ILO launches new evidence-based minimum wage report to support Caribbean employers

Port of Spain, Trinidad and Tobago (ILO News) - The Caribbean business community continues to navigate rising labour costs, skills shortages, economic uncertainty, and increasing pressure to remain competitive. As a result, wage-setting discussions are becoming more frequent and more complex, and Employers’ and Business Membership Organizations (EBMOs) need stronger evidence, clearer arguments, and practical tools to support their members. The new ACT/EMP–ILO report Setting a minimum wage through evidence-based practices. A situation analysis and guide for Caribbean employers’ and business member organizations responds to this need. It offers a regional analysis based on surveys, interviews, and economic data from 14 Caribbean territories. Its purpose is straightforward: to help EBMOs understand how productivity and wages interact, and to use this knowledge during policy discussions and collective bargaining.

Against this backdrop, the virtual launch of the guide was organized by the ILO Bureau for Employers' Activities (ACT/EMP) and hosted by the International Labour Organization (ILO) Caribbean Office on 26 November 2025. The event brought together tripartite stakeholders from across the region to strengthen social dialogue and promote data-driven approaches to wage setting.

Opening the session, Maria Victoria Giulietti, ILO Senior Specialist for Employers’ Activities, thanked the 190 companies and 17 employers’ organizations from 13 ILO Member States, as well as Aruba and Sint Maarten, whose survey participation and interviews shaped the publication. She emphasized that the report gives EBMOs practical tools to support members during wage negotiations. It helps them to explain the relationship between wages and productivity; promote regular and moderate adjustments and strengthen technical arguments at the bargaining table. EBMOs now have Caribbean-specific evidence to show how wage increases affect SMEs, how labour costs influence competitiveness, and what businesses do when labour costs rise too fast.

Report overview and key findings
Lead author Pedro Espaillat presented the report’s in-depth analysis, noting that all of the countries and territories covered had adjusted their minimum wages following the COVID-19 pandemic, many after long periods without revisions. These adjustments ranged from 2 per cent to 138 per cent, with political considerations frequently outweighing empirical indicators such as inflation, labour productivity, or GDP growth.
Survey findings revealed that employers place strong emphasis on the cost of living (particularly consumer price index trends), the capacity of businesses to absorb higher labour costs, and the importance of labour productivity and competitiveness in determining wage levels.

Despite their importance and impact, the report highlights that these indicators are not consistently applied in national wage-setting processes. While real minimum wages have risen and reshaped wage structures, there is no evidence of widespread employment losses or significant price shocks. However, many firms reported coping with increased labour costs through price adjustments, efficiency improvements, or adopting new technologies to maintain viability.

The report also identifies several ongoing challenges across the region. Many countries continue to rely on irregular or ad hoc review cycles, making wage adjustments unpredictable for both employers and workers. Limited access to reliable or consistent productivity data complicates evidence-based decision-making, and in several territories, wage-setting processes remain heavily influenced by political dynamics rather than technical analysis.

Launch highlights
Ms. Giulietti underscored the need for robust tripartite engagement, explaining that minimum wage decisions must be grounded in labour market data, cost-of-living assessments, and employers’ financial realities, to build trust and ensure sustainability. She cautioned against unilateral, government-driven decisions, stressing the importance of dialogue-driven reforms.

Mr. Espaillat facilitated a highly engaging discussion that included Menti polls and contributions from participants representing Antigua and Barbuda, Belize, Saint Lucia, Trinidad and Tobago, and Montserrat. Participants highlighted examples such as Saint Lucia’s updated wage-setting model, which incorporates the Kaitz Index at 60 percent of the median wage, a positive step toward standardizing evidence-based practice. Others raised concerns about the pressures that arise when wage adjustments are driven by political promises rather than technical considerations, reinforcing the need for predictable review intervals and the inclusion of productivity indicators in national frameworks.

Participants also described how businesses have been adapting to increased labour costs through price changes, technology adoption, and operational efficiencies, while reaffirming the need for transparent, predictable, and economically grounded wage-setting systems.

Recommendations and next steps
The report proposes several structured methodological approaches that Caribbean Employers and constituents can adopt to improve the balance and transparency of their wage-setting systems. These include formulas that combine inflation and productivity metrics, multi-component frameworks that assess several labour market indicators, automated triggers or pauses during periods of economic instability, benchmarking tools such as the Kaitz Index to guide wage levels, and ratios linked to GDP per capita.

Employers and business organizations surveyed expressed strong support for two- to three-year review cycles, with adjustments differentiated by occupation or skill level rather than uniform increases across all sectors. The report recommends using robust productivity data such as output per hour metrics from ILOSTAT, while acknowledging measurement challenges in small island contexts.

In closing, participants reaffirmed their commitment to using the data available in the report to strengthen national wage-setting processes. Giulietti reiterated the ILO’s ongoing support to Caribbean Member States and territories  as they work toward predictable, transparent, and socially just minimum wage systems.