Wage rise triggers American Samoa job losses

Since 2007 the US has imposed a minimum wage structure on its territories.

The report says that as a result of the increase American Samoa's employment has fallen and there are concerns that budget shortfalls could threaten future development.

Presenter: Geraldine Coutts

Speaker: Togiolo Tulafono; American Samoa's Governor

Listen:

Windows Media

TULAFONO: It's been devastating for the last two years. We're recovering a bit with the programs we're putting in place to soften the blow on families, but it's still have a very uncertain future, because the wages are scheduled to increase again in 2012.

COUTTS: Well, an attempt to make wages on parity with the US mainland, the US thinking they're doing the right thing by increasing the minimum wage has resulted in job losses. How many job losses in American Samoa?

TULAFONO: It went as far as over 4,000 jobs, which you have to realise that when we lost the cannery, together with the affect of the tsunami, a lot of devastation resulted to the territory over and above the damages of the tidal wave. And this being a single industry jurisdiction when the cannery closed, a lot of businesses that are also dependent on the existence of that cannery closed as well and immediately after the cannery was closed over 2,000 jobs were lost immediately.

COUTTS: What happened to those people?

TULAFONO: Well, some of them are still unemployed, a good part of them are now going to a retraining program. We received some generous funding from the United States to retrain them, but the problem we have there is we don't have any other industries. There's only so many jobs available and so many kinds of jobs available that even if we retrained them in new areas, new trades, that the jobs are still lacking. So we're training them in the hope that we can also find jobs for them outside of American Samoa and hopefully we'll soften the blow on our families.

COUTTS: Are you now looking at school leavers entering the class of the permanently unemployed if this situation continues?

TULAFONO: Oh, we continue to work with our fisheries, because we don't have any precious metals or anything of those natural resources and fish in the ocean are the only resources that are immediately available as you well know to any Pacific Island country. So we are still committed to working with our fisheries, the canneries, the long liners, the persayners and our local fishing fleets to continue to develop fisheries in different ways.

COUTTS: How can you do that without a cannery?

TULAFONO: Well, we still have one cannery operating. We've signed agreements with another cannery to take over the plant that was closed, although they're coming into business is a bit slow, but we are still very hopeful that those developments will materialise soon and will then elevate the situation back to as close as it was a few years ago.

COUTTS: Well, you've been in negotiations with the cannery for sometime now after it closed and the negotiations have been protracted. Have you managed to reach any agreement with them, because they wanted a range of government assistance and tax concessions. Have you reached agreement with them?

TULAFONO: Yes, we have. We've signed a lease with them to lease the land where the plant is located. We've submitted it to our legislature and the legislature has given his approval for a long term lease, so they have that secure. We've worked out a system of tax holidays with them to give them assistance to try and offset the high cost of labour and high cost of other like the energy and things like that. So all those are in place. They have submitted to us a modified plan for their cannery and we're also working with them in setting up and standing up a fresh and frozen fish processing plant and so a little bit of diversification from a simple cannery is being worked on we've also recaptured our ship yards in the hope that we will do more of repairing of the fishing boats, so even the fish that will not be processed in American Samoa can be unloaded here if we have the ship yard available to the fishing fleets.

COUTTS: Now, there is still more instalments of the minimum wage bargain that has been struck at the insistence of the US. Have you gone back to the US to say look, once you've got this report, the findings from this report and saying look, we just can't manage this, it's having a devastating impact, can you table that now and put it in the bin for now and no more wage increases until the territory actually settles it's finances?

TULAFONO: We have in fact began that process. We have people in Washington DC beginning to work through with our Congress in the hope that we will find the appropriate avenue for fixing the problem. We're not opposed to increasing wages. We're just arguing to our Congress that these studies should have been made before as we've argued right from day one, instead of just increasing the minimum wages arbitrarily and in response to political pressure. It should have been studied before because I have insisted to them that this is going to be devastating to our economy and now two studies later, and four years later, we're exactly where we said we would be and the studies have now confirmed what we said four years ago. So now we're going back to them and appealing to them that we need a formula, we need a process and we need a way that we can make wages grow, along with economies where it will help us grow the economy and grow the jobs in the territory and also to help us maintain this industry, because it's a highly competitive industry in the world anymore. Our market is now competing with Thailand, Vietnam, Ecuador and we're not competing with anybody in the United States.