Chamber reacts to minimum wage increase

Following the increase in the minimum wage as announced in the annual budget in July last year, the Chamber feels compelled to respond to some of the comments by Unite the Union over this month’s increase.

When the Chief Minister made the announcement last year of progressive increases in the minimum wage over a 3-year period, no-one could have foreseen the dramatic change in the economic landscape that has come to pass since March this year.  Indeed, the Chamber wrote to the Chief Minister in July highlighting that if the increase went ahead, it would “probably result in job losses or possible worse outcomes for certain companies” and  asked him to postpone this year’s increase due to the current economic crisis.  Unfortunately, we never received an acknowledgment or a response to our representations. We urge Government not to ignore our representions which are made in good faith and to be as proactive in engaging with the Chamber as they are with the Union.

Unite the Union continues to adopt an ostrich-like attitude and denies all the talk about doomsday predictions of job losses caused by increases in the minimum wage, saying that the opposite has been true. That may have been true in the past.  Sadly, not any more.

It cannot have escaped the Union’s notice that the Government has spent tens of millions of pounds of taxpayer’s money since March trying to reduce the burden of fixed costs for hundreds of local employers who have seen a near collapse in their revenues. Despite these measures, we have already seen some businesses in Gibraltar and abroad, both big and small, announce job cuts as a result of the dramatic loss of business they are experiencing. The situation does not look like it will get better any time soon and will, unfortunately, result in even more businesses having to cut jobs or having to close down completely.

How does it help these businesses which are experiencing severe economic hardship to add further to their costs when they are currently operating at a fraction of their capacity?

Yes, everybody would like to be paid more but this can only be accomplished in the private sector by businesses operating in a buoyant economy. Since March this year, very few companies in Gibraltar have managed to achieve this.

No employer wants to lay off staff if they can possibly avoid it.  But when the viability of a company is at stake, limited job cuts may be the only way to keep going.

Unite leaders need to take stock of the situation, be responsible and be careful that their push for ever-higher wages and other benefits does not come at the cost of people’s jobs and livelihoods. ENDS