Conflicted minister seeks minimum wage do-over

(CNS): Labour Minister Dwayne Seymour has effectively rejected the findings of the Minimum Wage Advisory Committee and wants a do-over of the report they submitted last year. Speaking in parliament on Monday, the minister, who employs minimum wage workers in his airport services business, said the UPM wants the committee to look at the minimum wage again based on different rates for different sectors.

In the meantime, in July 2025 tourism workers will get an increase to just $7 per hour, far short of the $8.75 that was recommended, and employers will no longer be able to use gratuities to supplement wages.

Seymour has dragged his feet on the report and its recommendations since MWAC Chairperson Lemuel Hurlstone handed it to the government in October 2023. It was not made public until March this year.

The minimum wage is currently just CI$6 per hour. Although only a few thousand migrant workers are on this exceptionally low rate, inflation over the last five years has pushed the minimum wage below the absolute poverty line, which was previously estimated to be around CI$6.75 per hour in Cayman.

The proposed increase from CI$6 to CI$8.75 would have directly benefited an estimated 10,457 workers. But many workers, including Caymanians, who are earning far less than the recommended $8.75 will now have to wait at least another two years to find out if their salaries will increase at all, as Seymour has hinted that some sectors should not see any increase.

The decision to raise the minimum wage by just one dollar per hour for those working in tourism might be an indication that an increase across the board, if it ever comes, is unlikely to make much of a difference, as it would increase pay by just $40 for an average working week, and inflation will continue to bite into the value of low earnings.

The recommended rate was a 46% increase on the current rate, which was rolled out in 2016, but given the impact of inflation during that time, the value of the wage has been dramatically reduced. The committee found that most businesses could sustain an increase to $10 per hour, though they did not recommend this rate due to fears of inflation.

The current minimum wage is slightly less than 28% of the average wage in the economy. “Compared to regional and international standards, this is a very low percentage,” according to the International Labour Organization, which assisted the MWAC.

The report noted that there are only seven countries in the world with a ratio as low as the Cayman Islands, and most countries have a ratio of around 50%. Cayman’s minimum would need to be around $10.50 per hour to get close to half the nominal hourly mean wage rate.

As Seymour answered questions from Progressive Leader Roy McTaggart, who did not raise the minister’s conflict on this issue, he said the government wanted to take another look and was establishing a new committee.

“While giving careful considerations to the implications for Caymanians as well as general economic concerns… a decision was made to initiate the reactivation of a Minimum Wage Advisory Committee with specific instructions to investigate and recommend a sectorial approach,” he said. “It was also decided that, effective from 1 July 2025, employees of the hospitality and service industry will be the only sector to receive an increase in the minimum wage to seven dollars per hour.”

The minister said the current ability for employers to use 25% of the gratuities pool to supplement that $6 will be removed on 1 July. But until the new committee is formed and completes its work, all other sectors will remain at $6 per hour.

Seymour said the new committee had not been formally appointed but it was something the government hoped to get started as soon as possible. Some of the committee members from this latest review will be asked to serve on the new committee, he noted.

McTaggart asked him what would happen to the rejected report, but Seymour claimed the report was not rejected. At that point, for the first time, he thanked the committee publicly for the “extensive” work they had done, but noted that they had based that work on what was asked of them.

“The caucus… needed more information and data on the sectorial approach,” he said. “Members felt that we could not just do a blanket minimum wage on all sectors because of the economic impact that it may have on Caymanians who may not see an increase in their own salaries.

While he did not clarify what he meant, it appears the minister was talking about domestic helpers. However, the rejection of the report will not assist Caymanians earning less than CI$8.75 an hour who would have benefited from the increase.

See the brief answers on CIGTv below:

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