ANALYSIS: First the numbers, then the way forward

Written by Tito Laclé

Fighting poverty in Aruba is necessary. Yes. There is little need for debate about that. "Het Koopkrachtplan Aruba" (Aruba Purchasing Power Plan), the report prepared for the government by Economisch Bureau Amsterdam in October 2025, which I already began reporting on last Monday, shows that many families have lost purchasing power in recent years. But there is one recommendation in the report that, in my opinion, doesn't quite add up: gradually raising the minimum wage until it reaches the minimum income needed to live (the bestaansminimum).

Why doesn't it add up? Well, let me explain myself. Because the report itself acknowledges that the foundation for making such a decision is not sufficiently solid. There is no updated poverty threshold. Nobody knows exactly how many households are currently living in poverty. Much of the data is outdated, dating back to 2011, 2016 and 2021, and unemployment has fallen considerably since then. We don't even know how many people actually earn the minimum wage. That is still being investigated. Yet the recommendation is already clear: raise the minimum wage (!). Can you follow that logic? I can't.

To be fair, the recommendation did not come out of nowhere. The minimum wage, together with the compensation supplement (reparatietoeslag), amounts to approximately 80 percent of the minimum income required for a single person to live, currently set at Afl. 2,624. That is a concrete comparison, not an outdated figure. The authors also provide arguments suggesting that the negative consequences might be less severe than expected: low unemployment, a substantial gap between social assistance and the minimum wage, and prices that rise mainly because of imports. But these are expectations. No concrete calculations have been made to determine the actual impact.

There is another problem. The report itself acknowledges that many people living in poverty earn less than the minimum wage. Think of people receiving social assistance, self-employed workers, part-time employees and people working in the informal economy. And for those who don't know what "informally" means, that's simply the nicer way of saying they work off the books or get paid under the table, without paying taxes. Anyway, let me continue. An increase in the minimum wage does not reach these people. So we must ask ourselves: WHO exactly are we helping with this measure, and how much will it cost us? Consider the impact on employers, prices and the number of formal jobs.

Now, please understand me correctly. My point is not "no", but rather "first this, then that". In other words, let's do things properly instead of doing everything backwards, as my mother likes to say. First, establish an updated poverty threshold. Investigate how many people earn the minimum wage or an amount close to it. Calculate what an increase would mean for employment, prices and informal work. Then, together with employers and trade unions, develop a solid plan that can remain sustainable in the long term. That's the way to do it. Not the other way around.

And again, don't misunderstand me. This does not mean that, in the meantime, we should sit around with our arms crossed. No. That is not necessary either! Old-age pensions (AOV) and social assistance benefits have already been increased. Annual indexation, an unemployment compensation scheme and targeted assistance for the lowest-income groups are measures we can take without waiting for new figures.

The problem is that anyone who builds policy on outdated figures runs the risk of helping people who don't need as much assistance, while those who genuinely need help receive far too little. Something that already happens all too often. The government itself says that more reliable information and data are essential. Well then, let that be the first thing that happens, not the last. NO.

With the increase in pensions, we have already ended up helping, among others, a group of people who did not actually need that additional assistance. At some point, we really must learn from our mistakes. That's what I'm saying!