PNG Chamber of Commerce says wage rise could cost thousands of jobs
Updated
The Papua New Guinea Chamber of Commerce and Industry says a planned increase in the minimum wage could cost thousands of jobs. The Minimum Wages Board has recommeded a pay rise be phased-in over 12 months, increasing the minumum wage from 74 Kina a fortnight to 201 Kina. That's around 114 Australian dollars. The Chamber of Commerce says implementation of such a large pay rise would be a disaster for the country. Chamber President John Leahy says this based on the results of a survey sent to companies, business organisations and employer groups across PNG.
presenter: Jemima Garrett
Speaker: John Leahy, President of the Papua New Guinea Chamber of Commerce and Industry
- Listen:
- Windows Media
LEAHY: What we got was a number of responses that said that in their particular industries or particular organisations there would be job losses. The numbers used were 150 in one case, several thousand potentially in terms of an opportunity wouldn't be layoffs, but it's a project that was threatened if the wage increases went through as proposed, so that's not people being laid off, that's just people who would otherwise be employed. Others would say there might be 50 here, somebody said 20 there. It's very difficult to get any accurate figure, but in PNG terms those sort of numbers add up.
GARRETT: In fact they are very significant indeed, aren't they?
LEAHY: Well they are really. I mean the employment base is really quite small and that is sort of the point we are making. People who are employed in Papua New Guinea are really, a very small proportion of the total. I mean most people live in subsistent lives and for many of them that is fine, but nevertheless, people do have aspirations to engage in formal cash economy with paid employment and clearly the higher the wage rates or minimum wage rates go up, the less people can make that transition from the subsistent lifestyle to the paid employment world.
GARRETT: This is the first minimum wage rise since 1992. It's clearly come at a bad time with the international financial crisis taking a toll. But also after waiting so long, there must be some room for pay rises. What pay rise would the Chamber of Commerce be willing to countenance?
LEAHY: Oh we were anticipating something about half as much as came out. So what we're saying is we do acknowledge that I think all of our members would acknowledge some increases is probably warranted. There probably is a need for some sort of floor below which employers can't go. So around about half of what was proposed, what is proposed was roughly what we were anticipating what we had sort of made representations through the Employers Federation to achieve.
If they want to stick with the current level it's proposed, we're suggesting that that should be phased in over several years, to give industry time to adjust.
GARRETT: So just how many years would you like to see it phased in over?
LEAHY: Oh, we are saying over four years.
GARRETT: And have you spoken to government about that and what's the reaction been?
LEAHY: No, well I haven't personally. There's going to be further representations made among some of the other industry bodies here, particularly the Manufacturers Councils very concerned about what's proposed and we will be getting together on Friday, if not sooner, to sort of work out a bit of a game plan with some perhaps joint representations being made to government.
I am proposing that we work in with the others, rather us go on our own on this.
GARRETT: Now the Minimum Wages Board has spent a lot of time and is the independent arbiter in this case. Business, of course, is not renowned for wanting pay rises. Why shouldn't we stick to the independent arbiter's decision?
LEAHY: Well, I think what we're seeing is a little bit of a geographical split here. Places like Port Moresby and Lae, market forces have essentially dictated that the wages paid to people are greater and in many cases significantly greater than the minimum wage. So for those people who are operating in those particular sectors of the economy, then this is a bit of yawn really. As they say, they are already paying more than that, so what's the problem. What we are seeing and what we saw in our survey was more of a phenomenon whereby the manufacturing sector, particularly if they are operating in isolated areas or in the agricultural sector will be significantly impacted by this,
GARRETT: Are you willing to pay the full pay rise if it is phased in over four years?
LEAHY: Oh, well that would be a matter for individual employers. We don't have any sort of control over them, but what we're hearing from several of the larger ones is that they could adjust to such an arrangement.
