WILLEMSTAD - After years of resistance from business owners, the minimum wage in Curaçao has risen by just over 1 guilder. The business community now understands this, but fears negative consequences.
Raising the minimum wage is a hot topic in Curaçao politics. For years, the business community resisted an increase. In recent years – partly due to corona – no inflation adjustment has been made.
The minimum wage in Curaçao went from 9.62 to 10.70 guilders per hour on January 1, 2023. An increase of 11.2 percent, on the initiative of Minister Ruthmilda Larmonie-Cecilia of Social Development, Labor and Welfare (SOAW).
The discussion about the minimum wage is of great importance to Curaçao because about 60 percent of the population earns it, says the minister. As a result of further inflation, people are therefore in danger of having to live below the social minimum. “So we have no choice but to increase it.”
Businesses want more support from politicians
Since last December, the Curaçao Business Association (VBC) has been converted. “We understand and support the government's decision to increase the minimum wage by 1.08 guilders per hour,” explains VBC chairman Daniel Hodge.
Many people have to get by with little money. At the same time, a large part of the increase will also end up in the island's economy, he thinks.
Nevertheless, concerns about this increase are echoing among business owners. Small businesses in particular are still having a hard time due to the corona crisis, Hodge says.
The business community therefore wants additional measures to ensure that these companies do not collapse. But also to prevent that they do not pass on the increase in the minimum wage for their staff in the prices for the consumer. “If that happens, we won't get anywhere with the increase,” says Hodge.
The VBC advocates, among other things, an energy surcharge for companies with many employees who earn the minimum wage. As far as the association of business owners is concerned, taxes for companies must also be reduced.
What do the forecasts say?
In an official statement, the Central Bank states that it is "a logical policy choice" to raise the minimum wage. Partly because of the sharply rising inflation 'which mainly affects the lower income groups in society'.
A calculation shows that the increase of 11.2 percent "has a slightly negative effect on the economic growth of Curaçao".
That is because the economy of the island is coming from a deep recession. There is also an 'inefficiently functioning labor market' in combination with 'labor productivity that has been declining for years'.
'Don't just look at negative consequences for the economy'
According to Minister Larmonie-Cecilia, the discussion should not only be about the effect on the economy. Politics should be based more on 'the employee who goes to work every day for a minimum wage, with which basic costs cannot be paid and with which a family cannot be supported'.
Nevertheless, the central bank advises that the Curaçao politicians will take measures for the economy. Curaçao must become more 'resilient' to economic shocks and productivity on the island must increase.
“Someone who has financial worries every day will have trouble being very productive,” says the minister. “Without those worries, people will naturally be more productive.”
The last time the minimum wage had a similar increase was in 2017, when it went from 8.20 to 9 guilders. After that, there were a few minor adjustments, for example from 9.175 to 9.37 in 2018. But wages have remained the same in the corona years.
'Minimum wages for young people must also be raised'
Now she says she also wants to adjust the minimum wage for young people aged 16 to 21 during 2023. According to the minister, it is not the case that someone is allowed to vote (from the age of 18), but cannot count on a full income.
Larmonie-Cecilia is currently also leader of the governing party PNP. In 2017, then as minister for Pueblo Soberano, she had plans to raise the minimum hourly wage to ten guilders. She couldn't do that then.