The impact on minimum wage on workers in the hospitality industry was among the main concerns of Chamber of Commerce members who attended a discussion on the issue Wednesday.
Members of the local business community voiced their opinions following a presentation on minimum wage from guest speaker Anne Knowles, a senior specialist for employers’ activities with the International Labour Organization.
In February, a legislative proposal asking the government to accept a $5 per hour minimum wage was defeated, with all government members and backbenchers opposing it.
“What you would obviously have to do is look at the sort of impact that would have on people that work in that sector,” Ms. Knowles said.
“I would have thought myself that the Cayman Islands is too small to differentiate … It depends on the size of your economy and what it is, if there should be one minimum wage or more.”
Servers in the hospitality industry in Grand Cayman have reported working for as little as $3 an hour, making the majority of their income through tips.
Hungry Horse restaurant manager Wanda Thompson said it was her personal opinion that there needs to be a different rate for those in the service industry, with most venues enforcing auto-gratuities that contribute to a server’s wage.
“At the end of the day, it all depends on what the minimum wage is set at,” Ms. Thompson said. “Let’s say they were to put in $5 as a minimum wage. Most restaurant employees make more than that already. But it depends what they’re trying to accomplish with it.”
Ms. Knowles said before the introduction of a minimum wage, Cayman would need to be clear why it was doing so.
“The reason that countries introduce a minimum wage is because they have identified a problem that can be addressed by the introduction of that minimum wage,” she said.
“[It’s] important for each country to analyze why a minimum wage is necessary and where,” she said. “The minimum wage is there to protect the most vulnerable unless there is another problem you are trying to address.”
She said a full analysis of the labor market and economic data also needs to be undertaken, and a survey of actual wages paid needs to be recorded.
Chamber of Commerce president Johann Moxam said the issue of a minimum wage is at the top of the national priorities list.
“This is not a new issue for the Chamber of Commerce,” he said. “The Chamber of Commerce supports the concept of a minimum wage in the Cayman Islands. However, it is imperative we have a discussion on a public level so we understand the tipping point.”
Ms. Knowles said elements that need to be taken into consideration in determining a minimum wage include the needs of workers and families and economic factors, adding that using a minimum wage to fix wages or benefits, reduce inflation or promote social dialogue would lead to distortion.
Focus was also on the country’s reputational issues in receiving countries, forms of employment including part-time and temporary, a decline in trade union membership, and wage moderation, and increased wage differentials leading to a new “working poor.”
Ms. Knowles said there are also risks if a minimum wage is set too high as it could hinder employment of the least experienced, have a negative impact on young workers, bump up other wages, become a broad “paid rate,” distort internal relatives within enterprises, increase non-compliance, increase growth in informal economy, and ignore productivity and ability to pay arguments.
Risks also involved pricing unskilled workers out of the market, which could cause employers to cut back on discretionary spending such as training and fringe benefits, increase the number of people on welfare, and encourage employers to install labor saving machines and technology.
If a minimum wage is too low, residents could be better off not working and receiving social security benefits, she said. It could also give a message that some jobs are too “lowly” to take, and can mean “make-work” scheme jobs pay more than the private sector.