Business leaders have given a lukewarm response to the Government’s plans to implement a minimum wage next year.

Jason Hayward, the Minister of Labour, said last week that a minimum wage of between $16 and $16.40 per hour would come into effect next June.

Hospitality workers whose income is a combination of wages and gratuities are to be paid a minimum of between $12 and $12.30 an hour.

Marico Thomas, an entrepreneur who owns a number bars and restaurants, said that the majority of food and beverage outlets would not be affected by the legislation because most employees were already earning similar wages.

Mr Thomas said: “The minimum wage in my opinion, is likely to have a larger impact on restaurants that do not sell alcohol, and do not benefit from the automatic collection of a gratuity.

“Many mom-and-pop restaurants may need to rely more heavily on friends and family to support the business.

“Most all restaurants will have to make adjustments. The effect of the minimum wage will require some change to pay structures and related administrative systems or processes to ensure the minimum guaranteed level of salary are met.”

Mr Thomas said it was a “good thing” that a minimum wage was being introduced as it would give lower earners increased purchasing power.

But he warned: “The impact of the minimum wage will have a ripple effect as wages and salaries of persons on the hierarchal ladder above the minimum wage earner may also need to be adjusted.

“This may create a meaningful impact on the overall cost of labour and the profitability of the business entity.

“To pay for this, many restaurants may need to remove less-profitable items from their menus and increase prices of those remaining.

“As businesses with low margins and low profitability are required to pay more in the absence of increasing their sales, these businesses must try to find other ways to remain viable.”

Mr Thomas said businesses would be under pressure to reduce their costs through increased efficiency, reduced waste and improved staff performance.

He said: “A knock-on effect of this may be a need for higher productivity and efficiency by the workforce and, potentially, a lower tolerance of staff-related norms related to tardiness, absenteeism, insubordination and inefficiency. There also may be a tightening of the belt with an overall lower number of staff employed.

“Ultimately, businesses, including restaurants, will be required to evolve. Prices, staffing levels, business strategies will be examined. For some businesses this activity will be a blessing and for some others it may be the worst and result in closure.

“Overall it is a good thing, and adjustments plus considerations will be required. For our group of companies, we have already commenced analysis and look forward to announcing a move towards applying these rates well in advance of the date required.”

Stephen Todd, the chief executive officer of the Bermuda Hotel Association, said that members had “strong reservations and concerns” regarding the plan, but declined to comment further until after a meeting with Mr Hayward this week.

The opposition One Bermuda Alliance also expressed concern over “problems” that the minimum wage will produce, and questioned the timing of the announcement.

Jarion Richardson, the Shadow Minister of Labour, said: “This is a complex issue when the economy is going well. It’s an incredibly difficult issue when the economy is as bad as it is today.

“We’re concerned that there are considerable problems with the course of action that the Government is taking.

“The first problem is the lack of data. The last labour survey was conducted in 2019 and published in 2020.

“The issue here is to ensure that remuneration levels are maintained at levels where people can afford basic necessities to support themselves.

“Where is the data to address this? How many jobs are impacted?

“We don’t think this is going to work. Not because we’re against a minimum wage but because it is so complex and we haven’t been given the numbers. It’s like math homework – you can’t just come out with a number, you have to show the equations, the workings out, how you got there.”

Mr Richardson said that small businesses would more likely be affected by the minimum wage rather than larger corporations.

He said: “Are they going to be protected? What is strength of economy? Will it be able to provide for increased costs? What will the impact be on the wider economy?”

Mr Richardson also highlighted concerns raised last year by Wage Commission members Robert Stubbs and Chris Furbert.

Mr Richardson said: “According to Mr Stubbs, the minimum wage report was not an accurate reflection of the commission’s deliberations. Have those concerns been addressed?”