Benefits, wage hike can’t go together: HANMI, Chamber

The Saipan Chamber of Commerce and the Hotel Association of Northern Mariana Islands yesterday said the CNMI government must repeal a law that require businesses to provide subsidies in housing, food, transportation and medical treatment to non-resident workers if it would allow the gradual phasing in of federal minimum wage.

Based on the ten step plan of the government for stronger enforcement of labor and immigration laws, the established Wage Review Board will ensure the implementation of US minimum wage without economic disruption.

The Chamber will accept a proposal for a gradual increase in minimum wage based on federal standard if businesses would be given credits for subsidies on housing, food, local transportation and medical treatment of non-resident workers, according to Kerry M. Deets, president of the association.

While the Chamber will support the recommendations made by the Wage Review Board, Deets said failure to take into consideration the additional benefits provided to non- resident workers would result in an increase from the present $3.05 per hour rate to $6 to $7 per hour in minimum wage, higher than the $5.25 US mainland standard.

HANMI president Ron Sablan said no business in the CNMI would be able to afford an increment of 30 cents per year and still pay for the benefits required under the law.

“It is simply impractical and unrealistic. If we are to implement the federal minimum wage, then the local statute must be repealed including agreements worked out with other countries,” said Sablan.

HANMI maintains that the federal minimum wage in the US has no relevance whatsoever to the island’s economy which has been devastated by the Asian crisis where the costs of doing business are far higher.

“Any increase in wages now would cause inflation at a time when most need to cut costs in order to survive,” said Sablan. Furthermore, this would result in massive layoffs and potential closure of some hotels, he added.

Since the Asian financial crisis begun more than a year ago, the tourism industry has been hardest hit with hotel occupancy averaging only 58 percent in 1998, down from 85.57 percent in 1996. Likewise, hotels have dropped room rates anywhere from 10 percent to 40 percent. In order to survive, hotels have been forced to reduce costs wherever possible, including reductions in non-resident workers staff and working hours from 40 to 36 hours per week.