Introduction

There is a clarion call by many individuals to increase the minimum wage in the Turks and Caicos. This call is due to the fact that the rate is low and that the cost of living in the Turks and Caicos is very high and so if employees are only making the minimum wage, it is a challenge for them to survive.

Unfortunately, there is very little data on how many people are getting paid just the minimum wage. I know for fact that there are many individuals who are getting paid above the minimum wage. On the other hand, there are others who are just being paid the minimum wage which is evident from some of the jobs being advertised in the local newspapers.

It is very difficult to say though what a workable minimum wage should be because the truth is no matter what the minimum wage, it may never be adequate. While the minimum wage may need to increase, we also need to look at other alternatives.

Minimum Rates in TCI and other places

In May 2015, the Government of the Turks and Caicos increased the minimum wage from $5.00 an hour to $6.25 an hour which equates to 25% increase.

In the USA, the federal minimum wage is $7.25 an hour but of course individual states have different minimum wages. In Florida, the minimum wage rate is $8.65 per hour and for tipped employees it is 5.63 per hour. In Texas, the minimum wage rate is $7.25 per hour.

The minimum wage in the Bahamas is $5.25 per hour. In the Cayman Islands, it is CI$6 per hour for employees who are getting gratuity, the minimum wage is CI$4.5 per hour.

Impact of an increase in minimum wages

An increase in minimum wage would be exciting news for waged employees especially if they are only making the minimum rate. However, as mentioned above the increase may still not be adequate for employees to manage their finances. For example, if we were to use the 25% increase in the minimum wage, the new rate in TCI would be $7.81 per hour. If an employee works for 44 hours at the rate of $6.25 per hour, the gross weekly wages would be $275 and if we were to use $7.81, the weekly wages would be $344.

From an employer point of view, an increase in minimum wages would mean an increase in their wage bill. Other employees who are already getting paid above minimum wage would also want their employer to increase their rate. Due to an increase in the wage bill, the employer may reduce the number of hours an employee works and may also increase the cost of their services and products.

Alternatives to the minimum wage increase

The previous administration in the TCI amended the service charge bill whereby 100% of the service charge collected will be distributed to all employees. As a result of this, employees are taking home more wages. Therefore, if you are in the hospitality industry, you are better off with the service charge no matter what you minimum wage is. Quite frankly, if the Government were to increase the minimum wage, the minimum wage should not be increased in the hospitality industry given that the employees are getting 100% service charge reimbursement.

Another alternative to the minimum wage is a review of the housing rates in the Turks and Caicos Islands. I know many Governments do not want to interfere with the market rates of rents but some intervention needs to be done because some of the rates are too expensive. Even if the Government does not want to say what the rate should be, they should perhaps put a ceiling on apartment rates.

Another alternative is to review the rate imposed on the imported food and other materials. I know that we do not have income tax like the US and other Caribbean countries and so the Government has to find ways and means to have revenue and so the import duty is one of the main sources of revenue for the Government. However, I think we can reduce the rates further and force businesses to pass this down to the consumers by reducing their prices.

Another possible alternative is to have minimum salaries and wages for certain sectors similar to what is being done in Singapore.

Conclusion

I know that this topic is a very sensitive one but it must be addressed. If the Government can spend thousands of dollars to repatriate and house illegal immigrants, then certainly they should be able to bit the bullet to reduce some rates. We have to be careful in passing some of these costs to employers because in the end the employers will find a way to pass the cost onto consumers and then it defeats the whole purpose of increasing the minimum wage. The extra money that employees would be getting will be used to pay for the increase in the cost that businesses passed onto consumers.