CHAPTER 5: CONCLUSIONS/RECOMMENDATIONS

5.0 Conclusions

As simplistic and obvious as the question might seem at the conclusion of making certain discoveries, it is still important to ask in the context of this exercise, what was the fixing of a minimum wage set out to achieve? The most simple answer would be that the Commission was assigned a task to accomplish just that, and in so doing, has fulfilled its mandate. The aforementioned notwithstanding, there have been a wide gamut of implications and ramifications that cannot be ignored throughout the process of problem-solving or solution-finding. This, of course, might very well constitute the philosophical underpinning guiding the objectives of a tacit hypothesis that would set out to prove that the recommendation to establish a minimum wage above the current threshold of earnings, where it is below the nominal rate would not produce adverse repercussions within the macroeconomic environment. So, the concerns initially postulated by way of the Terms of Reference would, in fact take into account the effect that the setting of a minimum wage would have on business practices; investment; employment; the Treasury; and the ability of employers to pay a wage more reflective of what the market forces would inevitably dictate. The Terms of Reference have also implicitly promoted the exercise of prudence in the pronouncement of a new minimum wage regime by factoring in the social impact that any such hike might necessitate.

It is to be pointed out that the many theories and perceptions distilled on how utilitarian or practical a minimum wage fixing would be to an economy or to the eradication of poverty was not really the thrust of the investigation, or any such determination. That could not be, especially in an economy where global market forces influence macro-economic trends, especially in an environment of limited resources. As equally interesting is what might be today's status quo might suddenly transform into a Cul de Sac requiring rethinking and regrouping or reengineering of its routes and processes. So it could be that what or those who might be considered poverty-stricken now might very well descend into indigence when certain situations occur. The vulnerable, on the other hand, might be very well restored to poverty level as conditions internally and externally prevail.

The foregoing situation is one with which any attempt at addressing a particular standard of living has to contend. The question, therefore as to whether the setting of a minimum wage is a panacea for those

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within a certain economic bracket or whether it would extricate them from poverty is as per the mandate immaterial to such polemics. As a matter of fact, nothing in the Terms of Reference provided a rationale in pursuant of the activity. However, research instituted to produce an outcome could not ignore the debate abounding in a profusion of literature on the subject. While the contemporary position is that, a minimum wage regime does not engender a reduction in poverty, that does not mean that a minimum wage would not at least provide a modicum of relief for the destitute.

The setting of a minimum wage is perceived in some quarters, as well to raise the unemployment index, thereby contributing to further destabilisation within the workforce in an already pervasive paradigm of a lack of employment opportunities.

For the employer, an increase in productivity can be manifested when employees express appreciation in the face of the incentive of a higher wage. The idea that raising the wage bar would drive out investment or result in businesses folding up by way of losing profitability have been shown to be unfounded for the most part. While in the literature review, the concerns have been highlighted, the arguments against raising a minimum wage seem negligible.

The argument lodged in the foregoing was raised in a speech delivered by the Labour Commissioner on behalf of the Minister for Labour, at the opening of the St. Lucia Employers' Federation Minimum Wage Workshop on September 13, 2010 where he made the following observations :-

"Naturally, the debate on minimum wage legislation has given rise to differences of opinion about the benefits and drawbacks of a minimum wage. Supporters of the 'minimum' say that it will serve to increase the standard of living of workers and reduce poverty, as it will dictate the lowest wage at which workers will be compensated for their labour. Alternatively, opponents question whether the minimum wage will be high enough to be effective and worry about possible increases in unemployment, particularly among workers with low productivity due to inexperience or handicap, thereby harming lesser skilled workers to the benefits of better skilled workers."

The statement advocated that "whichever side of the discussion that you may find yourself, I sincerely hope that you consider all the issues in arriving at a consensus."

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It is not the mere decision to set a minimum wage that is contentious, but it is the level at which it is raised that can potentially tilt the socio-economic balance. However, part of the raison d'etre of setting a minimum wage is to provide a social safety net for the more vulnerable. It is partly for this reason that the work of the Commission having broaden the scope of the consultations, gathered statistical data from all the reputable agencies, thereby basing conclusions on these econometric evaluations which were relegated valid and reliable.

While it might be true that some might question the availability of data on other focal groups within the informal sector, it was not as a result of an attempt to exclude that resource pool. The fact that relevant information from other agencies which were considered helpful to the study could not be located is not likely to be injurious to the outcome. The scope of inclusion was expanded simply to satisfy the curious and intuitive minds that the intent was to make the exercise as broad-based as possible. That attempt is adequately addressed in Table 1 of Volume II (Notes and Appendices) as "Directory of Consultation Apparatus set up with Concomitant Results". A review of this information is instructive. The Commission is delighted that all major stakeholders were given an opportunity to contribute to this historical and landmark undertaking.

The Commission tried as much as possible to limit the research and debate as espoused by the mandate. There was some skepticism initially, particularly since there was a dearth of information to provide any template or benchmark in order to launch the task. Based on documentation, some type of minimum wage fixing seemed to have been performed in Grenada and Dominica as well as part of an ECCB initiative to perform a comparative minimum wage study among the OECS territories as at 2008. The Commission was able to lay hold of the Commonwealth of Dominica's Statutory Rules and Orders (S.R.O.) No. 10 of 2008, which simply offered a one page schedule listing Occupation or Category of workers and the rates to be paid. The Grenada Minimum Wage Order, S.R.O. 10 of 2002 is more detailed in terms of definitions and a list of occupations and rates identified per parish. That Grenada S.R.O. also provides the basic training and skills required for the various occupations. Despite that information, nothing was contained therein to guide the process or to determine the outcome for the benefit of the proposed exercise.

It was therefore an ingenious strategy that the Commission employed by inviting key professionals to sit with the Commission and make presentations for and against instituting a minimum wage. It is highly commendable how agencies such as the Ministry of Finance,

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Economic Affairs and National Development; the Office of the Budget; the Statistics Department; the Inland Revenue; and other persons who laid the foundation in their individual capacities were the ones who set the Commission on the right path. Both the quantitative and qualitative contribution of the representative from the NIC, Mr. Paul Kallicharan, who took charge of one of the most critical segments that dealt with the analysis which provided justification for the setting of a minimum wage, must be seen as the main architect of the proposed rate.

As indicated previously, five (5) pieces of legislation relating to minimum wages are available in Saint Lucia. The more recent ones were in 1985 and in 2006 respectively, which fixed a minimum wage for Construction Workers, as against 1985 which was fixed mainly for Clerks.

In this exercise, the main reservoir of data and information on insurable wages resides at the National Insurance Corporation and this institution is the bastion upon which this quasi-hypothesis was constructed. However, there had to be a basis supported by principles established by the ILO in which a number of countries held membership referred to research performed as in the case of the Saint Lucia Country Poverty Assessment of 2005/2006.

The main target in the study is the category of workers considered 'vulnerable'. One cannot raise the issue of the vulnerable without drawing relationships with the indigent or those existing below the subsistent level that are, in fact, the destitute or the poor. The vulnerable might be somewhat better off than those at the level of indigence but would be classified as simply survivors. Within the social milieu, those categories are identified by a line of demarcation referred to as the Poverty Line, income for which has been determined as EC $16.61 (daily), EC $505.27 (monthly) and EC $6,063.33 (annually) as of July 30, 2010. Below that Poverty Line lies the indigent, while above that line lies the vulnerable. The vulnerable figure has been adjusted to twenty-five percent (25%) of the Poverty Line. The analysis as presented in Chapter 4 clearly illustrates the permutations and the justification for fixing the minimum wage using the Poverty Line as the baseline estimate. Before stating what the Commission has agreed to recommend to the Minister for Labour, it is important to indicate that a minimum wage has been established as 40% of the average national wage (refer to Chapter 4 page 43). This has been derived by way of the econometric and statistical analyses performed by the NIC.

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In order to ensure that the statistics from the insurable wages obtained from the NIC were reliable, the Minimum Wage Commission performed its own random independent survey, Table 2 of Volume II (Notes and Appendices) outlines a comparison of the results with the NIC figures, and the correlation was established. The figures attest that there are variances in the earnings between males and females. The uniqueness in this recommendation, is that notwithstanding earnings derived from various places of employment, one will observe uniformity in minimum wages across the board.

Having examined all scenarios from all the investigations outlined in Chapter 4, it is the opinion of the Minimum Wage Commission that a minimum wage of $750 a month for the occupations listed in Chapter 4 will not result in any dislocation or cause shocks to the economy but would set the benchmark upon which wages for the vulnerable sectors should be affixed. This is the recommendation to the Minister that this exercise has produced. Of course, the Commission is also recommending that an indexation regime over a five (5) year period be established after which it is not anticipated that the minimum wage will pick up momentum independently, but would rely, as often is the case, on what the market forces would dictate. Naturally, economic factors such as inflation, Consumer Price Index (CPI) or even Average Wage Earnings (AWE) would play a part. Bearing in mind the speech delivered on behalf of the Minister on September 13, which highlighted that caution should be exercised in the pronouncement of a minimum wage. The Minimum Wage Commission is satisfied that it considered all the issues thereby obviating potential conflict in its declaration.

While the Terms of Reference included the Setting of Standards, Terms and Conditions, the Minimum Wage Commission has shelved such undertakings for the time being having exhausted its energy in fixing a minimum wage that is the most reasonable recommendation within the context of this socio-economic climate.

The Minimum Wage Commission therefore presents this document to the Minister for Labour, Information and Broadcasting in partial fulfillment of the Terms of Reference which has guided its operation and recommendations throughout the exercise.

5.1 Recommendations

Finally, the Minimum Wage Commission is of the view that it has achieved certain milestones in its quest to set a template for a new minimum wage regime in Saint Lucia. It must always be borne in mind however, that the Minimum Wage Commission functions at

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the behest of the Minister for Labour and that all permutations reached, benchmarks set and decisions made are transferred as recommendations to the Minister. It must therefore be pellucidly understood that as a minimum wage has been fixed, it is the Minister's prerogative to make that declaration as well as set the tone for the Government to engage in whatever public debate that he might deem appropriate. It must also be observed that those categories of workers already earning a higher wage (or those workers whose unions have negotiated increases) would not realise any alteration in their earnings that might be above the new minimum wage that has been set.

The Minimum Wage Commission has made a list of twenty (20) recommendations. It must be noted however, that some of the suggestions have taken into account the input from various interest groups.

Whereas Government has duly appointed the Minimum Wage Commission to be guided under specific Terms of Reference to review the labour market landscape bearing in mind the socio-economic and macro economic considerations in pursuance of that mandate, it is therefore recommended that:-

1. A National Minimum Wage be set at:-

$750.00 - Monthly $375.00 - Fortnightly $187.50 - Weekly $ 37.50 - Daily $ 4.70 - Hourly

2. Indexations of minimum wage to Consumer Price Index (CPI) over a period of five (5) years will be undertaken, of which the first date of maturity will be 2015.

3. A comprehensive review of the minimum wage structure be performed every subsequent five (5) years.

4. The minimum wage be capped at forty percent (40%) of average wage.

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The following list of occupations as well as others related in scope and function would constitute the categories of workers to fall under the new minimum wage regime:-

(i) Clerks - Counter, receptionists, information, stock, library, filing and sales;

(ii) Home-based personal care workers;

(iii) Domestic Workers;

(iv) Cooks;

(v) Waiters, Waitresses, Bartenders;

(vi) Child care workers;

(vii) Cleaners;

(viii) Helpers in offices, hotels and other establishments;

(ix) Messengers;

( x ) Package and Luggage Porters, those making deliveries;

(xi) Merchandisers;

(xii) Cashiers;

(xiii) Stewards;

(xiv) Farm-hands and Labourers;

(XV) Building Construction Labourers;

(xvi) Protection Care Workers (Security Officers/Guards);

(xvii) Garbage Collectors;

(xviii) Gas Attendants;

(xix) Other Clerks.

Consideration be given to greater use of the National Competitiveness and Productivity Council.

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7. That a Labour Advisory Board (L.A.B.) be formulated to complement the minimum wage regime in order to set terms, conditions, standards and institute enforcement mechanisms to ensure permanency of the decision.

8. The appropriate agency be given the latitude to co-opt, sensitise and seek the intervention of any facility and Government agency on activities reposed in the L.A.B.

9. Employees whose wages are already above the minimum wage should be expected to retain their current level of earnings.

10. Employers should not interpret the fixing of this minimum wage structure as one that would discourage them from awarding increases if or when such become necessary. The purpose of the enactment is for employers to desist from paying a wage below the established minimum wage.

11. There should be adherence to the philosophy of equal pay for equal work.

12. The Ministry of Labour, Information and Broadcasting maintains a working relationship with the Minimum Wage Commission, the National Insurance Corporation and the Department of Statistics in developing Decent Work Programmes for all.

13. Mechanisms should be instituted to monitor labour market trends and engage in data/statistical gathering for the establishment of an effective Labour Market Information System (LMIS). This initiative has already been recommended by the Ministry of Labour and funding has been identified.

14. The Ministry of Labour, Information and Broadcasting partners with the Ministry of Education and Culture and the Ministry of the Public Service and Human Resource Development in developing vocational education and training policies to meet required regional and international needs. The Commission has been informed that the initiative is already being spearheaded by the Ministry of Education.

15. A survey be carried out to identify skills necessary to create a vibrant and robust labour market environment. The results of the survey should be consigned to the national training priority list.

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16. Appropriate alliances be established to encourage the development of skills that would be required to fulfill the needs of the labour market.

17. In collaboration with other related parties, a skills bank should be set up to be made available to businesses, firms, potential investors and industries at large.

18. Training be initiated for the development of specific skills that might be required for a competitive local and global environment.

19. A machinery be instituted to monitor social and economic development trends and offer recommendations to rectify irregularities that might surface.

20. The Ministry of Labour, Information and Broadcasting be advised on formulation and implementation of labour regulations, by any agency with an interest in promoting any labour related initiative.

21. Any minimum wage fixing machinery established should be reviewed periodically and adjusted in conjunction with contemporaneous occurrences.

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