By Alric Lindsay
At the Fourth Meeting of the 2023-2024 Session of the Parliament of the Cayman Islands today, Monday, July 22, 2024, Labour Minister Dwayne Seymour confirmed that “effective 1 July 2025, employees of the hospitality and service industry would be the only sector to receive an increase in the minimum wage of $7 per hour.” He added, “All other sectors will remain at the current minimum wage of $6 per hour” until the Minimum Wage Advisory Committee is reactivated to investigate other sectors.
Expounding on decisions made for the hospitality and service industry, Seymour said, “It was also decided that the current structure for this sector, whereby 25% of the minimum wage can be made by up by gratuities, will be removed as of the 1 July 2025.”
Attempting to explain why the minimum wage increase was not applied to all other sectors, the Labour Minister said: “Members felt that we couldn’t just do a blanket minimum wage across all sectors because of the economic impact that it may have on Caymanians who may not see an increase in their own salaries.”
In addition to the impact on Caymanians, he indicated, but did not explain, that there were also “general economic concerns.”
Such general economic concerns may include those raised in the Chamber of Commerce report attached to the Minimum Wage Advisory Committee Final Report dated October 2023.
The Report said:
The Chamber of Commerce is submitting this minority position and is requesting that it be incorporated in the final report.
We have been informed by our representative on the committee that an increase in the minimum wage from KY$6.00 to KY$8.75 beginning in July 2024 is being recommended with a further increase to be implemented in July 2025.
This recommended increase exceeds what we had recommended to the committee during our presentation which was based on consultations, surveys and focus group discussions with our members.
The Report added:
Our members, of which more than 400 are classified as small Caymanian owned businesses, agree that an increase in the minimum wage is overdue, but recommended a rate increase from KY$6.00 to between KY$7.50 – KY$8.00. They stated that increasing the rate beyond KY$8.00 will adversely impact them and may lead to staff and work hour reductions and price increases, causing a rise in the cost of goods and services in an economy that already is contending with a high cost of doing business and living.
Furthermore, data from the Economics and Statistics’ Employers and Households Minimum Wage Survey confirms what our members are warning. When asked if the business would continue to keep all of its employees if the minimum wage was increased by one dollar 77.6% of businesses that responded to the survey said they would keep all their employees, but only 45.5% would retain all of their employees with a three-dollar increase. Other industry associations such as the Cayman Islands Tourism Association and the Cayman Islands Small Business Association have warned of the same result.
While it is unclear whether the Report from the Chamber of Commerce influenced the Government’s decision not to increase the minimum wage for all sectors at this time, the Report has important unemployment implications for Caymanians if the minimum wage is eventually increased beyond the threshold stated by the Chamber of Commerce.
If the Chamber of Commerce’s position remains the same after the new study of all other sectors by the reenacted Minimum Wage Advisory Committee, then the economic outcomes noted by the Chamber of Commerce will be inevitable, including staff layoffs.
Timing of new study and reenacted Minimum Wage Advisory Committee
Regarding the timing of the new study, the Leader of Opposition Roy McTaggart pressed Seymour for further information in today’s parliamentary session.
Seymour did not specify any dates for the commencement or completion of the study but said: “This is something that we hope to get started as soon as possible.“
This “as soon as possible” timing is curious because elections are not far away, and minimum wage could become a vital election topic. In fact, any decision made on minimum wage for all other sectors prior to the election may impact how voters cast their votes.
In addition to this perceived minimum wage decision delay, more public funds may now have to be spent on the Minimum Wage Advisory Committee, presumably for work that could have been completed in their initial evaluation. Voters will no doubt raise this concern, together with the question whether the Government’s approved budget anticipated a further spend.
While members of the public wait for information from reenacted Minimum Wage Advisory Committee, they may review the Minimum Wage Advisory Committee Final Report dated October 2023 by visiting the below link, which also contains the Report from the Chamber of Commerce:
https://www.gov.ky/publication-detail/minimum-wage-report
