The Vanuatu Chamber of Commerce and Industry (VCCI) is greatly disappointed to learn that despite all concerted efforts to delay the proposed 36% increase to Vanuatu’s minimum wage, the Government is intent on enacting the increase from 1 June 2023.
“The VCCI has attempted to work cooperatively in good faith with the Vanuatu Government, including the Department of Labour, to ensure a balanced approach to any increase to Vanuatu’s minimum wage so that will not adversely affect Vanuatu’s economy and compound cost-of-living pressures,” said Antoine Boudier, the VCCI President.
“We are deeply concerned about how this decision has come about without any private sector consultation and leaving inadequate time to prepare for its implementation and call on the Government to not proceed with gazetting of the Order. ”
The VCCI has also reached out to the Department of Labour (DoL) to urgently provide legal advice and practical guidelines on how the private sector is to effectively implement the imminent changes.
Due process not followed
“In recent press statements, the Commissioner of Labour is reported to claim that the increase was supported by Vanuatu’s Tripartite Labour Advisory Council (TLAC). The VCCI corrects this inaccurate statement. The TLAC never approved this wage increase. Due process has not been followed,” said VCCI President Boudier.
VCCI is a key member of the TLAC, a Government advisory group formed via the International Labour Organisation (ILO) in 2011 and mandated to guide Vanuatu’s development of new labour and employment policy. The TLAC’s membership is comprised of equal representation from employers, workers, and the Vanuatu Government’s DoL.
“The VCCI has participated in good faith in the Vanuatu TLAC. In the past, the TLAC has considered and deliberated proposed changes to the Employment law of our country and reached consensus between all parties before the gazetting of any legislative changes that effect the people of this country,” said VCCI President Boudier.
No private sector consultation for wage increase strategy
In June 2022 the DoL under direction of the then Minister for Internal Affairs, was tasked to undertake proper analysis and consultations on what a wage increase strategy could look like.
The DoL met with three department officers representing the Vanuatu National Statistics Office, the Price Control Unit, and the Department of Industry.
“From these three conversations came the so-called ‘consultation report’, available to the public by request to the DoL or VCCI. However, no direct consultations occurred with the private sector on the wage increase strategy,” continues VCCI President Boudier
At the TLAC Board meeting on 16 Dec 2022, the VCCI pushed back on this ‘report’, to request time for proper consultations to take place, while VCCI conducted its own research into providing a three-year implementation strategy for a gradual increase as per ILO best practice.
As minuted at the December TLAC meeting, DoL was mandated to undertake a second national minimum wage consultation in Feb and March 2023 after which, per the TLAC Board meeting minutes, DoL was to “table its consultation report to the TLAC Board”.
“That report was never presented to the TLAC Board, and no consultation was ever undertaken with the Chamber. In fact, since 16 December 2022 the TLAC has not met again,” said VCCI President Boudier.
“An issue so crucial as the minimum wage which directly affects the welfare of the less fortunate in society should follow due process.”
Proposed increase will hit the worse off
When the proposed 36% minimum wage increase from 220VT to 300VT was announced exactly two weeks ago, the VCCI expressed grave concerns about its likely implications not only to businesses but more so to the citizens of this country.
“Two groups of people will be most affected by this poorly considered minimum wage increase proposal. Low-income earners, and unskilled unemployed people will be the ones worse off by this politically driven decision,” said VCCI President Boudier.
VCCI also refutes the Commissioner’s claim that this increase will counter the skills gaps faced currently by businesses across the country, due to skilled workers leaving for seasonal worker programs. Such an increase still does not come close to what can be earned in Australia and New Zealand on an hourly basis. This claim is baseless.
Negative impacts already starting
Two weeks on from the announcement and the negative effects have already begun.
Last week a large employer in town laid off 20 workers as it simply cannot afford the proposed wage increase from 1 June 2023.
Even more telling, yesterday VCCI met with the livestock industry sector who wanted to share their concerns with the Government and outline how the changes will affect the consumer at the retail counter.
This collective of local farmers, who provide all beef to the abattoirs and direct to butcheries, explained that since 2020 border closures, they have been carrying the additional costs of doing business and holding back passing on these costs to consumers.
Vanuatu meat prices will increase from 1 July 2023
The livestock industry sector has been hit hard with increased fuel and utility costs, increased 40% landing duty for imported farming machinery parts and fencing wire, and up to 400% on pre-COVID days for shipping.
The increased costs of doing business for the livestock industry on top of a seemingly 36%, overnight increase on unskilled labour costs means they have no choice but to pass on these increases to the consumer.
“These increases will increase not only the cost of buying meat from our butchers but will also directly affect the costs of food at restaurants, cafes and resorts.”
“In real terms, beef currently sold to the abattoirs and butcheries at 375vt per kilo, will increase to 450vt per kilo. Veal will increase from 450vt per kilo, to 500vt per kilo. Older cows and bullocks will go from 240vt per kilo, to 300vt per kilo,” said VCCI President Boudier.
“The livestock industry has told the Chamber that they are not against an increase to minimum wage, in fact, they support it.”
“What the private sector do not support is the non-consultative way it has been come about, and lack of strategic implementation, with a cliff edge approach which will send shockwaves throughout not only their industry, but all that rely on unskilled labour,” said VCCI President Boudier.
Cost of living set to skyrocket
“We can all agree that the cost of living has gone up, with reports of up to 4% CPI as reported by the Vanuatu National Statistics Office (VNSO) earlier this month for 2022 Q4.”
An increase in the minimum wage will not translate to an increase in buying power of the Ni Vanuatu citizen.
The Chamber strongly advocates for the current Government to let common sense prevail and to not proceed to gazetting of the Order.
The VCCI is willing and available to work on an implementation strategy for a minimum wage increase.
“As presented time and time again, the private sector is not against an increase to the minimum wage and have been working behind the scenes and with the support of the ILO on a proposed approach that allows for collaboration, and more importantly, consensus,” said VCCI President Boudier.
“We ask that the Government looks at how it can lower the costs of living for its people via reforms that benefit its people, while working in conjunction on the development of a business environment conducive to growth and prosperity for all.”