Cost of living far outstrips minimum wages

Last Updated on Wednesday, 8 January 2025, 23:58 by Denis Chabrol

Guyana’s cost of living is outstripping the minimum wages being paid by the government and the private sector, even as the administration points to various grants that are being provided to segments of the population.

Unofficial estimates are that at least 40 percent of public servants take home salaries of $140,000 and less after income tax and National Insurance Scheme (NIS) deductions.

The Guyana Public Service Uni0n (GPSU), in its New Year’s message called for a minimum salary of GY$221,000, shortly after agreeing with government for a 2024 minimum salary of GY$94,765 which is not taxable but employees’ NIS would be deducted. The union and government also agreed to an 8 percent increase in wages and salaries for 2025 retroactive to January 1, 2025.

The government-authorised minimum wage for the private sector, which dates back to 2022, is GY$60,147 and which is also below the GY$100,000 income tax threshold.

Repeated efforts to contact GPSU 2nd Vice President, Dawn Gardener proved futile.

However, those minimum salaries pale in comparison to a bare minimum monthly budget of  $148,824.00 for one adult That budget is hinged on a number of absolutely minimum assumptions- the employee resides in central Georgetown and its immediate environs where the bus fare is GY$100; rental or mortgage of  a one-bedroom apartment  for GY$60,000; utilities, GY$21,699; other items, food GY$50,515; other monthly household items $10,810, and transportation GY$5,800.

The budget d0es not include clothing, fragrances, sanitary pads, entertainment/recreation, bottled water, over the counter medicines and transportation to a place of worship.

If the worker is a single parent of one nursery school child, the overall monthly household expenditure will jump to a minimum of GY$164,324; that is GY$15,500 more.  If the person is a parent, the budget also does not include confectionery and other treats, story books and toys. 

Government provides a  GY$40,000 cash grant  plus a GY$5,000 uniform allowance for each child who is attending public or private schools.

Vice President Bharrat Jagdeo said government determines the minimum salary based on how much the coffers could afford to pay in the long-term for comparable positions. “You look at affordability for the Treasury, one, and two, comparable payment for the same work,” he said. He said at the lower end of the scale, public service salaries are competitive than even at a number of commercial banks. He said a “significant” number of public servants would earn GY$200,000 per month with the new salary increase from this year.

Told that the estimated monthly budget of a woman and her kindergarten school child is more than GY$140,000, Mr Jagdeo declined to address that point but compared the minimum public servant salary of US$25 in the 1990s compared to US$500 currently. The Vice President said from 2020 to 2025, public sector wages would grow by GY$100 billion (US$500 million) annually. “Then, you see the effort that this government has made in public service wages too… but you hear somehow that we are short-changing public servants,” he said.

Mr Jagdeo said 69,000 public servants would benefit from the 10 percent salary increase for 2024. It is unclear whether those employees include the 12,000 members of the Disciplined Services. President Irfaan Ali on Thursday announced that the starting salary for a Private in the Guyana Defence Force or a Constable in the Guyana Police Force would be $130,000 to remove any disparity.

President Ali suggested at his most recent news conference that the minimum wage was pegged to Guyana’s inflation rate. “I don’t know where you’re getting your analysis from but I would like to hear from you what is the inflation rate because if you look at the inflation rate at the middle of this year and look at the type of salary increase that we’ve given, you will see the challenge,” he said. He said the public sector’s “so competitive” salaries have resulted in private sector employees seeking to work with the government.

Working People’s Alliance (WPA) Executive Member, Dr Dennis Canterbury told a news conference on Monday that minimum wages and salaries need to be adjusted based on the Consumer Price Index which itself needs to be revised to take account of several variables such as geography, age and the actual basket of goods and services. “The items in the basket are not necessarily reflective of the consumption patterns for all the categories of people and income levels within the society,” he said.

The WPA also advocated for an annual Universal Basic Income (UBI) to be disbursed to Guyanese based on 10 percentage of oil revenues at any given time “as a top-up” on earnings so that “you are bound to see a lift in your material circumstances.” Dr Canterbury said the UBI should be eventually phased out when more people are put to work for a “living wage” through largely private sector-led initiatives. “Generally, these social programmes aren’t meant to be in place indefinitely. The idea is to help people get on their feet and then for them to be able to participate in the economy in a particular way that they will be self-sustaining,” he said. He said government appeared to be spending monies in a “planless” manner that was leading to wastage. He said sustainability of wages must be linked to affordability based on revenue and the need to save and invest in broadening the economy.

On the issue of sustainability of the UBI and salary increases due to the fact that oil is an exhaustive natural resource, WPA Co-Leader Tacuma Ogunseye described that as a “bogeyman” because production was yet to begin at the more-than 30 other oil wells and so there would be sufficient revenue for another 40 years to satisfy the demands of a population of about 800,000 persons. “People are introducing sustainability like if this could collapse in five or 10 years. We ain’t even begin to throw up the oil yet and we have more money than any other government has had from slavery to present with only three wells. What will we have when we have 10 wells functioning so for me, the question of sustainability in terms of the cash transfer is a bogeyman,” he said. Mr Ogunseye said there is a larger potential in renewable energy and the need to find a solution to the “political disaster” that has been facing Guyana.

WPA Co-Leader Dr David Hinds said his party estimates that a minimum wage should be “upwards of $200,000”, pending a detailed study that would be included in its 2025 general elections manifesto. He recommended the establishment of a think-tank to study the long-term issues of wages and salaries and a UBI instead of haphazard issuance of cash grants. “Coming up with a number is the easy part of the work. It is when you come up with that number, that that number can stand the economic test, it can stand the test of what people need to live so we’re just being careful,” he said. He said consideration should be using wages and salaries to stem the human capital flight for comparable positions in the Caribbean.

For his part, President Ali said his administration has delivered “unbelievable ways” of expanding disposable income, eliminating fuel taxes and advanced healthcare support to 150,000 persons worth GY$3.3 billion. “That is money that we are saving persons from their own disposable income or they could not afford it all or could not benefit from the healthcare,” he said.

He said more than 201,000 children are receiving cash grants, over 126,000 children are benefitting from the national school feeding programme, and over 179,000 are receiving textbooks. He said segments of the population are receiving various types of cash grants such as for disability, green tech, and business support, all expected to be more than GY$160 billion. “Direct transfers to the people. That is what we’re doing for the people. There is no other country that’s doing that,” he said.