Two weeks ago the President introduced in the Senate a bill that would increase the minimum wage to $3.50 over a six year period.
The introduction of the bill has come under fire from critics, most notably Senator Surangel Whipps, Jr.
Whipps charged that the Toribiong bill has no concrete basis and does not reflect cost of living increases.
Whipps also claimed that with the rapid increase in the cost of living, the wage increase proposed by the President would mean little to the intended beneficiaries once it is in full effect by 2016.
From 2000 up to now, the cost of living in Palau has increased by 26 percent, and still increasing. The bill, if it becomes a law, will affect the more than 10,000 workforce in Palau, of which more than 3, 700 are foreign workers.
In an interview, Toribiong stated that the bill he introduced is the “best option” that could be placed on the table.
“I considered all sectors that will be affected by such increase. I see to it that the workers will get the amount they deserve, that businesses, especially small businesses, can accommodate such increase, and that the consuming public will not go through an abrupt price increase,” he said.
“My version of the bill would make the increase gradual so that all sectors concerned can benefit and adapt to it over time,” he added.
While defending his own version of the bill, Toribiong took a swipe at the wage increase proposal advanced by Sen. Whipps.
“The senator may have good intentions in proposing such bill, but I think it will only worsen the economic situation and not help the workers, businesses and the general public,” he stressed.
Earlier Whipps introduced in the Upper House a three-phased increase of the minimum wage, but like three others before it, the bill “died” in committee.
The Whipps proposal would increase the minimum wage to $3.50 per hour in three phases. Based on the proposal, there would be an initial increase of $0.50 to $3, and then an increase of $0.25 until the $3.50 per hour minimum wage will be in effect.
“If you raise the minimum wage as proposed by the good senator, then you will see an abrupt increase in the prices of commodities. That is basic in Economics,” said Toribiong, who is an Economics graduate of the University of Colorado in the United States.
The President also claimed that a sudden increase will “hurt” the small businesses that will be forced to raise prices, cut jobs or slash the hours of low-wage workers.
“Small businesses are the backbone of the Palauan economy. If small businesses were to close, then the local economy will be devastated. We will not allow such thing to happen,” Toribiong declared.
“I want the workers to get the wages they deserve at the same time I want to protect the small businesses and the consuming public. That’s the main reason I introduced such bill,” he concluded.
Two weeks ago Pres. Toribiong introduced a bill in the Senate which seeks to increase the minimum wage to $3.50 from the current $2.50 which has remained stagnant since 1998.
Under the proposed bill, effective April 1, 2011, every employer shall pay a minimum wage of $2.50 per hour to each employee, excluding other benefits provided to the employee by the employer like food and housing allowance.
Then commencing October 1, 2011, and every six months thereafter, the minimum wage every employer is required to pay shall increase by $0.10 until a minimum wage of $3.50 is in effect.
The Toribiong bill, if enacted into law, applies to both Palauans and foreign workers.
