Vanuatu government eyes minimum wage increase

The Vanuatu Chamber of Commerce and Industry (VCCI) is against the decision to have private sector employees receive a severance pay at the rate of two months’ salary, against the number of years in service.

The intention to make Vanuatu’s private sector employees’ severance pay two months’ salary, similar to the government employees, was recently revealed in Parliament by the minister responsible. 

Vanuatu Deputy Prime Minister (DPM) and Minister of Internal Affairs, Ishmael Kalsakau, also announced the intention to increase the minimum wage.

While these announcements will directly benefit workers, President of VCCI, Antoine Boudier said raising private sector’s severance payment could result in employers reducing the number of workers and closure of businesses. 

He stressed that raising the severance pay will also encourage an increase in the price of goods and services in the country.

Boudier said instead of increasing the severance payment, the government should consider increasing the employers’ monthly contribution to the Vanuatu National Provident Fund (VNPF).

Currently, both employers and employees are contributing 4% per month.

Boudier said raising the employers’ VNPF contribution is more sustainable for the members, instead of burdening employers with a severance payment raise.

He said these decisions cannot just happen overnight, there has to be consultations and be decided by the Tripartite Labour Advisory Committee (TLAC). 

Meanwhile, the Vanuatu National Workers Union (VNWU) which has been advocating for workers’ safety and rights, has welcomed the announcements.

VNWU’s National Secretary, Rocky Bule, has argued that the current VT220 per (US$1.87) hour minimum wage is too low compared to the current standard of living.

He said reviewing the minimum wage was an agenda in TLAC’s last meeting held at the end of 2021. The majority of the members supported the agenda, only the VCCI was against the proposal, he conveyed.

Bule said they have not discussed private sector severance payment, but it could be in the next TLAC meeting. 

“In my opinion, many businesses have existed many years before the COVID-19 pandemic in 2019. They have been successfully making millions of vatu over the past years thus, should not be complaining,” he said.

“I have been having talks with many employers. I think they can afford the severance payment increase.”

According to DPM Kalsakau, the raise in minimum wage and the private sector severance payment increase to two months’ salary should be effective by the end of this year.