Minimum wage level as a percentage of average earnings P.26/2010 amendment

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A decision made 1 April 2010 regarding: Minimum wage level as a percentage of average earnings P.26/2010 amendment.

Decision Reference: MD-E-2010-0066
Decision Summary Title :	Amendment to P26		Date of Decision Summary:	1 April 2010
Decision Summary Author:	Strategy Development Manager		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	n/a
Written Report Title :	WR P26 Amendment to MW P 19Mar10		Date of Written Report:	22 March 2010
Written Report Author:	Policy Principal		Written Report : Public or Exempt?	Public
Subject: Amendment to P26/2010: Minimum Wage Level as a Percentage of Average Earnings
Decision(s): The Minister approved the proposed amendment to P26/2010: Minimum Wage Level as a Percentage of Average Earnings, to be presented to the States by being lodged ‘au Greffe’ at the earliest opportunity.
Reason(s) for Decision: To enable the Minister’s proposed amendment to P26/2010 to be presented to the States.
Resource Implications: There are no manpower or financial implications.
Action required: Policy Principal to forward the proposed amendment to the States Greffe and request that it be lodged ‘au Greffe’ at the earliest opportunity.
Signature:		Position:
Date Signed:		Date of Decision (If different from Date Signed):

Minimum wage level as a percentage of average earnings P.26/2010 amendment

MINIMUM WAGE AS A PERCENTAGE OF AVERAGE EARNINGS p.26/2010 - AMENDMENT

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Paragraph (A) – after the words “April 2011”, add, “subject to consideration of economic conditions and the impact on competitiveness and employment of the low paid in Jersey”.

REPORT

Whilst it is important that, as an independent body, the Employment Forum feels able to bring forward recommendations regarding the level of minimum wage in Jersey, the objective to gradually increase the minimum wage beyond 40% of weekly average earnings in the future is a goal that is shared by the Minister for Economic Development, the Minister for Social Security and the Employment Forum. The Minister for Social Security, in summing up during the debate on P.211/2009 - eloquently described his position:

“I have made it clear to the Employment Forum that when we are out of recession, they should have the courage to come forward with increases because it is only right and proper that they do so.”

This statement clearly reflects a link between the Forum’s recommendations and the economic conditions that pertain at the time in the Island. Indeed, the Employment (Jersey) Law 2003 requires the Forum to take into account the effect on the economy of Jersey and on competitiveness of any proposed increases in the minimum wage. It is essential that the Forum can continue to give this appropriate weight in making its recommendations, in addition to considering States objectives.

P.26 could be construed as removing both the independence of the Forum to recommend increases to the minimum wage in Jersey and the requirement to pay due regard to prevailing economic conditions. This would be a retrograde step.

Consistent with the requirements of the Employment (Jersey) Law 2003, it was wholly appropriate that the Forum’s decision to return to a minimum wage set at 40% of average weekly earnings was a temporary measure, agreed unanimously by the members, to reflect the current economic situation.

The Forum is an independent body and the States must enable the Forum to react to expert advice provided on the economic climate and to make its recommendations accordingly. The recent example, in which the Forum decided to recommend a return to a minimum wage set at 40% of average weekly earnings illustrates that the Forum needs, and will exercise, flexibility in its approach to achieving a difficult balancing between protecting the earnings of the lower paid in the Island and sustaining employment for the lower paid in our society.

The impact of the minimum wage in Jersey is largest in tourism and agriculture. Both sectors compete with businesses in an increasingly competitive international market place in which sustainability and employment levels are at risk. Jersey’s tourism industry is operating in a highly price sensitive market in which increases to operating costs could have a dramatic impact on the sustainability of the sector and many of the businesses within it. Jersey’s agriculture industry, which is increasingly export driven, is facing similar, if not more intense competitive pressure that cannot withstand significant increases in the underlying cost base.

In making judgements, the Forum needs to be mindful of the prevailing economic conditions and whether those countries have a minimum wage, what level it is at and what changes they may implement in future economic climates. Simply following a formula for minimum wage setting, without reference to economic conditions, competitiveness and employment could make it much harder for the Forum to get the balance right in future between protecting both the wages and the jobs of the low paid.

In summary, it is vital that for both employees and businesses, in consideration of the level of minimum wage in Jersey and to satisfy the requirements of the Employment (Jersey) Law 2003 the Employment Forum must pay regard to the prevailing economic conditions.

There are no manpower or financial implications for the States in this amendment to proposition P.26/2010-