ECA supports minimum-wage increase, concerned about underemployment

THE Employers’ Consultative Association (ECA) views with cautious optimism the 3.7 per cent unemployment rate as noted by Finance Minister Colm Imbert in Monday’s budget, even as it remains concerned about high underemployment levels.

The ECA welcomed the increase in the minimum wage, agricultural incentives, Christmas back pay and plans to develop the capacity and competency of the SME sector.

It observed, however, critical areas were missing, such as government’s industrial-relations strategy and resourcing key institutions.

Noting crime remains a major concern, the ECA welcomed the injection of $80 million for police vehicles, equipment and expansion of recruits.

It was optimistic that the installation of new scanners at ports of entry would improve the capacity of enforcement agencies and yield the outcomes so desperately needed.

Given the $67 billion injected into national security over the past decade, the ECA called for proper management and maintenance of these resources, defined performance standards, clear deliverables and accountability.

“There is also a fundamental issue of trust in our enforcement agencies that continues to impede effective collaboration with members of the public and other stakeholders.”

In a statement on Tuesday, the ECA welcomed the building capacity for diversification and growth theme, as it continues to consolidate and rebuild after covid19 and ongoing national and global developments and disruptions.

It described the budget as a measured and reasonable attempt to achieve the objective of continuing to sow the seeds of “building back better.”

While encouraged by the reported 3.7 per cent unemployment figure, which falls within the realm of full employment, it said, “We remain cautiously optimistic given what we believe are higher levels of underemployment that continue to exist.”

The ECA said similarly, the uptick in the labour-force participation rate is encouraging, though just over eight per cent lower than a decade ago.

“We hope that this trend continues in the right direction.”

Underlying areas “we liked,” the ECA said the 17 per cent, or $3, increase in the minimum wage, moving it from $17.50 to $20.50 per hour, was reasonable, balancing the interests of employers and employees.

The ECA renewed its call for the allocation of funding to develop and establish a national wage-setting model, in a consultative manner, to support the work of the Minimum Wages Board and to add more objectivity and predictability to the wage-setting process.

On the digitisation agenda, the ECA supports this drive, understanding that it can contribute to expanding access to various opportunities for all citizens, improving the ease of doing business, and driving greater efficiency in delivering public services.

This strategy, however, it said, must not be exclusive.

“We are particularly pleased to see an acknowledgement of the need to create a national financial inclusion roadmap for citizens and businesses alike.”

In terms of industrial development and diversification, the ECA said it was pleased to see some notable focus on boosting industrial capacity and facilitating continued diversification efforts through export growth, the expansion of apprenticeship, trade and investment programmes in emerging sectors, the long-awaited finalisation of the single economic zone, and the increase in incentives for those in the agriculture sector.

While welcoming the $1 billion Christmas back pay for some 37,000 public-sector workers who accepted a four per cent wage offer, the ECA called for a fruitful culmination to long-standing wage negotiations in general.

Applauding the continued investment in developing the capacity and competency of the SME sector, and in particular, access to foreign exchange for qualified SMEs, it said it eagerly awaits further clarification on this initiative.

The ECA also identified areas it felt were missing from the budget: “Government’s industrial relations strategy seems to lack the requisite funding for the adequate resourcing of those key institutions charged with administration or enforcement within our industrial relations system, such as the Industrial Court, Labour Inspectorate and the OSH Agency.

“This is especially pertinent given the inclusion of a safe and healthy working environment by the ILO in 2022 as a fundamental principle and right at work, as well as the risks associated with a growing informal sector."

It also expressed concerns about the absence of any specific reference to VAT refunds for business, particularly in respect of a strategy for improving the efficiency of the refund system and reducing the continuing delays.

“While we envision that the long-awaited TT Revenue Authority (TTRA) may bring some relief to this ongoing issue, its establishment does not seem to be materialising in the short to medium term, leaving businesses, particularly small businesses, without timely access to this source of revenue injection, as small as it may be in some instances.”

It commended the $8.022 billion allocation to education: “In a real sense this is responsible for training current and future leaders of our nation. This includes the tax allowance for corporate sponsorship in public and private schools, which businesses are encouraged to support as financial realities allow.

“With the continued investments in digitalisation and diversification of the economy, and the continued transformation of the future of work and jobs, we must ask whether our education system – policies and curriculum – are using some of these resources to ensure realignment, with national development priorities and the current and future needs of the workplace."