Minister of Economic Development Fayyaz Ismail has stated establishing the minimum wage as proposed now will require to include an additional USD 24.64 million to the state budget.
Speaking at a forum organised by the parliament to seek public opinion on establishing a minimum wage, Economic Minister Fayyaz said the minimum wage must be established in an approach that does not impact the employers and the economy, instead of rushing to set a minimum wage. The minister explained the decision will affect small and medium enterprises (SMEs) more and the number of jobs will indicate the impact the minimum wage has on the companies. He said the administration expects to bring about positive changes without costing jobs and businesses.
Furthermore, the economic minister stated the bill will affect the budget directly, explaining with the changes to the various sectors the state budget will need additional funds. He said the adjustments will have to be made either from the budget of Public Sector Investment Programme (PSIP) or to increase taxes and hence, the administration is working to mitigate the impact the introduction of minimum wage will cause the economy.
Additionally, the minister remarked the issue has been submitted for counsel from parliament as the impact is significant. Fayyaz said one approach to minimise the impact on SMEs is to set wage bands for different businesses. He also condemned former administrations for not commencing the work on setting a minimum wage.