It is unusual for a letter to the editor to spark wide spread discussion and even more to solicit a response from the Presidents office. Last week a letter titled Shame On You was written to Palaus media criticizing the newly passed minimum wage and calling it a minimum impact bill. The letter examines serious deficiencies in the new minimum wage law highlighting the employers ability to deduct housing and food, side effects no minimum wage for what the letters calls the hardest working foreign workers and even suggests a violation of international human rights. The president’s office has responded in a written statement saying that the President is aware of the issues and thinks it would be unfortunate if unscrupulous employers took advantage of the new law. The letter suggests that the people should not focus on the negative aspects of the bill but rather the positives, which he says is the employment of the Palauan people.
Below is the official letter from the presidents office followed by the original editorial.
I am writing in response to the letter in the Friday, May 3rd issue of Tia Belau regarding the Minimum Wage Law. The Office of the President would like to acknowledge that the President is aware of the issues presented by the editorial as set forth in the President’s signing statement for RPPL 9-1.
The Minimum Wage increase has been a long ongoing debate and while the bill was not perfect, the intent of signing it into law was not to “mislead the people into thinking the government is helping them,” as indicated in the anonymous criticism of the law. On the contrary, the President is well aware that subsections (c) and (d) leave a significant amount of discretion to the employer about how to compensate foreign workers and the President is concerned how that will play out in practice. He noted this concern in his signing statement by saying, “It would be an unfortunate and unintended result if this results in foreign workers being exploited by unscrupulous employers and I look forward to tracking the impact of this aspect of the law with the Olbiil Era Kelulau.” However, the President believes that the intention of the bill to create a more even playing field between Palauan citizens and foreign workers, has been strengthened overall. Finally, the bill will improve wages for many Palauan employees and skilled foreign workers who will earn more under a higher minimum wage.
If the Republic is to increase Palauan private sector employment and enable more Palauans to provide for their families, a stable core of Palauans that will form a strong foundation for Palau’s future must be established. In addition to the minimum wage law, the recent Palauan Workforce Investment Act reinforces this notion by encouraging the employment of more Palauans in essential technical services by increasing tax incentives for employers who hire technical graduates from PCC. Rather than focusing on the negatives of the bill, the President is focused on what he believes to be the positive aspects of the bill: the employment of the Palauan people.
Office of the President
Original Editorial Published April3, 2013
Palau’s President signed into law the first increase in minimum wage in sixteen years, yay!. . . wait . . . it does not apply to anyone who is hired before October, 2013? It does not apply to the hardest working foreign workers? And an employer can reduce the minimum wage based on food and housing deductions that they themselves calculate? Is this a minimum wage bill or a minimum impact bill.
And how about the penalties? Maximum penalty for a violation is $500 paid to the government and $1,500 paid to the victim-employee. It would not take long for an employer violating the law to surpass this number. So why not violate the law, it might just make financial sense. Of course the employee can take legal action in to their own hands if the overworked AG does nothing after ninety days, but who can afford to take a chance at litigating a case for tens of thousands of dollars only to recover $1,500 and attorney fees . . .if they win.
Under the new minimum wage bill, if you are an employer paying minimum wage you no longer have to pay for travel, food, housing or other expenses. But minimum wage is not fully in effect until 2016. So if an employer pays their employee $2.75 beginning in October, 2013 they can still collect food and housing from the employee’s paycheck leading to a loss for the employee. What about farmers, domestic helpers and others who are exempt? Who knows? The bill says nothing about them. Oh, and by the way since March 30, 2005, the Philippine Overseas Employment Administration (POEA) has prohibited the employment of domestic helpers in Palau (Advisory Number 07).
The minimum wage does not apply to contracts entered into before October 1, 2013, hmmmm. What if my contract is with a Philippine employment agency not the individual and signed before the cutoff date? How long can a contract be for? 5 years, ten years? What about renewal of a contract or an extension of an existing one? What about the farmer working as a mechanic or the DH working as a cashier, who is going to enforce that one?
So here is the bottom line. Everyone in the Republic, Palauans and foreigners, will get an equal minimum wage unless:
You are a farmer, domestic helper, caretaker, houseboy or babysitter. (500+workers)
You are a student, are on probation or work for a non-profit (300++workers)
You are receiving housing from your employer (4,000+workers)
You are hired before October 2013 (everyone else)
Minimum wage is supposed to be just that, minimum wage. What we now have is a stillborn bill with so many exceptions that almost no one qualifies and it is impossible to enforce. Once again the Palau government has failed to do its job, to create a fair and transparent minimum wage that will level the playing field for all workers, be acceptable under international human rights standards and encourage the hiring of Palauan citizens in the work force.
This minimum wage bill is a mirage — misleading people to think they government is actually helping them but it actually protects the businesses run by those who passed the law. But now that it has passed the legislature can pretend to have accomplished something and they don’t have to talk about minimum wage for another 16 years. Shame on you elected leaders, again you have misled the voters!