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Fiji: Minimum wage increase postponed

At the beginning of February, Fiji’s workers and trade unions were preparing to receive a roughly 20 percent increase in the country’s minimum wage.

However, Fiji’s business leaders — especially the garment industry, whose workers receive a lower minimum wage than employees in other sectors — warned the increase would force layoffs and shutdowns. Other economic concerns arguments persisted. The global financial crisis has increased worries of recession in the Pacific Island nation, which recently experienced its worst floods in a century, destroying some vital infrastructure (and many crops). January’s flooding has lead many tourists and travel agencies to wrongly believe the tourism industry is unable to handle more guests, helping hamstring this economically important sector.

Business leaders won a reprieve when Prime Minister Frank Bainimarama postponed the wage increase until July 1.

It is unclear how many of Fiji’s workers earn minimum wage. The government sets wage minimums by sector, with most industries compelled to pay workers around $2.50 FJ per hour, or $1.33 US. In admittedly old data, roughly one-quarter of Fiji's households live in poverty and another 20 percent of families hover near the poverty line.

Bainimarama’s move coincided with a government decision forcing taxi drivers to decrease fares, but allowing bus companies to maintain their prices. News also broke that an audit would soon be complete investigating the legality of a $184,000 FJ payout to Bainimarama for untaken leave and other backpay from Fiji’s military, where some of the money owed dates back to 1978. Bainimarama, the head of Fiji’s military, dissolved Parliament and took power of the government in a December 2006 coup.

Like many economists, the blogosphere is largely divided over what effect a minimum wage increase would have on workers and industry. Interestingly, the pro-government blog IG Fiji condemned the country’s leaders for going back on its promise to workers and “fall[ing] prey to the sly and bastardly businessmen.”

We noted with grave disappointment the announcement by the PM that the minimum wage order would be shelved until July. We share the sentiments shared by many when the accusation that the govt. has given in to the elite of the society. For the PM to come out with a ridiculous statement that it is for the betterment of the country, the statement is in very bad taste, particularly if it was said in jest.

We cannot understand why such a decision was taken, particularly when the govt. is supposedly doing what it is doing for the good of the people. Added to this, the Fiji Times today revealed details about PM's leave payout which means that decisions made have been one-sided – for the people in govt. It is indeed a dark day when the people who chose to take the reigns of this country in their quest for truth and fairness do exactly what the previous govt's. were doing and continue to treat the backbone workers of this country like dirt. For a man who has just about everything, the least the PM could have done was allow the minimum pay order to go through. By deferring it, he has not only made a fool of himself as that was his initiative, but also of the govt. which has been, ironically, preaching from the pulpit about fairness, transparency and benefits for the poor. Where has that vision gone to? Has the PM finally succumbed to the temptations of the dollar and decided to let the country go to the dogs? Perhaps we are truly not far from the days when Fiji will become another Zimbabwe.

On the other hand, the anti-regime bloggers at Raw Fiji News argue that with local businesses already laying off workers, an impoverished government with no support forthcoming from donor countries because of the postponement of elections, it is best to hold off for the next few months on forcing industries to pay workers higher minimum salaries.

People must understand that the private sector is also made up of affectionate people who fully understand the contribution made by their staff and it is wrong to try and create a wedge between the employers and employees. They need each other and let them sort things out the best way they know how.

We must give it to the businessmen/women in the private sector who are shouldering all the business risks that comes with being in business because without them, Fiji is stuffed. They too must be rewarded handsomely for their blood, sweat and tears in setting up businesses that majority can never do in their lifetime. But it is the government’s job to create a conducive environment that will allow these entrepreneurs to go wild with their job creation plans.

real jack, writing in the Fiji Exiles Board, contends the government's deferment didn't go far enough.

personally i think that wage increase should wait for at least 12 to 15 months – thats a sensible time frame – after that period there should be a reassessment of the situation – if the world wide economic situation starts improving that would be a good precursor to improved demand on local garments and derivation of sales generating revenue to sustain those increased wage costs.

as it is these workers are taking home packets below the tax threshold – and there is basically a “honey pot” set up emerging around these factories – wherever they set up they are creating employment for the local neighborhood – workers are generally living within 1 kilometer of these factories – out at Nadawa, in the Kalabu Tax Free zone – out at Laucala Beach Estate etc etc etc – and they have schools, supermarkets and basic amentities (health centres) within 1 kilometer radius of their abodes. so its really a sustainable proposition – those wages may look meagre but within the context of the set up that many of these factories have done (some even have set-up kindergardens and play centres for pre school age kids of workers who have no one to look after the kids during working hours) – and the factory workers walk to their factories.

defering the wage increase is not going to put any families into a worse position – it is sustainable.

Media observer Crosbie Walsh, who runs Fiji: The Way It Was, Is and Can Be, notices that business leaders have not been completely forthcoming on their earnings, and delaying the minimum wage increase casts doubts on the regime’s commitment social justice and Bainimarama's leadership style.

Whatever the economic realities, Bainimarama's wage decision raises many questions about his credibility on other matters: What happened to his championship of social justice and help for the poor? Why has he succumbed so easily to business interests? Will it be the “right time” in July? This was an Order on minimum wages, not all wages. How do decisions like this differ from those of the Qarase Government? [The government Bainimarama ousted in 2006] Why has he ignored his own advisers and made clowns of his ministers? How many supporters will leave his cause? Can he be trusted? Is this another example of a broken “promise”? Is he really a dictator? [My advice to the Interim PM? You need to reverse gear quickly and make a sharp U-turn to avoid running over many ordinary citizens.]

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