Can Jamaica transition from minimum wage to “livable wages”?

In his 2025 budget presentation, Opposition Leader Mark Golding suggested that wages should be tied to the cost of living, ensuring that workers can afford their basic needs. 

However, speaking on Taking Stock with Kalilah Reynolds, Economist Dr Chris Stokes, expressed some concerns. 

He said that while higher wages would mean more money in people’s pockets, it could also lead to problems for businesses. 

He said that if companies are forced to pay much higher wages, some may struggle to afford it. This could lead to job losses. 

“It’s fairly predictable that if you move from a minimum wage to a livable wage that could be a material increase,” Dr. Stokes explained. “We may expect less employment because people simply can’t afford to pay those wages.”

Dr Stokes pointed out that many small and medium-sized businesses could be hit the hardest. These companies are important for Jamaica’s economy, and if they face higher costs, they might not be able to hire as many workers. 

He also mentioned that while a slight increase in wages may not cause big changes, pushing wages up too much could hit what he calls an “inflection point.” This is where businesses start cutting jobs because they can’t afford the higher salaries.

However, there’s another side to the story. If workers earn more, they have more money to spend. This could help businesses grow because people would be buying more goods and services. Dr Stokes acknowledged this but emphasised that a competitive labour market, where businesses naturally pay higher wages when they can, is a better solution than the government setting a much higher mandatory wage.

Meanwhile, Prime Minister Andrew Holness later announced that Jamaica’s minimum wage would increase from J$15,000 to J$16,000 starting June 1, 2025. While this is not a move to a livable wage, it does mean workers will get a bit more in their paychecks.