No inflation by minimum wage hike

MINISTER in the Ministry of Finance, Conrad Enill, yesterday assured that inflation would not spiral out of control as a direct consequence of an increase in the minimum wage from $8 to $9. The increase was announced at Thursday’s post-Cabinet news conference at Whitehall. Enill told Newsday that increasing the minimum wage would not cause inflation to run rampant. He explained that the minimum wage was a small part of the national economy, and for inflation to take place, there must be additional costs coupled with zero production. Enill also indicated the higher wage bill was balanced by the provision of tax breaks for small businesses, and assured there was protection for the most vulnerable within the society. Former Central Bank governor Winston Dookeran said the minimum wage was approximately 35 percent of the economy and an increased wage bill would not cause an increase in inflation. He added that inflation was stable at four percent. 

However, he warned that inflation could increase once a higher wage bill is combined with uncontrolled Government expenditure and increases in demand for goods and services. Dookeran said once Government kept inflation below five percent there was no cause for alarm. Inflation over seven percent would cause serious damage to the economy. San Juan Business Association (SJBA) president Gail Merhair said the higher wage bill could result in some businesses reducing their working hours in order to compensate for higher operating costs. She said the wage bill on its own would not cause inflation to get out of hand, but inflationary increases could be reflected in areas such as higher food prices. Merhair also commended the Labour Ministry for creating a unit to monitor the minimum wage’s implementation and said the SJBA had no problem with the increased wage.

TT Manufacturers Association president Anthony Aboud also said he did not foresee a higher minimum wage causing rampant inflation.
However, he said the overall cost of doing business in TT had increased, and one of the most poignant lessons from the oil boom of the 1970s was that measures must be implemented to ensure people are able to maintain high standards of living once the time of plenty had ended. Aboud was optimistic that the higher wage bill would allow all persons across the employment spectrum to be able to properly access basic necessities of food, housing, health care, education and security.