Chamber gives provisional support to minimum wage

Although it makes more arguments against the implementation of a minimum wage than in its favor, the Cayman Islands Chamber of Commerce has given equivocal support to the establishment of a base wage rate for Cayman.

“The Chamber of Commerce supports the introduction of a minimum wage in the Cayman Islands,” a position paper released Monday by the Chamber indicated, based on a survey of its membership conducted in May.

While it has given provisional support, the Chamber withheld its backing for any specific proposal from government for a minimum wage until it sees the details.

“The Chamber strongly urges the government to release a white paper clearly outlining the specific policy proposals as well as the specific objectives of the policy to avoid the perception that the introduction of a minimum wage is driven by special interest groups, personalities, ideology or dogma,” the Chamber statement read.

The Chamber also urged the government to create a clear distinction between minimum wage, what employers would have to pay at a minimum, and a living wage, the lowest wage that a worker could earn to meet their basic needs.

The business advocacy organization does not seek to recommend a specific minimum wage rate in its position paper, but it states that any policy should seek to avoid “unforeseeable shocks” from the introduction of such a wage.

“The minimum wage should be initially introduced at a minimal level with incremental increases of no more than .50c per annum until it reaches the intended level,” the Chamber statement noted. “For example, if the proposed rate is $5 per hour, then a gradual increase is probably not needed.”

The group also recommended that any minimum wage should be reviewed periodically by an independent commission that mitigates “against the risk of politicization” and comprises members of employers’ organizations, workers groups and government. Any such group would be required to keep “full minutes” as records of all meetings.

Other areas that should be considered include whether different categories of minimum wages should be paid to different types of employees, particularly those employed by private households as domestics or those who receive tips in addition to their salaries in the hospitality industry. Consideration should include in-kind payments for such things as lodging and meals, as well as gratuities, the position paper indicated.

Local business owners contacted by the Cayman Compass generally accepted the concept of a minimum wage, but said the most important issue, the pay rate, still needs to be decided.

“[With] Cayman not being a large manufacturing country for export, the impact of minimum wage should be minimal,” said Robert Hamaty of the Tortuga Rum Company. “When the tide rises, all ships rise, so, hopefully, it will raise the standard of living.”

Prentice Panton of Reflections said a proposed $5 per hour minimum wage wouldn’t affect his company since they pay more than that to starting workers already.

“My concern will be if they keep on pushing it higher into the future,” Mr. Panton said.

In favor

The introduction of a minimum wage in Cayman would “alleviate conditions of poverty among low-paid and unskilled workers,” the Chamber position paper stated. The position paper also argued that a higher base wage rate in some categories of employment would work to alleviate exploitation of foreign workers who are brought here, in some cases, because they will work for such low pay.

The lower pay situation for non-Caymanian workers could also represent “unfair competition to Caymanians and permanent residents in the local labor market”.

The Chamber also noted that higher wages – depending on where the rate is set – could lead to more Caymanians and permanent residents accepting employment in lower paying jobs, rather than choosing to remain unemployed.

Opposed

However, the Chamber also warned that a minimum wage rate could lead to increased operating costs for some businesses that would ultimately translate to higher consumer prices.

Other business concerns included profit losses, job losses and the potential for creation of bias among the lower paid positions.

“The vast majority of workers likely to benefit from the introduction of a minimum wage are work permit holders,” the Chamber statement read. “The policy would disproportionately benefit non-Caymanians, while likely downsides of increased prices for goods and services would affect all residents equally.”

The danger of a minimum wage could also be presented in the political arena, the Chamber position paper argued, with changes being proposed by successive governments.

“This could have a destabilizing impact on the economy as well as lead to uncertainty in the business community.”

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2 COMMENTS

  1. The problem with minimum wage is not just increased operating costs. It also removes the most vulnerable people from the workforce because a business who might hire an entry level learner at a low wage will not be able to afford to do so, guaranteeing that person will turn to government assistance or crime to survive.

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