Samoa suggested to increase minimum wage by 61 per cent
A government-commissioned report has recommended Samoa the national minimum wage by more than 60 per cent.
The proposed change would, from January next year, lift the minimum wage from $2.30 to $3.70.
The Ministry of Commerce, Industry and Labour (M.C.I.L) hired a consultant, Vlassis Missos, to research the implications of a wage increase.
Its findings will be subject to industry feedback before being considered by the Government.
According to a presentation of the research's findings, made to the Samoa Chamber of Commerce and Industry, Dr. Missos believes a minimum wage increase is essential because of the rising cost of living. He suggests it should be revised every two years according to the consumer price index.
The minimum wage was last lifted in 2015.
The research finds that in the years since 2018, the richest income earners in Samoa have seen their wages increase by nearly $10,000 tala, while those in the lowest brackets are seeing little to no movement in their incomes at all, the research shows.
Wages for restaurant workers barely budged between 2014 and 2018, with a mere $137 increase in average wages.
Regionally, Samoa is lagging behind other Pacific Islands in keeping minimum wage at a liveable standard. It falls behind Fiji, Papua New Guinea and even Kiribati, but is ahead of the Solomon Islands.
A large proportion of Samoa’s workers operate in the informal sector, and do not take home salaries or regular wages. Between 2015 and 2018, more than 90 per cent of the agriculture sector worked in the informal sector, as did 50 per cent of the construction workforce.
Manufacturing, wholesale and retail trade, hospitality and information/communication have around 40 per cent of their workforce in the informal sector.
Ensuring those workers are being paid, or paying themselves fairy is another challenge, as well as voluntarily paying their N.P.F contributions and preparing their pension fund.
Dr. Missos also suggests workers on minimum wage be excluded from National Provident Fund increases.
The issue of the minimum wage made headlines in January while M.C.I.L reviewed the Labour and Employment Relations Act (L.E.R.A), including considering making regular reviews of the wage compulsory.
In 2005, the minimum wage was set to $ 2.00 per hour.
It was increased in 2015 to $ 2.30. In July 2015, N.P.F. In July N.P.F. contributions were increased from 7 per cent to 8 per cent (and gradual increases for 2020 and 2021).
Previously, Prime Minister Tuilaepa Dr. Sailele Malielagaoi has cautioned against increasing minimum wage too quickly by too much, saying the private sector might struggle to afford it.
“Any raise in the minimum wage is dependent on private sector’s ability to absorb it among other related issues,” Tuilaepa said earlier this year.
“If the raise is too much, this will have an impact on the businesses, hence the Government is cautious,” he said.
But since then, Government has engaged Mr. Missos under an Australian Aid programme to look into the increase.
Dr. Missos is a research fellow at the Centre of Planning and Economic Research in Greece. His current research project is on income inequality.