WILLEMSTAD - The increase in the minimum wage could have a negative impact on the country's macroeconomic level. This is evident from documents from the Ministry of Economic Development (MEO). Nevertheless, MEO is in favor of the 11.2 percent increase in the minimum wages.
The documents show that a higher wage rate can have a negative effect on consumer prices. This means that there may be a decrease in economic activities, such as shopping or buying clothes. “Furthermore, the purchasing power for a large part of the population will decrease, because these people will have less to spend. The purchasing power of minimum wage earners will increase," said MEO.
Since the economic outlook for 2022 and 2023 was positive until recently and it looks like the economy will continue to grow, the ministry says it agrees with the increase. However, MEO is cautious and recommends that socio-economic factors such as education, occupation and income should be taken into account when deciding on indexing the minimum wage. Economic growth can be disrupted by rising consumer prices as a result of the increase in minimum wages. This has a negative effect on the middle class.
The plan for the increase in the minimum wage comes from Minister Ruthmilda Larmonie-Cecilia. The Pisas cabinet already wanted to increase the amount in September and repeat this in January 2023. The first increase did not go through, after which it was decided to do both increases in one go. With the increase in the minimum wage, the hourly wage will rise to 10.70 guilders after the turn of the year.