Tue | Jan 19, 2021

Job cuts considered as minimum wage increases

Published:Monday | January 6, 2014 | 12:00 AM

Sheldon Williams, Staff Reporter

The increase in minimum wage takes effect today, amid concerns about the preparedness of employers to embrace the change and the impact of the payout on their budgets.

Wages have increased from $5,000 to $5,600 for a 40-hour work week. The minimum wage for industrial security guards has also increased from $7,320.40 to $8,198.80 for a 40-hour week.

Commander George Overton, president of the Jamaica Society for Industrial Security and director of operations at The Guardsman Group, yesterday reiterated his dissatisfaction at the short interval given to effect the increase since the announcement from Labour Minister Derrick Kellier in Parliament on December 17.

"What we are extremely disappointed about is the amount of notice the minister has given for the implementation," Overton said. "The industry and the ministry have had sort of a gentleman's agreement that any notification for this change would come with a minimum 30-day notification period. The minister has chosen to throw that through the window."

Overton said security companies were now faced with tough decisions and negotiations as some clients have expressed a desire to reduce the number of guards being requested while others have to maintain their full complement.

"There are going to be a number of responses from various market sectors. There are groups who cannot do without it by law and those that can. And those who can will make the adjustment to cut the numbers and those who can't will be very hard in their negotiations," Overton said.

Professor Rosalea Hamilton, president of the Micro, Small and Medium-sized Enterprises Alliance, said the external and internal contexts of small businesses would determine how well they absorb the increase.

"Increase in wages will mean for some businesses they either have to lay off or they maybe have to put persons on part time or they have to make other adjustments in order to absorb the higher costs so they can still be viable and competitive. So any higher costs to some small businesses will imply adjustments in order to survive. And that means strategies to improve revenues or strategies to cut cost," Hamilton explained.

External variables she highlighted were the economic malaise and limited purchasing power.

"What happened at Christmas was illustrative of that, because I have never seen so many deals and sale bargains at Christmas before to lure consumers," she noted.

"The internal challenges that businesses face, whether it be electricity costs and wage bills and other fixed overheads that they can't change easily ... to that extent, it is more difficult for them to absorb additional costs because firms now are looking to cut costs,"she added.