The Wages Index
As stated by Moore & Maynard (2004)
“A wages index is normally employed to track changes -in the general level of the price of labour in an economy. It can be used as an indicator of variations in the standard of living of the labour force over time, and, given Barbados’ fixed exchange rate, provide an important barometer of the external competitiveness of the nation.”
The authors first introduced the new approach to update the discontinued wage index (formerly compiled by the Barbados Labour Department) in their paper entitled
“Extrapolating the Discontinued Wages Index Using Data on Collective Wage Bargaining Agreements”.
The discontinued wages index series, a Laspeyres Index, was an arithmetic mean of wages and salaries indices for hourly-paid skilled labourers in the sectors given in the below table, using a 40-hour week as the basis of calculation. Weights were based on the percentage of total employment provided by the sectors, where employment data was unavailable in the detail required the percentage contribution to GDP by the sector was used.
The agricultural sector is represented by sugar farms.
Data was not available for garments and food for 1970. Wage index for that year is assumed to be the same as for 1971, since agreements at that time lasted for three years. No data available for chemicals for 1970-72; wages in the sector assumed constant.
As of 1985 the index was adjusted to accommodate the removal of the category domestic services. This was due to the curtailment of data collection for this category by the Labour Department in 1980 when a minimum wage of $60 per week was legislated for this category.
published in the Bank’s ECONOMIC REVIEW Vol. XXXIINo. 3 December 2005
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