Guam business owners worry about trickle effect

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HAGÅTÑA (The Guam Daily Post) — Although the minimum wage increase is supposed to benefit about 3,500 workers, some local business owners believe it couldn’t be happening at a worse possible time.

The Onigiri Seven Japanese food stand is pictured on Wednesday, March 4, in Tumon, Guam.  Photo by David Castro/The Guam Daily Post

Hitomi Sako, owner of the Onigiri Seven Japanese food stand, said currently her business’ sales have gone down by 30% compared to the same period last year, and she hasn’t received bento orders from any groups at all.

Sako said her business would like to reach out to other groups of customers who weren’t their main target before.

Sales have been dropping due to the novel coronavirus, she said. And with the increase in minimum wage, she said she doesn’t want to pay $8.75 to someone who isn’t fully prepared to work.

If they were to hire, Sako said, it would be only for experienced employees, leaving those with less experience fewer opportunities.

“The customers will come back eventually, so we do not want to cut employees or shorten operation time,” she said.

5% GRT, government wage rates don’t help

On top of the flight cancellations caused by the Covid-19 outbreaks in Japan and South Korea — Guam’s major tourist markets — one concerned local restaurant owner said the government of Guam isn’t prepared for the economic impact of reduced visitors.

The restaurant owner, who wished to remain anonymous, said the administration should cut down on their wages, just like the CNMI’s government.

He said the CNM had reduced its 80-hour workweeks for government employees down to a 64-hour schedule because of the revenue losses caused by the COVID-19 outbreaks.

“(GovGuam) thinks they have a lot of money,” he said. “They have a lot of money because of the gross receipts tax.”

Last year, he said, the government relied on a surplus from the 5% GRT, which was in the millions of dollars.

He added the government should not have continued with the increase in GRT, which was supposed to end during the last administration.

The restaurant owner said he understood that the minimum wage increase was supposed to provide much-needed help to thousands of workers. It’s unfortunate, however, that the coronavirus outbreak came at the same time.

It doesn’t make sense, he said, “The hourly wage went up, but I gotta cut your hours because we’re not making money.”

The Guam Chamber of Commerce has twice called for a delay in the implementation of the new minimum wage until Sept. 1; however, the governor already made her decision to veto such a measure.

As a result, the first minimum wage increase happened on March 1, going from $8.25 an hour to $8.75. The wage increase to $9.25 is set for March 1, 2021.

According to Guam Visitors Bureau statistics, there have been more than 30,000 travel cancellations. Weeks before, the bureau reported 15,000 cancellations that amounted to a $9.1 million loss which could be double that amount now.

Without an austerity measure to help those in the tourism industry, “businesses are going to close down — hours are cut...and (owners) can’t afford rent,” he said.

It’s a trickle effect, he said, from the airport, to the hotels, to restaurants, to operational tours — all of them won’t make any money.

Tumon used to be bustling with tourists. Now, it’s a “ghost town,” he added.

Another popular tourist spot, the Chamorro Village Wednesday night market, could also be affected, he said.

On Wednesday, Feb. 26, the Chamorro Village night market was OK, he said. However, for this week, he’s not so sure.

Proactive, but help still needed

Frank Toves, general manager of Proa Restaurant in Tumon, said his business has started to feel the negative impact of tourist cancellations.

Toves said he’s thankful that there are still local customers who love their food and tourists who’ve marked the restaurant on their bucket list.

“But the fact is, tourist arrivals are down, and we are feeling it during our non-peak hours,” he added.

Toves said Proa is moving forward with several options to increase revenue; however, timing is crucial that tourism recovers soon.

He said he’s somewhat relieved that the governor announced the administration is moving forward with plans to assist businesses that are dependent on tourism.

However, he added, “It is a sad fact that many businesses will have no choice but to reduce working hours as there’s such a decrease in arrivals.”

Toves said it is strongly needed that the business privilege tax be returned to 4%.

According to Toves, in the Netherlands, which has 23 cases of Covid-19 infections, more than 300 businesses have applied for permission to reduce employee hours.

Toves said he believes it’s the responsibility of the executive and legislative branches to meet immediately with business groups to discuss the best path forward.

“It takes all of us to shoulder the costs of diversifying our tourist markets and bringing our businesses to Guam,” Toves said. “It is also a point that we need to consistently communicate to us locals to live our lives and enjoy local business options.”

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