Am. Samoa Businesses Unanimously Oppose Minimum Wage Hike

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Economy can’t afford Senator’s proposed $7.50 per hour

By Fili Sagapolutele

PAGO PAGO, American Samoa (The Samoa News, May 5, 2015) – StarKist Inc., and Tri Marine International have re-emphasized the need to keep cannery costs down as American Samoa continues to face stiff global competition from low labor cost countries, such as those in Southeast Asia, while the local Chamber of Commerce says it is not in favor of the establishment of wage increases and setting minimums that might have the effect of substantially reducing employment.

The canneries and the CoC were responding to Senator Galea’i’s public support of higher minimum wages in the territory, during a news conference he called two weeks ago to discuss several issues.

He acknowledged that the canneries would have concerns over wage increases, but he also believes that it’s about time the canneries face the facts — and pay these workers the right amount of money.

The next 50-cent minimum wage hike for all industries in the territory becomes effective Sept. 30, 2015. This means the minimum wage for the canneries — the largest private employer in American Samoa— will go up from the current $4.76 per hour to $5.26 per hour.

Pittsburgh based StarKist Inc., along with its local cannery StarKist Samoa is owned by South Korean based Dongwon industries, while Washington state-based Tri Marine’s local operations include the Samoa Tuna Processors Inc. cannery.

STARKIST REPLY

Responding to Samoa News inquiries and request for comments to Galea’i’s statement, StarKist corporate spokesperson Michelle Faist said, "Our focus is to keep American Samoa an economically viable place to manufacture tuna products.

"This means maintaining a wage rate that reflects the nature of the American Samoan economy and the global competition from economies where tuna workers are paid 70-80 cents per hour," she said via email.

Faist also pointed to information the U.S. Government Accountability Office (GAO) released in April last year, about the economic impact on American Samoa of the federal Fair Minimum Wage Act of 2007 and subsequent wage increases.

"The report found that there has been a continuation of the downward trend in employment thanks to the three previous minimum wage increases including a 44% minimum wage increase for tuna canning industry workers in 2007," she explained.

According to the report, both employers and employees agree that further increases would be detrimental, she said.

The report also states in part that by current law, the minimum wage in the tuna canning industry will reach the current U.S. minimum of $7.25 per hour in 2027, increasing the average annual cost per worker by $4,709.

With the next wage hike set for this year, GAO will issue another report in 2017. The GAO report is online at www.gao.gov

TRI MARINE

Asked for comments and reaction, Tri Marine’s chief operations officer, Joe Hamby pointed out that the company has long held the position that American Samoa wages should be determined by American Samoans who understand the local economy best.

He said the global tuna industry is "extremely competitive" and "our strongest competitors are in Southeast Asia where the costs of production—including energy and labor—are lower."

Hamby said Tri Marine has "invested significantly" in Samoa Tuna Processors and increasing labor costs with a higher minimum wage would make the company’s already difficult job even tougher.

"We are just starting. Increasing costs will obviously have a very negative impact on our young business. We simply can’t afford a wage hike," he said via email.

CHAMBER OF COMMERCE

Asked for comments on Galeai’s call to hike minimum wage and even to increase it to $7.50 per hour, Chamber chairman David Robinson says, the Chamber is not in favor of the establishment of wage increases and setting minimums that might have the effect of substantially reducing employment.

"The impact would substantially affect both the local tuna industry and the ASG," he said, adding that the Chamber would be interested in discussing the data used by Galea’i, which measures employers ability "to pay the proposed higher rate of $7.50/hour in these present economically difficult times for all local industry categories."

"The private sector has just had two price increases levied against it in the form of Business License increases and a 5% hotel room tax," he said, referring to the fees and taxes already signed into law by the governor and to become effective next month.

Regarding Galea’i’s suggestion for one minimum wage for all local industry activities, Robinson said that the Chamber always held the position that one minimum wage is better than having a different one for each of the 18 industry categories. "It simplifies the process," he said.

Robinson also said the Chamber agrees with Galea’i that minimum wage and any subsequent wage increases should be set by a locally constituted board comprising federal, ASG and private sector agencies.

"These settings and increases should be contingent on the performance of the local economy at the time of the review," he added.

Galea’i has also suggested setting the minimum wage via appropriate legislation through the Fono.

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