As more Jamaicans clamour for a liveable wage, stakeholders are urging the Government to consider new ways to calculate salaries for workers. The island’s national minimum wage, which is the least amount of money any employer should pay their worker, has been at $7,000 per week since 2018.

Speaking at a Jamaica Observer Business Webinar recently, president of the Jamaica Confederation of Trade Unions (JCTU) Helene Davis-Whyte argued that the current minimum is simply not liveable for most Jamaicans.

“I lift my hat off to persons who survive on that $7,000 per week because I cannot imagine how they do it. It is because some of us are very creative in Jamaica,” said Davis-Whyte.

She said, “The truth is that because we start with a minimum wage, we are starting at a very low level. If you say you’re going to be increasing by 50 or 100 per cent you’re almost going to create a storm of persons who are opposing, for one reason or the other. As a result, the commission has over the years really tried to come with a figure that both employers and employees can live with but not necessarily represent what workers really need to be able to deal with their most basic needs.”

Chief Group HR Officer at VM Group Dr Dayton Robinson agrees, but contends that there should be a revision of the basket of goods to help determine what would be liveable for most Jamaicans.

“It is extremely difficult to live on $7,000. I mean, that’s the truth. However, I do believe that more assessment of the basket is required to give a better understanding of what it costs a citizen to survive in terms of their basic needs, including security and education. I know it’s not $7,000 but to say what it is at this point I’m unable to say,” Dr Robinson noted.

The Statistical Institute of Jamaica (Statin) revised the Consumer Price Index (CPI) in 2020 using the 2017 Household Expenditure Survey.

Introduced in April 2020, the new CPI series reflects the expenditure patterns of low- to middle-income households in Jamaica.

The CPI basket now contains more than 300 commodities, including newly added items such as technology products, health food products, hair extensions, toll, entertainment and recreation activities, namely parties and attractions.

The CPI basket is usually revised once every 10 years. The next revision is expected in 2027.

Senior lecturer in the Department of Economics at The University of the West Indies (UWI), Mona Dr Andre Haughton agrees that there needs to be a shift to a liveable wage, but he notes that the approach must account for the nuances which exist within the society.

“I look at the basket quite often and when I look at the elements of the basket, especially as it relates to food, the idea is that the cost of this basket keeps increasing month to month, year to year, so to say that a particular liveable wage is X or Y amount would be undermining the effects of inflation on the basket. A more reasonable proposition would be for us to have a basic liveable wage based on three meals a day, minimal housing, minimal amount of electricity, minimal amount of water usage, minimal amount of Internet coverage and usage as well as transportation, health care and education. After doing so, this liveable wage as we define it must now be indexed to the change in elements of the basket,” said Dr Haughton.

“People living downtown, based on their consumption patterns, have a different inflation than people living uptown. People living in the rural areas have a different level of inflation from people living in the urban areas,” he continued.

But even as the importance of a liveable wage is noted, the economist warns that its implementation could have deleterious effects on the jobless rate in Jamaica.

“Remember that wage is an input cost, so by increasing wages you’re increasing cost to the business which means that it reduces their profit margin. When we look at all the industries now if we increase the minimum wage to $15,000 per week the only industries that can pay that now are mining and quarrying, finance and insurance services and electricity, gas and water. The other industries, for example, agriculture, restaurants and hotels, producers of government services, construction, wholesale and retail, these industries are not earning enough to pay their current levels of people employed a double in the minimum wage,” Dr Haughton explained.

Put simply, employers may be forced to lay off some workers to satisfy the minimum wage threshold or employers might opt to hire less people.

“Of the 1.2 million people employed in Jamaica, over 250,000 are employed [as] excess labour scattered across the industries, which if you remove them the industry can be equally as productive as it is now. In order for us to increase the minimum wage and move it towards what we consider to be a liveable wage the output in these industries have to increase to move towards them becoming more productive,” said Dr Haughton.

At the same time, Davis-Whyte said, “We need to start doing some calculations so that we have an understanding of what it actually takes to provide for workers’ basic needs and we’re saying that you have to look at that in the context of a family structure and not just of an individual either. We think that work needs to be done so that we can come up with a figure and it may have to be average, so you may have highs and lows but we come out with an average that you can say is what it takes to provide these very basic needs for our workers.”

In the meantime, Dr Robinson believes that finding the formula for a liveable wage is a process and will therefore require time.

“I think it has to be a properly laid-out structured initiative that we work towards because what you really don’t want to happen is that you have a situation where an employee with a half of bread loses that half of bread because of an organisation’s inability to make the pay. That’s something we can’t disregard. We have to help organisations who are unable to make a liveable wage payment to its employees to get there. Help them to get there either through government interventions or otherwise but I believe that if we just go right ahead and come up with what we consider is a liveable wage and thrust it on all employers I think you could really see negative impacts as a result of it,” Dr Robinson warned.

Notwithstanding, Davis-Whyte is urging the Government to move quickly in addressing the current minimum wage.

“The commission did make a recommendation to the minister and it’s supposed to have gone to Cabinet. None of us have been advised as to what that level is, but clearly the Government seems to be in a quandary and so have not acted on the recommendations of the commission. People are calling for it even whilst you recognise that you are living in a pandemic and the economy is not what it should be. But the truth is that, without any kind of stimulus, workers are actually feeling the pinch right now as are a lot of companies as well, so we have to find some means of being able to move to that point of being able to look at the minimum wage and determining what level it should get to. We are all awaiting the report as to whether Cabinet has accepted or rejected the recommendations of the commission.”

“We believe that it is something that can happen in Jamaica. We don’t think that it will happen in one go but the work needs to be done in terms of finding the average and coming up with a liveable wage. And it may be [a] liveable wage in terms of industries and sectors as well, but we believe that that work has to be done and then once you know what the target is we can work to getting there. But we cannot any longer be living with this thing about national minimum wage when the minimum wage really can do nothing for most workers,” she argued.

An assessment of the minimum wage is done every three years in Jamaica. However, in other countries the minimum wage assessment is done annually to ensure that salaries are keeping pace with inflation.