Central Bank Governor no to sectoral minimum wage

IF workers employed on the construction of the Atlantic LNG Train IV plant are being paid less than obtains in the industry, then by all means they should get a salary increase. However, it should be done through collective bargaining rather than establishing a sectoral minimum wage. That is the personal view of Central Bank Governor, Ewart Williams, in his capacity as an economist.

He was commenting on the implementation of the sectoral minimum wage and whether it will contribute to inflation. Williams said sectoral minimum wages carry significant risks and he understood the concept as “setting a flaw for wages protecting workers at the lowest rung of the ladder.” “My personal view is that sectoral minimum wages carry risk and I prefer a system of wage determination based on collective bargaining.”

He said his view didn’t meant there isn’t a case for increase in wages for any group of workers, “and therefore I am not saying there isn’t a need for increase in wages for workers at the ALNG.” Williams said perhaps there was “a need and I’m sure there is, if the wages that are now being paid to those workers are below the minimum that obtains in the industry, sure there is a case,  but I prefer to see it determined in a context of collective bargaining rather than establishing a sectoral minimum wage.”

Concerning what impact the rising wages would have in the energy sector, Williams said in the previous oil boom “there was pressure for wages to get out of line with productivity.” He noted that then average wages moved from six, seven and eight percent to 15 and 20 percent of average wages in the country.” He said that was understandable in a boom since workers were striving to increase their share of the take. However, Williams said if “wage increases go too far ahead of productivity there is a tendency for it to kindle inflationary pressure.”