Trade unionist Helene Davis-Whyte has knocked back a suggestion that the minimum wage should be tied to the US dollar, saying while the idea is “nice-sounding”, it would be difficult to implement “at this point in time”.

Davis White, who is the president of the Jamaica Confederation of Trade Unions, made the observation as part of the panel of the recent Jamaica Observer Business Webinar, which explored the topic ‘Liveable Wage: Moving Beyond Survival’.

“The truth is, pegging your local labour costs to another country’s exchange rate is not something that should be encouraged because it can put you in some serious problems,” she added.

The trade unionist explained that what currently obtains is that the Minimum Wage Commission should consult with both employers and employees and gather information on the changes in the economy since the last minimum wage increase in 2018. With this information, the commission will make recommendations as to an appropriate wage that both employers and employees can live with.

Emphasing the topic of the webinar, Davis White said the trade union movement would like to see the shift from a minimum wage to a liveable wage, pointing to implementation of the concept in other countries. She added that such a shift would be beneficial to all and not just people who earn at that level.

“I will tell you that having spoken to some of my counterparts in countries where they have begun implementing the concept of a liveable wage, they have found that there are benefits for employers… things like retention of employees — you have low staff turnover as a result,” Davis White said.

“There are benefits to society as well. So when we’re looking at it, we should only look at in the immediate term, but in the medium and longer term you will see benefits to society, to the employer, to the employee and even to the economy. Because it is felt that if you have a person earning a liveable wage, they spend more in the economy and that helps to turn the economy,” she continued.

In implementing a liveable wage, countries take into consideration rent, groceries, health care, and transportation costs. In addition, Davis White said they also take into account a provision of saving for two weeks as a buffer for any emergency.

Andre Haughton, one of the panellist who holds a Phd in economics and also lectures at The University of the West Indies, Mona, said the question of indexing the minimum wage to the US dollar raises a concern as to whether the Bank of Jamaica is focusing on the right economic variables — inflation versus the exchange rate.

“Many people in Jamaica believe that the exchange rate plays a significant role in the value of their consumption because a lot of them believe that the goods we import for consumption purposes depends on the US dollar,” he stated.

“Why blame them?” he questioned adding: “Because such is the state of the Jamaican economy that your exchange rate shows your level of competitiveness relative to the rest of the world.”

Haughton further argued that if Jamaicans are concerned with the exchange rate then the central bank’s messaging on inflation targeting may not be effective. Moreover, he said that given that Jamaicans have to deal with a “real scenario of the depreciating dollar that affects our pockets more severely”, the question of dollarising wages isn’t surprising.

“What we realise in Jamaica is that a lot of people now, based on their expectations, they look at prices based on the nominal exchange rate and not necessarily movement in inflation, which is what is being controlled by the Bank of Jamaica to curtail living expenditure,” the economics lecturer pointed out.