Living wage is of benefit to all society
I need to speak to the thorny subject of a minimum and living wage, which has been proposed as legislation. I can certainly relate to the morality of people working and earning enough to afford a roof over their heads and raise a family, with all that that entails.
In some limited examples, it has been proven that when a family have enough income to feed and provide quality education, the whole society benefits because these families become self-sufficient and no longer carry the stigma of a welfare client.
The issue is not just the morality, rather it’s also the practicality because the burden of that transition and upgrade will rest on the shoulders of businesses. Timing in that regard may be an acute factor, as Bermuda is still rallying from a deep recession, which is not yet approaching anywhere close to full recovery.
Some industries such as construction are already beyond the minimum wage, so we can expect minimal impact there. However, it will be the smaller, more casual employment provided by retail stores and little boutiques that will trim their employment and try to extract more work out of fewer employees.
It will be very predictable which companies will be able to ride the tide from those that will not. This is one more step towards the rule of the jungle, where only the strong survive. This is not America or Canada, or even Europe, where there is an abundance of resources, global manufacturing, with a deeply imposed welfare state. We tax basically on goods and services because we do not have an export. Therefore, any rise in the cost of service will be spread out as an additional cost on goods.
The only way around an inflated cost of goods, in the Bermuda context, would be if there was hyperconstruction that fuels a situation of hyperemployment, which would result in the purchase of more goods. It is sales that keep retailers’ doors open and sales that provide for the salaries for employees and staff levels.
In summary, while the idea may have some moral background, given the state of the economy which is essentially flat, the idea should go on hold until there is more bounce in the economy.
Unless the gross domestic product goes up, all we are doing is moving the deckchairs around. At the end of the day, it may be the Government that picks up the burden for what industry does not sustain.