A recommendation has been put forward to raise the minimum wage in the Cayman Islands to CI$8.75 from the CI$6.00 where it has been for the past seven years.
It comes in the final report of the Minimum Wage Advisory Committee and will now be considered by the government.
In a comprehensive 154-page document outlining the justification for the CI$2.75 increase (45.8 per cent), the MWAC said it “considers this a fair wage that would be affordable to most employers and beneficial to low-wage employees.”
It stated that there was unanimous agreement that the minimum wage rate should apply equally to all persons regardless of gender and immigration status.
“The minimum wage applies to all employees, including those in the domestic or household sector and by organisations legally defined as non-governmental, not-for-profit and charitable organisations, and employees (as defined in the Labour Law) of all ages.”
The Minimum Wage Advisory Committee(MWAC) also recommends that for employers who pay gratuities and commission “no more than 25 per cent of the CI$8.75 minimum wage may be paid by gratuities or commissions - at least 75% of the minimum wage rate must come directly from the employer - beginning July 2024 to June 2025.
It goes on to state that “after that, the gratuity contribution to the prevailing minimum wage will be reduced by 5 per cent annually, with the reduction occurring in July of each year until June 2029.”
According to the MWAC, starting July 2029, there should be no gratuities contribution to the minimum wage.
For household employers of ‘live-in employees’ only, the MWAC says a maximum of 25 per cent in-kind credit should be applied to the new CI$8.75 per hour (gross) minimum wage rate (CI$2.19 per hour) for accommodations and utilities only.
There are also provisions for part-time employment of Caymanians aged 12 to 17 years old. They will benefit from a proposed school-age minimum wage of CI$6.00 per hour. “This encourages school-age youth employment to improve work ethics, and discipline and gain experience, and encourages employers to hire young Caymanians for part-time employment opportunities,” the MWAC said.
LIVING WAGE vs MINIMUM WAGE
Chairman Lemuel Hurlston explained that one of the core issues they had to grapple with was whether to opt for a Living Wage instead of a Minimum Wage.
“A Living Wage is a wage that allows a worker to attain a socially acceptable living standard and this approach is typically not legally binding as a socially acceptable living standard is difficult to define legally. Alternatively, a minimum wage protects against undue low pay and ensures a just and equitable share of the economic wealth to all, provides a minimum living for unskilled employed persons and helps to overcome poverty and reduce inequality.”
He said the MWAC agreed that the concept of the living wage was outside of its mandate, and that the focus should instead be made on “the upscaling of Caymanians to increase their earning potential rather than mandating businesses to hire low-skilled staff at high cost.”
ECONOMIC IMPACT
The broad economic impact of increasing the minimum wage was addressed by Adolphus Laidlow, Director of the Economic and Statistics Office(ESO).
He outlined the main areas where the additional costs of paying the recommended new minimum wage are likely to be passed on to the public by businesses.
“What is likely to happen is that the firms with the highest costs are likely to try to pass it on if it’s possible to pass it on because it may not be possible. It depends on competition in the marketplace as to whether you can pass it on or not.”
The impact on the cost of goods and services is estimated to range from approximately 4 per cent up to around 23 per cent depending on the type of business.
Regarding the overall economic impact, ESO Director Laidlow said there was the potential for a 3.1 per cent inflation impact if companies decide to pass on the cost to consumers and clients.
The MWAC said it differed with claims by some businesses that this could result in around 700 job losses. It said a more realistic figure would be in the region of 200.
BALANCING ACT
“Setting the minimum wage requires a balancing act to ensure that there is economic stability but, at the same time, allowing people to meet their basic needs,” the MWAC said.
Other details coming out of the report showed that the CI$8.75 per hour proposed increase in the minimum wage will directly benefit an estimated 10,457 employed persons or around 18 per cent of the employed labour force.
The direct cost of the proposed minimum wage is CI$51.5 million per annum, with businesses paying CI$38.7 million while households will be responsible for CI$12.8 million. Caymanians will receive CI$13.2 million and non-Caymanian CI$38.3 million annually.
The wide-ranging consultation involved the business community, employees, the public, civil society groups and advice from the International Labour Organisation (ILO).
The report was presented by Lemuel Hurlston - MWAC chairman, Adolphus Laidlow - Director of the ESO, Maureen Nabi - Director of the Business and Professionals Women’s Club and Wesley Howell, Chief Officer in the Ministry of Labour and Border Control.
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