Raphael John-Lall
The debate between the viability of a minimum wage and a living wage, that is taking place globally, is also engaging discussions in T&T.
In India, the world’s fifth largest economy, which is poised to overtake both Germany’s and Japan’s economies in size over the next decade, is considering the possibility of introducing a “living wage.”
India could shift to the living wage system by 2025 from the current minimum wage norm, with the government seeking consultations with the International Labour Organization (ILO) to develop a framework to implement the new norm, according to a report by the Economic Times.
According to an article dated April 5, Indian news website news18.com which did an analysis of the topic, explained that the living wage is theoretically described as an income level that allows individuals or households to afford minimum adequate shelter, food, and other basic necessities.
A minimum wage rate, in contrast, is the lowest amount of remuneration required to be paid by law to an employee by an employer for work performed during a given period.
“Economists suggest that wages should be enough to ensure that no more than 30 per cent of this income gets spent on housing. The ILO considers the country’s circumstances and the work performed during normal hours to estimate living wage rate,” the article stated.
Trade unionists in T&T have traditionally argued that the minimum wage, and even higher pay grades, is not sufficient for the working class to survive while economists and policymakers in the Government have said employers can only pay what they can afford.
Economist Dr Ronald Ramkissoon who weighed in on the debate, told the Sunday Business Guardian that whatever the size of the economy or the population of any country, everyone should live a decent life, where there are opportunities with good jobs and an income to support living standards.
“Whether you call it a ‘living wage’ or a ‘minimum wage,’ there are many issues tied up in there. People use different definitions. I would say every citizen in T&T should earn a good income, meaning one that affords them the basic necessities in life. But to do that there must be an economy structured in such a way to allow that. You cannot pay wages or profits to individuals or companies that are being propped up artificially that are not exporting. That depends on subsidies.”
But Ramkissoon noted that if the Government and employers in the private sector attempt to pay wages that are not sustainable, this will result in “failed companies” especially Small and Medium Sized Enterprises (SME’s).
“You will have Governments having to borrow on the international market to pay wages. Will that make sense? That is not sustainable. We have got to make sure that we have an economy and that workers would want to know they are working for a company or a government that is sustainable. The one way to be sustainable in a small, open economy like T&T is to be a net foreign exchange earner. It has to be an efficient, well-run, export-oriented company.”
Living wage necessary
Assistant General Secretary of the Joint Trade Union Movement, Trevor Johnson who has also lectured in trade union studies at the Cipriani College of Labour and Co-operative Studies, said the trade union movement in T&T has been advocating for a “living wage” as opposed to a “minimum wage” for at least two decades now.
“The concept of a minimum wage never guarantees a worker being able to meet their basic needs. These include food, clothing, shelter (rent), transportation, basic medical supplies and now compulsory utilities (electricity, water rates, and internet). You can forget about a mortgage or owning a house if you are a minimum wage earner.”
He argued that no worker, given the challenges of T&T’s economy, can survive on a minimum wage.
“A minimum wage earner who has a household of two, three or four,even if there is another minimum wage income, is basically living ‘hand to mouth’ to use a local term. By the time they pay their rent and get some groceries and manage to pay a few utility bills their salary is generally depleted and the only way one can survive in such circumstances is with a side hustle.”
He said this was depicted in a recent survey throughout the Caribbean, where the heads of many low-income households spoke of the need to supplement their income by some sort of economic activity (sales of sundry items) or home-made delicacies of some sort.
Because the study has not been published as yet, Johnson declined to give more details at this time, but he did say it was undertaken by one of the Caribbean region’s leading academic institutions which specialises in industrial relations studies.
He also said that the reality that must be faced is that a living wage must incorporate the ability of an individual or a household to meet all of their basic and essential expenses and be able to have some level of savings to build towards their first-level dreams in time such as owing a starter home.
“A living wage is what any government must be aiming towards for the average citizen and decent work (not month-to-month contracts etc.) must be part of the facilitation of such an approach. Ultimately, the hopes and dreams of a population is best realised when decent work and a living wage becomes an expectation that becomes a part of the spectrum of social justice.”
ILO’S definition
Johnson pointed out that a decision by the ILO’s Governing Body opens the way for new work by the ILO on estimating and operationalising living wages, and on engaging with living wage initiatives. He pointed out that this decision by the ILO is an endorsement of what has long been advocated by labour.
He also said that the ILO position, reached during a meeting of experts on wage policies, in February, was endorsed by the ILO’s Governing Body at their session in March of this year.
The ILO’s February report pointed to the preamble of the ILO Constitution which calls for the provision of “an adequate living wage” and that the Declaration of Philadelphia (1944) calls on the ILO to promote “policies in regard to wages and earnings, hours and other conditions of work calculated to ensure a just share of the fruits of progress to all, and a minimum living wage to all employed and in need of such protection.”
Also, the ILO in its report in February outlined that in line with the ILO constitution and the Philadelphia Declaration, and consistent with the spirit of the Universal Declaration of Human Rights (UDHR), the ILO denotes that the concept of the living wage is, “The wage level that is necessary to afford a decent standard of living for workers and their families, taking into account the country circumstances and calculated for the work performed during the normal hours of work.”
The ILO report further stated that the living wage estimates translate the living wage concept into a national monetary value.
The ILO states that these estimates can contribute to and inform an evidence-based social dialogue and for wage setting. living wage methodologies should follow a number of principles:
(a) Estimation of the needs of workers and their families through evidence-based methodologies;
(b) Consultation with representative employers’ and workers’ organizations on living wage estimates and involvement of social partners throughout their development, with a view to ensuring national and/or local ownership;
(c) Transparency, including details with regard to data sources and methods of processing, that are open to scrutiny, are comprehensive and replicable.