Difficult Conversations – Barbados’ Minimum Wage
G4S has agreed to pay a minimum wage of $8.79 per hour, with a minimum of 40 hours per week. As part of the agreement, it seems that the Government must force their competitors to adopt a similar standard. It is important when setting government policies, that all perspectives be examined.
It is normal for large businesses to want to maintain their dominant market position. This is done in two ways; namely, offer better service, or damage competitors.
Those who choose the method of offering a better service, tend to view obstacles to their growth as challenges to overcome. They tend not to concern themselves with their competition. Instead, they focus on continually improving their quality of their service, by improving the management of: competent staff, quality input materials, and quality and low-maintenance equipment.
One common method that dominant players use to harm their competitors, is to adopt an artificial standard, that has little to do with the quality of the service. Then they influence the government to make that standard mandatory for their competitors.
A minimum wage is an artificial standard. It has nothing to do with the quality of service. Paying someone a higher salary does not magically improve that person’s competence or productivity.
Established companies who compete on quality, normally reward their productive employees with higher salaries. Therefore, a minimum wage is not an issue for them. A minimum wage is an important issue for many newer companies, who have to compete on cost.
A dominant company can harm newer companies, if they can entice them to match the salaries of the dominant company. But new companies are not normally that stupid. They would never agree to such madness that would immediately make their companies uncompetitive.
Uncompetitive businesses normally accumulate high debts. This then leads to the closure of the business, and the dismissal of all employees – who then earn no wages whatsoever.
When the government meddles unnecessarily in the commercial market, the results are normally disastrous for everyone – employees, employers and the Government. A high minimum wage is a win for the dominant business, and the unions who represent entry level employees. It can be political abuse for everyone else.
Entry level positions are not designed to be permanent for an employee. They are designed to give all employees an opportunity to demonstrate their competence and productivity, so that they can earn a higher salary.
Employees who have qualified for a higher salary, but are underpaid, are being robbed by bad employers. Unlike our physically enslaved fore-parents, we have options. Good employees can leave bad employers and offer their services to a competitor, or they can start a rival business.
Employees demonstrate their mental enslavement, when they stop trying to be better. In my opinion, one of the most tragic sights, is to see a person comfortable in an entry-level position for their entire careers – and being lauded as a loyal employee.
High minimum wages allow bad employers, to keep employees in entry level positions for longer periods. It can also make employees comfortably mentally enslaved. So what is the solution?
Government may mandate a minimum wage with the following attributes:
a) it it high enough to prevent mentally enslaved workers from being exploited;
b) it is low enough to allow new businesses to be competitive;
c) it is low enough to give entry level workers an incentive to qualify for higher-paying positions.