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SGMA: No to wage hike
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Posted on May 18 1999
Garment manufacturers are opposed to any raise in the minimum wage in the Northern Marianas, warning against impact on the industry that continues to face stiff competition from countries offering cheaper labor cost.
Any wage hike will only increase production costs that constitute about a quarter of the final selling price of any apparel sewn on the island, according to Richard A. Pierce, executive director of the Saipan Garment Manufacturers Association.
He said the prolonged financial turmoil in Asia that has pulled down labor cost in the region and the recent $1 billion lawsuit filed against Saipan factories have made it more difficult for local garment firms to stay competitive.
“Our current situation, where we are less competitive than we have ever been… makes any increase in our basic wage rates just another burden which jeopardizes our ability to maintain operations in the CNMI,” Pierce said.
SGMA, which groups 33 garment manufacturing firms on the island, is commenting on the ongoing study being undertaken by a government body tasked with reviewing the minimum wage level in the Commonwealth.
Susan Briola, chair of the Minimum Wage Review Committee, has sought comments from various business groups and other private sector representatives on the proposed rate increase from the prevailing $3.05 per hour.
According to Pierce, more than 80 percent of the 13,000 workers employed in the garment industry are earning minimum wage, including overtime pay.
If the industry factors in other variables that affect production costs such as taxes, transportation, insurance, utilities, raw materials, shipping rates and others, any wage increase will eventually result to higher prices of apparel sold to buyers.
“With all other variables remaining the same… SGMA is against any increase in the basic CNMI minimum wage rate at this time,” the executive director said.
The wage review panel expects to make its report to the Legislature, including its recommendations for the minimum wage by June 30.
