The business community in Barbados is pushing for a delay in the planned hike in the national minimum wage, slated to take effect this Thursday (April 1).

In a plea to the Mia Mottley administration, the Barbados Private Sector Association (BPSA) said it was not ready for an increase at this time, arguing that the increase to BD$8.50 an hour could lead to a possible collapse of some firms, increases in consumer prices and job losses.

The BPSA has recommended to the Mottley administration that the minimum wage be pushed back to January 2022 and should be BD$8 instead of the proposed BD$8.50.

Mottley, however, has already indicated her intention to go ahead with the April 1 implementation, with several government ministers and senators throwing their full support behind the proposed wage level and the start date.

Acknowledging that the BPSA fully agreed there was a need for a national minimum wage, the association’s chairman, Ed Clarke, declared many companies already pay workers above what is being proposed.

Hike at this time could spell disaster

However, he was quick to point out that there were hundreds of micro and small businesses that currently could not afford to do so and the move could spell disaster.

In addition to a new national minimum wage starting Thursday, the Mottley government has proposed a minimum wage for security guards of BD$9.25 to take effect the same day.

The current minimum wage in place is BD$6.25 and only applies to shop assistants under a provision in the Shops Act. During an online media conference last Friday, Clarke told local journalists that, based on the start to 2021, many more businesses “will likely fall by the wayside”.

According to the BPSA chairman, “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.”

He added: “The private sector is of the opinion that the timing is way off. 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.”

Clarke said: “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,” Clarke explained.

The BPSA was not in a position to say what percentage of the private sector labour force was being paid below the proposed BD$8.50. However, private sector officials have said the micro and small businesses would be the most affected

Ripple effect if hike goes ahead

Based on an initial survey, one in three businesses say they would be negatively affected by the hike in the minimum wage. Clarke, along with other private sector members, have warned that should the change take effect, there will be ripple effects, including layoffs, changes in contracts and consumer price rises.

The private sector leaders have explained that in addition to increased costs by service providers as a result of the minimum wage, other pay scales that were at the level of the proposed minimum wage but higher than another pay grade would have to be adjusted.

The Barbados Employers’ Confederation (BEC) has also raised several concerns with government, indicating that while it supports a minimum wage, it was also concerned about its timing.

For her part, BEC President Yvonne Hall cautioned the Mottley administration to take several things into account, including the need for a clear definition for minimum wage and the knock-on effect on commissions, allowances, incentives and new working arrangements.

The notice of intention to make a national minimum wage order was made public on February 4 and individuals and organisations were given until March 17 to indicate any objections in writing.

The BPSA, BEC, as well as trade unionists have questioned why enough meetings had not been taking place at the level of the social partnership on certain key issues, including the proposed minimum wage, could have been ironed out.