JCC wants minimum wage determined by demand and supply

WESTERN BUREAU:

THE JAMAICA Chamber of Commerce (JCC) says Government should end the age-old practice of setting the rates for minimum wage and instead allow wages to be determined by the demand for labour under the free-market system.

The free market is an economic system based on supply and demand, with little or no government control. It is a summary description of all voluntary exchanges that take place in a given economic environment.

“We don’t believe that the Government must interfere with the free-market system,” JCC President Ian Neita, said. “We believe the free market needs to set rates. It’s important because, once you start to interfere with businesses by telling them what they need to pay or what they need to charge, you are disrupting the flow of competition.

“You are creating a false economy by not allowing the market to determine demand and supply,” he added.

“When the Government starts to interfere with businesses and dictating what must be paid, they are interfering with the free market.”

Neita further argued that the Government does not have a good understanding of what businesses can afford at the micro level, making it difficult for them to determine the rate, saying instead they should focus on creating the ideal environment for businesses to grow and thrive.

“If businesses grow, and new businesses are formed and they begin to employ, investors will have to compete for labour, which will result in more improved wages far beyond the measly amount being offered presently,” said Neita.

The country’s minimum wage is $7,000 per week, which means that this is the least amount that can be paid for a 40-hour workweek.

However, the JCC boss was quick to acknowledge that it could prove difficult for the Government to end its almost 60-year practice, citing political and social implications.

In supporting his claim, Neita argued that, if wages are allowed to be derived by demand and supply, in the case where there is an abundance of lawyers, fees would eventually reduce, while a shortage forces the client to pay more.

“Once you start to get involved in setting wages, you are interfering with employment, because a company has a finite amount to spend on labour and, if they say you have to pay more, you may end up having to employ less and you disrupt the whole dynamic of a free-market system,” Neita explained. “But the cost of underpaying your employees is extremely high. You might think you are saving money, but you are fostering low productivity.”

The year 2021 ended with an inflation rate at 9.1 per cent, forcing Jamaicans to dig deeper to purchase basic food items.

Since the start of the week, baking flour has increased by six per cent, while chicken price has climbed by 10 per cent.

Moses Chybar, president of the Westmoreland Chamber of Commerce and Industry, said minimum wage must be increased to a liveable rate to allow low-income earners to survive.

“Nobody can live off $7,000 per week, the cost of living is very high now,” Chybar said. “Every human has a right to the basic things in life and the minimum wage, as it is, is insufficient.

“I suppose there would be some persons who say they can’t afford to pay more, but I would say to them that we can’t afford not to pay, because a hungry man is an angry man.”