MINIMUM WAGE - MAXIMUM IMPLICATIONS

The minimum wage debate is turning into a defining discourse about the Cayman Islands as a society and how we prioritise and set policies that will determine the structure of the society going forward.

This is more than just a matter of numbers - and when you look deeply into it, the numbers are not adding up.

With the initial deadline for public input running out (or would have run out by now), the perspectives of the people who live and work in these islands are vital. Input from the public is critical as that will form part of the recommendations to the government.

With elections under two years away, the minimum wage matter could be a significant issue and is shaping up to be the dominant issue for the next campaign.

Cost of living is a recurring campaign, but this time expect it to be more prominent than ever before. That is why the minimum wage debate is so important now.

The Chamber of Commerce, which by its mandate looks at matters primarily from a business perspective, sees a risk of rising costs to its members from raising the minimum wage. That’s understandable. A higher wage bill cuts into margins with the real prospect of increased prices to consumers to retain their margin.

That ultimately means that an increase in the minimum wage would most likely be ‘minimised’ by an even higher cost of living as goods become more expensive. Then it could have the domino effect which effectively nullifies whatever gains might have been made by raising the minimum wage.

But the point is that for many, the current minimum wage is impossible to live on in the Cayman Islands.

The Chamber of Commerce says, “Based on our research, increasing the minimum wage to between CI$7.50 and CI$ 8.00 per hour was supported by most members contacted.”

That could be the first step towards a practical solution but is it just sticking a plaster on an otherwise sticky problem?

There are views that for Caymanians and longstanding residents, the cost of living impacts them harder than those in the imported labour force who do not face the same challenges.

Their dollars on average go further, even if they are paid less, because they do not face the same demands on their income as the average Caymanian and long-term resident does. Not many Caymanians can afford to send remittances back home (untaxed in many countries) and still have enough left to live on.

That’s a fact. Do the math.

There’s no question that the Minimum Wage Committee has a lot to consider with complex this issue. That’s why the views of the public are vital.

One point that might be quite practical, albeit potentially unpopular, is for a two-tiered approach to the minimum wage; an upper level for Caymanians and longstanding residents and a separate level for work permit holders.

Monitoring and enforcing will always be a challenge in a no-income-tax environment except in instances where formal challenges are brought against an employer.

The cost of living in the Cayman Islands is said to be among the highest in the world, but maintaining a high living standard comes at a cost. That living standard at even its basic level must be maintained across the board, and we posit that to correct the imbalances the scale must be ‘tipped’ and rebalanced.

“I have never paid the minimum wage to my employees”, remarked a local business owner. “I also believe that most businesses also do not pay the minimum wage, because they know that it’s not a liveable wage,” he added.

So, who is really paid the minimum wage? With no income tax regime its impossible to accurately provide those statistics. Using job advertisements to determine that wage can be misleading as the actual employment contract is private and confidential and not readily available.

Another approach is to consider a compensation package versus a minimum wage.

Many companies use this method including the Tourism sector and sales companies who focus on pay for performance thereby ensuring that the bottom line moves in tandem with the paygrades.

Compensation can also include living expenses such as uniforms, paid holidays, Insurance, school fees, daycare, gratuity, transportation, accommodation and so on.

This is too important an issue with broad social implications to be rushed to a conclusion.

Let’s take the time, consider all aspects, and come to a workable solution.