Grand Bahama Chamber of Commerce Minimum Wage and Severance Pay Comments
Mar 24, 2015 - 11:48:54 AM
The Government of The Commonwealth of The Bahamas is reviewing the minimum wage and severance pay requirements of the nation with a view to potentially increasing and securing the benefits on behalf of employees.
The Grand Bahama Chamber of Commerce (GBCC) fundamentally supports the concepts of free markets. It believes that free markets promote innovation that improves the world in which we live. It supports the free movement of financial and intellectual capital, and supports the concept that businesses ought to be free to establish compensation and benefits packages as valued by the market.
Notwithstanding the aforementioned, GBCC appreciates that free movement of labour is not universal. Labour markets are typically artificially restricted by national borders. These artificial restrictions provide an opportunity for businesses to abuse employees offering their services to the company, especially in a very small market like The Bahamas. It is thus incumbent on the government to preclude such an abuse without unduly hindering the ability of business to succeed. Profit is not a dirty word, whether applied to employees or employers.
It is GBCC’s opinion that any approach to preventing employer abuse should be principled and not merely arbitrary. An arbitrary 36% increase in the minimum wage (exclusive of the impact on NIB contributions) is not appropriate. A minimum wage should be based on a true living wage which has been researched and updated on a regular basis. It is reasonable to expect that an employee who works a full 40 hr. week would, at a minimum, be able to support him/herself without handouts from the State. It is also reasonable to expect that two parents working a full 40 hr. week would, at a minimum, be able to support their family without handouts from the State. It is argued that employee, employer, and the community win with a living wage. Employees would be more willing to work, improving productivity and helping the employer reduce worker turnover, and it would help the community when the citizens have enough to have a decent life. Additionally, any increase required should be phased in over a reasonable period.
Likewise, severance pay ought to be based on availability of jobs in a particular category in the market. If there is typically a dearth of opportunities, employers benefit from lower wages and should be able to provide better severance packages. Conversely, if there is a labour shortage, displaced employees are very likely to find replacement employment and do not need such lucrative severance packages. Either way, foreign employers should not be treated any differently than domestic employers.
GBCC realizes that these principles require more effort by the government to administer them than arbitrary laws do, but we believe that the need to find win/win solutions that protect employees and encourage investment (both domestic and foreign) is essential.
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