Boosting agribusiness by opening access to markets for 16,000 plus Papua New Guinean

by PNG Business News - September 13, 2022

EU-STREIT PNG started work on two additional farm-to-market access roads in Sandaun and East Sepik provinces totalling 56 plus km, to serve over 16,000 villagers, including businesspersons, women and school children, with improved access to towns, health posts and schools.  

The International Labour Organization (ILO) under the EU Funded UN Joint STREIT EU-STREIT PNG has started major improvement work on two key Farm-to-Market Access Roads in Vanimo-Green District, Sandaun Province and Wosera-Gawi District, East Sepik Province.

Connecting two Pasi and Krisa rural communities in Bewani-Wutung Onei LLG of Sandaun Province, this 25 km road will serve more than 3,000 rural population.

Thirteen thousand plus villagers living in South Wosera and North Wosera LLGs, East Sepik Province, will also benefit from a road rehabilitation project started by ILO to improve the 31.6 KM Farm-to-Market Access Road connecting Patiko and Nuangawai rural communities, it includes 13,000 plus farming-dependant population who lives along this road.

The roads rehabilitation and maintenance projects implemented by the EU-STREIT PNG Programme will provide safe, reliable, and climate-resilient transport infrastructure to cocoa, vanilla and fishery-dependant farming communities in the Sepik region, facilitating agribusiness nourishment, people, goods and crops movements and better marketing for locally produced agri-food products.

“These roads are important since they help the trade and open business opportunities, market access and also help who provide services such as trucking and Public Motor Vehicle (PMV) operators for movement of people and goods,” said Mr Wesley Weli, Director of National Authorising Officer Support Unit, Department of National Planning and Monitoring. 

Likewise, these farm-to-market access roads are also a relief to villagers, particularly women and mothers who carry heavy loads and walk with their children for hours to the main highway to catch a PMV to town to sell their produce and get medical treatment.

“These roads are very important also in terms of enabling socioeconomic indicators, including health, education, and financial services. These roads also help local businesses and movement along the roads. These projects are a win for all fronts, for all people living around roads,” explained Mr Weli.

“We mothers feel the pain of carrying heavy garden produce as well as our sick children and walk this road for hours to the junction. If we’re lucky, we catch a PMV to town. If not, we walk back to the village and do the same thing the next day,” said Maria Mali, a mother of 11 children and grandmother of 12 grandchildren, living along Pasi-Krisa road in Bewani-Wutung Onei LLG.

Maria was part of about 500 villagers who celebrated the start of specific maintenance and Rehabilitation work on the Pasi Krisa road. She has been married for 45 years and shares the dilemma the women in the area face. She said there has been no proper maintenance on this road until the recent intervention by ILO under the European Union-funded STREIT Programme in Papua New Guinea.

The two roads rehabilitation and improvement projects will be completed in 12 months which include scarifying and reshaping of existing surface, spot re-gravelling, construction of reinforced concrete cement (RCC) box and pipe culverts, and gabion retaining wall as well as installation of crash barrier at different locations. The works also include erecting traffic signs and signages to increase visibility and ensure safety of passengers. 

Speaking at the ground-breaking ceremony to mark the start of Patiko-Nuangawai access road’s rehabilitation work, the EU-STREIT PNG Programme Coordinator, Dr Xuebing Sun said, “Road is the backbone of many rural infrastructure systems. Road provides assurance for the supply of the agricultural inputs, facilitates the delivery of the farm outputs to the markets, and assure your accesses to financing, health and education services. Road will also help you to strengthen competitiveness of your products in the market.  Sincere thanks to the EU for its generous funding support, I am really happy that after one year, this road can reach you. I want to request for your active support, contribution, and participation to this road project as much as possible. Sustainability and long-term use of the road through effective maintenance rely on you; you are the ones who are going to use and own this road.”

Calling on the community to support the road project, ILO’s Chief Infrastructure Specialist, Mr Shailendra Kumar Jha, said, “the contractor is willing to complete the whole roads with quality before the 12 months period, that will generate thousands of paid decent jobs for local community and youths, however community support and collaborations are must. The Road project will also transfer the skills to local youths for future use and employability.”

This Pasi-Krisa (25 km) & Patiko-Nuangawai (30.6 km) are two out of 15 selected rural roads in the Sepik totalling 264 km in length for rehabilitation/specific maintenance by ILO to support the market access initiative implemented by the FAO-led EU-STREIT PNG to boost agribusiness activities and cocoa, vanilla and fisheries value chains for an improved income and cash flow for the rural sector. The roads will also support other agricultural, business, markets, services, inputs and social and community activities and facilities like schools, aid posts and health centres that are in dire need of better accessible roads.

The EU-STREIT PNG, as a UN Joint Programme (FAO as the leading agency, and ILO, ITU, UNCDF and UNDP as partners), is the largest grant-funded Programme of the European Union in the country and the Pacific region. Being implemented in close cooperation with the National and provincial government institutions, research entities, civil society organisations, and private sector enterprises, the Programme aims to help improve the lives of the people from East Sepik and Sandaun provinces by focusing on increasing sustainable and inclusive economic development of rural areas through improved economic returns and opportunities from cocoa, vanilla and fishery value chains while strengthening and improving the efficiency of value chain enablers, including the business environment, and supporting sustainable, climate-resilient transport and energy infrastructure development. 



Related Articles

Agriculture

PNG Business News - June 29, 2022

Supporting farmers with tools and materials to produce quality cocoa and vanilla in Papua New Guinea

In a bid to enable farmers to put into practice skills acquired during capacity-building trainings, the EU Funded UN Joint STREIT PNG Programme has started distributing tools and materials that will enable rural communities to improve their husbandry practices in cocoa and vanilla blocks. This intervention which started in May has so far distributed to 52 cocoa farmer groups in East Sepik Province and 38 cocoa farmer groups in Sandaun Province with 900,000 polybags, 90 shade cloths, 180 telescopic pole pruners, 90 measuring tape and 90 boxes of budding tape. These inputs will help the farmers to rehabilitate their blocks to improve the production of high-quality cocoa beans for an increased income to support their livelihood and families. These groups all have already received tailored training on cocoa bud grafting and block management organised by the Programme in collaboration with PNG Cocoa Board and Department of Agriculture and Livestock officers in the districts and LLGs . The skills acquired during these trainings assist the farmers to enhance their cultivation, farm management and harvesting practices. The 90 registered cocoa groups of over 45,000 farmers have started propagation of cocoa bod borer (CPB) tolerant seedlings in their respective nurseries.  The Programme will continue to support them, whereby each group will have their seedlings purchased and distributed to their respective members or farmers including youths and women for free. “I want to say thank you to STREIT PNG and the financiers of this Programme the European Union. The trainings we attended, we will now put into practice using these tools and materials,” said Mrs Maureen Mombi, whom with her husband Ben are organizing and supporting three farmer groups of 1500 members from Mushu Island, Hambraure Village (Wewak District) and Hambini Village (Ambunti-Drekikier District). For the vanilla value chain, the Programme has distributed 120 sets of vanilla cultivation, husbandry and processing tools including shovels/spade, gumboots, pruning baskets, harvesting knife, cooking pot, cooler box, strainer, thick clot, digital thermometer, kraft/wax paper, plastic canvas, and cardboard box to the farmers in 11 villages of Wewak District and 4 villages of Aitape/Lumi District. 6 Vanilla vines treatment shed with a 10,000 vines capacity has been established. The vanilla kits and sheds in total so far is supporting more than 4000 men, women and youths in rural Sepik. “The transfer of knowledge and skills to farmers and their families is an important extension activity that must be supported with tools and materials. Under the Programme we distributing these items as well with new technology to improve their practice,” explained Programme Coordinator Dr Xuebing Sun. “Tools and materials are vital link in adoption of technologies for sustainable farming systems which is being encouraged under the Programme,” added Dr Sun. Among the recipients were 1000 plus farmers from four remote communities of inland Turubu area in Wewak District, East Sepik Province. On behalf of youths and women in the village who will also benefit from this intervention, Brigitte Kamiresa, a mother at Mundangai Village, said: “I want to thank European Union. We mothers didn’t attend big schools so our youths or kids will help train us to use these tools and materials to improve our practices.” The national technical officers of cocoa and vanilla value chain have also explained on the local radios the distribution of tools and materials for farmer groups/clusters that have already been formalised and are supported under the rural agriculture development programme. “If you have transport, please come to the office at Wharf Road. For those in hard-to-reach areas, we will come to you,” said Mr Michael Lames, National Cocoa Value Chain Officer. The distribution of quality inputs by the Programme will continue to cover other farmer groups in the Programme’s implementation sites in East Sepik and Sandaun provinces. The EU-STREIT PNG, as a UN Joint Programme (FAO as leading agency, and ILO, ITU, UNCDF and UNDP as partners), is the largest grant-funded Programme of the European Union in the country and the Pacific region. Being implemented in close cooperation with the National and provincial government institutions, research entities, civil society organizations, and private sector enterprises, the Programme aims to help improve the lives of the people from East Sepik and Sandaun provinces, by focusing on increasing sustainable and inclusive economic development of rural areas through improved economic returns and opportunities from cocoa, vanilla and fishery value chains while strengthening and improving the efficiency of value chain enablers, including the business environment, and supporting sustainable, climate-proof transport and energy infrastructure development.

Business

PNG Business News - July 06, 2022

Contracts signed for rehabilitation and specific maintenance of first 4 roads in EU-STREIT PNG

To create an enabling environment including farm-to-market roads to support cocoa, vanilla and fisheries farmers in the Greater Sepik Region, the ILO under EU Funded UN Joint STREIT PNG Programme, has recently engaged three local contractors to commence rehabilitation and specific maintenance of four farm-to-market access roads totalling 52.1 km in the Sepik Region of Papua New Guinea. The ILO signed the contracts with three local firms last week. The contracted firms are Hiawani Limited for the rehabilitation of 7.8 km Banak-Wautogik road in Wewak District, Midway Pacific Ltd for the Specific Maintenance of 12.8 km Balif-Araseli road in Maprik District, and Kaystar Construction Ltd for two (2) roads; Rehabilitation of a 6.5 km Munji-Haripmo road in Yangoru-Saussia District, and Specific Maintenance of 25 km Pasi-Krisa road in Vanimo-Green District, Sandaun Province.  These roads were selected based on high production of vanilla, cocoa and fisheries in the areas that are supported under the EU-STREIT PNG Programme. The contract duration of these specific lots and packages are 12 months and the contractors have been given two weeks to mobilise their resources including machineries to commence road works by 15 July 2022. The ILO Engineer will conduct regular supervision, monitoring and monthly meetings to discuss work progress, challenges and way forward. “We will not only monitor, we will be satisfied to support you by providing technical training to the key personnel of the contractors for continuous capacity development and quality assurance of sub-projects,” explained Mr Shailendra Kumar Jha, ILO’s Infrastructure Specialist/Chief Technical Advisor under the EU-STREIT PNG. “Given the delay caused by the COVID-19 pandemic which has put a strain on the progress, I’m pleased to announce that this is a milestone achievement for the road transport infrastructure component to ensure we assist the government in its efforts to bring markets closer to the unreached in our focus areas,” said Dr Xuebing Sun, EU-STREIT PNG Programme Coordinator. The contractors were selected through the competitive bidding process using e-portal of United Nation Global Market Place (UNGM) to ensure principle of sustainable procurement of ILO. This is a totally new practice in the case of PNG where local contractors were trained on e-bidding and successfully submitted their bids using UNGM and ILO electronic Tendering System (eTS). As part of EU-STREIT PNG’s mandate to support capacity development, all contractors including their personnel will undergo training in technical areas like contract management and administration, Supervision, Quality Assurance and Quality Control, Material Testing and Laboratory Practice, environmental and social safeguards, occupational safety and health at construction site, and modern survey techniques using GIS (geographic information system) and Total Station. This is to ensure delivery of quality road transport works for EU-STREIT Programme in the Sepik Region while also fulfil PNG government’s requirement to develop professional contractors in the country. The contractors were excited and looking forward to complete sub-projects within allocated time frame of 12 months. Mr David Bannah of Midway Pacific Ltd said: “We’re very fortunate because we’re learning a lot of new things here, especially the UN ILO procurement process through e-bidding. As a local contractor I’m so proud to be associated with the Programme.” Mr Pious Hiawani of Hiawani Ltd added: “We know the ILO team will help us to become better contractors and many rural people will benefit here so I like to thank European Union (EU)-the donor agency and ILO under the STREIT Programme.” Under road transport infrastructure component led by ILO, 15 rural roads in the Sepik totalling 264kms in length will be rehabilitated to support the market access initiative implemented by the EU-STREIT PNG for rural farming communities to boost agriculture production and agribusiness activities pertaining to the three targeted value chains for an improved income and cash flow for the rural sector. The roads will also support other agricultural, business, social and community activities and facilities like schools, aid posts and health centres that are in dire need of better accessible roads. The EU-STREIT PNG, as a UN Joint Programme (FAO as leading agency, and ILO, ITU, UNCDF and UNDP as partners), is the largest grant-funded Programme of the European Union in the country and the Pacific region. Being implemented in close cooperation with the National and provincial government institutions, research entities, civil society organizations, and private sector enterprises, the Programme aims to help improve the lives of the people from East Sepik and Sandaun provinces, by focusing on increasing sustainable and inclusive economic development of rural areas through improved economic returns and opportunities from cocoa, vanilla and fishery value chains while strengthening and improving the efficiency of value chain enablers, including the business environment, and supporting sustainable, climate-proof transport and energy infrastructure development. 

Energy

PNG Business News - July 11, 2022

Installation of solar power to support rural communities in Papua New Guinea

EU-STREIT PNG preparing to install micro grid solar panels in selected public facilities to support cocoa, vanilla and fisheries entrepreneurs as well as livelihoods of rural communities. To create an enabling environment for cocoa, vanilla and fisheries entrepreneurs and to generate real possibility for economic growth that will enhance the livelihoods of rural communities, the UNDP under the EU-Funded Joint UN STREIT PNG Programme, is closing in on preparatory works with stakeholders to install solar generated clean and renewable electrical energy in the Sepik region of Papua New Guinea. In a one-day workshop organised by the Programme in Wewak, East Sepik Province, on Thursday 23 June, participating stakeholders from Division of Education, Sepik Seventh-day Adventist (SDA) Mission, Division of Health and Catholic Health Service came together to discuss and gauge feedback from beneficiaries on the installation of micro grid solar systems in six identified facilities. The selected recipients in East Sepik Province are Taul Community Health Post in Turubu area of Wewak District, Nagum Adventist Secondary in Yangoru-Saussia District and the Catholic Health Service-run Dagua Community Health Centre along west coast highway in Wewak District. The beneficiaries in Sandaun Province are all located in Vanimo-Green District namely Don Bosco Technical School, Vanimo Secondary and Baro Community Health Post. These education and health facilities are located in areas with limited or no access to grid-connected electricity. Opening the workshop was Head of FAO Country Office in Papua New Guinea Mr Bir Mandal who was visiting Wewak to support the programme to expedite the programme implementation and enhancing partnerships with East Sepik Provincial Government. Mr Mandal draw attention to the global scenario on energy access and what this means for the Greater Sepik Region and PNG. “A third of the 2.6 billion people in the world still do not have access to safe, clean fuels and technologies for cooking or heating their homes, at significant health, social and environmental costs. In PNG, only 15% of the total population of about 8 million have access to grid connected electricity.” He added: “For change to occur, we need to reset our energy systems and put people into the centre – ensuring that these systems are cleaner, more secure, more resilient, and totally inclusive.” “Under the Programme, we’re working together with relevant Government of PNG (GoPNG) agencies at the national level and our target provinces to ensure communities in the agri-value chain get connected to electricity via renewable energy sources. This initiative will contribute to the GoPNG’s energy access target as outlined in the Medium-Term Development Plan III and various development plans, policy frameworks and regulatory instruments,” said Mr Mandal. Despite the disruption in the global supply chain by the Pandemic which has put a strain on the progress of this effort, UNDP’s Project Manager, Ms Karen Anawe, said, “I’m pleased to announce that preparatory works are now underway to ensure we assist the government to close the energy access gap by promoting clean energy and a transition towards a low carbon economy in our focus areas.” Ms Anawe said the meeting also discussed sustainability and ownership arrangements of these micro grid solar systems. For the recipients, unreliable electricity supply has been an ongoing dilemma for years, hence the support will give confidence as well as strengthening their operations to service better the rural people. “Nagum Secondary is a recipient of this support and I like to say thank you to the European Union as financiers of this impact project, not only for the school, but for the community at large. We’re glad that the solar project in the future will gather for students from the Sepik provinces, and also from Madang and Morobe,” said Mr Jeffrey Saigomi, Secretary for Sepik SDA Mission. For Dagua Community Health Centre, serving sick patients after hours or in the night has been an concern for some years because of no proper lighting. “This is a big help to us, especially for the people living along west coast including Dagua LLG. The solar power will provide sufficient lights for sick patients in our wards. It will also help with some emergencies we conduct after hours and in the night like attending to deliveries and injuries from road accidents mainly,” said Mr Ignatius Burr, Health Extension Officer. The rural health facility services some 100,000 plus rural population of Dagua LLG including those from Boikin LLG. Despite being handicapped in its operations, the facility is known for being the first to attend to some very serious road accident injuries along the west coast highway before referrals are made to Boram General Hospital in Wewak Town. A feasibility assessment for renewable energy power was conducted in early 2021 for the region, and six facilities were identified for solar energy installation. The UNDP under the EU-STREIT PNG Programme supports development and improvement of renewable energy to create an enabling environment that will embrace development of the three targeted value chains which thousands of rural communities in the Sepik Region depend on to sustain their livelihoods. The EU-STREIT PNG, as a UN Joint Programme (FAO as leading agency, and ILO, ITU, UNCDF and UNDP as partners), is the largest grant-funded Programme of the European Union in the country and the Pacific region. Being implemented in close cooperation with the National and provincial government institutions, research entities, civil society organizations, and private sector enterprises, the Programme aims to help improve the lives of the people from East Sepik and Sandaun provinces, by focusing on increasing sustainable and inclusive economic development of rural areas through improved economic returns and opportunities from cocoa, vanilla and fishery value chains while strengthening and improving the efficiency of value chain enablers, including the business environment, and supporting sustainable, climate-proof transport and energy infrastructure development.


Recent Articles

Agriculture

Paul Oeka - September 29, 2022

AGRICULTURE HAS HUGE ECONOMIC POTENTIAL

Photo credit: Oxford Business Group The creation of the new ministries by the current government for both major agricultural commodities, Coffee and Oil Palm is a huge step forward in achieving the agriculture sectors economic potential. For the past years the agricultural sector had not been fully utilized by consecutive governments as the focus had mostly been centered on the extractive industry and Mining & Petroleum sector. This important and vital sector is eventually and currently being recognized as an economic pillar to boost the state coffers. Prime Minister Hon. James Marape said the allocation and restructure of the four newly created ministries concentrating on Horticulture (Fresh produce), Coffee, Oil Palm, and Livestock to the agricultural sector is a complete paradigm shift to get agriculture moving again. The focus of the Marape Government on ‘Taking Back PNG’ is deeply rooted and aligned with the mechanisms and functions of the agricultural sector as most of the country’s population are situated in rural settings and largely depend on subsistence agriculture to sustain themselves. Coffee, Cocoa, Oil palm and Fresh produce have been a mainstay that this rural population rely on for income for so many years. As far as many Papua new Guineans can recall and relate, Agriculture has always been the foundation and backbone of the country and it can surely drive the economy forward. Although the agricultural does not match in monetary turnovers for the country, it is an economic foundation and is here to stay. In comparison over monetary benefits with other sectors, Agriculture had not been performing to expectation due to so many underlying issues concerned and faced with the value chain of agricultural commodities prompting a decline in agricultural activities over the years. The Prime Minister said it was no secret that agriculture had declined since independence in 1975, and the current allocation of the four agricultural ministries was to revive the sector for it to be a major income generator for PNG. PM Marape said this when explaining the concept and rationale for his allocation of four ministries to the agricultural sector. This direction by the Marape/Rosso Government to emphasize more on agriculture will boost agricultural activities in and around the country. Mostly the sector had not been given proper recognition for decades and had been lacking government intervention from past successive governments. Now with the current Government’s backing, the respective agricultural ministries and its industries are expected to flourish dramatically and are likely to bring more benefits. The new ministries will also empower provinces that currently do not have mining and petroleum resources. This will certainly build stronger local economic activities for future generations. “We want to see import replacement and more exports within the agriculture sector, which is why we have allocated four separate ministries to agriculture,” PM Marape said. The recognition of this agricultural industries will also ease and slowdown rural-urban drift. The number of people migrating from rural areas into towns and cities in search for better opportunities have risen in the past couple of years due to inequality in the distribution of wealth and lack of government services. Thus, the governments focus on agriculture will encourage many unemployed Papua New Guineans living in urban areas to go back to their home Provinces or villages and be self-reliant. As economic opportunities arise in rural areas from vibrant and innovative policy interventions within these newly created agricultural ministries, it will attract many to contribute meaningfully and be productive on their own customary land. Prime Minister Marape said over the last three years prior to the creation of the new agricultural ministries, his government has given millions of kina to support agriculture through price and freight subsidies and SME support. “We are now targeting specific commodities through the establishment of the four ministries. Over the next term of government, we will give specific production targets for Coffee, Oil Palm and all other major agricultural Commodities” he said. The government also plans to revive and rehabilitate once thriving agricultural hubs in the country such as Cattle farming in the Central Province and the Coffee plantations of the Highlands region that produced quality organic Coffee and grew the fledgling industry pre-independence in the 1960’s.   Now that the agricultural sector has been categorized into four industries, there will be room for much improvement in economic activity within the agricultural sector as people will start contributing meaningfully to the economy.

Business

Paul Oeka - September 28, 2022

TREASURER WANTS REVIEW OF ELECTION FUNDS

Treasurer Ian Ling-Stuckey is dismayed at how the 2022 National Elections were conducted and is now looking forward to a complete review of the allocated funds that were spent on the elections. Ling-Stuckey recently stated in parliament that the government had allocated and funded enough money for the election process to be conducted this year. “We provided a further K50 million to cover the costs for the 2022 election, bringing the total funding for the election to nearly double the level of expenditure in the 2017 national elections. There was enough money to support a much better election this year, so I look forward to the proposed parliamentary committee examinations of what went wrong and what can be done better” he said. The Treasurer also expressed concern that there was a decrease in the public servants’ salaries. He explained that “Once again there is a salary cost overrun. This is K201 million much lower than in previous years, and out of this, over 70 percent is related to teacher wage overruns. We contributed to bring this area under control. After no pay increases during the latest part of the Covid-19 crisis, it is now time to start increasing some salary payments”. “There is also the need to provide additional funding for the seven new districts that have been created and K3 million each has been provided. There are also new members in existing electorates, and it is appropriate that they be given some funds for commencing programs through to the end of the year. For equity reasons all districts and provinces needed to benefit the same so an additional 2 million per district and province have been allocated bringing the funding back to 10 million per districts and provinces” he said. Meanwhile there was an announcement on Thursday last week that the Department of personnel management, Treasury and Finance are working together to ensure that there will be a three percent pay increment in the salary of public servants. This pay increment is to be adjusted and effective by December this year, the welcoming news for public servants was confirmed by the Secretary of the Department of Personnel Management, Taies Sansan.

Commentary

PNG Business News - September 28, 2022

PNG’s minimum wage

Commentary by Stephen Howes, Kingtau Mambon and Kelly Samof The urban minimum wage has been an important part of Papua New Guinea’s economic history. In the last few years before independence (in 1975), it was greatly increased. In the decade or so after independence, it was widely regarded as too high. In 1992, it was slashed, merged with the rural minimum, and hardly increased again for more than a decade. We can compare the minimum wage in PNG today with other Asia and Pacific developing countries using International Labour Organization (ILO) data. As Figure 1 shows, PNG’s minimum wage is 18% below the average of the 19 countries shown if the market exchange rate is used to compare minimum wages. It is 37% below the average if differences in cost of living are also taken into account (with conversions made on the basis not of market exchange rates but so-called purchasing power parities or PPPs). The greater difference in terms of PPPs reflects PNG’s relatively high cost of living. Of the countries shown, only Samoa and Kiribati have a lower minimum wage than PNG when a PPP comparison is made. This is very different to the past. Raymond Goodman, Charles Lepani and David Morawetz in their 1985 report The economy of Papua New Guinea compared minimum wages in PNG with a subset of the countries above back in 1978. Then, the PNG minimum wage was about twice as big or more than the other comparators. Today (using market exchange rates, and the earlier authors do), PNG comes in the middle of the pack, as Figure 2 shows. So far, we have shown that around the time of independence minimum wages were very high in PNG by international standards, and that they no longer are. Figure 3 shows how this change came about – also, for interest, comparing trends in PNG with those in Australia. Both the PNG and Australian weekly minimum wages are shown in Figure 3 measured in Australian dollars. The PNG minimum wage is converted into Australian dollars using the current exchange rate. Both wages are then adjusted for inflation and expressed in 2021 prices. The two series follow diametrically opposed paths. The Australian minimum wage fell with the high inflation of the 1970s and industrial relations reforms of the 1980s, and by the early 1990s was little more than half its value in the 1970s. It then increased in the late 1990s and 2000s during the resource boom, and has continued to increase. Adjusting for inflation, it is now almost back to where it was in the early 1970s. The PNG minimum wage does the opposite. It increased in the 1970s and was then held stable due to indexation, until the big bang reforms of 1992. Adjusted for inflation, PNG’s minimum wage continued to fall until 2004. There have since been some significant increases, but today PNG’s minimum wage is only about one-third of its value at independence, and below its value even in 1972, which is when the steep minimum wage increases began. The Australian minimum wage has always been significantly higher than the PNG one, but the ratio has changed a lot over time. The lowest that ratio has ever been is 2.2 in 1986, the highest 45 in 2004. The gap between the two wages is much higher now than at independence: the ratio of the Australian to the PNG minimum wage was 14.5 in 2021, compared to only 3.2 at independence (1975). This reflects PNG’s 1992 deregulation, and the faster growth in the Australian economy, which has enabled an increase in the Australian minimum wage. The solution to low wages in PNG is not necessarily to increase the minimum. In some sectors, where there is a lot of international competition, a higher minimum wage might lead to job losses. For example, in tuna processing, one of PNG’s main competitors is the Philippines. From Figure 1, we can see that PNG’s minimum wage is lower than the Philippines' on the basis of PPPs, but actually higher on the basis of market exchange rates. While the former is what matters for the welfare of workers, the latter is what matters for international competitiveness. Whether PNG’s minimum wage should be increased will require a lot more analysis. The point of this blog is simply that PNG’s minimum wage does not look high any more by international comparisons, as it has fallen a lot since independence. PNG is often described as a high-cost economy, and this is a fair description. However, with regards to unskilled labour, it is no longer a high-wage economy.   Data note: The PNG Economic Database provides the weekly minimum wage of PNG going back to 1972, and the PGK-AUD exchange rate. Wikipedia provides the Australian weekly minimum wage data (hourly and weekly, on the assumption of a 38-hour week) starting from 1966. The Australian CPI is from the Australian aid tracker. There are some years where Australian minimum wage rates change more than once in a year. For such cases, we took the average as annual minimum wage rate. The data for Asia-Pacific comparisons are from the International Labour Organization and the World Bank. The different frequencies of minimum wages for each country in 2019 in the ILO’s report are adjusted to convert to weekly rates. World Bank data is used to obtain market exchange rates and PPP conversion factors. For the Goodman, et al., data go to Table 3.6 on p.61 in their report.\ Disclosure: This research was undertaken with the support of the ANU-UPNG Partnership, an initiative of the PNG-Australia Partnership, funded by the Department of Foreign Affairs and Trade. The views are those of the authors only. This article appeared first on Devpolicy Blog (devpolicy.org), from the Development Policy Centre at The Australian National University. Stephen Howes is Director of the Development Policy Centre and Professor of Economics at the Crawford School of Public Policy, at The Australian National University. Kingtau Mambon is currently undertaking a Master of International and Development Economics at the ANU Crawford School of Public Policy, for which he was awarded a scholarship through the ANU-UPNG Partnership. Kelly Samof is a lecturer in economics at the School of Business and Public Policy, University of Papua New Guinea.

Join Papua New Guinea's

Business Community

Be the "First" to get our exclusive Digital Magazine & Weekly Newsletter.