Minister of Public Health, Social Development and Labor VSA Omar Ottley in a rather terse release issued on Monday stated his intention to index the minimum wage for 2017, 2018, 2019 and 2021. He mentioned having received advice from the Social Economic Council SER and signing off on the increase.
Exactly by how much was not announced, but as no adjustments to the consumer price index (CPI) were apparently made all that time, it regards a cumulative – be it not retroactive – and therefore significant hike. On the other hand, the minimum hourly rate was already low compared to the cost of living on the island even before that.
It is consequently hard to argue against raising the smallest legal salary, despite legitimate concern about the local tourism economy still hurting from the coronavirus-related crisis. Many businesses continue to struggle, with the high season ending and another difficult summer ahead.
The recovery is well underway, although due to higher inflation the Central Bank recently downgraded this year’s expected gross domestic product (GDP) growth by 0.3 per cent. While it is still forecast at 14.3 per cent, keep in mind that there was a decline of more than 20 per cent during the height of the pandemic in 2020.
The average occupancies at hotels and timeshare resorts were respectively 71 and 73 per cent as of February. However, this was based on 3,217 rooms, about 81 per cent of the pre-Hurricane Irma inventory.
Stayover arrivals last year went up by 134 per cent compared to 2020, but remained at 78 per cent of their 2019 level. The number of cruise ship passengers totalled 47 per cent less than the year before and a 14 per cent recovery from 2019.
There is thus a long way to go under difficult circumstances, with the full impact of the war in Europe on prices yet to be felt. The latter can also be seen as additional reason to protect the lowest income earners.
Truth be told, this step is way overdue and no doubt a necessity for those involved.
