Sun. May 31st, 2020

Minimum Wage Increase: Pros and Cons considered

The bill that pushes for a gradual minimum wage increase of $8.50 per hour is currently at the Committee of Ways and Means as further considerations are being undertaken given the current economic status of the country and after consultation with the private sector.

Chairman of the Committee of Ways and Means and Senate Vice President Mark Rudimch told Island Times that the minimum wage bill is still pending additional information on the state of the economy especially after the recent decline of visitor arrivals and also after careful consideration on the observation posed by the private sector.

While the initiatives to push for the increase of minimum wage is considered a welcome news by many workers, the bill poses some concerns to the private sector who says that while the minimum wage increase would mean “more money in the pocket of the workers which can keep them in pace with inflation if the cost can be covered by the employer,” it is also noted that some negative effects might come out of this given the current business environment.

“Its impact for employees, although helpful, appears to be minimal as business (especially the small) owners who already pay the minimum wage says that increasing the minimum wage at this time would only mean they have to increase the prices of their products, cut back employees’ hours or let some employees go,” Rudimch shared.

“Additionally, the increase in the minimum wage will vary on location, industry and the amount of increase.  If the increase would be set within the levels or close to the labor costs, its impact could be minimal, but if it is set (too) high, then its harmful effect could be significant”, Rudimch further explained.

The main premise cited in the bill which prompted the call for the minimum wage increase was the claim that many Palauans choose to leave Palau in exchange for a higher paying job abroad, among others. It is viewed that raising the wage would offer competitive salary, hence, enticing Palauans to work in the country.

The bill was first introduced by President Tommy Remengesau, Jr. in January last year who originally proposed to gradually increase minimum wage by raising it from $3.50 to $4.00 by October 2017 and adding 25 cents increase each year until it reaches $8.50 per hour by year 2026. (Rhealyn C. Pojas)