The Solomon Islands Chamber of Commerce and Industry (SICCI) supports the proposed increase of the country’s legal minimum wage, however expresses its disappointment with the breakdown in the mandated process.
SICCI makes the comments in advance of its submission, containing views of its members of the business community, to the Labour Advisory Board’s (LAB) review into the minimum wage.
The last increase of the legal minimum wage was ten years ago in 1 May 2008 when then Minister for Commerce, Industries and Employment, Sir Francis Billy Hilly ordered a new rate for all sectors to $4 per hour and $3.20 for the Agriculture and Fisheries sectors. The decision was made following a unilateral consultation process including stakeholders, relevant Government ministries, Central Bank (CBSI), the private sector and other interested parties.
The new increase in the minimum wage was announced in Parliament by Caretaker Minister of Commerce, Industry, Labour and Immigration (MCILI), Hon William Marau in December 2018.
SICCI CEO Atenasi Ata says while the review of the minimum wage is timely, it was disappointing that there was limited consultation with stakeholders prior to the announcement, as required by law.
“Any proposal to change the minimum wage initiates a process managed by the Labour Advisory Board, who has to hear from all concerned parties. That is the nature of a well-functioning system of government regarding labour relations,” she said.
Since the announcement made in December, a review process has commenced, with LAB giving stakeholders time to submit their views of the proposed increase from $4 to $8.
“The timeframe for interest groups to make submissions to the LAB is an abbreviated one. And one after the fact. Nevertheless, it is a process that will not be taken lightly,” SICCI CEO, Ms Ata, said.
She further added that the exercise can also benefit by hearing from other subject-matter experts.
“At the table there should be Government, and the workers’ union together with employer representatives of course, but the LAB should consider submissions from other entities such as policy-making bodies.
“It is good that the LAB will consider data to be presented by Ministry of Health and Medical Services on nutrition levels in the country, as well as poverty data by the National Statistics Office. However, there will be benefits in seeking inputs from the Ministry of Finance and Treasury to speak to their tax reform agenda and its impacts on workers and employers alike.
“This gives the LAB a bigger picture within which to place this review. The LAB should also be informed by Central Bank of Solomon Islands. There is no sense of impact-modelling of proposed changes for the country’s economy,” Ms Ata said.
In its submission to the review process, SICCI has reached out to its 200 plus member companies and small businesses. These inputs will be compiled and submitted to the Labour Advisory Board at its next meeting.
While acknowledging the fact that raising the minimum wage will enable low income earners to cope with the high cost of living in the country, food, electricity, rent, transport and school fees, Ms Ata urges that small businesses in the country must also be well consulted on the proposed minimum wage increase.
“Small businesses including those in the provinces, especially retail, security and service businesses might experience hardships with a very substantial jump such as a 100% increase. For bigger companies an increase such as suggested brings in for negotiating benefits that workers currently receive like housing, and utilities support,” she said.
Ms Ata said consultations into the minimum wage should be done regularly and incrementally.
SICCI Board member and Honiara businessman, Toata Molea highlights an additional aspect of the review.
“Government has a long way to go in monitoring compliance to its rules and laws, and this wage-increase will be one of them. Also, what about spill over effects such as immediate hikes in prices of foodstuff?
“With the influx of Asian businesses into the country, Government must ensure that systems are there in place for monitoring purposes and also ensure that these new businesses adhere to our laws such as the proposed minimum wage increase,” he said.
In light of this proposed minimum wage increase, SICCI Chairman Jay Bartlett calls on Government through its Inland Revenue Division (IRD) to also review the personal tax exemption threshold for workers.
SICCI is of the view that the current tax exemption threshold is too low. With the proposed increase of minimum wage, low income earners would be exempted under $15,080. However, any changes resulting from an increase in their wages that brings their income to above $15,080 will be taxed at the minimum of 11%.
“This brings us to the purpose of a review to minimum wages. If Government genuinely wants to see an increase in what workers actually receive in their hands every fortnight, then it should look at the repercussions when this pushes workers out from the threshold bracket,” the SICCI Chairman, Mr Bartlett, said.
Looking forward, Mr Bartlett states that the Chamber remains committed to collaborate with stakeholders in such initiatives that leads to better lives for our people.
“SICCI sees inputs from the private sector and business community as very important. To the best of our ability in this very short timeframe, we want to inform all stakeholders of what happens when implementing outcomes of a minimum wage review,” he said.
SICCI is a LAB member, along with the Solomon Islands Forest Association (SIFA), the manufacturers interest group, and Solomon Islands Women in Business Association (SIWIBA) on behalf of the employers, the national employee’s union representing employee interest; and on the public sector side, representatives of Government entities/departments including the Public Service Commission.
Solomon Islands Chamber of Commerce & Industry
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