Palau’s national congress, the Olbiil Era Kelulau (OEK), is considering two proposals to raise the minimum wage.

The government has advocated for an increase for the past three years, recently granting a US$3,120 annual raise to public sector employees.

Two bills are on the table: House Bill 11-49-5S, HD2, and a supplemental budget proposal submitted by President Surangel Whipps Jr on 15 March 2024.

The debate centres on balancing the needs of a recovering private sector facing inflation with the rising cost of living for workers.

House Bill 11-49-5S, HD2, initially proposed raising the minimum wage from US$3.50 to US$8.50 per hour. The revised version submitted to the Senate mirrors President Whipps’ proposal of a phased increase:

*A first increase of 75 cents to US$4.25 per hour on 01 October, 2024.

* Another 75-cent increase to US$5.00 per hour on 01 October 2025.

The House version proposes further annual increases of 50 cents until reaching US$6.00 per hour in 2027, while President

Whipps’ plan caps the minimum wage at US$5.00 per hour.

A key difference is that the House bill applies the increase only to Palauan citizen employees, while President Whipps’ proposal extends it to all workers. Both bills allow existing contracts to be fulfilled but require adherence to the new minimum wage upon renewal.

While some businesses fear the proposed increases could cripple their operations, President Whipps dismisses these concerns as excuses to avoid raising wages.

The potential impact includes higher prices for goods and services, along with increased income and social security taxes.