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Minimum wage likely to jump by 13 per cent

WageKINGSTON, Jamaica--If the Planning Institute of Jamaica’s (PIOJ’s) projections are right, the National Minimum Wage (NMW) should move by 13 per cent, or J $728 per 40-hour work week this year.

The fact is that the PIOJ is usually on the ball and, for several years, has been the most convincing contributor to the consultations by the National Minimum Wage Advisory Commission (NMWAC), which concluded last week at the Ministry of Labour and Social Security (MLSS) in Kingston.

According to the PIOJ, its submission is based on an analysis of the movement of the NMW vis-a-vis inflation, in relation to consumption cost to keep a reference family of five out of poverty.

The institute said that, based on its analysis and the current general economic environment and the increase in the prevalence of poverty to 19.9 per cent in 2012, it is recommending the following:

“That the national minimum wage be increased by 13 per cent or J $728 per 40-hour work week.”

“This would be in line with the recorded average annual inflation rate for 2014, and the projected inflation rate for 2015, which totalled 13.3 per cent over the two-year period,” the submission, presented by PIOJ Labour Market Analyst Deidre Coy, stated.

The increase would bring the minimum rate to approximately J $6,328 per week (approximately US $55), or approximately J $158.20 per hour (US $1.35 per hour).

“An increase of this size is projected to be sufficient to assist the most vulnerable in maintaining reasonable purchasing power. This recommended 13 per cent increase, although not eliminating the gap, would reduce the gap between the cost per annum for the reference family and the annual earnings of two persons at minimum wage and maintain real purchasing power relative to the time of the last increase in the national minimum wage,” the PIOJ said.

The institute asked that the recommendation be evaluated in the context of the “continuing realisation of commitments to increase nominal benefits” through the Programme of Advancement Through Health and Education (PATH), the conditional cash transfer programme funded by the Government and the World Bank, with the aim of delivering cash and bursary grant benefits to the most needy and vulnerable in society.

The PIOJ also noted that the real minimum wage declined by 8.2 per cent between January 2009 and May 2015, despite increases in May 2009, February 2011, September 2012 and January 2014, when nominal increases were granted.

The decline in 2009 occurred in the context of consumer prices increasing by 64.8 per cent, while the nominal minimum wage increased by 51.4 per cent.

The institute pointed out that the analysis covered a reference family of two adults of working age and three children, and the adult equivalent poverty line was defined in terms of the minimum acceptable level of food and non-food consumption required to keep the average individual out of poverty.

During the consultations, the Commission heard proposals from the trade unions, including the Jamaica Confederation of Trade Unions (JCTU) and the Union of Clerical, Administrative and Supervisory Employees (UCASE), and employers including the Jamaica Employers Federation (JEF) and the Jamaica Society for Industrial Security (JSIS). The submissions included proposals for increases ranging from 15 per cent to seven per cent. The Jamaica Security Guards Association’s (JSGA’s) Wayne Hanchard proposed a 30 per cent increase.

The PIOJ also confirmed an assessment of the relationship between the national minimum wage and the adult equivalent poverty line between 1989 and 2015 indicated that the minimum wage rate was sufficient to cover the minimum necessary for an adult to remain out of poverty, except in 1991 and 1995.

In 2013, it said that the annual minimum wage rate was 80.9 per cent above the poverty line, but that it is projected that by the end of calendar 2015 it will only be 64.2 per cent higher, assuming a an annual average inflation rate of five per cent.

The commission, comprising chairman Silvera Castro, employers’ representative Bernita Locke and Danny Roberts of the Hugh Shearer Trade Union Education Institute, will submit their recommendation to Labour Minister Derrick Kellier by the end of October, after which it will be referred to the Cabinet and, finally, to the House of Representatives.

The National Minimum Wage was last increased in January 2014, moving from J $5,000 to J $5, 600 for a 40-hour work week. The minimum wage for industrial security guards was also increased by 12 per cent, moving from J $7,320.40 to J $8,198.80 per 40-hour work week. ~ Jamaica Observer ~

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