According to the Department of Labor and Research (DAO), approximately 20,526 private sector workers (43%) earn less than the subsistence minimum (Afl. 2,683). However, the figures do not provide a complete picture because they exclude tips. In 2019, AHATA confirmed that many hotel and restaurant workers receive significant income from tips. A worker with a base salary of Afl. 2,000 per month and Afl. 1,000 in tips takes home Afl. 3,000, well above the subsistence minimum. DAO statistics indicate that around 30% of those earning below Afl. 2,500 per month work in food & beverage and accommodation. When including those working in hospitality via employment agencies, around 5,500 to 6,000 workers (28%) may appear to earn below the subsistence line on paper while their reality is quite different.
How much will the increase cost?
The current minimum wage is Afl. 2,007.05 per month; to reach the subsistence minimum (Afl. 2,683), it would need to rise by an additional Afl. 675.95. For an employer, the extra cost would be around Afl. 844.94 per employee, including 25% for employer social security contributions (AOV/AWW/AZV/ZV/OV). An employee earning exactly the minimum wage would take home Afl. 8,111.40 more per year, while an employer would pay approximately Afl. 10,139.– more annually per minimum-wage worker. Naturally, not all 20,526 workers earn strictly minimum wage, but assuming an average increase of Afl. 400.– per month, the total additional cost for the private sector would reach Afl. 98.5 million in direct wages and Afl. 123.2 million including employer expenses. Is there room in the 2027 budget to provide adequate compensation?
A proposal by a Member of Parliament to raise the minimum wage by Afl. 1.33 per hour across three annual phases would result in a cumulative annual expense of roughly Afl. 71 million in 2027, Afl. 142 million in 2028, and Afl. 213 million in 2029, assuming all 20,526 workers receive the full adjustment.
How does the government intend to compensate businesses? Will this compensation be temporary or permanent? Where will the funds come from? Reducing profit tax (winstbelasting) is not enough. While a profit tax reduction has been proposed, it solely benefits profitable businesses. Companies making no profit (such as many startups) or operating on thin margins will receive minimal relief while facing sharply higher payroll costs.
Consider a company with Afl. 1 million in profit and 30 employees receiving an additional Afl. 230 per month. Lowering the profit tax by 1% to 1.5% saves Afl. 10,000–15,000 annually, whereas the wage hike costs roughly Afl. 103,000. Over 85% of the additional expense remains uncompensated and will likely be passed on to consumers.
When Bonaire increased its minimum wage by $514 between 2023 and 2024 (a 41.6% increase), the government lowered employers’ social security contributions from 13.4% to 10.3% (a 23.1% reduction). A broad reduction like Bonaire’s benefits all businesses, not just those with direct wage expenditure hikes. Given the growing number of retirees, can SVb and AZV sustain a substantial drop in revenue?
Public finances under pressure
The challenge of compensating businesses for a structural rise in labor costs comes amid geopolitical instability, rising interest rates, and existing structural fiscal commitments by the AVP-Futuro government. Repair allowances (reparatietoeslag) for pensioners, higher social assistance, expanded benefits for individuals with disabilities, and educational salary adjustments have already generated an annual fiscal impact of around Afl. 147 million in 2026, projected to grow to Afl. 180 million by 2030 (including lost revenues).
Now the government must incorporate permanent compensation for businesses, pushing the structural fiscal increase above Afl. 200 million within just two years in office. The government must present a clear financial strategy with stress tests so the public is not hit with emergency austerity measures during future economic downturns.
What happened to government reform?
In 2026, government revenue is projected at around Afl. 1,945 million—yet that is still insufficient? The Tourism 3.0 concept proposes a 125% increase on entry fees by adding a $25 resilience fee on top of the $20 sustainability fee. However, solutions for Aruba’s sewage system and landfill (dump) issues remain as distant as ever. Plans also include raising room taxes and cruise passenger taxes, but when it comes to reforming government operations to meet core duties: nothing. The state of our roads, school infrastructure, and healthcare—even with nearly Afl. 2 billion in revenue—points to structural inefficiencies that no politician seems willing to tackle.
Where is the plan to cut government spending, streamline the bureaucracy, and improve efficiency? Why not consider reducing BBO, eliminating BBO at the border, or reviewing import duties (invoerrechten) to boost purchasing power? While not all tax cuts can be funded, accepting higher spending and tax hikes as the only answer is unacceptable. With nearly two billion florins in annual revenue, the government must prove it can manage resources effectively before demanding more.
Time to pull the handbrake
No one disputes that workers deserve better pay, or that Aruba needs modern schools and proper infrastructure, but these must be sustainably financed. Minimum wage increases, business compensation, expanded social benefits, and new visitor taxes are not isolated choices—they are interconnected parts of the same fiscal policy. The core issue is not simply how much revenue the government collects, but how effectively it manages those funds. It is time to pull the handbrake and reflect on our current direction before today’s obligations compromise tomorrow’s future.