San Nicolas: More business closures, terminations could happen this May

Labor Secretary Gil San Nicolas said yesterday there could be more business closures and terminations of employees when the next 50-cent minimum wage increase takes effect next month.

In an interview with Saipan Tribune, San Nicolas said the problem started since the federal minimum wage law was first implemented in July 2007, increasing the local minimum wage from $3.05 an hour to $3.55.

“We received a lot of letters from employers terminating their employees because they cannot pay the minimum wage that was mandated,” he said.

The Secretary said they might see the same trend come May 26, 2008, if the federal minimum wage law is not amended or suspended.

“We may continue to see that. At this point, I don’t know how many but I can tell you we can gather those information starting from last year when the new minimum wage took effect to present and give you some kind of an idea as to how many employers have written to the Labor director terminating their employees,” he said.

Starting last year, Labor has been getting closure notices, terminations and as simple as employers saying they cannot afford the minimum wage because of the economic situation, San Nicolas said.

The local minimum wage is currently at $3.55 an hour. Under federal law, it must be raised gradually until it reaches federal level in 2015. The first 50-cent increase was implemented on July 25, 2007. On May 26, 2008, the minimum wage will go up to $4.05 an hour.

“However, as I understand it from reading newspaper articles, there’s a move to suspend the increase. So we don’t know if that’s going to happen this May or after May,” he said.

However, the Secretary said, provisions under the Nonresident Workers Act require that anytime the minimum wage is raised, the wage in the employment contract will automatically be increased on the effective date of the law.

“Unless we receive another law amending such provision. We will continue to implement it,” he said.

“So come that date, everyone is being informed, everyone should be aware that the new minimum wage will take effect. So they have to start paying their employees whatever that minimum may be… in this case it’s $4.05 an hour,” the Labor official added.

The Fitial administration has vowed to lobby against the next scheduled increase in the local minimum wage.