the review – 2 of 1999

First Published: 1999-07-15

Three Surveys

The Institute for Economic Freedom recently conducted three surveys on the December 1998 draft of the Minimum Labour Standards Act. The objective was to assess private sector views on provisions like the proposed Minimum Wage and to determine whether the business community had enough information to respond effectively to such far-reaching legislative proposals. The surveys use representative samples and the results range from interesting to astonishing.

Survey #1 – Minimum wage

Forty businesses responded to the March survey including retailers and wholesalers, professional services, banking and insurance firms, contractors, tour operators, automotive companies, petroleum retailers and publishers.





The results showed that while most respondents were aware that the government was going to introduce a new labour law, almost 60% of them did not have enough information on the provisions. But the overwhelming majority of respondents are concerned enough about the Bill to express their opposition to their Member of Parliament.

Five percent of the respondent-s employees earn less than the mandated minimum wage of $4.12 per hour proposed in the Bill. The survey defined the minimum as $175 per week including commissions. Of the 2,132 workers covered by the Survey 109 were below the minimum. It should be noted that these employees are concentrated in fast foods, retail household sundries and gasoline stations.

Survey #2- Severance Pay

In April, the IEF surveyed businesses on their awareness of the employee severance provisions contained in the proposed Bill. Responses were received from 22 businesses. These included wholesalers and retailers, professional services, bankers, contractors, tour operators, automotive and marine firms, manufacturers, realty companies, and petroleum retailers.

The Bill states that an employee is eligible for redundancy pay if he is dismissed because of redundancy or natural disaster, or is laid-off or kept on short time as specified in the Bill. He is entitled to, and the employer is liable to pay, a sum equal to 4 weeks pay for each year of service up to 33 years of service.

Two thirds of respondents paid one week per year of service (with variations) and only one firm, a financial management company, paid the 4 weeks contained in the proposed Bill. These results showed that a free market existed in terms of severance pay, with businesses paying more or less what they can afford, which by and large conform the to policy and practice customarily suggested by the Labour Board.

The proposed Bill will make companies liable for severance pay. Most respondents said they would have to accrue funds to meet those requirements and half said they would have no choice but to downsize if the Bill becomes law. If this result is extrapolated across the entire business sector, the results for unskilled workers could be disastrous.

Survey #3 – Dismissal, Reinstateament, etc.

The third survey had 55 respondents, the largest of the three. The survey identified the new powers given to politicians such as the unlimited power of the Minister of Labour to set minimum wages and the Industrial Tribunals power to order employee reinstatement or re-engagement. It also showed how unfairness in dismissal would now relate to "the size and administrative resources of the employers undertaking" without mention of either employer rights or employee obligations.

Very strong and unanimous opposition that ranged from 90 to 100% was expressed on all these issues.

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