What is a fair living wage?

  • 8th June 2017
  • 2017
  • // Display comment count + link

With Government and the Unions deadlocked over the issue of a fair national minimum wage, Labour Leader  Mahendra Chaudhry recommends that $3.50 per hour be adopted as an interim NMW to give immediate relief to workers while tripartite negotiations continue on a fixed rate indexed to inflation.

In a country where the average level of poverty is as high as 40%, with poverty in the informal sector estimated at an alarming high of 53%, the issue of what is a fair wage takes on enormous significance.

It is widely accepted that low wages is the root cause of poverty in Fiji among the working class families. It is estimated that some 60% of those in full time employment are earning wages below the Basic Needs Poverty Line (BNPL) currently set at $203 a week. These employees are all in the private sector.

Government’s own survey shows that those in the lower wage group are spending less than $40 a week on food for their families. This is absolutely shocking. What can a family of five buy for $40 a week except the bare essentials?

Is it little wonder that the Tebutt-Times poll shows cost of living as the number one issue of concern for our citizens?

A living wage pegged to the cost of living and one that meets the basic needs of our workers, must be a priority for any caring government.

Trade unions are currently locked in a dispute with the government and the employers on what is a living wage. The unions are asking for $4 an hour based on a BNPL of $186 which was set in 2014. The inflation adjusted BNPL is $203 which would mean $5.00 an hour.

Late last year, Economy Minister Aiyaz Sayed-Khaiyum announced that government was undertaking a review. It then appointed a consultant to prepare a report with recommendations for a revised minimum wage rate.

The unions were not consulted or invited to participate, and the entire review process was handled outside the Employment Relations Advisory Board.

The consultant Professor Partha Gangopadhyay from the University of the South Pacific recommended that the national minimum wage be revised from $2.32 to $2.68 per hour or $117.92 per week.

His view seems to be that workers in this category were helped by government handouts (social wages he calls it) and should be able to manage their household expenditure within the limit set.

Naturally, the unions rejected the report. A meeting of the Employment Relations Advisory Board (ERAB) was held on 1st June to discuss the recommendations. It is believed the Minister is now preparing a report on the matter for presentation to Cabinet.

This issue about government’s so-called “social wage” offsetting the need for a living wage for our workers, is totally unacceptable and has no relevance to the national minimum wage.

It is a reference to government handouts such as subsidised school bus fares, medicine, water and electricity etc.

We all know that these freebies are not working well. In fact, most wage earners are told that they do not qualify for these handouts. It is, therefore, not quite correct to suggest that it has brought down working poverty from 35% to 11%, as Employment Minister Jone Usumate stated a week ago (FT 29/5).

In any event, one must not be distracted by such red herrings. The bottom line is that 60% of our low income earners are receiving wages below the poverty line. And that most of them have difficulty spending $40 a week on food for their families.

Professor Gangopadhyay himself found this a very “disturbing picture”. He found that the lowest paid category of workers did not benefit from such government assistance because for them the major worry was the cost of food.

Using $240 a week as the median for food expenditure in Fiji, he found that 50% of families spent less than this with the lowest income group, spending only $40 or less on food because that it all they can afford from their poor pay packet. He considered even $100 a week for food as being in the lower category.

With a minimum wage of $2.68 per hour, a worker will receive $117.92 per week. If $100 a week for food is considered on the lower end, certainly on the proposed NMW, he cannot put decent, nutritious food on the table for his family while meeting all his other living costs such as rent, water, electricity payments and meeting other household expenses.

Every worker in this country has a right to a decent, living wage. A fair wage, for fair work.

The NMW of $2.68 an hour, therefore, is not the answer to our problem of tackling poverty. We need to raise the national minimum wage rate above starvation wages to a level where a worker is able to meet the basic needs of his family, and still be able to save a little.

What then is a living wage for our workers? This is the crux of the matter.

The best option for determining a fair NMW may be through properly convened tripartite negotiations between the unions, employers and the government. The issue is too important to be resolved unilaterally by government imposing its own figure on the unions and the workers.  Nor should it become a subject of political propaganda in the lead up to the 2018 elections.

A negotiated NMW, as we have already said, should have a bearing on the basic poverty line – we can’t have our people surviving on cassava and tea or roti and water.

On the other hand, the NMW should not lead to job losses. It must also take into consideration the ability of the employers to pay – small business operators, in particular.

There may be exceptions but how these are accommodated within the NMW framework must be agreed to in the negotiations.

An interim solution to the impasse may be to raise NMW to $3.50 per hour ($154 per week) to give immediate relief to workers in this category. Tripartite negotiations can then follow to fix the actual rate which must be indexed to inflation.