A living wage for Aruba needs a labor-law deal

Aruba’s rent is too damn high! For years we have seen wages stagnate while prices rise, what we once considered a strong alarm has now become our background noise, regular inflation in Aruba has resulted in rising inequality where the middle class has been squeezed and the more vulnerable in our population struggle to make ends meet.

The statutory minimum of Afl 11.58 an hour works out to Afl 2,007 a month for a full-time worker. The Central Bureau of Statistics puts the bestaansminimum, the income a single person needs to live adequately, at Afl 2,700 as of September 2026. That leaves a full-time minimum-wage worker Afl 693 a month short, or Afl 518 short even after the reparatietoeslag top-up. It is the second-largest September gap in six years. Prices rose 3.0% in the year to September, led by transport (up 11.1%) and food (up 3.5%). The outgoing Prime Minister after announcing his retirement from politics wants to close that gap of roughly 25% as soon as possible. The Labor Department counts 20,066 private-sector workers, 43.3% of the total, earning below that line.

The Prime Minister is right in wanting to close the gap, but it seems to me that we are about to do it the wrong way. The coalition debate has shrunk to two questions: how fast, and how much compensation for business. The other half of the bargain is missing. If we ask employers to pay a third more for their lowest-paid workers, we also have to let them run their businesses in a way that can absorb it. That means relaxing the rules that make hiring in Aruba slow, risky and expensive.

The SER saw this coming in its January advice. It supports a phased raise but says a first step in 2026 is not feasible. It warns that employers will cut hours, delay hiring, automate or move work into the informal economy. Its answers are all on the cost side: tax credits, wage subsidies and deductions. These are important, but somehow nobody is even mentioning restructuring employment laws as a precondition.

Why wages have to rise

Aruba sells wellness and a high quality of life to the world. The people who make that happen should be able to live it too. Almost everything we eat, drive, wear and build with is imported and paid for in dollars, so our wages have to cover world prices. We will not keep our young professionals from staying in the Netherlands with wages that don’t even cover the basics.

But wages that last have to be earned. Tourism is our export, and what we earn per visitor decides what the island can pay. Higher-value tourism, better training and more productive businesses let wages rise without pushing up prices or killing jobs. Law can set a floor but I think productivity has to do the higher lift.

Housing

Housing shows the limits of a raise. Foreigners can buy here without restrictions, with incomes earned in North America and Europe, according to general statistics non-residents already own at least 11% of our vacation rentals. No local wage can compete with that. We hear that a 100 m² home now costs close to Afl 300,000 to build, with a 6.5% mortgage over 30 years, that is about Afl 1,900 a month, around 35% of what two adults earn together even at the bestaansminimum. And if incomes rise while land stays scarce, a lot of the raise ends up in the land price. Rental rules in Aruba make it worse: A landlord needs the Huurcommissie’s permission to end an open-ended lease, the same committee can review the rent, and eviction for non-payment usually takes about three months of arrears. A court even ruled that wanting to re-let at a higher rent is not a valid reason to end a tenancy. Owners fear that a local tenant is a risk they can’t undo, while a vacation rental pays more and is free again next week with easier inspection and insurances that pay for any damages. No surprise that lodging in vacation rentals has skyrocketed while hotels haven’t grown at all. Making long-term renting safe for owners will bring supply to local families without building a single wall.

What the raise really costs

Closing the gap means adding about Afl 693 a month to the full-time minimum, roughly 35%. With employer premiums, that is about Afl 865 a month, over Afl 10,000 a year, per worker. One proposal in Parliament, Afl 1.33 an hour per year for three years, adds about Afl 71 million to private payrolls in 2027 and Afl 213 million a year by 2029.

In a big economy, part of that money comes back: workers spend it locally and create more local jobs. Here that loop is broken. We import about 93% of our food and almost everything else, so the extra florins mostly leave the island, the cost stays here. With the florin pegged to the dollar, we can’t devalue our way out either. Something has to give: productivity, margins, prices or jobs. We should choose which.

The raise also won’t stop at the minimum. With 43% of private-sector workers below the bestaansminimum, a new floor of Afl 2,700 swallows a big part of the workforce. The cashier at Afl 2,400 and the cook at Afl 2,600 end up on the same pay as the new hire, and the supervisor at Afl 3,000 is only a few hundred florins ahead of her team. Few businesses can raise everyone by the same percentage. So the bottom goes up, the people just above get little or nothing, and then prices rise. The bookkeeper, the technician and the young professional pay for it. We would be squeezing the middle class even more.

The government sets part of the price itself. Since August 2023 every import pays 7% BBO, BAVP and BAZV at the border, on top of import duties. Shops can deduct it only on goods they resell as they are. A restaurant’s ingredients or a builder’s materials carry it as a cost and then pay 7% again on the final sale: about 14.5% in turnover tax alone, before import duties. The BBO at border is one of the drivers of our cost of living.

The big hotels will manage, they have pricing power and tipped staff. The small businesses, mini-market, the family restaurant, the local farm and the small contractor will not.

Hiring and firing

In most of the private sector, you can’t end a permanent contract without a dismissal permit (ontslagvergunning) from the Department of Labor (DAO). Without it, the dismissal is void and the wage keeps running. The principle behind this is noble: protect workers from arbitrary firing but the result is that every permanent hire becomes a long-term liability. Employers hire less, hire later, use agencies, and pick only the safest of candidates. Young workers, the people coming back to work, the ones with a gap in their CV, the very people a minimum wage should help, are the first ones left out. Suggestions for the need for Aruba to make its labor market more flexible to back to more than a decade. Making every hire a third more expensive while firing stays this hard only makes it worse.

Sick days

Sick leave is a large hidden cost, and it hits small companies hardest. SVb pays 80% of the wage only from the fourth day. The first three days are on the employer. Short absences are rarely checked: you report sick online, you may have to stay home in case an inspector shows up without need for a doctor declaration. Many employers see the same pattern: one or two days off around weekends, paydays and holidays, from the same few people. Companies can’t dismiss someone during illness unless they have been unfit for more than a year. Frequent short absence is not even a ground for dismissal.

For a resort with 300 staff, one missing cleaner is usually just a scheduling headache. For a business with six people, it means everything, a closed counter, leading to less sales, the owner working a double shift, or overtime on the rest of the staff. Small firms have no spare staff, so they pay more than double: for the person who isn’t there and extra for whoever covers. Raise wages by a third and every unchecked sick day costs a third more. Curaçao has tested a fix in 2025: workers at six high-absence firms had to report in person on the first and third sick day. Sick days per case and wage-loss payments went down.

The deal

I propose that a wage increase goes hand in hand with other reforms:

Raise the wage to the bestaansminimum in phases from 2027, with a check on prices and jobs before each step, as the SER asks. Update the bestaansminimum first, since it still rests on an older methodology.
Replace the dismissal permit with clear rules: notice plus severance that grows with years of service, like the Dutch transitievergoeding, and the courts for unfair or discriminatory dismissal. Keep DAO oversight for mass layoffs only.
More room to try before committing: a longer trial period and more fixed-term contracts before a job becomes permanent.
Flexible hours adjusting to seasonal economy and workers needs.
Faster work permits, tied to a sector instead of one employer. Ends the dependence and openings for abuse of workers.
Sick leave that can be checked: SVb check by day two or three for frequent reporters, a doctor’s note after a set number of short absences, a documented pattern as grounds for dismissal, and the SVb paying the first three days for firms under ten employees.
Compensation through lower premiums, not profit tax. Bonaire raised its minimum wage by about 42% in 2023–2024 and cut employer premiums from 13.4% to 10.3%. Aruba should lead with cutting taxes that raises costs of living.
No more stacked tax at the border. Make the border BBO deductible on all business inputs, or drop it, and finally move to the VAT that has been promised for years.
Safe long-term renting: fixed-term leases that end on time, fast eviction for non-payment, indexed rent increases, and registered, fairly taxed vacation rentals.

What stays: the minimum wage itself, health and safety, protection during real illness, and the rights to go to court.

What the unions will say

The unions will probably say flexibility means insecurity: the government gives with one hand and takes the job away with the other. Dismissal protection gives workers bargaining power, and the evidence on minimum wages and jobs is mixed. Bonaire’s big increases have not yet caused the collapse some predicted.

Real security comes from employers who keep hiring. A clear severance formula protects everyone, including those who can’t pay a lawyer or wait months for a committee. A higher minimum wage only helps the people who get hired. And a doctor’s check costs a sick worker nothing, while the colleagues covering for those who aren’t sick will thank us.

The Prime Minister is right that wages must rise, and the Finance Minister is right to want the numbers first. But nobody is talking about the labor laws. The Social Dialogue already has wages and pensions on the table. Add dismissal, sick leave and rentals, and let unions and employers bargain over the whole package. That is how Aruba gets a living wage and an economy that can pay it.