Dr Mahendra Reddy’s article of May 13 2026 (FS 13/05/26) argues that a minimum wage increase to $8 per hour risks making Fiji economically uncompetitive. He does not disclose that as FCCC Chairman and FijiFirst parliamentarian under the Bainimarama administration, he helped design and administer the wage suppression architecture he now defends from a university chair. That omission is the starting point of this response.
The author’s conflict of interest
DR Mahendra Reddy writes as a Senior Fellow at the University of the South Pacific Graduate School of Business (FS 13/05/26). His article on minimum wages carries the authority of an academic economist. What it does not carry is a disclosure of his institutional biography. Dr Reddy served as a FijiFirst parliamentarian under the Bainimarama government, the administration that introduced Fiji’s first national minimum wage of $2 per hour in 2014 and maintained it, with minimal adjustment, across its tenure. He served as Chairman of the Fiji Commerce Commission, the regulatory body that oversaw wage and price conditions in Fiji’s formal economy during the same period. The FCCC operated under a government that banned and suppressed union activity, removed collective bargaining rights, and treated labour advocacy as a threat to national stability. Dr Reddy was a senior institutional participant in that system and a minister. When he now advises caution on raising the minimum wage from $5 to $8 per hour, readers are entitled to know the full picture of who is offering that advice and from what institutional vantage point it originates.
The baseline deception
The centrepiece of Dr Reddy’s argument is a trend line. The national minimum wage increased from $2 in 2014 to $5 by April 2025, a 150 per cent increase over eleven years, averaging 13.63 per cent per year. He presents this as evidence of substantial wage progress. It is evidence of the opposite. The $2 per hour baseline was not a neutral market-determined wage floor. It was set by a regime that had simultaneously suppressed unions, criminalised labour advocacy, and dismantled collective bargaining.
Measuring progress from a figure that was itself the product of systematic wage suppression does not establish that workers have been treated fairly. It establishes that the suppressed base has been allowed to rise, partially and belatedly, toward something approaching adequacy. At $5 per hour, a full-time worker in Fiji earns approximately $10,400 per year. Australia’s national minimum wage in 2026 is approximately $A24.10 per hour. New Zealand’s is $NZ23.15 per hour. These are the economies to which Fiji’s workers are emigrating in their tens of thousands. Dr Reddy’s trend line explains precisely why.
The market forces paradox
Dr Reddy argues that Fiji’s labour market currently exhibits worker shortages across tourism, construction, agriculture, and services. Under standard economic theory, a labour shortage should increase worker bargaining power and push wages upward without legislative intervention. He uses this argument to suggest that a mandated minimum wage is therefore unnecessary and potentially counterproductive. The argument contradicts itself. If market forces were genuinely pushing wages upward in response to scarcity, the minimum wage at $5 per hour would have been exceeded organically across all shortage sectors. It has not been. Instead, Fiji’s employers have responded to the labour shortage not by raising wages, but by importing workers from Bangladesh and other lower-wage nations who accept below-standard conditions and lack the legal knowledge to enforce their entitlements. The Prime Minister himself has stated publicly that employers are actively preferring overseas workers. This is not a functioning labour market. It is a labour market in which worker scarcity is being resolved by circumventing domestic workers entirely rather than compensating them appropriately. Market forces theory requires workers with genuine bargaining power. Fiji’s domestic workforce has been denied that power for sixteen years.
Who is in the begging bowl?
Dr Reddy frames his article around a pointed inversion: Businesses are not welfare institutions, and asking employers to solve national poverty through wage mandates is misplaced policy. The framing is rhetorically effective. It is economically dishonest. Fiji’s major commercial conglomerates — operating across retail, manufacturing, distribution, milling, and hospitality — generate annual profits in the hundreds of millions while paying workers the legislated minimum of $5 per hour. A full-time worker at that rate earns $200 per week before deductions. The business lobby that opposes a wage increase to $8 is simultaneously the beneficiary of a state-maintained wage floor that has been suppressed below subsistence for 16 years. When the cost of labour is kept artificially low by institutional design, the commercial entities paying that wage are receiving an implicit subsidy from the workers who supply it. The welfare in this arrangement does not flow to the workers. It flows to the shareholders. Dr Reddy’s own framing, applied to the correct parties, indicates the position he is defending.
$1.2 billion tells the story
There is one economic indicator that Dr Reddy’s article does not cite, and it is the most revealing number in Fiji’s entire economic dataset. In 2024, Fiji received $F1,231 million in personal remittances from citizens working overseas — up from $F871 million in 2022, an increase of more than 41 per cent in two years. Remittances now represent approximately 9 per cent of Fiji’s GDP and constitute the nation’s largest single source of foreign exchange income. Much of this flow derives from the Pacific Australia Labour Mobility scheme, under which Fijian workers travel to Australia to perform agricultural and other labour at wage rates that are orders of magnitude above what they could earn at home. This is not an economic success story. It is the monetised record of a domestic wage failure. Fiji is exporting its nurses, meteorologists, lawyers, mechanics, electricians, air traffic controllers, engineers, carpenters, and bricklayers — every skilled cohort at every level of the economy — and importing the wages those displaced workers earn abroad. A nation whose biggest revenue stream is the wages of its absent citizens has not solved a problem. It has institutionalised one.
The Bangladesh worker argument backfires
Dr Reddy notes that Fiji has been importing labour from Bangladesh to fill domestic workforce gaps. He presents this as evidence that the labour market is tight and therefore wages need not be legislated upward. The analysis requires reversal. Bangladesh workers are preferred by Fiji’s employers not because they are more productive, but because they are more exploitable. They arrive on temporary visas, they do not know Fiji’s labour law, they cannot effectively assert their entitlements, and they can be removed without the procedural protections that domestic workers — however inadequate — can access. The Prime Minister’s own public statement confirms that employers are actively choosing overseas workers for precisely these reasons. What Dr Reddy describes as a labour market responding to scarcity is in fact a labour market using imported workers as a mechanism to avoid paying Fijian workers a living wage. Every Bangladesh worker employed at a wage rate that a Fijian worker would and should reject is a data point demonstrating that the market is not correcting the wage suppression. It is extending it by alternative means.
The productivity trap demolished
Dr Reddy’s most academically presented argument is that wages must follow productivity, and that Fiji cannot legislate itself into prosperity. Countries that sustain high wages, he observes, do so because workers generate high output and value. Productivity must come first; wages follow. This argument has a distinguished economic pedigree and a catastrophic empirical record in small developing economies. Singapore, Taiwan, and South Korea did not achieve high-productivity, high-wage economies by waiting for wages to rise as a consequence of productivity growth. Each implemented deliberate wage and labour policy that forced wages upward, compelled employers to invest in skills and technology, and produced productivity growth as a consequence of the wage pressure rather than as its precondition. Low wages suppress productivity because they remove the employer incentive to invest in labour-saving technology and skills development. They also suppress worker health, nutrition, concentration, and motivation. A meteorologist colleague of mine, earning below $30-40,000 annually in Fiji, was offered more than $A90,000 ($F143,000) overnight in Australia — with full penalty rates, Medicare, education support, and superannuation. No rational argument about Fiji’s wage-productivity alignment survives that comparison. Almost every single meteorologist who worked with me in the past left for overseas deployments, often at 300-500 per cent hike in their pay and conditions. This remains to be the case today.
