Position Paper On Progressing Minimum Wage
Minister of Economy and Labour Jason Hayward introduced the Position Paper on Progressing Bermuda’s Minimum Hourly Wage.
Speaking in the House of Assembly, the Minister said, “The first statutory minimum hourly wage rate for Bermuda was established on 1 June 2023 by the Employment [Minimum Hourly Wage] Order 2023, which set the minimum hourly wage rate for employees within Bermuda at the rate of $16.40.
“The purpose of the Position Paper is to outline the Government’s commitment to the progression of the minimum hourly wage rate beyond the current $16.40 and to propose a framework in which this can be achieved.
“The Government supports the Position Paper’s proposal to progress the statutory minimum hourly wage rate every two years by the annual average rate of inflation, utilizing the Consumer Price Index [the “CPI”] as the indicative measure, capped at 2.5% per year. Using this methodology, the newly proposed statutory minimum wage rate to take effect in 2025 will be between $16.81 and $17.23.”
The Minister’s full statement follows below:
Good morning Mr. Speaker, I am pleased to introduce in the Honourable House today, the Position Paper on Progressing Bermuda’s Minimum Hourly Wage.
Mr. Speaker, as the Members of this Honourable House may recall, the first statutory minimum hourly wage rate for Bermuda was established on 1 June 2023 by the Employment [Minimum Hourly Wage] Order 2023, which set the minimum hourly wage rate for employees within Bermuda at the rate of $16.40.
Mr Speaker, the purpose of the Position Paper is to outline the Government’s commitment to the progression of the minimum hourly wage rate beyond the current $16.40 and to propose a framework in which this can be achieved.
Mr Speaker, while the establishment of a minimum hourly wage in Bermuda was a significant step towards ensuring fair compensation for employees and the reduction of income equality, a further step needs to be taken to assure that employees can maintain a reasonable standard of living and their purchasing power is not diminished while the costs of everyday goods and services rise.
Mr Speaker, the Government supports the Position Paper’s proposal to progress the statutory minimum hourly wage rate every two years by the annual average rate of inflation, utilizing the Consumer Price Index [the “CPI”] as the indicative measure, capped at 2.5% per year. Using this methodology, the newly proposed statutory minimum wage rate to take effect in 2025 will be between $16.81 and $17.23.
Mr Speaker, the CPI is often used as a benchmark for adjusting minimum hourly wages as it tracks the average change over time in the prices paid by consumers for a market basket of consumer goods and services, which includes but is not limited to essential items such as food, housing, clothing, transportation, and healthcare. Since the minimum hourly wage is intended to help workers afford basic living expenses, by linking the minimum hourly wage increases to the CPI, albeit “capped”, the minimum hourly wage can be adjusted to better keep pace with inflation.
Mr Speaker, the Position Paper details the Government’s intention to enhance the wage floor over time, why the CPI is the most appropriate method to utilise to progress the statutory minimum hourly wage rate, those most likely to be impacted by the progression of the statutory minimum hourly wage rate and the role that the Wage Commission and the Government will play in the monitoring and evaluation of the continued progression of the statutory minimum hourly wage rate in Bermuda.
Mr Speaker, it should be noted that in its 2021 report on the proposed minimum hourly wage rate, the Wage Commission posited that “As there is an employment census, counting the number of jobs and the rate of pay for those jobs annually, the minimum wage can be reviewed annually.” Additionally, the International Labour Organization’s 2021 Global Wage Report highlights that over half of the countries with statutory minimum wages adjusted their wages at least every two years.
Mr Speaker, when drafting the Position Paper, the views of the Wage Commission were sought and considered and agreement on the intention to progress the minimum hourly wage rate by linking it with the CPI was reached.
Mr Speaker, as the Government continues to strengthen the protections afforded to employees within Bermuda, adopting a transparent and consultative process for implementing and monitoring the minimum hourly wage adjustments will foster inclusivity and avoid the erosion of the minimum hourly wage rate and to allow employees the opportunity to maintain income equality.
Thank you Mr. Speaker.
The Position Paper on Progressing Bermuda’s Minimum Hourly Wage follows below [PDF here]:
Forgot to add, that in addition to the 2.5 % per year, the payroll tax an pension cost will increase too, so inlation will be closer to 3% a year.way to go minister with zero economic understanding, you just made Bermudabmore expensive to live in.
“progress the statutory minimum hourly wage rate every two years by the annual average rate of inflation, utilizing the Consumer Price Index [the “CPI”] as the indicative measure, capped at 2.5% per year.”
This is interesting.
My first comment is that the pubic has not been told the true rate of price inflation in Bermuda for years.
My second comment is that capping the increase in minimum wage at 2.5% per year means that workers on minimum wage will suffer a reduction in wages in real terms.
In 2023, the average rate of price inflation in Bermuda is reported as 4.1%.