“IN DEFENSE OF LOW-INCOME EARNERS”

A Statement by Savenaca Narube, leader of Unity Fiji and former Governor of the Reserve Bank of Fiji

“Through our 2026 Manifesto, Unity Fiji announced its plan to raise the minimum wage from $5 an hour to $8.  As expected, the increase has invoked public discussion. In response to the views of the public, I wish to clarify the decision to increase the minimum wages.

Focus on the entire economic package

We have done a careful assessment of the need to increase minimum wages, and the what the appropriate level should be.  Everything in economics is related. I am asking the public to therefore understand the entire economic package in our manifesto. Many people have focused narrowly on minimum wages. The proposed increase in minimum wages is an important component of the entire package, but it is only one component.

Keep the big picture in mind

I am asking the people to keep in mind the bigger picture especially the state of our economy. I have repeated many times that the economy is treading water and will soon go under if we do not change what we have been doing. Unity Fiji’s entire manifesto is the blueprint of this change. It will take nothing less than a bold and visionary package to turn things around.

Cost of living must be tackled on two fronts

The people have told us clearly that the cost of living is their priority. Up to now, the Government has done nothing. We have as focused our responses entirely on to reducing prices. To this end, I have suggested better sharing of the burden through the price control mechanism, and the use of the exchange rate to cushion the rise in imported prices.

But the escalation of the Iran war and the continuing global trade war mean that the rise in the prices of imported goods and fuel will continue. These higher prices have already filtered through to the domestic cost structures. This is permanent. Therefore, we as responsible policy makers, must supplement our efforts to reduce prices by measures to increase income. In doing so, we have also tried to redistribute income to low-income earners. This is why we have proposed the package of increasing the minimum wages, raising the tax threshold to $40,000, and increasing the welfare allowances.

Low-income earners are slipping into poverty

The hourly wage rate of $8 is calculated based on the poverty line. With wages staying the same and the cost of living continuing to rise, the basket of goods that that the wages can buy is seriously shrinking. As a result, the real wages (after adjusting for the rise in the cost of living) in Fiji had declined by at least 20%.

The salaries of higher income earners normally rise by increments and promotions. However, the wages of the lower wage earners are not adjusted at all. The lower wage earners and their families are therefore slipping below the poverty line.

The  2019-20 Basic Needs Poverty Line [BNPL] is $41.91 per adult per week. In a family of 4 adults, this poverty line translates to $175 per week. A minimum wage earner working 8 hours a day at the old rate of $5 per hour will bring home $200 per week, which is clearly not enough for the family with children. At $8 per hour, the worker’s weekly wage increases to $320, which is $120 more than before.  Unity Fiji considers this a living wage.  

This is the main reason for raising the minimum wages to $8 an hour. It is fair and helps the families survive in these difficult conditions.

Impact on businesses

Many people are rightly concerned about the impact of the higher minimum wages on businesses. We have thought of that. Businesses operate at different levels. There are businesses who may already be paying above the minimum wages. Others may be able to absorb the new minimum wages straightaway. We have a devised a transition plan for small and micro businesses. They can progressively graduate to the $8 an hour. Some may have to be exempted under certain conditions. For others, we may be able to offset the higher wages through reduction in government fees.

Sustaining higher wages

The country can sustain higher wages. We have built in two sustainability factors in this manifesto. The first is productivity. Fiji’s productivity level is low. Through a productivity program, Unity Fiji will work at raising the productivity which will sustain the higher minimum wages.

Second, as the economy grows through our economic package in the manifesto, the level of income for the entire country rises, giving more support to the entire private sector and government.

High cost of living is destroying families

These are difficult times. The high cost of living is creating tensions in the families which may erode family values and hurt the education of our children and grandchildren. They may also be causing the rise in the use of drugs and HIV. Higher wages will assist the families deal with their financial difficulties.

How will we implement the new wage rate?

The proposed increase in the wage rate will be implemented by an amendment to the labour legislation which will need to be passed by Parliament.

Summary

In summary, we at Unity Fiji, fully understand that the people have been suffering for too long. The MPs including Ministers have raised they own salaries. The poor people are getting poorer. No government is looking after them. The integrated package in our manifesto is aimed at turning this around. We are putting money into people’s hands. We are growing the cake. But we are also distributing it to help the poor and ordinary people.”