Academic journal article International Journal of Employment Studies

Fixing for the 'Battlers': Wage Fixation in Papua New Guinea

Academic journal article International Journal of Employment Studies

Fixing for the 'Battlers': Wage Fixation in Papua New Guinea

Article excerpt

Papua New Guinea (PNG) has a brief history of wage determination for workers. Any meaningful analysis of wage policy particularly pertaining to the large minimum wage earning population (some 200 000 of a total of 350 000 workers in the formal sector) could be done under four main periods seen as notable wage determination years for the country. These periods include pre-independence, post independence, the 1992 Minimum Wages Board (MWB) determination and the 2000 wage policy. The political and economic circumstances, which prevailed in these periods, have greatly influenced the particular course of wage policy. This article traces the emergence of wage fixation and the various wage determinations followed detailed reviews of the most recent 2000 minimum wage determination.

INTRODUCTION

This article aims to highlight several important observations inherent and prevalent in the context of wage fixation in Papua New Guinea (PNG). The first is the colonial legacy in the form of wage fixation structure and principles, which have continued to influence and form the basis of wage policy making right throughout after independence. Further, attempts made by the country to come up with a sustainable wage policy in order to accommodate social justice for its workforce and simultaneously use it as a critical tool to trigger general economic development are analysed and shows the incompatibility in its application. Finally, implications arising from the analysis of the wage policies, particularly the 2000 wage policy, are noted. Several points are also made in the end of the article, which provide insights for a better future administration of wage policy in PNG and that also has lessons for similar developing countries.

EMERGENCE OF WAGE FIXATION IN PRE-INDEPENDENCE PNG

Earlier, formal wage fixation in colonial PNG was largely a responsibility of the Australian colonial administrator of the Territory. A decree was used to regulate and adjust wages up to 1960. For most of the period between 1930s and early 40s the indentured labour system regulated the use and control of labour in the colony. In the subsequent years the Native Labour Ordinance determined the legal minimum wage for the Territory. Before the introduction of the Minimum Wages Board (MWB) in 1972 PNG adopted a decentralised wage-fixing system. Urban awards were negotiated between the Employers Federation and appropriate trade union (or group of unions) and the resultant general employment award was extended to the other major centres (Hess, 1983; McGavin, 1991: 31; Carrol, 1993). In fact, the wages were meagre and reflected the status quo of colonial policy in administration of locals at the time.

However, an intense interest shown by local workers in labour activities in 1960s convinced the colonial government to initiate the Cochrane Enquiry of 1970 that led to the recommendation for the establishment of an autonomous MWB. The tripartite nature in composition of the MWB called for representatives of employers, workers and government (and later to also include representatives from the community) with an independent chairman. In particular the Cochrane Report 'was very influential in the pattern of quasi-judicial determination of minimum conditions of employment that was to emerge in Papua New Guinea' (McGavin, 1991: 34; Gupta, 1992), although it was not until the mid-1970s that the MWB made its determination on the minimum wage within the government's broad 'Eight Point' Plan goals (protection of living standards, discourage inflation, promote orderly industrial relations and serve interest of both employers and workers). The guidelines reflected a tradition of wages fixation by a central authority.

Wage fixation in the pre-independence early 1970s in PNG was much influenced by two factors; what happened in Australian wage fixation politics and non-economic factors in the country. The introduction of wage indexation in the first 1974 MWB determination coincided with the 1974-75 Australian Wage Case. …

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