The pros and cons of the increase of the minimum wage
A minimum wage is the minimum pay that an employee should get paid. The current minimum wage in the Turks and Caicos Islands is $6.25 per hour and prior to April 1, 2015, it was $5.00 per hour. The Government is now proposing that on April 1st 2023, the minimum wage should be $8 per hour. However, if you are working in the security, manufacturing, construction, banking, financial services and insurance industries, then the minimum wage shall be $9 per hour. In addition to the minimum wage, the Government will be implementing a living wage support in September 2023 which entails a national school nutrition program, a national day care program and an after-school programme.
While an $8 per hour minimum wage means the increase is only $1.75 per hour but in terms of percentages, that increase is 28%. Likewise, a $9 per hour means that the minimum wage increased by $2.75 per hour but it is 44% increase.
There is no data available that provides the number of the persons in the Turks and Caicos Islands that are currently getting $6.25 per hour. However, based on my knowledge, while there are some people in the country getting paid $6,25 an hour, the majority of people especially Turks and Caicos Islands are getting paid above the minimum wage.
With that said, this article will highlight the pros and cons of the proposed minimum wage increase.
Increase in wages.
Obviously an increase in the minimum wage rate means that those employees who are getting $6.25 will now get an increase in salary. For example, if they are currently working 40 hours a week @$6.25, your gross salary will $250 a week but with this proposed increase, the new gross salary weekly will be $320 if you are going to make $8 per hour and then $360 per week if you are going to make $9 per hour.
Increase in overtime rate and holiday rate.
According to the current legislation, overtime kicks in after working 44 hours per week. I never understood why it was not 40 hours per week. Anyway, with this proposed rate, the overtime rate would be $12 per hour and $13.50 per hour respectively as opposed to the current minimum overtime rate of $9.375 per hour.
The holiday rate or double pay rate would be $16 per hour and $18 per hour as opposed to the current minimum holiday rate or double pay of $12.5 per hour.
Increase in spending or increase in savings.
The increase in minimum wages means that employees now have an opportunity to spend more money on the things they need. Of course, the dollar amount may seem insignificant, but it is something they never had before. Alternatively, the increase can also means that the employees have an opportunity to save. In fact, if they are making it with the current wages, then any extras they get, they should save.
No major impact for the average employee
As I mentioned I believed that most people are already getting paid above the minimum wag so I am not sure if the proposed minimum wages will have a significant impact for the average employee.
Pressure from other employees
I believe given that some employees will be getting a 28% or the 44% in their salaries, other employees who are unimpacted by this increase will also want an increase. They may feel that it is not fair they are not getting an increase while others are and so employers may be under pressure to increase the rates of other employees.
Why is there a differential rate?
I don’t know the logic between the two different rates for minimum wage. I believe if there should be a differential rate, it should be for the hospitality industry only. My reason is that those persons in the hospitality industry are not only getting a wage rate but they are also getting a service charge unlike any other industry. Therefore, the hospitality minimum wage rate should be lower than the rest of the industries.
Possible Higher cost of living
The increase in the minimum wage particularly will increase the cost of living if companies must increase their wage bill. While I did mention that the average employee will not be impacted, there are some employees that will be impacted if they are only getting $6.25 per hour. This means the payroll costs for some companies will increase and if the payroll increased then they will pass this cost onto the consumers thus increasing the cost of living.
Due to the high cost of living in the Turks and Caicos Islands, the proposed minimum wage will be inadequate to cover the cost of living and as a result, some employees will be unhappy and dissatisfied with the new rate. They will want the rate to be significantly higher.
I am not sure what the right rate should be for the minimum wage. I know a lot of people are concerned about the rate and feel that it should be higher. However, the higher the rate, the higher the cost of living and it will also become a burden for the average small business. Most businesses in the Turks and Caicos are small. If their payroll costs increased significantly, they will be forced to cut back on the hours for their employees. However, this does not have to be the case as businesses must find a way to be creative to increase their revenue, so they do not have to layoff any employees or reduced their hours.
The increase in minimum wage is a start but it is not the solution. We have a cost-of-living problem and I know this issue has expounded due do the global increase in prices. We must find a way where we can collaborate regionally for some products and focused on the construction on a deep-water harbour. Locally we must also encourage and promote the local agriculture and poultry industries. We also must do our best to diversify the economy so that we can additional streams of income so that Government can help the residents more.