Minimum Wage in Fiji

The Fiji government could have boosted the minimum wage in Fiji by 15% or cut services instead. But it opted to keep services at the same level while increasing the minimum wage. Unions have criticized this decision. Nevertheless, 32% of working Fijians live in poverty and 52% of those in the informal sector are considered low-income. These are serious concerns, and the government must find a way to meet them.

Cost of the living principle

While employers’ associations are not advocating the minimum wage increase, many of them have. The Tripartite Forum and Wages Councils in Fiji have been highly successful, requiring public accountability through audited company accounts. However, most employers seem happy with ad hoc determinations by paid consultants. The result is that wages are lagging behind the cost of living in Fiji, and only partially adjusted for inflation.

Despite the importance of a cost-of-living principle for minimum wage reform, the Bainimarama Government does not seem to remember this process. Neither does it remind the public that the Wages Council is a local institution, and has been reforming the Wages Council since 2008. As a result, this economist has received the stamp of approval from the country’s Vice President, Ratu Joni Madraiwiwi. It was no wonder that Bainimarama has not hired any local economists to study this issue, and so it is not even the simplest question to answer.

While the Bainimarama Government has hired many foreigners to do the necessary work for the poor, the cost-of-living principle should not be ignored. While he has worked to increase the incomes of the poor and improve housing, his slew of industrial policy backflips should serve as a cautionary tale to the Bainimarama Government. The unions in Fiji should not let the Bainimarama Government forget its mistakes in the past.

The current political turmoil in Fiji has affected the country’s economy. Three military coups have taken place since independence in 1970. The last one in 2000 put an end to formal dialogues on labor issues. The new Government, however, has been elected and the “Tripartite Social Dialogue Forum” could not be reactivated. The new regime will ensure economic emancipation for all the productive forces.

Lack of industry-based wage councils

The absence of an industry-based wage council for Fiji’s minimum wages is a problem for both workers and taxpayers. Such an entity would be a necessary institution for fair and equitable wages in Fiji, as a high minimum wage would not only be too expensive to implement, it would be a logistical nightmare. That’s why the government chose not to use industry-based wage councils.

The Bainimarama Government’s failure to set up these wage councils has been criticized by many unions in the country. While many companies have complied with the WROs, many others have refused to join. The reason is simple: profit. Profitable companies want to squeeze as much money out of the Fijian economy as they can, and they did not want to be tied to a wage council. They also fear that a minimum wage increase will devalue the Fiji dollar.

In a letter to the Minister of Employment Parveen Bala, the Textile Clothing and Footwear Council called for the establishment of an industry-based wage council to fight for a better minimum wage in Fiji. This initiative is a welcome development, but it’s not the only way to achieve a higher minimum wage. Industry-based wage councils would also encourage employers to improve their working conditions.

The lack of industry-based wage councils for Fiji’s minimum wage has also contributed to the country’s growing inequality. Although the country’s labor market has been largely privatized in recent years, women are still the main caretakers in Fiji. And since women in Fiji are the primary caretakers in the home, this trend will not change anytime soon.

Without industry-based wage councils, the minimum wage in Fiji cannot be effectively enforced, particularly in the garment sector. The industry is a key foreign exchange earner for Fiji. Ninety percent of its garment production is exported. And because it’s such an important industry for the country, the minimum wage in Fiji must be high enough to cover the costs of running the business.

Failure to keep pace with inflation

The Bainimarama Government has resisted the recommendation of an independent economist to keep the minimum wage in Fiji at a level that is in line with inflation. While the government has resisted the WRO, the majority of companies in Fiji have complied. The most profitable companies, however, fought the WRO tooth and nail, refusing to present their audited accounts to the Wages Council. These companies feared the effect on the Fiji dollar, and they sought to squeeze profits from Fiji.

Some people believe the minimum wage should be lower than the inflation rate. In fact, some industries cannot afford to pay $3.45 per hour, and many employers are content to pay less. Fiji’s government is a “control freak” and squeezes every cent from its businesses. The minimum wage in Fiji must be meaningful, based on the costs of food, housing, energy, and transport. Increasing the minimum wage to match inflation would be very costly and logistically impossible.

Inflation is a key issue facing the Fijian people. It is increasing well above the people’s ability to pay. While the government is fining businesses to keep prices under control, many costs are outside Fiji’s control. This is the real problem. Fiji is suffering from rising prices, not rising incomes. It’s time the minimum wage kept pace with inflation. Only then will it start catching up to inflation.

The Bainimarama Government is not happy with the minimum wage. Employers will be happy with the minimum wage as it was announced by consensus. They understand that there is no system for enforcing it. Instead, they can hold out until the next review in two years. Unions, however, can ask the Opposition parties about a Wages Council to force a revision of the minimum wage.

There are a few reasons why the Bainimarama Government failed to keep pace with inflation. In the first place, it failed to raise wages. The wage rate in Fiji slowed because the wages council had started from a low base. In addition to partial adjustments, there were long delays between the two reviews. It was clear that the minimum wage in Fiji had fallen behind inflation.

Employers federation’s opposition

The Employers’ Federation of Fiji (FCEF) has stated that the proposed increase in minimum wage will not solve the problems of poverty in Fiji, and will most likely cause job losses. The opposition comes in the wake of the resignation of Father Kevin Barr, the head of the Wages Councils, who claimed that greedy employers conspired to keep wages low. But Nesbitt Hazelman said the claims were “irresponsible” and that some union demands were simply too high for Fiji.

The federation claims its research has shown that an increase in the minimum wage is not financially viable for small businesses. But it believes that a minimum wage of $4 an hour will be affordable for small businesses. The FTUC also points out that it is in the interests of small businesses, as well as the garment and security industries, to defer wage increases. The government can grant concessions to small businesses, but only if the increase is justified by genuine hardship.

The government’s claim to a social wage is based on a misplaced view of how the new wage will impact the economy. While subsidies for electricity and water are a welcome relief, free medical care and education policies have met with disaster. The government has been unwilling to increase wages in the face of these failures. It has been a long road since Fiji introduced the minimum wage.

Despite the social partners’ opposition to the new minimum wage in Fiji, the increase in wages in the metal and electronics sector has been a success. On 30 March 2021, workers in the metal and electronics sectors signed a settlement. Social partners mobilized margins for negotiated wage increases to help employees save jobs and reduce working hours. The 2.3% wage increase took effect in July but will be paid out in February 2022. By the time it’s compounded, the increase will equal 18.7% of the monthly wage.

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