Palau minimum wage to increase to US$4.25 in October 

Surangel Whipps Jr. (Photo: Office of the President, Palau)

Palau’s minimum wage will rise from US$3.50 to US$4.25 per hour, effective 01 October 2024. 

The increase was passed as part of the Fiscal Year (FY) 2024 Supplemental Budget bill, signed into law by President Surangel Whipps Jr on 10 June 2024. 

The new minimum wage will apply to all employment contracts established on or after October 1st. The passage marks a victory for the Whipps administration, which has advocated for a minimum wage increase since taking office. 

“The people need to earn enough money to live,” President Whipps said in a statement. 

However, concerns have been raised about the impact on businesses.  

Moses Uludong, speaking at a press conference, expressed fears that the increase would hurt small and medium-sized businesses (SMBs) and further inflate the cost of goods and services. 

President Whipps dismissed these concerns, calling them a “tiredless excuse.” 

He argued that businesses “will adjust” to the wage increase by becoming more efficient. Whipps pointed to past minimum wage hikes, stating that no companies had closed down as a direct result. 

The increase, according to Whipps, will also benefit the Social Security Administration by narrowing the gap between contributions and benefit payments. Additionally, it will generate more government revenue to support social programmes. 

A local mid-sized company owner expressed concerns about the cumulative effect of rising costs. The owner cited high utility bills due to the Palau Goods and Services Tax (PGST) and general inflation, which have already led to declining sales as customers tighten their budgets. The owner emphasized the struggles businesses are facing as they emerge from the COVID-19 pandemic. 

In a recent talk show appearance, former President Johnson Toribiong echoed concerns about inflation.  

He argued that raising the minimum wage would also increase the cost of goods and services, potentially negating the benefit of the wage hike.  

Toribiong suggested the government should explore ways to reduce utility costs, allowing people to save more money.