The Private Sector Organisation of Jamaica (PSOJ) last week completed a “wage increase” survey on behalf of the Jamaica Observer that seeks to determine the factors affecting the ability of companies to raise employee income and the forces pushing others to meet the demand for higher employee remuneration.

The PSOJ, headquartered in the Kingston Metropolitan Area, has a membership that comprises a wide cross section of private sector companies, associations and individuals operating islandwide.

Among 49 companies which responded to the survey, 90 per cent of the sample increased the wages of existing employees. Five companies have not increased wages.

Among those who have not been able to raise wages, the reasons given were a decrease in sales; static output resulting from shared service via online and in-office services (“we have maintained the same level of service and performance throughout COVID”); and the failure of sales in general to return to pre-COVID levels.

Of the 44 companies that increased wages for their existing employees, the lion’s share, 61.4 per cent, increased wages by less than 10 per cent.

Just under 65 per cent of the companies sampled increased wages by less than ten per cent. Fifteen companies or 31.1 per cent of the sample increased employee wages in the range of 10 per cent to 20 per cent.

Two companies representing 4.5 per cent of sample increased employee wages by between 21 per cent to 35 per cent in 2022.

Of the 49 respondents, 19 can be classified as large businesses earning more than $425 million annually, 13 were medium-sized earning more than $75 million but less than J$425 million annually, nine (18.4 per cent) were small businesses, and eight (16.3 per cent) were micro-enterprises.

In some cases increased wages were influenced by the need for new hires. Thirty-five organisations have hired new employees since the start of the year. Of that number, 29 (59.2 per cent) offered their new hires higher wages than was paid to the person in the role previously.

Costs

Most businesses (72.7 per cent) indicated they absorbed the cost of increasing existing employees’ wages, while 22.7 per cent passed the cost on to consumers through higher product prices.

Among those who were not able to increase new hires’ wages, comments were:

•It is not necessary to increase output and collections.

•There will be no increase in service.

•Working to keep the current flow going.

•A person is usually given a raise after one year with the company; and

•One company also reported a decline in projected services and subsequent income.

In October, Jamaican Teas CEO John Mahfood, who is also president of the Jamaica Manufacturers and Exporters Association, said that despite the pressure of inflation on workers, financing a wage increase could be challenging. He noted that companies, especially those in manufacturing, have been “hit hard in 2022 with increased costs of raw material shipping”.

Meanwhile, he noted that there is a serious shortage of people available for work. “Companies are finding it difficult, also trying to win staff over from other companies by offering higher salaries. We see that happening in manufacturing, both the inability to hire staff and inability to keep staff,” he said.

Mahfood added, “There is pressure which is being created, number one, because of shortage of staff; and, number two, because staff need an increase to compensate for inflation, but at the same time companies are not not having the financial ability.”