Barbados Private Sector Association pleads for delay of minimum wage hike

The Barbados Private Sector Association (BPSA) has urged Government in that country to defer the increase in the national minimum wage, set to take effect April 1, until next year, saying businesses cannot afford it right now.

BPSA Chairman Edward Clarke not only suggested a January 2022 implementation date, but that the rate be set at BD$8 (US$4) per hour instead of the pending BD$8.50 (US$4.25).

Chairman of the Barbados Private Sector Association Edward Clarke (Photo: CMC)

“We do agree there is a need for a national minimum wage increase, we support it and understand the needs of our employees, but we do believe it should not be at the expense of the whole business sector and wider economy,” he said at a press conference on Friday.

Bad timing?

“…Based on our research we were able to say [BD]$8 is an acceptable amount, but timing is a big problem. This year is not the time for it.”

In addition to the increase in the national minimum wage, which has been BD$6.25 (US$3.12) per hour since 2012 and only applies to shop assistants, the minimum wage for security guards will be set at BD$9.25 (US$4.62) per hour.

Shoppers at a supermarket in Bridgetown, Barbados August 25, 2019.
(Photo: REUTERS/Nigel R Browne)

But Clarke said that given the effects of the COVID-19 pandemic on businesses, many of which have laid off staff and seen a significant drop in revenue, this would present a serious challenge.

“In 2021, we see no revenue coming in from the tourism sector, we see a very stagnant business sector, but now we are being asked to increase our minimum wage by April 1 this year. The private sector is of the opinion that the timing is way off,” Clarke told the media.

“We certainly are asking Government once again, and for the public to understand the reasons we are asking for the deferral until January 2022. We believe it will give businesses — certainly those in the tourism and hotel sector, small businesses that are still struggling, and the larger businesses that have laid off people — time to build back up their strength and get the economy going again in order to allow us to meet the demand of this wage increases in 2022.”

Barbadian notes and coins (File photo)

Keeping businesses alive

The private sector boss acknowledged that many companies already pay their employees even more than the minimum wage, but said small businesses that do not and now have to comply with the minimum wage legislation could be significantly impacted.

“Will they be able to charge an increase in their prices to customers? Will they be able to cut other costs to continue operation if they can’t get increases in their prices? Market forces might then force them out of business, so those are the things you have to be aware of,” he noted, adding that there could be an increase in prices as a result.

“There must be a way that they stay in business if they want to stay in business and if they can stay in business. If they cannot gain that additional revenue by increasing prices or gain new revenue from volume, which at this time in Barbados is a rarity, they have to find ways of reducing their other costs or labour costs. Those are the two factors that will impact them most or increase the prices to the current customer base they have.”

Earlier this week, while contributing to the 2020-2021 Estimates debate, Minister of Economic Affairs and Investment Marsha Caddle defended the minimum wage legislation and the timing of the implementation.

Barbados Minister of Economic Affairs and Investment Marsha Caddle (File photo)

“This is exactly the right time in the context of COVID-19, when far too many people are struggling, to look at the question of a minimum wage. It is precisely the right time. I don’t know when could be a better time,” she said.