Raphael John-Lall

The de­bate be­tween the vi­a­bil­i­ty of a min­i­mum wage and a liv­ing wage, that is tak­ing place glob­al­ly, is al­so en­gag­ing dis­cus­sions in T&T.

In In­dia, the world’s fifth largest econ­o­my, which is poised to over­take both Ger­many’s and Japan’s economies in size over the next decade, is con­sid­er­ing the pos­si­bil­i­ty of in­tro­duc­ing a “liv­ing wage.”

In­dia could shift to the liv­ing wage sys­tem by 2025 from the cur­rent min­i­mum wage norm, with the gov­ern­ment seek­ing con­sul­ta­tions with the In­ter­na­tion­al Labour Or­ga­ni­za­tion (ILO) to de­vel­op a frame­work to im­ple­ment the new norm, ac­cord­ing to a re­port by the Eco­nom­ic Times.

Ac­cord­ing to an ar­ti­cle dat­ed April 5, In­di­an news web­site news18.com which did an analy­sis of the top­ic, ex­plained that the liv­ing wage is the­o­ret­i­cal­ly de­scribed as an in­come lev­el that al­lows in­di­vid­u­als or house­holds to af­ford min­i­mum ad­e­quate shel­ter, food, and oth­er ba­sic ne­ces­si­ties.

A min­i­mum wage rate, in con­trast, is the low­est amount of re­mu­ner­a­tion re­quired to be paid by law to an em­ploy­ee by an em­ploy­er for work per­formed dur­ing a giv­en pe­ri­od.

“Econ­o­mists sug­gest that wages should be enough to en­sure that no more than 30 per cent of this in­come gets spent on hous­ing. The ILO con­sid­ers the coun­try’s cir­cum­stances and the work per­formed dur­ing nor­mal hours to es­ti­mate liv­ing wage rate,” the ar­ti­cle stat­ed.

Trade union­ists in T&T have tra­di­tion­al­ly ar­gued that the min­i­mum wage, and even high­er pay grades, is not suf­fi­cient for the work­ing class to sur­vive while econ­o­mists and pol­i­cy­mak­ers in the Gov­ern­ment have said em­ploy­ers can on­ly pay what they can af­ford.

Econ­o­mist Dr Ronald Ramkissoon who weighed in on the de­bate, told the Sun­day Busi­ness Guardian that what­ev­er the size of the econ­o­my or the pop­u­la­tion of any coun­try, every­one should live a de­cent life, where there are op­por­tu­ni­ties with good jobs and an in­come to sup­port liv­ing stan­dards.

“Whether you call it a ‘liv­ing wage’ or a ‘min­i­mum wage,’ there are many is­sues tied up in there. Peo­ple use dif­fer­ent de­f­i­n­i­tions. I would say every cit­i­zen in T&T should earn a good in­come, mean­ing one that af­fords them the ba­sic ne­ces­si­ties in life. But to do that there must be an econ­o­my struc­tured in such a way to al­low that. You can­not pay wages or prof­its to in­di­vid­u­als or com­pa­nies that are be­ing propped up ar­ti­fi­cial­ly that are not ex­port­ing. That de­pends on sub­si­dies.”

But Ramkissoon not­ed that if the Gov­ern­ment and em­ploy­ers in the pri­vate sec­tor at­tempt to pay wages that are not sus­tain­able, this will re­sult in “failed com­pa­nies” es­pe­cial­ly Small and Medi­um Sized En­ter­pris­es (SME’s).

“You will have Gov­ern­ments hav­ing to bor­row on the in­ter­na­tion­al mar­ket to pay wages. Will that make sense? That is not sus­tain­able. We have got to make sure that we have an econ­o­my and that work­ers would want to know they are work­ing for a com­pa­ny or a gov­ern­ment that is sus­tain­able. The one way to be sus­tain­able in a small, open econ­o­my like T&T is to be a net for­eign ex­change earn­er. It has to be an ef­fi­cient, well-run, ex­port-ori­ent­ed com­pa­ny.”

Liv­ing wage nec­es­sary

As­sis­tant Gen­er­al Sec­re­tary of the Joint Trade Union Move­ment, Trevor John­son who has al­so lec­tured in trade union stud­ies at the Cipri­ani Col­lege of Labour and Co-op­er­a­tive Stud­ies, said the trade union move­ment in T&T has been ad­vo­cat­ing for a “liv­ing wage” as op­posed to a “min­i­mum wage” for at least two decades now.

“The con­cept of a min­i­mum wage nev­er guar­an­tees a work­er be­ing able to meet their ba­sic needs. These in­clude food, cloth­ing, shel­ter (rent), trans­porta­tion, ba­sic med­ical sup­plies and now com­pul­so­ry util­i­ties (elec­tric­i­ty, wa­ter rates, and in­ter­net). You can for­get about a mort­gage or own­ing a house if you are a min­i­mum wage earn­er.”

He ar­gued that no work­er, giv­en the chal­lenges of T&T’s econ­o­my, can sur­vive on a min­i­mum wage.

“A min­i­mum wage earn­er who has a house­hold of two, three or four,even if there is an­oth­er min­i­mum wage in­come, is ba­si­cal­ly liv­ing ‘hand to mouth’ to use a lo­cal term. By the time they pay their rent and get some gro­ceries and man­age to pay a few util­i­ty bills their salary is gen­er­al­ly de­plet­ed and the on­ly way one can sur­vive in such cir­cum­stances is with a side hus­tle.”

He said this was de­pict­ed in a re­cent sur­vey through­out the Caribbean, where the heads of many low-in­come house­holds spoke of the need to sup­ple­ment their in­come by some sort of eco­nom­ic ac­tiv­i­ty (sales of sundry items) or home-made del­i­ca­cies of some sort.

Be­cause the study has not been pub­lished as yet, John­son de­clined to give more de­tails at this time, but he did say it was un­der­tak­en by one of the Caribbean re­gion’s lead­ing aca­d­e­m­ic in­sti­tu­tions which spe­cialis­es in in­dus­tri­al re­la­tions stud­ies.

He al­so said that the re­al­i­ty that must be faced is that a liv­ing wage must in­cor­po­rate the abil­i­ty of an in­di­vid­ual or a house­hold to meet all of their ba­sic and es­sen­tial ex­pens­es and be able to have some lev­el of sav­ings to build to­wards their first-lev­el dreams in time such as ow­ing a starter home.

“A liv­ing wage is what any gov­ern­ment must be aim­ing to­wards for the av­er­age cit­i­zen and de­cent work (not month-to-month con­tracts etc.) must be part of the fa­cil­i­ta­tion of such an ap­proach. Ul­ti­mate­ly, the hopes and dreams of a pop­u­la­tion is best re­alised when de­cent work and a liv­ing wage be­comes an ex­pec­ta­tion that be­comes a part of the spec­trum of so­cial jus­tice.”

ILO’S de­f­i­n­i­tion

John­son point­ed out that a de­ci­sion by the ILO’s Gov­ern­ing Body opens the way for new work by the ILO on es­ti­mat­ing and op­er­a­tional­is­ing liv­ing wages, and on en­gag­ing with liv­ing wage ini­tia­tives. He point­ed out that this de­ci­sion by the ILO is an en­dorse­ment of what has long been ad­vo­cat­ed by labour.

He al­so said that the ILO po­si­tion, reached dur­ing a meet­ing of ex­perts on wage poli­cies, in Feb­ru­ary, was en­dorsed by the ILO’s Gov­ern­ing Body at their ses­sion in March of this year.

The ILO’s Feb­ru­ary re­port point­ed to the pre­am­ble of the ILO Con­sti­tu­tion which calls for the pro­vi­sion of “an ad­e­quate liv­ing wage” and that the De­c­la­ra­tion of Philadel­phia (1944) calls on the ILO to pro­mote “poli­cies in re­gard to wages and earn­ings, hours and oth­er con­di­tions of work cal­cu­lat­ed to en­sure a just share of the fruits of progress to all, and a min­i­mum liv­ing wage to all em­ployed and in need of such pro­tec­tion.”

Al­so, the ILO in its re­port in Feb­ru­ary out­lined that in line with the ILO con­sti­tu­tion and the Philadel­phia De­c­la­ra­tion, and con­sis­tent with the spir­it of the Uni­ver­sal De­c­la­ra­tion of Hu­man Rights (UDHR), the ILO de­notes that the con­cept of the liv­ing wage is, “The wage lev­el that is nec­es­sary to af­ford a de­cent stan­dard of liv­ing for work­ers and their fam­i­lies, tak­ing in­to ac­count the coun­try cir­cum­stances and cal­cu­lat­ed for the work per­formed dur­ing the nor­mal hours of work.”

The ILO re­port fur­ther stat­ed that the liv­ing wage es­ti­mates trans­late the liv­ing wage con­cept in­to a na­tion­al mon­e­tary val­ue.

The ILO states that these es­ti­mates can con­tribute to and in­form an ev­i­dence-based so­cial di­a­logue and for wage set­ting. liv­ing wage method­olo­gies should fol­low a num­ber of prin­ci­ples:

(a) Es­ti­ma­tion of the needs of work­ers and their fam­i­lies through ev­i­dence-based method­olo­gies;

(b) Con­sul­ta­tion with rep­re­sen­ta­tive em­ploy­ers’ and work­ers’ or­ga­ni­za­tions on liv­ing wage es­ti­mates and in­volve­ment of so­cial part­ners through­out their de­vel­op­ment, with a view to en­sur­ing na­tion­al and/or lo­cal own­er­ship;

(c) Trans­paren­cy, in­clud­ing de­tails with re­gard to da­ta sources and meth­ods of pro­cess­ing, that are open to scruti­ny, are com­pre­hen­sive and replic­a­ble.