The first ever National Minimum Wage for the country was announced today by the Minister for Labour, Mr Jone Usamate.

Mr Usamate said that Cabinet, in its sitting yesterday, approved Fiji’s first ever National Minimum Wage (NMW) to be set at $2.00 per hour.

Mr Usamate stated that this is a milestone achievement in the history of Fiji as it is the first ever determination of a national minimum wage covering both the formal and informal sectors, the hourly rate below which all sectoral wage rates must not be allowed to fall. He said that “Government is fully committed to give all workers the right to a just minimum wage as required under Section 33 of the 2013 Constitution”.

In presenting the proposal to Cabinet, Mr Usamate revealed that the establishment of a National Minimum Wage is one of Government’s key commitments under the Peoples Charter for Change, Peace and Progress towards reducing poverty to a negligible level by 2015 and at the same time enhancing productivity. He added that, this major wage policy of Government is designed to alleviate poverty amongst marginalized workers in the informal sector and those workers in the formal sector that are not covered under the current ten Wages Regulations Orders.

In arriving at the proposal, the Minister added that the Ministry of Labour, working in partnership with the Consultant Dr Mahendra Reddy, conducted a four month comprehensive and representative survey throughout Fiji amongst twelve sectors between 6th May and 4th September 2013. The survey covered both the formal and informal sectors. A total of 9,770 workers used for the study were randomly selected from 1,470 employers distributed amongst twelve sectors in the formal sector. A further 314 were interviewed from the informal sector. The survey obtained critical information on the existing terms and conditions of employment including wage levels in the various sectors of our economy before making informed determination on the most appropriate level of minimum wage and the relevant review mechanism to be adopted.

In determining the NMW, the Minister advised that Government has to carefully balance a fair value of our labour in terms of minimum wage against the ability of employers to pay this minimum wage in the context of our domestic economy, whilst cognizant of the fact that Fiji should not lose its competitive edge in the global economy and international trade. To guide Government in this very important decision, the Ministry of Labour adopted the social and economic factors provided for in the ILO Minimum Wage Fixing Convention, No. 131 and its Minimum Wage Fixing Recommendation 135.

The NMW survey findings were presented by the Consultant Dr Reddy to stakeholders in four workshops throughout Fiji between September and October 2013. They were held in Suva, Lautoka, Labasa and concluded with a national debate at the Fiji National University between Dr Mahendra Reddy and Dr Wadan Narsey. The Minister added that the consultations were very successful, achieving the desired outcomes of Government hearing all views from all sectors.

In his presentations to the stakeholders’ workshops, the Consultant, Dr Reddy, recommended an initial NMW proposal of $2.32 per hour and its review mechanism. The Labour Ministry noted the reservations of Small and Micro Enterprises (SMEs) to set the NMW at $2.32 per hour and their preference for a lower rate, as aired in the Divisional stakeholders’ consultation workshops.

After considering the feedbacks from SMEs, the Ministry of Labour reviewed the original NMW proposal by Dr Reddy of $2.32 per hour. In response, Dr Reddy presented his second recommendation to set the NMW at $2.00 per hour to address the issues raised by the SMEs, including the need for SMEs to also boost employment.

After considering the stakeholders’ comments against Government’s policy of alleviating poverty through the introduction of a NMW relative to the equally important need to grow the SMEs to alleviate poverty and boost employment, the Ministry of Labour recommended the adoption of a NMW rate to be set at $2.00 per hour.

Mr Usamate revealed that this proposal to set the NMW at $2.00 per hour rather than at $2.32 per hour was supported by most stakeholders including the SMEs. The Minister thanked the Workers, Employers, Civil Societies, Government and Private Sector organizations for their valuable contributions in the consultations which guided Government in the determination of a fair and equitable NMW. He said, “For employers that can afford, please pay above the NMW”.

The Minister also clarified that the establishment of the NMW will not repeal but will complement or co-exist with the current sectoral minimum rates for workers in all the ten sectors covered under the 2012 Wages Regulations Orders (WROs).

Further, he also confirmed that this first NMW will be reviewed within a year’s time after analyzing the economic and social impacts of its implementation.

Mr Usamate highlighted that there are a large number of workers engaged in the informal sector who will also stand to significantly gain from the imposition of a minimum wage of $2.00 per hour or a weekly wage of at least $90.00. He said that although this individual income is still lower than the $186 Basic Needs Poverty Line (BNPL) income for a four member family, there are several established poverty alleviation measures set up by Government that they could access to.

Therefore, for better appreciation of the significance of the NMW, the Minister said that the NMW will be complemented by other social components of wages provided by Government under its national social protection regime including the free income taxes and free education for all. In this holistic view, Mr. Usamate said that “Government, through the implementation of a National Minimum Wage, will be seen to actually deliver social justice in workplaces around Fiji in terms of alleviating poverty and also setting a level playing field for employers to boost their productivity”.

The Minister is also grateful to Government for providing $250,000 to his Ministry under the 2014 Budget to strengthen the Ministry’s Labour Inspectorate to implement the NMW. He thanked the Prime Minister in this budgetary support which helped the State to fulfill its responsibilities under Section 33 of the 2013 Constitution in taking “reasonable measures within its available resources to achieve the progressive realization of the right of every person … to a just minimum wage”.

Mr Usamate reiterated that Government will continue to provide an enabling environment for businesses to grow sustainably. For example, the progressive policy to set a NMW is a significant economic and social justice framework where the tripartite constituents – the employers, workers and the Government – can work closely together to boost enterprise and national productivity towards our collective efforts to alleviate poverty through a fair and equitable distribution of wealth, especially for the marginalised workers.

In this regard, the Minister appeals to all employers to be fair and just in distributing their profits and productivity gains not only to their shareholders, but especially to the workers, who are the most important assets in their organizations. Mr Usamate encourages employers to continue to shift their business culture from one of ‘cheap labour’ dependency towards incentivizing the development and participation of their workers to enhance their creativity and innovation to add more value to their goods and services with greater productivity and product differentiation.