Minimum wage rise increases private sector burden: Vanuatu Opposition

Aerial view of Port Vila, Vanuatu

The newly introduced VT300 (US$2.49) minimum wage has increased the burden of the private sector, especially the small medium sized enterprises.

This is one of the arguments that the Opposition bloc has cited in the no-confidence motion against the Prime Minister (PM), Ishmael Kalsakau.

The Opposition bloc said PM Kalsakau policies are undermining private sector growth.

They stressed that “the minimum wage rise is already resulting in business laying off staff which contributes to more unemployment at a time when cost of living is escalating.

“Vanuatu will likely lose more of its productive workforce to the regional seasonal work programmes.”

Opposition said the government has failed to come up with policies to provide incentives to support the private sector to mitigate the consequences of the global pandemic.

“There is no other time that is most critical and crucial for government support which with the directive of the PM to cease stimulus and recovery assistance shows no consideration of the hardship and burdens faced by this sector to recover,” cited the Opposition.

The Daily Post could not get the PM to respond however he revealed in his independence address to the nation that he wants to see the full implementation of the minimum wage order effective starting early August

In a press conference to announce the gazetting of the order, Minister of Internal Affairs, Rich Tchamako Mahe, asked the private sector to accept the increase as both the private sector and government will benefit from it.

“Vanuatu as a tax haven country has provided so many benefits for business operations. Businesses do not pay taxes that other non-tax haven countries are paying. Therefore, it’s only proper that minimum wage is increased to maximise the profit benefits that have been accruing over man years but importantly, distribute wealth and stimulate economic growth,” he stated.

“In normal times the government has not interfered with the market, however this challenging times of high inflation warrants its intervention to stimulate the economy.

“Increasing minimum wage has been a holistic approach that will benefit all sectors and ensures that businesses are not affected significantly hence the call for the Price Control to actively engage in the pricing of goods and services during the implementation of the new increase.

“The government is of the view that investing in the welfare and wellbeing of workers will increase productivity for business, as businesses rely heavily on workforce for sustainability and growth.”

Minister Mahe said the VT300 (US$2.49) minimum wage increase is a relief to those living in hardship and unable to save money due to challenges of high prices. He assured that the ministry will ramp up its enforcement functions to ensure the minimum wage is implemented.