The body known as the Minimum Wages Board, which was first set up in 1972, determines wages in Papua New Guinea.

The national Minimum Wage is set by the Minimum Wages Board.

The board meets every three years. The Minimum Wages Board over the past 20 years has continued to examine wage determination issues in an attempt to find a national wage formula.

The latest determination of the board was gazette on 15 September 1992 and is effective from the date of gazettal. This Determination applies to, an is, in relation to all employees and employers to whom the Employment Act Chapter No. 373 applies, and supercedes all previous Determinations including the Determination No. 1 of 1989.

The board’s decision was based on information submitted by employer groups, union, government organizations, and many others. The following is a summary of the submissions:

 

Assessment of PNG’s economic conditions- low commodity prices on international markets affected the domestic markets affected the domestic economy, as well as the closure of the Bougainville mine.

These events convinced the board of dangers or relying on one project as a major earner of foreign exchange.

Emphasis was on the agriculture sector because it employed the bulk of the population and provided livelihood for most Papua New Guineans.

High cost of labour and low productivity was a genuine concern in the agriculture sector.

Uncompetitiveness of PNG agriculture commodities on export markets was another concern.

Mining and petroleum sector still had high potential to contribute to revenue growth in the short and medium term.

Revenue derived from the mining and petroleum sector is channeled to the agriculture, manufacturing and infrastructure sectors to encourage employment.

About 60,000 working age young people left school each year. Only a small portion of this figure continued in school or secured some training. The majority sought employment.

The 1992 board was concerned about the rising number of unemployed youth. Therefore the board’s decision on a National Youth Wage had to reflect flexibility in wages so that wages could be adjusted according to market forces and opportunities nor new employment, in the manufacturing sector which had the potential of creating jobs, would rise.

The board highlighted the 1989 Minimum Wages Board Determination in regard to the ‘capacity or the incapacity to pay’ provision which helped the industry to maintain production levels and maintain their employees during depressed times as outlined above. The board wished to continue with the provision due to low economic growth and low employment generation.

The board agreed to make provision for a nominal wage adjustment of 2 per cent for minimum wage earners as part of the transitional process of adjustment. The transitional arrangement was also necessary to cater for the intervening period between the end of operational period of the 1989 Determination and before the 1992 Determination took effect.