Am. Samoa Chamber Doubtful About Private Sector Wage Subsidy

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Tax cuts for low-wage workers may be better solution

By Fili Sagapolutele

PAGO PAGO, American Samoa (The Samoa News, June 29, 2015) – The territory’s Chamber of Commerce is doubtful that the U.S. government will include the local private sector in any federal subsidy to help pay for the federally mandated minimum wage increase in the territory, says Chamber chairman David Robinson, who is also chairman of the ASG Shipyard Services Authority, which oversees and manages the government owned Satala shipyard.

During a June 19 cabinet meeting, Gov. Lolo Matalasi Moliga announced his plan to ask the federal government for a subsidy to help with the minimum wage hikes, with the next 50 cent increase set to go into effect on Sept. 30. Lolo has instructed Commerce Department director Keniseli Lafaele to draft a proposal for the governor’s review before the end of next month.

Responding to Samoa News inquiries, Robinson said in a statement that it would seem that at this late stage, Sept. 30 is not far away, there is not enough time to change legislation covering the minimum wage as it applies to American Samoa.

Robinson reiterated the Chamber’s position on the minimum wage issue, which is that "we should be able to make any increases in wages at the local level."

"Whilst we would like to see people at the lower end of the wage scale have more income, another increase is not something that certain parts of the private sector can really afford on top of the other recent cost increases that have been arbitrarily introduced, and the continued weakness of the economy," he says.

(The most recent cost increases include the hike in business licenses fees and the new hotel room tax.)

While there are certain local companies who may be able to afford another federally mandated 50 cent per hour wage hike, "our two canneries are the ones who stand to lose out as every increase in their cost of production puts them at a further competitive disadvantage for their products compared with their competitors in cheaper cost areas in Asia and other parts of the Pacific," Robinson pointed out.

Regarding the suggestion that the federal government "might provide funding for the difference in what we can afford to pay and what we might be asked to pay for a minimum wage, this would create a very significant precedent for the federal government and the Chamber is doubtful that any such agreement could be reached in such a short time," Robinson said.

"Even if it could be, it is unlikely that the private sector would be included in such an arrangement; it might be applied to local government employees only," he said.

As a suggestion to assist the lower end wage earners, he said the Chamber has asked the ASG Tax Manager to discuss with the ASG Treasurer the proposition of raising the 4% tax threshold from $10,000 to $15,000.

"This would not prevent a wage increase but it would potentially give the low wage earners more disposable income which would be of benefit to them and the economy in general. We continue to discuss this matter with the Tax Office," he said.

Asked if Chamber was briefed by the Administration on the governor’s subsidy proposal, Robinson told Samoa News that the Chamber was not involved in any discussions with the Commerce Department to, or since the governor’s announcement to cabinet.

Asked for further clarification, if the governor’s proposal includes the private sector, because it was not made clear during Lolo’s comments at the cabinet meeting, Robinson said "if such a subsidy is granted it’s likely to apply to the public sector only."

"I cannot see the federal government subsidizing the American Samoa private sector unless they consider that some relief might be necessary for the two canneries," said Robinson, who attends cabinet meetings as chairman of the Shipyard Service Authority.

See Samoa News edition last Friday on Congresswoman Aumua Amata’s reaction to the governor’s proposed federal subsidy for minimum wage hike.

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