Productivity must increase along with basic minimum wage rise

TYRELL GITTENS

LEADERS from several business associations in North Trinidad have sounded caution over Finance Minister Colm Imbert’s budget announcement on Monday that the basic minimum wage of $15 will be increased by government to $17.50. This was the prevailing sentiment by speakers at a post budget analysis meeting on Wednesday, hosted by the Greater Tunapuna Chamber of Commerce at the University Inn, Circular Road, St Augustine.

Apart from the chamber, officials from the San Juan Businessmen Association and the Arima Business Association were present.

President of the San Juan Business Association Vivick Charran said, “It’s good news about the minimum wage increase.”

Stating the increase will lead to an automatic improvement in the disposable income of people receiving basic minimum wage salaries, he added, “We feel that it should give people more confidence to spend.”

Charran anticipates the increase will have positive effects on what he considers “a depressed retail environment” especially along the east-west corridor.

However, he cautioned that there is a flip side to the issue of the basic minimum wage being increased.

“The flip side is the weight of the minimum wage increase during off-seasons and the slow period after Christmas.”

In these periods, he said, there are usually decreased sales and the onus of taxes and rising labour cost will be a challenge for small to medium sized businesses to cope with.

He said that while the basic minimum wage increase is good news for the workforce, what this means is that businesses will have to fork out $2.50 more per hour per worker and this could affect the bottomline of small to medium businesses already grappling with a sluggish economy and reduced sales.

With most global manufacturers factoring labour costs into their operation costs, he said, “The struggle for local manufacturers will be how to stay competitive globally and regionally.” He said that ultimately, productivity from the labour force must increase alongside the increase in the minimum wage.

Agreeing with Charran was president of the Supermarkets Association Rajiv Diptee who said, “The minimum wage increase should be married to a higher level of productivity among the work force.”

Noting that and increase in pay should warrant a change in productivity levels, Diptee said, “That’s a culture change from the top to the bottom.”

Reflecting on the wage increase which he said was a good thing, economist and senior lecturer Roger Hosein said, “I agree with the increase in the minimum wage once it comes with some change in productivity.”

He also chided the labour force’s participation rate which he says has not been sufficiently addressed.