Minimum wage: Big consequences

The government has introduced the National Wage Consultative Council (NWCC) in parliament this week. The main objective is to implement a minimum national wage, as it being done across many countries. However, trade unions are already crying foul as the rate to be decided by this council will be based per hour. This week, left-wing political party Rezistans ek Alternativ claimed that the national minimum wage should be fixed at Rs 13,000 per month. Trade unions more or less have called for a similar figure to be introduced. However, the potential impacts this measure could have on the economy, on employment levels, inflation and poverty cannot be undermined. Aichah Soogree from Rezistans ek Alternativ explains that the sum Rs 13,000 is based on the Consumer Price Index. “According to Statistics Mauritius, there are two income earners in a family. Based on the CPI, to meet its basic needs, a family needs Rs 26,000 per month. If we divide this income by two, then it comes up to Rs 13,000 per person. We are not requesting for a minimum salary of Rs 13,000 immediately. But we are asking for a mechanism providing for a salary which will allow Mauritians to survive. A person need at least Rs 13,000 to be able live and buy his basic necessities. Today, many people are living in an appropriate condition,” she says. According to her, the median salary proposed does not reflect the reality of our society. “Cleaners are getting a salary of Rs 5,000 or less. A skilled worker is earning Rs 1,000 per week. This is not enough for them to live. They are forced to work overtime. This has an effect on their family and social life. They do not spend enough time with their children and are working day night.” In the political manifest of Rezistans ek Alternativ, it has been illustrated over the past 30 years that the distribution of wealth has deteriorated at the expense of workers. “In 2014, the share of wealth going to the labour force decreased by 39.4% of GDP. This is why Rezistans ek Alternativ proposes the State to officially recognise a minimum wage of Rs 13,000 and a minimum transitional wage of Rs 10,000 to be introduced as from 2016. The gradual introduction of a minimum wage should be considered a prerequisite of an economic activity where human labour is involved. This is not a variable; it is a constant, as the payment of wages at the end of the month or the environmental or health and safety regulations,” the manifest highlighted.

[[{"type":"media","view_mode":"media_large","fid":"3983","attributes":{"class":"media-image wp-image-6086","typeof":"foaf:Image","style":"","width":"200","height":"267","alt":"Amar Deerpalsing"}}]] Amar Deerpalsing

Amar Deerpalsing: “Mauritius as a whole will suffer”

The President of Small & Medium Enterprises Federation Amar Deerpalsing argues that trade unions and the government can decide whatever they choose and SMEs will have to assess whether they can pay or not. “SMEs that will not be able to pay will close down. Trade unions are protecting the rights of workers without thinking of the potential consequences. The best is to protect the workers and the employment. With the proposed rate, there is no doubt that many SMEs will suffer. Only those SMEs that are in a financial position to pay will stay. Those who are in difficult situations will not be able to afford do so,” he says, showing his dissatisfaction. He further explains that some workers cannot be paid Rs 13,000 because of the limited skills and knowledge they have. “How can an enterprise pay a worker Rs 13,000 if the worker does not have the required skills and experience? With this measure, not only SMEs, but Mauritius as a whole will suffer. SMEs will have to decrease their staff roll in order to be able to pay. So, undoubtedly, unemployment will increase. Today, we are living in a global world and in which country wage compensation exist,” he questions. [[{"type":"media","view_mode":"media_large","fid":"16527","attributes":{"class":"media-image aligncenter size-full wp-image-27923","typeof":"foaf:Image","style":"","width":"300","height":"430","alt":"Minimum-wage-table"}}]]

[[{"type":"media","view_mode":"media_large","fid":"16526","attributes":{"class":"media-image wp-image-27922 alignleft","typeof":"foaf:Image","style":"","width":"200","height":"235","alt":"Pierre Dinan"}}]]Pierre Dinan: “Minimum wage must equal optimum work”

Economist Pierre Dinan trusts that it is crucial for the minimum wage to equal optimum work. “We must question if the work has been accomplished in the most competent manner and that if the quality of the work done is in the best conditions. If these conditions are applied, and if you are doing your best work, then we can say that the minimum wage is deserved. This is a basic principle. It is not the minimum wage in itself which is a problem, it is whether employees will do something in return,” he states. Regarding the effect of minimum wage on unemployment, Pierre Dinan explains that if a company must pay a minimum wage to its employees but it is not getting a satisfactory work in return, then the organisation will have additional costs. “Thus, the enterprise may find itself in difficulty. However, I am not speaking of the big companies. I am speaking about the small enterprises which make small profits and which are already sufferring. We can thus face unemployment as the risks are in those small enterprises.” He further points out that maids and caretakers of senior citizens who are usually not well paid can benefit from the minimum wage. “However, this may also cause unemployment as it will be difficult for senior citizens for example to pay the caretakers/maids more. Thus, this category of employees might suffer from unemployment.” Pierre Dinan trusts that the minimum wage will improve the purchasing power of those who will benefit from it. “Those who are earning less than the yet to be decided minimum wage will have an increasingly purchasing power.” However, on a question whether the minimum wage will have an impact on inflation, Pierre Dinan utters that he is not of that opinion. Regarding the poverty line, the economist believes that the real poor are those who are unemployed and those who do occasional jobs. “There are single-parent families and teenage mums who are the sole bread earners in their families, families with many children. These people are the most vulnerable ones. So, I doubt that these people will benefit from the minimum wage. The government must increase the benefits of those people instead of giving universal pensions to those who do not deserve it,” he argues. [[{"type":"media","view_mode":"media_large","fid":"16528","attributes":{"class":"media-image aligncenter size-full wp-image-27924","typeof":"foaf:Image","style":"","width":"640","height":"431","alt":"Minimum-wage-european-countries"}}]] [[{"type":"media","view_mode":"media_large","fid":"16529","attributes":{"class":"media-image aligncenter size-full wp-image-27925","typeof":"foaf:Image","style":"","width":"600","height":"436","alt":"Minimum-wages-per-hour-abroad"}}]]

Testimonies

Louis, living on Rs 6,200 per month

58-year old Louis works as a watchman in a school in the capital city. He works seven days a week, from 3:30 pm until 7:30 am the next day, for only Rs 6,200 per month. He lives in a partly-finished house. “We are living with a lot of difficulty. My monthly expenses amounts to Rs 9,000 including a loan repayment. I have five children, two of whom are married. The remaining three who stay with me do casual jobs and they can only buy some basic things. At the end of the month, we hardly have any money left. We seldom buy chicken, meat or fish. We mostly eat pulses and rice. On top of that, despite being ill, my wife also has to work,” he says. “My youngest son left school because we did not have enough money. He is working in a corner shop so that he can satisfy his basic needs. He tries to help. My house is not fully built but we are living in it. We are in distress.”

Bilkiss and Omar Couple paid Rs 8,000 per month

Both Bilkiss and Omar get a salary of Rs 8,000 at the end of each month. Bilkiss works as a cleaner whereas her husband works as a watchman. They have two children, 13 years old and two and a half years old. They have to face a lot of difficulties as they have to pay for tuition and buy baby food with the Rs 8,000 they receive. “We owe Rs 46,000 to the CEB. After buying the basic necessities for the month, we can barely save around Rs 1,000 for the remaining days. In the middle of the month, we do not have money left.” The couple narrates that they do not buy vegetables when they are expensive. “We buy only basic items we can afford. We do not buy meat unless they are offered by social workers.”

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