No businesses under the Barbados Chamber of Commerce and Industry (BCCI) have reduced working hours following the June increase in the minimum wage, but rising wages are having a broader impact on the economy, potentially driving inflation, the chamber said Thursday.
BCCI President Paul Inniss told reporters at a news conference that labour costs were being absorbed rather than through staff hour reductions, while warning that higher wages could contribute to inflationary pressure.
He said: “We haven’t received such communication within the chamber. So just to remind you, not all actors that do business in Barbados are members of the chamber. But I would say I haven’t heard or the chamber has not received any reports from its members.”
“We have received feedback from sectors, say, within the retail and the security services arena, around how the impact and how it will impact their businesses…. But I haven’t heard of any cutback in hours.”
Inniss noted that some additional labour costs were being passed on to clients and customers rather than through reductions in hours.
“The feedback has been that the additional costs are then transferred to clients and customers. Some of the cutback is not necessarily coming from the security firm or the business. It may be coming from the customer.”
“If the cost of your services to me has increased by ten per cent or say 20 per cent…. You, the service provider, then need to figure out how are you going to provide that same service… knowing that there’s a direct cost input in terms of your labour, your labour costs.”
Six months ago, the national minimum wage moved from $8.50 to $10.50, and the security guard rate increased from $9.25 to $11.43. The January minimum wage increase will raise the national rate from $10.50 to $10.71 per hour, a 21-cent increase, while the sectoral minimum wage for security guards will increase from $11.43 to $11.66 per hour, a 23-cent rise.
Inniss said that most chamber members already pay above the minimum wage and stressed the importance of a liveable wage. “We have a very simple view about minimum wage. We believe that every working Barbadian, a person living and working in Barbados, has a right and should earn a liveable wage,” he said.
But Christopher Sambrano, the chairman of the chamber’s economic advisory committee, warned that rising wages have wider economic consequences.
He said:“In terms of managing the dynamics in business, we are facing inflationary pressures…the theory of hyperinflation effect [is] where you have this constant cycle of increasing wages. Once [there are] increasing wages [there is an] increase [in the] cost of goods. And as a result of that, then that drives a cycle of constant increase.”
Sambrano added that businesses could mitigate the impact of wage increases by improving productivity and operational efficiency.
“Productivity is part of it. So, yes, you may have an increase in wages, but maybe there might be other elements in our business that we can adjust in terms of better sourcing… more efficient systems, more efficient software, methodology, AI, helping employees to be more efficient with what they need to do so they don’t need to spend as much time.”
“If we can make sure our employees have… a compensation that allows them to live comfortably, but they’re also incentivised to be more productive; as employers, also pull those other levers to make our businesses more productive, then hopefully not all of it needs to be passed on and we can bring that under control.”
Addressing reports that some business operators were caught off guard by the January increase, Inniss said: “We weren’t surprised from the perspective that we were part of the negotiations on the minimum wage and the implementation of the same over the foreseeable future as part of the Barbados Private Sector Association. And yes, our concerns and inputs were considered. Sometimes the expectation and reality doesn’t always collide
“The adjustment in June was actually late. So one can argue that there is an opportunity to actually make a further adjustment. But in terms of being surprised, I was not surprised that government made a decision to increase come January. I wasn’t surprised by that… We can’t continue doing business the same way. We have to evolve. We have to become more efficient.” (SZB)
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