The Aruba Food & Beverage Association (AFBA) is closely monitoring the Government’s plan to raise the minimum wage to the level of the subsistence minimum (bestaansminimum).
AFBA recognizes that every worker deserves an income that allows them to cover their basic needs. However, an increase of this magnitude must be evaluated responsibly, understanding its impact on businesses, employment, consumer prices, and Aruba’s economy.
While AFBA supports efforts to improve workers’ purchasing power, it emphasizes that these efforts must be accompanied by a realistic plan that guarantees business sustainability and job protection.
FINANCIAL IMPACT ON THE FOOD AND BEVERAGE SECTOR
Restaurants, bars, cafes, and catering businesses contribute significantly to Aruba’s tourism industry and economy. However, many of these businesses operate with limited profit margins, while personnel costs constitute a major portion of their operating expenses.
Based on the figures used for this analysis, the current monthly minimum wage is Afl. 2,007.05, while the considered subsistence minimum is Afl. 2,683. This represents an increase of Afl. 675.95 per month for a worker currently earning the minimum wage.
Adding approximately 25% for additional employer costs, the increase can reach Afl. 845 per worker per month, or Afl. 10,139 per year.
For an employer with 50 workers currently earning the minimum wage, this could represent an increase in expenses of approximately Afl. 42,247 per month, or more than Afl. 506,000 per year.
These figures are illustrative calculations and do not include possible wage adjustments for workers who already earn more than the current minimum wage.
THE IMPACT EXTENDS TO WORKERS EARNING ABOVE THE MINIMUM WAGE
The financial impact may extend far beyond workers currently earning the minimum wage. In the Food & Beverage sector, employees often earn more than the minimum wage due to their experience, responsibilities, or position. When the minimum wage rises, these workers may also expect wage adjustments to maintain the differential between their salary and the new minimum wage.
For example, a kitchen assistant earning Afl. 2,500 per month, working a six-day workweek, currently earns more than the prevailing minimum wage. If the same differential is maintained after a minimum wage increase to Afl. 2,683, the worker’s salary could rise to approximately Afl. 3,176.
Although this type of adjustment is not automatic, employers must take into account the potential impact on the complete wage structure and total personnel costs.
AFBA also emphasizes that calculations must reflect common labor arrangements in the sector, where a six-day workweek and 45 hours remain common practice in many businesses, rather than basing calculations solely on examples of a 40-hour workweek.
THE CENTRAL QUESTION: WHO PAYS THE COST OF THE INCREASE?
AFBA believes that the Government must clearly explain how the proposed increase will be funded and who will bear the additional costs.
If employers are faced with a considerable increase in wages and labor contributions without relief in other business expenses, they may be left with no choice but to raise prices, reduce operating expenses, postpone investments, limit staff hiring, or reconsider the number of personnel they employ.
Increases in wage costs can also lead to higher menu prices. If this happens across different sectors, the resulting inflation could reduce part of the gain in purchasing power that the wage increase attempts to introduce.
Higher wages do not automatically translate to a better standard of living if the cost of living rises at the same time.
Therefore, AFBA calls on the Government to evaluate measures such as reductions or adjustments in social security contributions, taxes, and other fiscal burdens affecting businesses.
The goal must be to improve workers’ living standards without placing an unsustainable burden on employers and increasing costs for consumers.
A RESPONSIBLE AND SUSTAINABLE APPROACH
AFBA acknowledges the establishment of Social Dialogue as a platform for consultation between the Government, employers, labor unions, and other interested parties. However, the existence of such a platform must be reflected in the decision-making process.
Social dialogue must not be merely a formality; it must guarantee that the concerns, recommendations, and potential consequences identified by all parties are genuinely considered before important decisions are made.
AFBA is concerned that an increase in the minimum wage to the level of the subsistence minimum may proceed without sufficient agreement among the involved parties, despite the significant economic and social consequences for businesses, workers, and consumers. Therefore, AFBA emphasizes that a measure of this magnitude should not be treated as a settled decision while meaningful discussions are still taking place.
We call on the Government to demonstrate a genuine commitment to social dialogue, addressing the concerns expressed by employers and other interested parties, and making every reasonable effort to reach a balanced and broadly supported approach before implementing the measure.
Decisions with such sweeping consequences must be based on transparent evaluations, meaningful consultation, and a clear understanding of how the resulting costs will be managed. Without this commitment, the purpose and credibility of Social Dialogue could be weakened.
A comprehensive plan must include:
- A reliable economic evaluation covering wages, employment, business expenses, and consumer prices.
- Realistic calculations reflecting labor hours and employment practices in the Food & Beverage sector.
- An evaluation of possible wage adjustments for workers currently earning more than the minimum wage.
- A clear financing plan identifying how additional costs will be covered.
- Fiscal relief or reductions in contributions, and targeted support for small and medium-sized enterprises.
- A gradual implementation plan and a system to monitor the effect on employment and inflation.
AFBA believes that improving workers’ well-being and maintaining a healthy business environment are objectives that can go hand in hand. To achieve both, transparent calculations, meaningful consultation, and practical solutions are required.
A SHARED RESPONSIBILITY FOR ARUBA’S FUTURE
As an important part of Aruba’s tourism industry, AFBA remains committed to constructive dialogue and finding solutions that balance social well-being with economic sustainability.
Workers deserve a living wage, but businesses must also remain competitive, protect jobs, and continue creating opportunities.
AFBA urges the Government to ensure that any decision related to the subsistence minimum is supported by a clear financial plan that protects purchasing power, employment, and the sustainability of Aruba’s business community.
Our goal must be an Aruba where workers can live with dignity, businesses can continue to grow, and the economy can maintain its competitiveness and generate prosperity for our entire community.