Finance Minister says it is not advisable to set minimum wage right now

Finance Minister Ibrahim Ameer. (File Photo/People's Majlis)

Finance Minister of Maldives Ibrahim Ameer has advised against setting a minimum wage in the Maldives at the moment, due to the economic downfall the whole world and the Maldives is faced with because of COVID-19.

The Minimum Wage Board has recommended setting a minimum wage of MVR 6,400, with a wage of MVR 6,400 to MVR 8,600 for the tourism industry and civil service.

Speaking in the Economic Committee of the parliament, Minister Ameer stated his support to setting a minimum wage but said that it can only be done when the economy of the country reverted back to the situation it was in January of 2020.

The Minister estimated that it may take as long as 2022 to regain the losses. 

“My view on minimum wage is that it is not the right time. We don’t know for sure, how our economy will change, as well as the countries of the world.” Said the Minister.

He noted that out of the 44,838 employees working in the public sector, 22,378 earned a basic salary below MVR 6,400. 

“Our estimates show that changes to salary structure, with an additional MVR 3.4 billion when taking into account the wages and pensions, could be incurred.” Said the Minister.

The wages of 21,974 would also have to be increased if a minimum wage of MVR 6,400 is set. These are individuals who earn above the proposed minimum wage right now. An additional MVR 2.3 billion would be needed according to estimates for this, said the Minister.

When a minimum wage is implemented, there shouldn’t be any discrimination between locals and foreigners, according to the advice of the Pay Commission, However, this meant that the amount of currency going out of the country would increase.

“Surveys show that USD 270.8 million would go out of the country per year if we base it on the MVR 6,400 as remittance if we implement a minimum wage because a large portion of the wages of foreigners is sent abroad as a remittance.” Said the Minister.

Due to the standstill of tourism and the shortages of foreign currency, Minister Ameer said that it would not be wise to set the minimum wage for foreigners in 2022. A minimum wage for foreigners should be carefully thought out, said the Minister.

Setting up a minimum wage is a pledge made by the government before it came to power. A minimum wage board was formed for the purpose last year.