Businesses, workers weigh effects of $3 increase – Minimum wage conundrum

THE PROPORTION of the population that earns and survives on the minimum wage of $20.50, up by three dollars, may be considerably higher than commonly believed, according to a limited but revealing survey involving members of the Trinidad and Tobago Coalition of Services Industries (TTCSI).

The TTCSI is an alliance of local service organisations and associations, which focuses on issues critical for the sectors to help them thrive in a competitive global environment. Its membership represents roughly 60 per cent of registered services.

Minister of Labour Stephen Mc Clashie said the minimum wage increase, which took effect on January 1, will benefit around 190,000 workers.

Business Day spoke with TTCSI CEO Vashti Guyadeen on Tuesday, a day after the new hourly wage of $20.50 went into effect, and asked about her view on the potential increase in the cost of goods and services, and the likelihood of layoffs.

Guyadeen subsequently posed the question to the TTCSI membership in a short survey.

Ten business associations – each representing industries with a workforce larger than 100 people – responded to questions concerning the raise in the minimum wage.

They represent professional services, tourism and hospitality, facilities management, and healthcare services, providing for limited but diverse participation.

Perhaps of most significant was the revelation that six of the ten reported having a significant number of employees currently earning the minimum wage.

“Firstly, it is noteworthy that a majority of our respondents reported that a significant proportion of their employees are earning minimum wage.

“This highlights the direct impact of minimum wage policies on a substantial segment of our workforce.”

While all ten respondents agreed that having a minimum wage is necessary, two opposed the increase in the minimum wage.

Guyadeen said, “This indicates a strong support for policies that aim to improve the living standards of employees, which is a positive sign of the social responsibility and ethical standards within our business community.”

Five of the ten said the wage increase would result in greater productivity, while the other five disagreed.

"Opinions are evenly split when it comes to the correlation between wage increases and productivity," Guyadeen found.

"Half of our respondents (believing) that raising wages results in increased productivity," she said, suggesting that many see higher wages as "a potential motivator for enhanced workforce performance.

“The other half, however, does not see a direct productivity benefit, indicating a need for further dialogue and exploration into how wage policies impact worker output and overall business efficiency,” she said.

Newsday asked if and how they projected the increase to affect the cost of goods and services, as well as employment levels.

Four of the ten respondents said the wage increase would likely cause an immediate increase in layoffs and cost of goods and services, while three believed that the effects of the increase would be noted within three months. Two said they believed the increase would not immediately affect businesses in the short term, and one said businesses would begin to feel the effects after about six months.

This, she said, reveals varying perspectives on the immediate economic impact of the wage increase,” adding that the diversity of views “highlights the complexities involved in economic adjustments to wage policies.”

"Remarkably," she noted, "there is unanimous agreement among our members on the necessity of having a minimum wage," a consensus that "underscores the importance of a baseline wage as a fundamental element in ensuring fair compensation for workers."

She concluded that the results, though representative of a fraction of the TTCSI’s membership, provide "critical insights for policymakers and business leaders as we navigate the delicate balance of fair wages, business sustainability, and economic growth."

Guyadeen said, “At TTCSI, we remain committed to fostering a dialogue that promotes both the welfare of our workforce and the health of our businesses.”

What the workers say

There are nuances in the discussion surrounding the minimum wage, not least its impact on inflation.

Since Finance Minister Colm Imbert announced the new minimum wage in the 2024 budget presentation, Newsday has interviewed a number of people who earn a minimum wage.Seemingly most important to many is their spending power.

Some want the government to compensate for the removal of the subsidies of fuel which increased in price at least seven times in the past eight years.

“Living on minimum wage is tough,” Bahati Garnes, a store clerk from Laventille Road, told Newsday. “You really live from paycheque to paycheque.

"If the government could find a way to drop the food prices by just a little, that would be beneficial to minimum-wage workers. I would also like to see the gas prices go down as well because that has a lot to do with transport.”

Garnes, the father of a seven-year-old, said he makes less than $1,800 a fortnight, of which most is spent on food.

He said he spends his salary differently depending on the month.

“I have to eat breakfast and lunch, I have to travel, which, if I add it up over the fortnight, would be about $120.”

Garnes said he also has to think of school books and stationery for his daughter, although he gets assistance from relatives. He also has to contribute to the home, which will run him about $500.

Morvant resident Mikkel Tappin said while the burden of home bills is shared between herself and other relatives, the day-to-day challenge of commuting and feeding herself takes up the largest share of her salary.

“When I calculate it, I have to work two hours to buy a box of food. That just doesn’t make sense to me.”

“To come into town is $8 and to go back home is $9,” she said. “Sometimes my aunt may lend me her car, but gas is very expensive. Driving the car, sitting in traffic and sometimes looking for parking, I may end up spending $300 in one day. So I decided to just travel instead.”

She said the fare to and from Morvant has increased by a dollar over the past few months, but taxi drivers sometimes raise the fare on their own, without consultation.

She also called for an increase in the minimum wage, but worried about the effect it would have on inflation and other effects.

“Thinking about it, I am not even sure it makes sense, because once you increase wages, then businesses would say they have to raise their prices and the cost of living will continue to go up.”

She also pointed out that food prices are going up all over the world, so that may also be an unavoidable cost.

“My grandmother, who lives in the US, told me that things like eggs and milk are going up over there as well.

"I hope there is something that the government can do about it, but it may not be something that we could really fight. It may just be something to which we have to adapt.”