The approval by the PNG Minimum Wages Board to increase PNG’s minimum wage from K2.29 [US$0.91] to K3.20 [US$1.28] is a good initiative to help the people of Papua New Guinea to earn a little bit more money to sustain their livelihood with the increase in the prices of goods and services. According to Labour and Industrial Relations Minister Benjamin Poponawa (The National, June 25, 2014) the increase in essence recognises the need to provide a fair and equitable wage rate and (also) provides for the agriculture sector and struggling businesses. He said it should adjust the purchasing power of the minimum wage earner and allow people to raise their standard of living. However, this will also be a burden to people who operate small to medium enterprises with revenues that cannot accommodate to pay their employees at such increased wage rate. This means that if owners of small to medium enterprises are going to comply with this increased minimum wage rate then they will have to lay off some of their employees. For instance, let’s look at a trade store or tucker shop operation. The owner employs two people and pays them K200.00 a fortnight each, which means the owner is paying a total of K400.00 in wages. Now the recent increase in the Minimum wage rate will put a strain on the operation of this small trade store/tucker shop. The revenue that the owner generates from the operation of this trade store/tucker shop will still remain the same but the wages that the owner will be paying now will be over the usual K400.00. This is bad for the business and the owner cannot afford to do that. The natural thing to do is to lay off one of the employee to accommodate the changes in the increase in wages. Majority of Papua New Guineans work for a minimum wage of K200.00 a fortnight as security guards, cleaners, cashiers, tea boy/girl, etc. Most of these people are likely to lose their jobs because most small to medium enterprises who employ them will not be able to sustain them with increased wages. The increase in Minimum Wage Rate can be seen as a good idea but can also lead to an increase in unemployment in Papua New Guinea. I think what the government should be looking at right now is to control and regulate the prices of goods and services in the country, come up with policies and incentives to protect and promote locally owned and operated small to medium enterprises and cut down on taxes (goods & services taxes and wages & salaries taxes). Such policies should at least help to decrease the high cost of living that we Papua New Guineans are experiencing at the moment. If the government wants the employees to be paid at a higher minimum wage rate, then the government must also make the employers, especially the small to medium enterprise sectors, happy to pay these employees at such rate. It is a two-way thing.
Posted on: Mon, 04 Aug 2014 05:17:02 +0000
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