This is not the right time to declare a minimum wage, says Finance Minister Ibrahim Ameer.

Highlighting the economic impacts of the Covid-19 pandemic, the finance minister made the statement during a meeting of the parliament’s committee on economic affairs.

Speaking at the meeting, Ameer said that they predict an economic contraction of 11.5 percent this year, and noted the challenges in establishing an economic outlook for the year given the possibility of a second wave of Covid-19 cases.

The Minimum Wage Board has recommended to set a minimum wage of MVR 6,400, as well as between MVR 6,400 and MVR 8,600 for civil servants and those in the tourism sector.

Noting that these are “high” even compared to international standards, the finance minister said that the most developed nations provide a minimum wage of 25 to 35 percent of the average income rate.

He said that the average income rate in Maldives in MVR 9,014, and stressed that the MVR 6,400 is 81 percent of the average income rate.

He said that by declaring a minimum wage of MVR 6,400, they predict that the state budget will increase by MVR 3.7 billion.

The finance minister also noted that USD 278 million would go out of the country per year if the minimum wage is based it on MVR 6,400 as a large portion of the wages of foreigners is sent abroad as a remittance.

Stressing that this is “not the right time” to declare a minimum wage, the finance minister said that it might take as long as 2022 to regain the losses faced due to the pandemic.