SHTA: Minimum wage increase not equal to more spending power
by The Daily Herald
Posted: Dec 21, 2005 19:27 UTC
PHILIPSBURG - A minimum wage increase will not result in more spending power for recipients if mitigating measures such as reducing the surcharge on wage and income tax and loosening of the labour laws are not introduced by government, St. Maarten Hospitality and Trade Association (SHTA) said Tuesday.
The association is supportive of a minimum wage increase, but not without proper research to ensure that the spending power of recipients is “solid, structural and sustainable,” SHTA Vice President Paul van Vliet said during a press conference at the SHTA office Tuesday.
Several board members, including President Emil Lee, were also present. Van Vliet added that SHTA was not holding back the implementation of the increase, as this was totally in the hands of government and that Labour Minister, as the association only had been asked for its opinion on the increase. When this was voiced, the association was “chastised unjustly” for wanting to ensure that the spending power it brought about was “not short-lived” at the expense of those who stand “to lose” their only source of income.
Without researching the impacts, if the increase is implemented January 1, 2006, it will cost the private sector more than NAf. 25 million annually. However, all of this will not end up in the hands of the minimum wage earners, as NAf. 2.5 million will go to the Island Government in taxes, more than NAf. 5.5 million will go to Social Insurance Bank SVB, almost NAf. 500,000 to Health Care Bureau BZV and one per cent to union dues, amongst other deductions, Van Vliet stated. The business community will have to compensate for this annual additional cost of NAf. 25 million “by increasing prices, which will take away from the purchasing power of the poor man, or by cutting down on personnel cost by taking away jobs of those people we are trying to help,” he stated.
Assumptive calculations, due to the lack of “genuine statistical data,” are built on minimum wage being increased from NAf. 1,100 to NAf. 1,339 with minimum wage earners (20 per cent of the labour force) receiving an increase of NAf. 239. Persons earning less than the new minimum wage and slightly above will receive a NAf. 120 raise.
Each group accounts for 10 per cent of the 20,000 strong labour force. If properly researched, the minimum wage increase and the mitigation measures will better serve the minimum wage earners and employers, as loosening of the labour laws will encourage employers to hire more people. The reduction of the surcharge will boost the spending power of those who receive the increase, Van Vliet said. The surcharge decrease can be made up for by the NAf. 2.5 million increase in the wage tax collected by government. Reiterating SHTA’s stance, SHTA Director and former Labour Commissioner Michael Ferrier stated that the group was not against the increase.
However, “simply giving an increase without mitigating the other problems will not give more spending power,” he said, as some businesses will pass on increased expenses in product and service prices, making the spending power less for the same persons who receive a raise in wages. To date the discussion on the increase has been based mainly on “emotions instead of facts and research.” There needs to be a shift in focus if the increase is to have the desired effect of enhancing the spending power of workers, according to the SHTA members.
by The Daily Herald
Posted: Dec 21, 2005 19:27 UTC
PHILIPSBURG - A minimum wage increase will not result in more spending power for recipients if mitigating measures such as reducing the surcharge on wage and income tax and loosening of the labour laws are not introduced by government, St. Maarten Hospitality and Trade Association (SHTA) said Tuesday.
The association is supportive of a minimum wage increase, but not without proper research to ensure that the spending power of recipients is “solid, structural and sustainable,” SHTA Vice President Paul van Vliet said during a press conference at the SHTA office Tuesday.
Several board members, including President Emil Lee, were also present. Van Vliet added that SHTA was not holding back the implementation of the increase, as this was totally in the hands of government and that Labour Minister, as the association only had been asked for its opinion on the increase. When this was voiced, the association was “chastised unjustly” for wanting to ensure that the spending power it brought about was “not short-lived” at the expense of those who stand “to lose” their only source of income.
Without researching the impacts, if the increase is implemented January 1, 2006, it will cost the private sector more than NAf. 25 million annually. However, all of this will not end up in the hands of the minimum wage earners, as NAf. 2.5 million will go to the Island Government in taxes, more than NAf. 5.5 million will go to Social Insurance Bank SVB, almost NAf. 500,000 to Health Care Bureau BZV and one per cent to union dues, amongst other deductions, Van Vliet stated. The business community will have to compensate for this annual additional cost of NAf. 25 million “by increasing prices, which will take away from the purchasing power of the poor man, or by cutting down on personnel cost by taking away jobs of those people we are trying to help,” he stated.
Assumptive calculations, due to the lack of “genuine statistical data,” are built on minimum wage being increased from NAf. 1,100 to NAf. 1,339 with minimum wage earners (20 per cent of the labour force) receiving an increase of NAf. 239. Persons earning less than the new minimum wage and slightly above will receive a NAf. 120 raise.
Each group accounts for 10 per cent of the 20,000 strong labour force. If properly researched, the minimum wage increase and the mitigation measures will better serve the minimum wage earners and employers, as loosening of the labour laws will encourage employers to hire more people. The reduction of the surcharge will boost the spending power of those who receive the increase, Van Vliet said. The surcharge decrease can be made up for by the NAf. 2.5 million increase in the wage tax collected by government. Reiterating SHTA’s stance, SHTA Director and former Labour Commissioner Michael Ferrier stated that the group was not against the increase.
However, “simply giving an increase without mitigating the other problems will not give more spending power,” he said, as some businesses will pass on increased expenses in product and service prices, making the spending power less for the same persons who receive a raise in wages. To date the discussion on the increase has been based mainly on “emotions instead of facts and research.” There needs to be a shift in focus if the increase is to have the desired effect of enhancing the spending power of workers, according to the SHTA members.
