partners.

-o0o-

See also Prof Wadan Narsey's discussion on the merging of the ten Wage Councils.  From FijiToday.
 Bear in mind that both Wadan and I are relying on press releases that may not have got the story quite right.  I have a guts feeling that the ten Wages Councils will stay until  the national minimum wage is in place. With this common platform it would then make sense to have only one Wages Council. With the wage regulation orders planned for July 2010 now deferred until May 2011, Kalpesh Solanki's 7% is probably the best the garment workers can expect. However, the situation is unclear thanks to the media — or to the Permanent Secretary of Labour  Taito Waqa for not immediately correcting media error, if indeed it erred.