Minimum wage increase approved
Local workers will soon benefit from a new year's minimum wage increase from $2.30 tala to $3 tala an hour.
The increase was confirmed in a public notice by the Ministry of Commerce Industry of Labour (M.C.I.L.) on Monday.
It becomes effective on 1 January 2020.
"The business community, workers and State Owned Enterprises are hereby advised that as per Cabinet Directive FK(19) 44, the minimum wage is now approved to [an] incremental increase from $2.30 to $3 tala per hour," says the notice.
“We request that the increase will be supported by the private sector and State Owned Enterprises.
“The increase of the minimum wage is supported by the Samoa National Tripartite Forum [S.N.T.F.] after comprehensive consultation with key stakeholders.”
A consultant, Dr. Vlassis Missos, hired by the M.C.I.L. and S.N.T.F. earlier this year, concluded that the minimum wage in the country should increase from $2.30 to $3.70 next January.
The conclusion from Dr. Missos followed one-on-one sessions with stakeholders and six weeks of research into what the review considered a living wage. The study also recommended the rate of the minimum wage be reviewed every two years.
A proposed amendment to the 2013 Labour and Employment Relations Act (L.E.R.A) supports Dr. Missos’ suggestion to review the wage on that time schedule.
In September this year, M.C.I.L. Chief Executive Officer, Pulotu Lyndon Chu Ling, said there is evidence that Samoa’s poorest are missing out on the benefits of economic growth.
Before considering the recommendations, Pulotu said there are factors that need to be balanced including whether the private sector could absorb a cost increase and attaining a wage that provided a “modest but decent living standard” for workers.
“All sides should acknowledge that the institution of the minimum is designed so as to offer protection to low paid workers and a fair share of the fruits of prosperity,” he said.
“Sensible increases may operate so as to boost local economic activity upwards hence our priority is to recommend a minimum wage that would be beneficial for the Samoan society as a whole.”
Dr. Missos had several national surveys to call upon for his research, including: the Household Income Expenditure Survey 2013, Samoa Hardship and Poverty Report, Labour Force Survey 2017, Dietary Patterns of Household in Samoa, and the Samoa National Provident Fund Wages for the Formal Sector.
Samoa has the lowest minimum wage among Pacific Island countries.
In February this year, Prime Minister, Tuilaepa Dr. Sailele Malielegaoi spoke on the issue of minimum wage and said any plans to increase it, would depend on capacity of the private sector to pay heightened wage bills.
"M.C.I.L. also has to consider variables like inflation rates and its effect on disposable incomes," Tuilaepa said in a statement.
“The key word here is affordability".
For instance, said Tuilaepa, the federal minimum wage imposed by the United States Congress in American Samoa some years ago — led to the closing down of the Van Camp fish processing plant there.
“And when the issue resurfaced again, the territories tuna processing industry was at cross roads and threatened to shut down operations in the territory, because the new wages dictated by Uncle Sam would lead to financial chaos for them," he said.
“This is one of the issues that my administration is mindful of whenever there is talk of wages and benefits.”
Tuilaepa also noted that the private sector could not afford the last hourly wage increased approved in 2014 and its implementation was delayed.
“The increase was originally approved for implementation in May 2014,” he said.
“But it was delayed to January 2015 in response to the request by the private sector employers for a grace period for them to embrace the increase to get their financial houses in order to minimize any drastic impact such as lay-offs and redundancies.
“And Government obliged.
"That is how my administration operates based on merits, facts and numbers and not politically infested promises.
“We all want to raise minimum wage but it has to be a measured increase and at a level the private sector can absorb.
“There is no point in raising minimum wage and immediately results in businesses closing down.
“Then all we will get is looking at a bunch of numbers while there are no jobs.”