The Maldives Minimum Wage Board recently released a report stating that forty percent of the country’s workforce earns less than MVR 6,000 per month. The International Labour Organisation recommends that the country set its minimum wage at MVR 6,000 to MVR 6,500. Minister of Economic Development Fayyaz Ismail addressed the public’s concerns about the low minimum wage, arguing that setting a minimum wage too high would result in a decrease in jobs and may cause the economy to go bust.
MRF 2,600 ($170)
A person with a full-time job can expect to earn at least MRF 2,600 a month. The minimum wage is MRF 2,600 ($170). Ordinary jobs don’t pay that much, and it’s not uncommon for gang members to earn MRF 5,000 a month or more. Even ordinary jobs don’t pay that much, but the Maldives’ low cost of living is low enough to attract workers from all walks of life.
The minimum living wage in the Maldives is MVR 3,100 per month. This is the minimum wage for the government sector. It is estimated that 60% of Maldivians earn less than this amount. The most wealthy country in the world is Luxembourg, while the poorest one is Burundi. However, it does not matter how wealthy a country is, it is unlikely that it will be able to meet the minimum living wage in Maldives.
The economic ministry has set a minimum wage in the Maldives. This wage is based on recommendations made by the Wage Advisory Board. This wage is applied to the national and sectoral scale, but it is lower for small businesses. The wage is not indexed to inflation, and deductions under section 20 of the Employment Act are not included. It is also necessary to ensure that the minimum wage in the Maldives does not discriminate against a particular group of workers.
Currently, the Maldives has no income tax on salaries, although a proposed bill will impose a progressive income tax ranging from 0% to 15%. The bill also provides paid annual leave and sick leave for workers with one year of employment. In addition, the law will ensure that workers have 30 days of paid leave. Several shops also close their doors during prayer time, so it is not difficult to find work.
In terms of salary increases, the Maldivian government pays employees 7% more than their private sector counterparts. This increases the overall living wage for Maldivians by approximately 7% per year. This increase is higher than the average wage in other parts of the world. However, it is important to understand that this raise is more based on performance than on contribution. For instance, an experienced employee earns 50% more than a new one.
Minimum wage board
The Maldives Minimum Wage Advisory Board has recently passed a decision to allocate MVR 5,700 as the minimum wage. The new wage will apply to civil servants and small and medium enterprises. In accordance with the Maldives Employment Act, the minister must announce the minimum wage within a month. The board also advised that civil servants and small and medium enterprises should revise their salary structure to ensure that workers contribute 70% of the minimum wage.
The new minimum wage has been implemented, but the country’s economy is still not strong enough to include expatriate workers. This would lead to further exploitation and ostracization of workers. Another big concern is that the new minimum wage board has not adequately accommodated the proposals of the Minimum Wage Board. However, the recommendations made by the board are based on current work scenarios. Thus, a minimum wage should be set in line with the demands of locals and expatriates alike.
In October, the Economic Ministry urged the Minimum Wage Board to establish new figures for different categories of business. It decided to implement new minimum wage figures after consulting international experts. However, due to the high risks of business failure and harm to the employees, the government could not implement the recommendations. In November, the Minimum Wage Board reissued its recommendations and formulated new minimum wage figures for different business categories. A new minimum wage board in the Maldives will ensure that workers have the best possible conditions to survive and prosper.
The minimum wage is set at USD 369 per month for small businesses. Medium and large businesses will need to pay MVR 8,000 per month. Small businesses cannot pay less than this amount. In addition, the Minimum Wage Board has also taken into account the ongoing COVID-19 pandemic. Once the minimum wage has been implemented for two years, the minimum wage will be set for foreign workers. So, now, if you are working in a small business, you may want to consider hiring someone from another country.
Exemptions from payment of minimum wage
The Economic Ministry recently announced the minimum wage for Maldivian employees. The proposed figures were drawn up after extensive research by the Wage Advisory Board. It was hoped that the minimum wage would not overburden small businesses or cause layoffs. President Ibrahim Mohamed Solih established the Wage Advisory Board to provide guidance on minimum wage matters. This new law is expected to come into effect on January 1, 2022.
While Maldives has no national minimum wage policy, there are exceptions for foreign workers employed in the country. For example, the Maldives has 11 public holidays. While the Maldives has no minimum wage law, the tourism sector employs approximately 5,300 local workers. As a result, approximately three percent of overall tourism revenue is devoted to wages and salaries. The average monthly wage in this sector is USD 250.
Employers may not have to pay back wages to employees who have been unfairly dismissed, but the court will consider the amount of back pay as a general contractual duty to mitigate loss. Moreover, the court will consider what amount is just and equitable in the circumstances. Exemptions from payment of minimum wage in Maldives for temporary workers are also limited. In the short term, employers can reduce or eliminate back pay and reinstate the employee if there was no reason for the dismissal.
Employers in Maldives are allowed to dismiss employees for economic or operational reasons. There are two separate pieces of legislation to address these concerns. The 6th Amendment to the Employment Act was enacted on the same day as the Public Health Emergency Act. Consequently, these two pieces of legislation do not contradict each other. In fact, they are more aligned with the current social environment in the Maldives.
Impact of minimum wage on productivity
The Maldives has recently introduced a new minimum wage, the first in its history. The proposed increase in salaries and wages is a significant development, fulfilling a pledge made by the president of the country. Moreover, the government has also announced an increase in the wages and salaries of workers in the country’s budget for 2022. This is good news for workers and employers alike. However, the proposed increase has created a new problem for local companies: workers are no longer able to pay the new minimum wage.
The impact of a higher minimum wage on productivity is complex, but it can be mitigated. For one, organizations can repurpose underutilized hours by hiring more part-time workers. In other words, the workers who were previously making $14 per hour can now earn $20. In addition, if the minimum wage is increased, it may increase the number of customers in the service sector. Therefore, a higher minimum wage will encourage more workers to stay in jobs for longer, gaining valuable experience and productivity-enhancing training. Moreover, the minimum wage will also encourage more productive firms to replace less productive ones. This will also help the surviving firms to become more efficient, which will ultimately boost overall productivity.
The Maldives is highly susceptible to external shocks. The COVID-19 shock has reinforced the need for the country to develop its economy through diversification. Increasing its focus on higher value-added business and financial services would create good jobs. The country faces a shortage of skilled labor, and this means that investing in human capital and the digital divide will be important for the future. With these investments, Maldives can better rebuild itself and improve its quality of life.