The Solomon Islands Chamber of Commerce and Industry (SICCI), as the peak body representing private sector in the country, is calling for a reduction of tariff and utility costs following the one hundred percent increase of the country’s legal minimum wage.
This includes a review to reduce electricity tariffs, port tariffs and in Information and Communications Technology (ICT).
SICCI believes that this will help support businesses with meeting the new increased costs and help foster confidence which is vital for continued investment and expansion plans.
“While Coral Sea Cable and Tina River Hydro projects are ongoing, we need to see some reductions in the interim until these two projects come online for the full cost saving benefits,” a SICCI statement said.
With the increase in the legal minimum wage, SICCI reiterated that increasing PAYE thresholds will also ensure that a broader spectrum of the workers can take home more pay.
“Increasing the minimum wage impacts positively only on minimum wage earners’
“PAYE needs to be reviewed and the thresholds need to be increased so that employees can earn a decent living,” SICCI Chair, Mr Jay Bartlett, said.
SICCI is also calling on the Government to stagger the implementation of the new minimum wage over a number of years, rather than a 100% increase to companies at immediate effect.
This is to give companies time to deal with a 100% increase in wages of employers on minimum wage and adjust operational budgets.
“Without a staggered approach, businesses are more likely to pass on the increased costs to their customers or more drastically, lay off staff or go through natural attrition where workers scheduled for exit are not replaced. Companies could also cut back on extra staff benefits that may affect welfare of all its employees, not just the workers on minimum wage,” SICCI Chief Executive Officer (CEO), Ms Atenasi Ata, said.
“This increase affects too student apprentices who are attached to companies as part of their certificate courses. This group could be the first ones to be highlighted for budget implication, which leads to a bigger issue of quality attachment experiences which only big companies can provide. This affects our youth who want to enter the workforce valued as skilled workers.”
Ms Ata notes in addition that SMEs account for 70% of SICCI’s membership and should also warrant special thought.
“SMEs are important as they provide services and goods that reaches throughout the country and in some cases provide employment that spans the informal sector. SMEs are also those who provide first time work experience for young people during school holidays,” said CEO Ata.
“Now they are faced with critical decisions. A higher minimum wage rate will mean an increase in the cost of their services. This can drive customers away. We heard from security service providers who asked that the increase should be in the range of $5.00 to $6.50 per hour. Now they may seriously consider downsizing or shutting down if they are not able to break-even.
“One thing that is missing from the discussions too is how the year has been for businesses with the NGE and the Voter Registration prior to that with high worker mobility experienced. Straight after that Honiara businesses went through a week during the election of the PM where they were either in shut-down mode or operated on skeletal staffing. It has been a tough time for businesses,” she said.
Following the announcement, on 12th August, a SICCI delegation presented a case for a staggered approach to help soften the impact on companies.
This was approved in-principle by the Minister for Commerce, stating that it would be a case-by-case approach and requiring provision of financial records of the company concerned.